PRODUCT AND BRAND MANAGEMENT

The Marketing Mix: Product

Products come in several forms. Consumer products can be categorized as convenience goods, for which consumers
are willing to invest very limited shopping efforts. Thus, it is essential to have these products readily available and
have the brand name well known. Shopping goods, in contrast, are goods in which the consumer is willing to invest a
great deal of time and effort. For example, consumers will spend a great deal of time looking for a new car or a
medical procedure. Specialty goods are those that are of interest only to a narrow segment of the populatione.g.,
drilling machines. Industrial goods can also be broken down into subgroups, depending on their uses. It should also
be noted that, within the context of marketing decisions, the term product refers to more than tangible goodsa
service can be a product, too.

A firms product line or lines refers to the assortment of similar things that the firm holds. Brother, for example, has
both a line of laser printers and one of typewriters. In contrast, the firms product mix describes the combination of
different product lines that the firm holds. Boeing, for example, has both a commercial aircraft and a defense line of
products that each take advantage of some of the same core competencies and technologies of the firm. Some firms
have one very focused or narrow product line (e.g., KFC does only chicken right) while others maintain numerous
lines that hopefully all have some common theme. This represents a wide product mix 3M, for example, makes a
large assortment of goods that are thought to be related in the sense that they use the firms ability to bond surfaces
together. Depth refers to the variety that is offered within each product line. Maybelline offers a great deal of depth
in lipsticks with subtle differences in shades while Morton Salt offers few varieties of its product.
Products may be differentiated in several ways. Some may be represented as being of superior quality (e.g., Maytag),
or they may differ in more arbitrary ways in terms of stylessome people like one style better than another, while
1

there is no real consensus on which one is the superior one. Finally, products can be differentiated in terms of
offering different levels of servicefor example, Volvo offers a guarantee of free, reliable towing anywhere should
the vehicle break down. American Express offers services not offered by many other charge cards.

NEW
PRODUCT
DEVELOLOPMENT
New product development tends to happen in stages. Although firms often go back and forth between these
idealized stages, the following sequence is illustrative of the development of a new product:

New product strategy development. Different firms will have different strategies on how to approach new
products. Some firms have stockholders who want to minimize risk and avoid investing in too many new
innovations. Some firms can only survive if they innovate frequently and have stockholders who are willing to
take this risk. For example, Hewlett-Packard has to constantly invent new products since competitors learn to
work around its patents and will be able to manufacture the products at a lower cost.
Idea generation. Firms solicit ideas as to new products it can make. Ideas might come from customers,
employees, consultants, or engineers. Many firms receive a large number of ideas each year and can only
invest in some of them.
Screening and evaluation: Some products that after some analysis are clearly not feasible or are not
consistent with the core competencies of the firm are eliminated.
Business analysis. Ideas are now exposed to more rigorous analysis. Profit projections, risks, market size,
and competitive response are considered. If promising, market research may be done.
Development: The product is designed and manufacturing facilities are planned.
Market testing: Frequently, firms will try to test a product in one region to see if it will sell in reality before
it is released nationally and internationally. There is a lesser risk if the firm only commits money to
advertising and other marketing efforts in one region. Retailers will also be more receptive in other parts of
the country and world if it has been demonstrated that the product sold well in one region. The firm may also
experiment with different prices for the product.
Commercialization: Facilities to manufacture the product on a larger scale are now put into operation and
the firm starts a national marketing campaign and distribution effort.

THE
PRODUCT
Products often go through a life cycle. Initially, a product is introduced.

LIFE

CYCLE

Since the product is not well known and is usually expensive (e.g., as microwave ovens were in the late 1970s), sales
are usually limited. Eventually, however, many products reach a growth phasesales increase dramatically. More
firms enter with their models of the product. Frequently, unfortunately, the product will reach a maturity stage
where little growth will be seen. For example, in the United States, almost every household has at least one color TV
set. Some products may also reach a decline stage, usually because the product category is being replaced by
something better. For example, typewriters experienced declining sales as more consumers switched to computers
or other word processing equipment. The product life cycle is tied to the phenomenon of diffusion of innovation.
When a new product comes out, it is likely to first be adopted by consumers who are more innovative than others
they are willing to pay a premium price for the new product and take a risk on unproven technology. It is important
2

to be on the good side of innovators since many other later adopters will tend to rely for advice on the innovators
who
are
thought
to
be
more
knowledgeable
about
new
products
for
advice.
At later phases of the PLC, the firm may need to modify its market strategy. For example, facing a saturated market
for baking soda in its traditional use, Arm & Hammer launched a major campaign to get consumers to use the
product to deodorize refrigerators. Deodorizing powders to be used before vacuuming were also created.
It
is
sometimes
useful
to
think
of
products
as
being
either
new
or
existing.
Many firms today rely increasingly on new products for a large part of their sales. New products can be new in
several ways. They can be new to the marketno one else ever made a product like this before. For example,
Chrysler invented the minivan. Products can also be new to the firmanother firm invented the product, but the
firm is now making its own version. For example, IBM did not invent the personal computer, but entered after other
firms showed the market to have a high potential. Products can be new to the segmente.g., cellular phones and
pagers were first aimed at physicians and other price-insensitive segments. Later, firms decided to target the more
price-sensitive mass market. A product can be new for legal purposes. Because consumers tend to be attracted to
new and improved products, the Federal Trade Commission (FTC) only allows firms to put that label on
reformulated products for six months after a significant change has been made.

DIFFUSION
OF
INNOVATION
The diffusion of innovation refers to the tendency of new products, practices, or ideas to spread among people.

Usually, when new products or ideas come about, they are initially only adopted by a small group of people. Later,
many innovations spread to other people. The bell shaped curve frequently illustrates the rate of adoption of a new
product. Cumulative adoptions are reflected by the S-shaped curve.

The saturation point is the maximum proportion of consumers likely to adopt a product. In the case of refrigerators
in the U.S., the saturation level is nearly one hundred percent of households. The figure will almost certainly be well
below that for video games that, even when spread out to a large part of the population, will be of interest to far from
everyone.

Several specific product categories have case histories that illustrate important issues in adoption. Until sometime in
the 1800s, few physicians bothered to scrub prior to surgery, even though new scientific theories predicted that
small microbes not visible to the naked eye could cause infection. Younger and more progressive physicians began
scrubbing early on, but they lacked the stature to make their older colleagues follow.

ATM cards spread relatively quickly. Since the cards were used in public, others who did not yet hold the
cards could see how convenient they were. Although some people were concerned about security, the
convenience factors seemed to be a decisive factor in the tug-of-war for and against adoption.
The case of credit cards was a bit more complicated and involved a chicken and-egg paradox. Accepting
credit cards was not a particularly attractive option for retailers until they were carried by a large enough
number of consumers. Consumers, in contrast, were not particularly interested in cards that were not
accepted by a large number of retailers. Thus, it was necessary to jump start the process, signing up large
corporate accounts, under favorable terms, early in the cycle, after which the cards became worthwhile for
retailers to accept.
Rap music initially spread quickly among urban youths in large part because of the low costs of recording.
Later, rap music became popular among a very different segment, suburban youths, because of its apparently
authentic depiction of an exotic urban lifestyle.
Hybrid corn was adopted only slowly among many farmers. Although hybrid corn provided yields of about
20% more than traditional corn, many farmers had difficulty believing that this smaller seed could provide a
superior harvest. They were usually reluctant to try it because a failed harvest could have serious economic
consequences, including a possible loss of the farm. Agricultural extension agents then sought out the most
progressive farmers to try hybrid corn, also aiming for farmers who were most respected and most likely to
be imitated by others. Few farmers switched to hybrid corn outright from year to year. Instead, many started
out with a fraction of their land, and gradually switched to 100% hybrid corn when this innovation had
proven itself useful.

Several forces often work against innovation. One is risk, which can be either social or financial. For example, early
buyers of the CD player risked that few CDs would be recorded before the CD player went the way of the 8 track
player. Another risk is being perceived by others as being weird for trying a fringe product or idea. For example,
Barbara Mandrel sings the song I Was Country When Country Wasnt Cool. Other sources of resistance include the
initial effort needed to learn to use new products (e.g., it takes time to learn to meditate or to learn how to use a
computer) and concerns about compatibility with the existing culture or technology. For example, birth control is
incompatible with religious beliefs that predominate in some areas, and a computer database is incompatible with a
large, established card file.
4

Innovations come in different degrees. A continuous innovation includes slight improvements over time. Very little
usually changes from year to year in automobiles and even automobiles of the 1990s are driven much the same way
that automobiles of the 1950 were driven. A dynamically continuous innovation involves some change in technology,
although the product is used much the same way that its predecessors were usede.g., jet vs. propeller aircraft. A
discontinuous innovation involves a product that fundamentally changes the way that things are donee.g., the fax
and photocopiers. In general, discontinuous innovations are more difficult to market since greater changes are
required in the way things are done, but the rewards are also often significant.
Several factors influence the speed with which an innovation spreads. One issue is relative advantage (i.e., the ratio
of risk or cost to benefits). Some products, such as cellular phones, fax machines, and ATM cards, have a strong
relative advantage. Other products, such as automobile satellite navigation systems, entail some advantages, but the
cost ratio is high. Lower priced products often spread more quickly, and the extent to which the product is trialable
(farmers did not have to plant all their land with hybrid corn at once, while one usually has to buy a cellular phone to
try it out) influence the speed of diffusion. Finally, the extent of switching difficulties influences speedmany offices
were slow to adopt computers because users had to learn how to use them.
Some cultures tend to adopt new products more quickly than others, based on several factors:

Modernity: The extent to which the culture is receptive to new things. In some countries, such as Britain and
Saudi Arabia, tradition is greatly valuedthus, new products often dont fare too well. The United States, in
contrast, tends to value progress.
Homophily: The more similar to each other that members of a culture are, the more likely an innovation is to
spreadpeople are more likely to imitate similar than different models. The two most rapidly adopting
countries in the World are the U.S. and Japan. While the U.S. interestingly scores very low, Japan scores high.
Physical distance: The greater the distance between people, the less likely innovation is to spread.
Opinion
leadership:
The
more
opinion
leaders
are
valued
and
respected,
the more likely an innovation is to spread. The style of opinion leaders moderates this influence, however. In
less innovative countries, opinion leaders tend to be more conservative, i.e., to reflect the local norms of
resistance.

It should be noted that innovation is not always an unqualifiedly good thing. Some innovations, such as infant
formula adopted in developing countries, may do more harm than good. Individuals may also become dependent on
the innovations. For example, travel agents who get used to booking online may be unable to process manual
reservations.
Sometimes innovations are disadopted. For example, many individuals disadopt cellular phones if they find out that
they dont end up using them much.
THE
PRODUCT-SERVICE
CONTINUUM
There is no clear distinction between a pure tangible product and a service. Most products contain some of both. A
computer, for example, is a tangible product, but it often comes with a warranty and software updates.

Product life cycle

PRODUCT LIFE CYCLE
FAD

STYLE

FASHION

TIME

TIME

TIME
I. STYLE
A basic, distinctive mode of expression in human endeavor.
Lasts for generations going in & out of vogue-homes, clothing, art, music.

II. FASHION
Fashion cycle is hard to predict-they represent a purchase compromise-consumers look for missing attributes-too
many adopt current fashion-lasts till society needs it-currently accepted or popular fashion. It has 4 stages:
1. Distinctiveness-sets you apart
2. Emulation-follow the current idol
3. Mass adoption-mass stage-a rage
4. Decline-late adopters, most move on to the next.
Small cars become popular, & affordable, and then become less comfortable & safe-need for comfort-migrate to big
cars. Rap music, tubes, parallels, flares & bell-bottoms, Capris.
CHARACTERISTICS of fashion

Sales over many seasons-vary dramatically from one season to next-there may be no sale of specific style over
many seasons.

Fashion tend to grow slowly, remain popular for a while, decline slowly-length of fashion cycle is hard to
predict.

They come to an end because of purchase compromise.

Length of fashion cycle-extent to which it meets a need [genuine one].

Consistent with other norms & trends in society.

Satisfies societal norms, values-doesnt exceed current limits.

PRODUCT Management and New-Product Development
Fashions

and

Fads

Fashion "the currently accepted or popular style"

generally what the majority of people follow in
clothing, fast food, etc.
Fashion cycles may last for some time as they
spread beyond the innovators
Fad cycles are short and do not re-occur
"fashionable only to certain groups"
Styles are Fashions / Fads that come back over time
and can last a short few months, or a couple of
years
- very common in the clothing industry and house
decor
III. FADS
Enjoy while it lasts!
Comes quickly into public eye-adapted with zeal-peaks early-dies fast-small acceptance cycle-limited following
capricious aspect-appeals to those searching for excitement to distinguish from others-fads dont satisfy a strong
society need, or media attention-short survival-discarded soon-yoyos, Rubiks cube, tattooing-body piercing, lower lip,
nose, belly button, eyelids! Lower-lip beard, dark lipsticks, fluorescent body art, peek of under garments out of normal
wear, high high heels! Any thing outrageous!
CHARACTERISTICS of fads

It has no sales over many seasons-no sale of specific style from one season to next sales even doesnt vary
dramatically, because of abrupt PLC.

Aim is to get attention-please notice me-wont? Now you will.
PLC-A strategic viewpoint
Product life cycle asserts 4 things:

Products have a limited life

The 4 different stages pose different problems for the marketer

Profits rise & fall over time

At each stage needs different resources, also stage boundaries are blurred-hence mktg. strategies too.
Factors:

Fore warned is fore armed

Gives investment directions

Forecast of technology

Forecast of sales levels is imprecise
Volumes

PLC curve
Introduction
Growth

maturity
Decline

+ve

- ve
Profitability curve

Profit peaks
Earlier

Time

volumes peak later

: PRODUCT LIFE CYCLE-PROFITABILITY curves:

PRODUCT Management and New-Product Development
Planning

for

Different

Stages

of

the

Product

Life

Cycle

Competitive Intro
Stage Growth
Stage Maturity
/
Decline
Stage
Situation
Monopoly
or Monopolistic
Competition
or Monopolistic Competition or Oligolpol
Monopolistic
Oligolpoly
or
Pure
Competition
Competition
- once the market grows, other - more and more vendors get involved
- your company has no vendors will want to get involved so as more companies learn to make the
competition
because you will lose your monopoly product and people try to "cash in" on
you
originated
the position
the
original
idea
product first and are the
- because there are so many vendors,
first to get customers
the supply/demand situation will
cause the price to drop and eventually
the price will be so low, nobody will
want to make the product anymore
because it will be unprofitable.

Product

Place

Promotion
Price

One or a few number of There are several companies selling several companies make the product
people
selling
the so there is competition to make the - it will become a battle of the brands
product
"best" product -many companies at
this stage will add variations, colour
changes, and new FABs to the
product
to
make
it
more
competitive
- companies in the lead will also
work to develop brand familiarity
Try to find good
channels
to
get
exposure
.
.
- maybe offer exclusive
distribution rights
AIDA
begins - competitive ads
- discount price oriented ads
- informative type ads
skimming
or "meet the competition" pricing or - some companies drop out if they
penetration pricing
price cutting
cannot afford to compete at a lower
price

Individual brands may not follow this pattern

o sometimes a product may crash and not get to the maturity stage
Each market should be carefully defined
o depends on where on the planet you are talking, some products are at different stages in the PLC
depending on the country
Product Life Cycle - length of time at each stage - varies
o depends on the products
o can be a few months in each stage
o or it can be years

3.1: The Ansoffs matrix

Product
Existing
M
A
r
k
e
t

Existing

Market Penetration

Market development

New
Product development

Diversification

New

Figure 10.1 The Ansoff Matrix

3.2: There are four possible strategies within the matrix. Companies can choose
9

One or more of these strategies

1. Market Penetration
This is concerned with gaining greater market share from the existing market. Such as by ranking customers
off our competitors or obtaining a greater share of the new customer of persuading our existing customer to
buy more.
2. Market development
Companies can look for new market segments for their products. This could be:
New geographical regions
New customers within the same region
New uses for the product amongst the existing customer group.
3. Product development
Companies continually need to develop new products and should incorporate this as part of their strategy.
New products need to be developed to meet customer needs.

4. Diversification
Companies can diversify be developing new products for new
Markets. This can be:
a) Related diversification into similar markets, such as a car components manufacturers diversifying into
the motorbike industry.
b) Unrelated diversification into completely different markets, such as the car components manufacturer
making precision tools for can manufacturers.
3.3: There may be different risk factors (possibility of failure and the size of
Losses incurred) associated with each strategy, with market penetration
Within your existing market having the lowest risk and unrelated
Diversification the highest risk.
3.4: The company must take account of the core competencies of the
Organization. Diversifying into a market and product for which the
Organization has no skills carries the greatest risk.

3.5: The BCG matrix as a strategic tool

The practical use of the BCG product portfolio matrix is in identifying
Possible strategies for products in the different categories.
A harvest strategy reducing expenditure on the product, such as reducing the proportional activities,
whilst still fulfilling orders to customers, and continuing until the product loses profitability.
A divest strategy selling the product to another company.
10

 A drop strategy ceasing to supply the product.

Problem Children
Stars
Characteristics
Characteristics
Rapid growth
Market leaders
Poor profit margins
Fast growing
Enormous demand for cash
Substantial profiles
Require large investment to
Strategies
finance growth
Invest
heavily
to
get
disproportionate share of new sales
Strategies
Buy existing market shares by
Protect existing share
acquiring competitors
Reinvest earnings in the form
of price reductions, product Divest (see Dogs)
improvements,
providing Harvest (See Dogs)
better
market
coverage, Drop (see Dogs)
production efficiency
Focus on a definable niche where
Obtain a large share of the
dominance can be achieved.
new users.
Cash Cows
Dogs
Characteristics
Characteristics
Profitable products
Greatest numbers of products fall in
this category.
Generate more cash than
needed to maintain market Operate at a cost disadvantages
share
Few opportunities for growth at a
reasonable cost.
Strategies
Markets are not growing: therefore,
Maintain market dominance
little new business.
Invest
in
process
improvements
and Strategies
technological leadership
Focus on specialized segment of the
Maintain price leadership
market that can be dominated and
protected from competitive in
Use excess cash to support
roads.
Research
and
growth

Harvest cut back all support costs

elsewhere in the company.
to a minimum level; supports cash
flow over the products remaining
life.
Divest-sale of going concern
*
Drop deletion from the product
line.
High
Low
Relative Market Share
10.2 Suggested strategies for products in BCG matrix
3.6: The BCG matrix can also be analyzed using strategic Business Units (SBUs)
Rather than individual products.
3.7: SBUs are established according to the market rather than individual
Products. They have three characteristics.
1) It is single business or collection of related business that can be planned
Separately from the rest of the company.
11

2) It has its own set of competitors

3) It has a manager who is responsible for strategic planning and profit.
Performance and who controls most of the factors affecting profit.
3.8: All the analysis and proposed strategies would be the same as it is for
Products.
3.9: Criticism of the BCG model would include
a)
b)
c)
d)
e)
f)

Economics of scale may not be significant in all industries making high market share less important.
Linkages between products or SBUs, so the strategy of one will impact another.
Market growth may not be a true reflection of the markets attractiveness, including its profitability.
Data problems in calculating total market size and market share.
Market share depends on a definition of the market.
Product modification is excluded.

3.10: The PLC as a strategic tool

Whilst the BCG suggest strategies for the whole product portfolio, the PLC
May assist in devising a strategy for each product individually.

Sales

Introduction

Growth
Maturity
Stars
Cash Cows
High share
High Share
High Growth
Low growth
Still needing cash large positive
For further
cash flow
Investment

Infants
Question Mark
Negative Low share
Cash flow High growth
Large negative

Decline
War Horses
High share
Negative growth
cash flow

Dogs
Dodos
Low share
Low share
Low growth
negative growth
modest +ve or Negative cash flow
-ve cash flow
Time

Fig. 10.3: The PLC and BCG matrix

Brand export

LACOSTE-French company-DEVANALAYA. S.A.

General Mills Inc., USA producer of POLO shirts-bought the famous alligator logo for $400 m. by mid-1980s
sales were declining rapidly. Competition was singing-see you later alligator-despite heavy promotion; Lacoste
started making it in cheap synthetics blends-the brand lost its prestige. US retailers stopped orders. 1992
Devanalaya bought it back for $31,5 m now it is in India-BRAND EXTENSION?

12
Made in France
Chemise La Coste

End-to end PLC-this one!

Johnson & Johnson
clinically
MILDNESS
Proven
YOU CAN BE AS SOFT AS A BABY again!
Baby population is declining in urban India. J & J
Has repositioned it to appeal to young girls. Or younger women re-discover softness. -Baby oil, vitamin E
shampoo, even talc now.
Story of PALM
Business travelers maintain addresses, phone numbers, appointment schedules,
& Basically communicate with PDAs. AT&T -$2,999, introduced the 1st PDA! Apples Newton came next$1,599; Casios Zoomer had tech problems when it came to pilot stage. High prices, unit volumes were too
low to hold market till market matured. Palm was a later entrant-at maturity stage-$ 399-599- learnt from
1st mover s mistakes. PDA is alive & kicking!

MARKET EVOLUTION-Explanation for each stage:

Latent stage

growth stage

maturity stage

decline stage

1. LATENT STAGE-needs are latent-for something that doesnt exist [paper, pencil, abacus, tables, log tables
slide rule, adding machine, electronic calculators, computers, some want 4-function calculator +, -, X,
division, -some want log, %, square roots, cube roots, some want large, medium or small-diffused preference
market] design single, niche, multi or mass market-hidden demand-hidden solutions are consumer
preferences
***
********
********
********
*******

Latent

growth

fragmentation

consolidation

2. GROWTH STAGE-enter an entrenched market-1st competitor is there-niche strategy-under attack by

competitors. Single-, multi-, niche-, or mass-marketer-avoid head-on collision with pioneer-share the market or
dominate [HLL is being attacked by P&G from all corners-lever has the major share of the shelf-space].
3. MATURITY STAGE-invade each others segments Growth slows-splinters-fragments-including smallunreserved segments. A competition covers all major segments-2 segments unoccupied, too small for profit.
DECLINE STAGE-societys total needs decline or new generation supersedes. Fragmentation is brought about by
competition.

13

Consolidation is brought about by innovation [tooth paste-mouth wash-fluoride, anti-cavity-each competitor

offered his niche-till AQUA FRESH CAME & swept aside Babul-Anchor-Colgate-Vicco-Cibaca.

STRATEGY
VARIABLE
Target mkt.
Variety
Distribution
intensity
Price
Promotion

Life cycle stage

INTRODUCTION GROWTH
Hi-income
Mid income
innovators
adopters
One
basic Some variety
offering
Limited
or More retailers
extensive
Penetration or Wide range
skimming
Informative
Persuasive

MATURITY
Mass mkt.
Greater variety
More retailers

DECLINE
Low income
& laggards
Less variety

Lower prices

Fewer
retailers
Lower prices

Competitive

Limited

PRODUCT

A product is not forever-it has a life-volumes, price, profits

Marketing-mix needs to be adjusted at each stage

Application-product class-form or brand-perfume-spray or roll-on- Chanel 5.

Fashions/fads/ lifestyles all keep on changing-skirts change from maxi-midi-mini-maxi.
ADOPTION & DIFFUSION of new products

Adoption-awareness-arouse interest-evaluation-trial-adopt
Awareness-only learns, buts lacks information
Arouse interest-search for information
Evaluation-considers utility
Trial-to determine utility
Adoption-considers regular usage
Apply marketing effort, and then provide post-purchase information to avoid dissonance.
5 factors in diffusion process
Adoption rate-relative advantage [diapers, non-stick pans, for working women]-compatibility-complexity [microwave ovens, PCS]-divisibility [sample sizes]-communicability [cosmetics, bank]
Diffusion-Innovators-referrals-early adopters-early users-late users-laggards.
Spread over a segment-marketers target [innovators+ early adopters + early majority], the 50% 1st.
Innovators-early adopters-early majority-late majority-laggards
2,5%
13,5%
34%
24%
16%
If this is low prod. Fails
unrealized potential

14

Spread of products over society-its social class, status, and reference groups, degree of risk taking, exposures,
nature and culture to experiment.
Adoption & Diffusion of innovations
A new-product introduction & innovation is an essential element of the economy & a critical activity for the
marketer.
As new & better products are developed & introduced, old ones phase out over their PLC & their fate
determined by the consumers.
Introductions expensive, & rate of success diminishing.
Innovation is any idea, practice, or material artifact perceived to be new by the adopting unit-its a
continuum-range of newness based upon its effect on established consumption patterns.
3 types of innovations:
1. Continuous innovations-have the least disruptive influence on consumption patterns-more of
alteration than total newness [Fluoride toothpaste, auto model change over, menthol cigarettes]
2. Dynamically continuous innovations-have higher disruptive influence-although dont alter patternsinvolves introduction of new products as well as modifications [electric tooth brush, electric car, wall
sized TVs, video telephones].
3. Discontinuous innovations-involves establishment of new products with new behavioral patterns
[Plasma TV, Computers, Hybrid car]

Adoption
Trial
Legitimating
Attitude
Comprehension
Awareness

M a rk e t S u m m a ry

M a rk e t: p a s t, p re s e n t, & fu tu re

H e a lth c a r e -e v o lu tio n -fr o m p r im a r y -s e c o n d a r y a n d o n to

te r t ia r y h e a lth -c a r e s e r v ic e s
M a in p la y e r s - A P P O L L O [H y d . N .D e lh i, J e h a n g ir .P o o n a ,
M A X H E A L T H C A R E (m e d i c e n t e r , N o id a ) , in d iv id u a l
c lin ic s ]
M a s s M a rk e t/
F o llo w e r s
N um ber
of
c u s to m e rs

E a r ly A d o p te r s /
P io n e e rs

E n d o f L if e

T im e

Depth

of

product-mix
15

Detergents Soaps Toothpaste

Talc Cleaners Cosmetics
Rin
Dove Close-up
Liril Vim
Fair & Lovely
Wheel
Le sancy Pepsodent
Ponds Vim bars Ponds moisturizers
Surf
Lux
Pepsodent Gel Sandal
Ultra
Rexona Renew
Dream flower
Excel
Liril
Ultra
Lifebuoy
Pears
Width of product-mix-HLL bought Lakme, Ponds [increased depth] also bought-Agro-chem. [increased width]
Kitchen-bath products-laundry-personal care[home]-personal care outside=

Volumes
New
Cannibalized volumes
Existing

Time

Major issues in the PLC concept:

1.
2.
3.
4.
5.
6.
7.
8.

PLC interprets product & market dynamics

It is a planning tool-identifies challenge at beach stage.
Develop marketing strategy for each stage separately.
As a control tool-measures product performance
Not as useful as a forecasting tool. Stages vary in duration, & exhibit diverse patterns.
Lack a fixed sequence of stages-temporary plateau prior to surge
PLC pattern may not be inevitable-it may be due to deficient marketing strategy.
PLC is a dependable variable-depends upon market inputs-not an independent variable that firms
have to adapt.
9. PLC focuses on whats happening to a particular Brand or product-rather than on the market, its
product-oriented picture rather than a market-oriented picture.
10. Firms need to anticipate markets evolutionary path as it is affected by SLEPT factors rather than
PLC.

Volumes

Cordura
Carpets
Panty hose
Textured yarns
Tires
Warp knit
Broad woven
16

Circular knit
Parachutes
1942
Nylons-product life cycle

a great idea

it wont work here

2000

weve tried it before

This isnt the right time it cant be done

here

Weve done it all

Right without it

it all cost too much

its not the way we do things here

things

lets discuss it at our

next meeting

StagesMarketing strategy
Concept development
& testing
Idea screening
Idea generation

product development
test marketing
commercialization

What is a new product?

3 distinct categories:

17

Products that really are innovative-truly unique-notable innovations in 20th Century were-zipper,
photocopying m/c, computer, security device with face recognition technology-still to be
developed cancer cures-GPSReplacements-that are significantly different from existing products in form-functions-benefitscellophane-sterile bandage strips-ball point pens-disposable contact lenses-digital
cameras-hybrid cars.
Imitative products-new to a firm but not to the market-annual models of cars-new versions of
cereals-cough & cold remedies are full of imitative product-Vicks gets hit by D cold, Total,
Moove-Pepsi Blue berry flavor-beer like beverage Canada Dry.
Factors
Perception is reality
Any product in the 1st category satisfies a real need that was not being satisfied till then.
2nd replace their predecessors because newer products deliver new or added benefits desired by buyers.
3rd category a firm wants to capture part of existing market with a me too product.
If buyer considers it to be different from competing product in some relevant characteristics-appearance
or performance-lately marketers find the word DIGITAL attached to any product-kitchen gadgets, cell
phones consumer electronics-all get lapped up as different fro their analog version!
It costs$30 m in FMCG, $200m in Drugs to isolate one molecule
New product decision process
A firm has to be good at developing & managing new products.
Every product seems to go thru a life cycle-gets born-passes thru several phases-eventually dies
as newer products come along that better serve consumer needs
A firm must be good at developing a steady stream of new products & adapting its marketing
strategies in face of changing tastes, technologies, & competition.
It can obtain them in 2 ways-acquisition or own R&D.
New products mean original- product improvements-product modifications-new brands developed
thru own Research.

Risks-Ford lost $350. M on Edsel, RCA lost $580m in Selecta-Vision videodisc player, Texas
Instruments lost $660m before withdrawing from home computer business-Iridium Global lost
$5bn. global satellite-based wireless telephone system-other include New Coke, Eagle snacks, Zap
Mail electronic mail [FedEx], Polar vision Instant movies by Polaroid, Premier Smokeless
cigarettes by R.J Reynolds, Clorox detergents by Clorox co., Arch Deluxe sandwiches by
McDonalds, Indias, own Lamsa chocolate tea! Chapatti m/c, phony product claims like kali
mehndi, sona chandi chavvan prash, abortion tablets, hair growth on a bald head-Beech Aircrafts
Starship was to perform as a jet for the price of a propeller plane-it ended up like one-it indeed
was a turboprop.

New products continue to fail at a disturbing rate-80% where packages are only different-some
25,000 hit the market every year-only h1/3rd will be around 5 years later
Reasons for failure
1. Market size may be overestimated, product may be good.
Bad design
Incorrectly positioned
Poorly advertised
Priced too high-poor value wrt price.
Poorly researched market
Competitors fierce
Cost overruns
18

Fraudulent claims
Failure to declare nutrient contents
Manufacturing batch obscure
Product does not pass consumers value tests
New-Product strategy
Identify the idea
idea
business prototype
mkt. commercial
Strategic role generation screening analysis development tests -zation
of new product

1. Explicit strategy for developing and evaluating new products is desired to keep growth & profit objectives
2. It is a statement guiding the role of new products are expected to play in achieving marketing goals
goals-protect a
market share-meet
meet a specific ROI
ROI-establish
establish a new position in the market place-maintaining
place
a companys
reputation for innovations-social
social responsibility.
3. Type of new product depends upon its intended role.
4. It identifies those ready for the market.
Co.s goal
product strategy
example

To defend

introduce an addition

Market share

To strengthen
A reputation
As an innovator

to existing productproduct
Line or revise an
Existing product

introduce a really
new product-not
not
just an extension

Pan Crust
from Pizza Hut

Digital camera by
Sony, Cannon

buyer behavior - decision-making

making process
How do customers buy?
Research suggests that customers go through a five-stage
five
decision-making
making process in any purchase. This is
summarized
in
the
diagram
below:

19

This model is important for anyone makin

makingg marketing decisions. It forces the marketer to consider the whole buying
process rather than just the purchase decision (when it may be too late for a business to influence the choice!)
The model implies that customers pass through all stages in every pu
purchase.
rchase. However, in more routine purchases,
customers often skip or reverse some of the stages.
For example, a student buying a favorite hamburger would recognize the need (hunger) and go right to the purchase
decision, skipping information search and evaluation.
evaluation. However, the model is very useful when it comes to
understanding any purchase that requires some thought and deliberation.
The buying process starts with need recognition. At this stage, the buyer recognizes a problem or need (e.g. I am
hungry, we need a new sofa, I have a headache) or responds to a marketing stimulus (e.g. you pass Starbucks and are
attracted by the aroma of coffee and chocolate muffins).
An aroused customer then needs to decide how much information (if any) is required. If the need is strong and
there is a product or service that meets the need close to hand, then a purchase decision is likely to be made there
and then. If not, then the process of information search begins.
A customer can obtain information from several sources:

Personal
sources:
family,
friends,
neighbors
etc
Commercial sources: advertising; salespeople; retailers; dealers; packaging; point
point-of-sale displays
Public sources: newspapers, radio, television, consumer organizations; specialist magazines
Experiential
ential sources: handling, examining, using the product
The usefulness and influence of these sources of information will vary by product and by customer. Research
suggests that customers value and respect personal sources more than commercial sources (the influence of word
20

of mouth). The challenge for the marketing team is to identify which information sources are most influential in
their target markets.
In the evaluation stage, the customer must choose between the alternative brands, products and services.
How does the customer use the information obtained?
An important determinant of the extent of evaluation is whether the customer feels involved in the product. By
involvement, we mean the degree of perceived relevance and personal importance that accompanies the choice.
Where a purchase is highly involving, the customer is likely to carry out extensive evaluation.
High-involvement purchases include those involving high expenditure or personal risk for example buying a
house, a car or making investments.
Low involvement purchases (e.g. buying a soft drink, choosing some breakfast cereals in the supermarket) have
very simple evaluation processes.
Why should a marketer need to understand the customer evaluation process?
The answer lies in the kind of information that the marketing team needs to provide customers in different buying
situations.
In high-involvement decisions, the marketer needs to provide a good deal of information about the positive
consequences of buying. The sales force may need to stress the important attributes of the product, the advantages
compared with the competition; and maybe even encourage trial or sampling of the product in the hope of
securing the sale.
Post-purchase evaluation - Cognitive Dissonance
The final stage is the post-purchase evaluation of the decision. It is common for customers to experience concerns
after making a purchase decision. This arises from a concept that is known as cognitive dissonance. The customer,
having bought a product, may feel that an alternative would have been preferable. In these circumstances that
customer will not repurchase immediately, but is likely to switch brands next time.
To manage the post-purchase stage, it is the job of the marketing team to persuade the potential customer that the
product will satisfy his or her needs. Then after having made a purchase, the customer should be encouraged that he
or she has made the right decision.

21

Product Management

Product management is an organizational lifecycle function within a company dealing with the planning or
forecasting or marketing of a product or products at all stages of the product lifecycle.
Product management (inbound focused) and product marketing (outbound focused) are different yet
complementary efforts with the objective of maximizing sales revenues, market share, and profit margins. The role
of product management spans many activities from strategic to tactical and varies based on the organizational
structure of the company. Product management can be a function separate on its own and a member of marketing or
engineering.
While involved with the entire product lifecycle, product managements main focus is on driving new product
development. According to the Product Development and Management Association (PDMA), superior and
differentiated new products ones that deliver unique benefits and superior value to the customer is the
number one driver of success and product profitability.
Aspects of product management
Depending on the company size and history, product management has a variety of functions and roles. Sometimes
there is a product manager, and sometimes the role of product manager is held by others. Frequently there is Profit
and Loss (P&L) responsibility as a key metric for evaluating product manager performance. In some companies, the
product management function is the hub of many other activities around the product. In others, it is one of many
things that need to happen to bring a product to market.
Product management often serves an inter-disciplinary role, bridging gaps within the company between teams of
different expertise, most notably between engineering-oriented teams and business-oriented teams. For example
product managers often translate business objectives set for a product by Marketing or Sales into engineering
requirements. Conversely they may work to explain the capabilities and limitations of the finished product back to
Marketing and Sales. Product Managers may also have one or more direct reports such as a Product Executive who
can manage operational tasks or a Change Manager who can oversee new initiatives.

22

Product planning

Identifying new product candidates

Gathering market requirements
Determine business-case and feasibility
Scoping and defining new products at high level
Evangelizing new products within the company
Building product roadmaps, particularly Technology roadmaps
Working to a critical path and ensuring all products are produced on schedule
Ensuring products are within price margins and up to spec
Product Life Cycle considerations
Product differentiation
Detailed Product planning
7 functions of marketing

Product marketing

Product positioning and outbound messaging

Promoting the product externally with press, customers, and partners
Conduct customer feedback and enabling (pre-production, beta software)
Bringing new products to market
Monitoring the competition
more detail on Product marketing

I.

23

BRANDS
AND
BRANDING
an essential issue in product management is branding. Different firms have different policies on the branding on
their products. While 3M puts its brand name on a great diversity of products, Proctor & Gamble, on the opposite
extreme, maintains a separate brand name for each product. In general, the use of brand extensions should be
evaluated on the basis of the compatibility of various productscan the same brand name represent different
products without conflict or confusion? Coca Cola for many years resisted putting its coveted brand name on a diet
soft drink. In the old days, available sweeteners such as saccharin added an undesirable aftertaste, implying a clear
sacrifice in taste for the reduction in calories. Thus, to avoid damaging the brand name Coca Cola, Coke instead
named its diet cola Tab. Only after NutraSweet was introduced was the brand extension allowed. Research shows
that consumers are more receptive to brand extensions when (1) the company appears to have the expertise to
make the product [McDonalds was not thought as credible as a photo-finishing service], (2) the products are
congruent (compatible), and (3) the brand extension is not seen as being exploitative of a high quality brand name
[e.g., one should not use a premium brand name like Heineken to make a trivially easy product like popcorn].
In many markets, brands of different strength compete against each other. At the top level are national or
international brands. A large investment has usually been put into extensive brand buildingincluding advertising,
distribution and, if needed, infrastructure support. Although some national brands are better regarded than others
e.g., Dell has a better reputation than e-Machinesthe national brands usually sell at higher prices than to regional
and store brands. Regional brands, as the name suggests, are typically sold only in one area. In some cases, regional
distribution is all that firms can initially accomplish with the investment capital and other resources that they have.
This means that advertising is usually done at the regional level. This limits the advertising opportunities and thus
the effect of advertising. In some cases, regional brands may eventually grow into national ones. For example,
Snapple was a regional beverage. While a regional beverage, it became so successful that it was able to attract
investments to allow a national launch. In a similar manner, some brands often start in a narrow nicheeither
nationally or regionallyand may eventually work their way up to a more inclusive national brand. For example,
Mars was originally a small brand that focused on liquor filled chocolate candy. Eventually, the firm was able to
expand. Store, or private label brands are, as the name suggests, brands that are owned by retail store chains or
consortia thereof. (For example, Vons and Safeway have the same corporate parent and both carry the Select
brand). Typically, store brands sell at lower prices than do national brands. However, because the chains do not have
the external brand building costs, the margins on the store brands are often higher. Retailers have a great deal of
power because they control the placement of products within the store. Many place the store brand right next to the
national brand and place a sign highlighting the cost savings on the store brand.
Defining Brand

We want to do a branding campaign! The statement that starts a chain of events that never seems to end:
brainstorming sessions, focus groups, strategic meetings, progress reports, surveys, analyses, event planning
committees, consultants, more meetings, etc. Its exhausting and can take a huge toll on businesses, not to mention
budgets. Maybe we should be asking ourselves the following first: What exactly is brand or what do we mean by
branding?
Of course, a single blog cant answer these questions. Just search Amazon.com for branding books and youll find
more than 20,000 available. Clearly branding is important, it just seems extremely ambiguous, which may explain
24

the

spiral

of

events

that

typically

follow

branding

campaigns.

Discussing brand with advertisers or within your own company is inevitable. We just need more clarity, direction
and an idea of expectations before we start those discussions. If youre in the same industry Im in, youve been
hammered over the head for years on how you cant brand using a newspaper. I guess this depends on ones
interpretation of brand. Hallmark television ads or Red Bull tactics are examples of branding, but theres more to it
than getting people to cry or convincing others to ride planes off the end of a pier. After reading dozens of marketing,
media and advertising books, Ive tried to devise a model that may help get everyone seated around the same table
and demystify this concept of brand. Ive borrowed from a number of must reads on the subject. Ive found that the
best books about branding were not specifically written about branding. Some include: Kellogg on Advertising &
Media, Positioning; What Customers Want; The Ultimate Question; The Fred Factor; Differentiate or Die; and a long list
of others. If you want a humorous, yet accurate, take on advertising and branding, theres a great short book written
by Bob Hoffman called The Ad ContrarianFirst, we need to understand the stakeholders in brand development.

The
business:
its
products,
services
and
employees.
Information distributors: media, advertising vehicles, the business (PR and websites), and the general population.

Consumers:
past,
current
and
potential.
Second, how do we, the stakeholders, develop a brand? Ive outlined five key elements of brand and their impact on
business
results.
1.
2.
3.
4.
5.

Brand
Brand
Brand
Brand
Brand

Awareness
Position
Knowledge
Experience
Loyalty

Creating and growing brand loyalty seems to be the ultimate goal. Brand loyalty typically translates into consistent
and repeat business. How does one succeed or fail at getting there? By understanding and utilizing the brand
elements
listed
in
Exhibit
1.

1. Brand Awareness: Maximizing name exposure and recognition. This can be done by reaching as many potential
consumers as desired (Remember, there are two sides to every coin. Theres good and bad awareness.). Youll want
to plant a seed in potential consumers minds. Consumers ability to recognize your name can go a long way in
having a chance at acquiring their business. The list of vehicles for achieving maximum awareness seems endless
25

and continues to grow (billboards, signs, traditional advertising, non-traditional advertising, events, public relations,
social media, etc.). Super Bowl ads are a classic example of generating brand awareness, but so is an accelerator that
sticks.
2. Brand Position: Next, you need to build your brands position. When consumers start considering options for
potential purchase, where is your businesss name on their short list? Example: If you were to ask someone to list
different sodas, it might look something like this---Coke, Pepsi, Sprite, Dr. Pepper, etc. Where one falls on that list in
the consumers mind can make all the difference in a sale. A basic means of achieving the highest position is a
combination or reach and frequency. The best brand positions, overly used in text book examples are Xerox, Kleenex,
Rollerblade, FedEx and iPod nowadays. Not only are they tops in their respective positions, theyve practically
renamed their categories. Jack Trout and Al Ries famed book Positioning does a great job of outlining the importance
of
this
stage
and
parts
of
the
next,
Brand
Knowledge.
3. Brand Knowledge: This can be considered a second form of positioning. Where your business falls in respect to
the competition in areas of quality, price, service, style, etc. (or whats your reputation when compared to the
competitions). Great, I know your name and its at the top of my list, but do I know enough about you to feel
confident in buying from you. Having a strong Unique Selling Proposition, or USP, is the difference maker at this
stage of the game. How can I benefit more from your product versus your competitors? Most people think it all ends
here, but these first three stages only represents the communications portion in branding. Media and advertising
play vital roles in these stages, and the businesses ability to craft this message and get it in front of prospects is
equally
vital.
Example
of
first
three
stages
of
Brand:
Am I aware of Ferrari? Yes. Will I buy? Highly unlikely. Who we kidding, it doesnt even make it to my short list of
options. But I am also aware of Toyota, Ford, Nissan and Honda. For me, this is a much more realistic short list. Who I
ultimately choose is based on who I believe can offer me the best value for my needs/wants and that happens
through brand knowledge. Brand knowledge helps me decide which manufacturer and vehicle I ultimately choose.
Sorry Ferrari. Toyota knows what its like to be at the top of the list in awareness and position only to have negative
knowledge
impact
consumers
decisions.
4. Brand Experience: Alright, you offered me something I considered to be more beneficial and now Im going to
complete the transaction. My level of brand knowledge was strong enough for me to choose you over another. Your
ability to deliver on your word or message is important here (Im calling this your Brand Promise). Theres a thin
line between a great advertising campaign and a terrible one and that usually lies in the hands of the advertiser. Over
promising is not an option here. Be prepared to deliver. Studies have shown that it can take between three to ten
positive comments to offset just one negative comment. Understanding your USP and unique experiences are vital in
helping to craft your messaging or your overall brand promise. This is where you set expectations. If your store
experience is junky, your ads shouldnt reflect a Nordstrom like experience. This wont help consumers or your
business. Your ability to understand and deliver strong customer experiences determines your success or failure in
brand loyalty. Brand promises are built as early as awareness, through knowledge, and your ability to deliver it will
determine your businesss level of success. The experience is everything and this includes all communications,
employees, products, advertising, PR, signage, store designs, locations, etc. Collectively, these experiences build an
overall perception in the mind of consumers; one they use to help make their first choice and sub sequential choices.
5. Brand Loyalty: Strong loyalty is your desired outcome and long-term goal. The outcome of the brand experience
plays a large role in determining loyalty and repeat business. Your ability to maintain communications with your
most loyal customers is vital in this stage as well. If things are good or bad, follow-up to develop a better
understanding. This will help you uncover the core of the experience, areas for potential improvement and areas to
focus on when crafting your messaging. In the end, loyalty reverberates into positive word of mouth. Dont forget
about the impact from negative word of mouth. Higher loyalty presents the opportunity for additional business,
insight,
and
stronger
customer
relationships.
This
is
a
win
for
all
stakeholders.
26

While Ive outlined this concept along a continuum (or a funnel in this case), the order isnt necessarily carved in
stone. Everyone that knows about you isnt necessarily going to buy, but clearly increasing awareness has its value.
The heart of branding is the consumer and their experiences. They ultimately define your brand. Understanding
this will help you craft better messaging and generate greater success. You can tell customers you have the greatest
products,
but
all
is
for
not
if
customers
see
it
differently.
How can you use this concept? Use this as a spring board for outlining branding strategies and to setting up
expectations for businesses. If your ads arent working, it may be the message, your USP, or worse, bad customer
experiences. Media, agencies and businesses all share a stake in maximizing results, but that comes through a better
understanding of consumers. They are the ones were trying to build awareness with, improve our position with,
convince
to
buy,
conduct
business
with,
and
hopefully
develop
loyalty
from.
Branding isnt just a Hallmark television ad, its several factors that combine to help or hinder business results. With
the right products, services, messaging, and delivery, a strong and long lasting brand can be built. A worthy
investment when presented in this manner. Just dont forget, businesses dont define brands, consumers do and
when done right, branding should have a direct impact on success and results.

Co-branding involves firms using two or more brands together to maximize appeal to consumers. Some ice cream
makers, for example, use their own brand name in addition to naming the brands of ingredients contained.
Sometimes, this strategy may help one brand at the expense of the other. It is widely believed, for example, that the
Intel inside messages, which Intel paid computer makers to put on their products and packaging, reduced the value
of the computer makers brand names because the emphasis was now put on the Intel component.
Certain peripheral characteristics of products may signal quality or other value to consumers. For some products,
packaging accounts for a large part of the total product manufacturing cost. Long warranties often signal to
consumers that the product is of good quality since the manufacturer is willing to take responsibility for its
functioning.

II.

Brands defined

A brand is more than a product, name and pack. It is a unique bundle of attributes and perceptions, which
together form a franchise with the consumer which is worth money today and goodwill tomorrow.
Introduction / Approach
Overview of some general concepts of branding, especially definitions, benefits and types of brands.
Whilst most literature relates to branding for goods, the second part of this report focuses on issues for branding
professional services, especially the accounting and consulting industry. The approaches this industry currently
takes to the relevant theory.
2
Branding in the literature
2.1
Definition and benefits
The common themes are that a brand is more than just a combination of a name, a design, a symbol or other features
that differentiate a good or a service from others.
It is a unique set of tangible and intangible added values that are perceived and valued by the customer. In addition a
brand is said to have personality, an emotional bond to the customer that grows out of the perceived characteristics.
27

These certain features of a brand grow out of a complex set of added values that can comprise of history and
tradition, additional services, marketing messages, quality, popularity of the product amongst a certain group of
users (status) and others. These basiss of a brand perception prove that a strong brand can not be established over
night The development of a brand takes time, strong financial marketing muscle and good marketing skills such as

Insight into customer needs,

Ability to offer products or services that meet those needs,

Creativity to produce exiting and compelling advertising,

Ability to communicate differentiation in a way that customers understand and that motivates them.
Without this process you do not have a brand but only a name and a sign for a product.
Brands have benefits for both, the brand owners as sellers and the customers:
Benefits of a brand for
Sellers

Customers

Identifies the companies products,

makes repeat purchases easier
Facilitates promotion efforts
Fosters brand loyalty stabilises
market share
Allows to charge premium prices
and thus to get better margins
Allows to extend the brand to new
products, new markets and to new
geographic areas
Can communicate directly with the
customer, reach over the shoulder of
the retailer
More leverage with middlemen
Is more resistant to price
competition
Can have a long life
Is more forgiving of mistakes

Helps identify products

Helps evaluate the quality of a
product
Helps to reduce perceived risk in
buying, provides assurance of quality,
reliability etc.
Is dependable (consistent in quality)
May offer psychological reward
(status symbol)
rout map through a range of
alternatives
Saves customer time
Is easier to process mentally

With this potential a brand can offer an important competitive advantage for a seller who has decided for a
differentiation strategy. Even in markets with many similar products or services a brand can provide some sort of
uniqueness to a certain product. Depending from the strength of a brand the branded product thus can be positioned
towards a more monopolistic situation.
With all these characteristics a brand is important in an organisations marketing mix. Although it is basically a
certain feature of the category product, it influences every component of the marketing mix:

The product gets a higher value in the perception of the customers.

This influences the pricing policy in the way that often a premium can be charged.

The promotional strategy and mix will be different because it is more focused on the brand than on the
individual product. For instance the introduction of a new product under a well established umbrella brand
requires a very different promotion campaign than the introduction of a new brand or an unbranded product.
28

The decision for the place

ce and the marketing channel is influenced because a branded product with a higher
perceived value might be placed in an environment that is well related to the brands personality, e.g. gourmet shop
vs. food department in a supermarket.

3
Branding for service industries
3.1
Reasons for branding services
Although the principles for branding of goods and services are generally the same there occur some differences.
These arise from the different natures of both categories.
categories. The main differences that influence branding policies are
that services

have a changing level of quality,

the consumer has to become involved in the consumption of a service actively,
they are intangible and not storable.

When a brand in general gives the consumer more confidence in his choice this is even more important for services.
Their quality and other features are more difficult to asses. Because of their intangibility and complexity it is harder
for the customer to
o distinguish between the offers from the wide range of service companies operating in the market
place.
This especially applies to the market of accounting, auditing and consulting where consolidation and globalisation
increase competition. In an FT-article
ticle about branding accounting services (Kelly 1998) a branding expert states that
more than 70 % of the Fortune 500 companies ...said branding is increasingly important in helping them to choose
where to get a service. They want to be able to tell who is
i good at what.

29

3.2
Drivers for the use of branding in the accounting/consulting industry with a focus on the Big Five (former
Big Six) firms
The Big Five accounting firms have a long history up to 75 to 100 years. These firms have developed from smaller
entities through co-operations and mergers. Often new products and new markets have been developed by buying
in, by buying the expertise and the access in the form of other firms. For many small and medium accounting and
auditing firms it is attractive to join the association (in most cases) of one of the large players for the following
reasons:
The form of an association with independent member firms allows retaining a level of individuality although in
some cases this is not long-lasting. The membership in a large powerful firm gives a competitive advantage
(reputation, access to knowledge, access to new markets, higher market share, cost savings through sharing
resources, e.g. for training and recruitment etc.).
Partners of these smaller firms are often offered to become partners in the large firm.
For a long time the industry did not put much effort in the development of brands.
The tradition and long lasting reputation of the Big Five itself gave their names a considerable brand value. For quite
a long time this was fairly enough for their purposes. In Kellys (1998) article a professional firms branding expert
states that for many years the accountancy firms hid behind the convenient parapet of the Big Six brand label. In
the audit market most shareholders were happy to have any audit firm as long as it was from the Big Six.
An other factor was legal limitations for advertising. Accounting firms were first allowed to advertise in 1984. That
means that marketing and communications focused mainly on activities like excellent work and the power of word
of mouth, job advertisements (as the only allowed advertisements they were used as a means to present the
company), speaking at conferences, publishing articles in professional journals, co-operating with universities and
business schools and so on. Accounting firms saw themselves as a conservative industry with discretion as one of
their services. In their minds this didnt go together with an aggressive marketing campaign.
In the last years the industry has seen some developments that required new strategies:

Globalisation: A global client needs a global auditor because companies are legally required to prepare
consolidated financial statements including all subsidies around the world. This is much easier if you have all
subsidies audited by the same firm. In addition global clients have a high need for specialised consulting. They
often prefer a consultant that is as global as they are to get more expertise and consistency.
Stagnation in the core business: The traditional auditing business does not show high growth rates. An
individual firms growth can mainly be achieved at the expense of competitors.
Growth in consulting services: On the contrary to the auditing business there is an enormous growth for
consulting services. The accounting firms have traditionally done some consulting and now they developed these
activities aggressively. This had two results:
A growing variety of services offered these new products had to be communicated to existing and potential
clients Accounting firms came into direct competition with the traditional consulting firms which had their own
brands and reputation
Need for qualified people: With the development of new products/services all firms needed much more
highly qualified people. Recruitment became an important issue. (For example: The German member firm of
30

PricewaterhouseCoopers took on about 1000 new employees in 1998, the first year after the merger.) This led to
a competition to attract the best university students.
All these factors together increased competition amongst the Big Five. For this industry excellent quality is not a
means to get an competitive advantage, it is an important requirement for any success at all. A large variety of
services is important; but the customer will perceive it only in the moment he needs a certain service.
In this situation the Big Five did not manage to differentiate themselves successfully from competition. A survey
conducted by PricewaterhouseCoopers during the merger process revealed that the business community and the
general public did not - and do not - perceive any compelling differences between and among either the Big Six or
the Big Five. Not only did all firms appear to have similar defining qualities, they were also not sending any
consistent messages about their organisations to external audiences. Here a strong brand with a personality and a
clear message can be a valuable means for differentiation and thus for gaining a competitive advantage. By now we
can say that the Big Five have become aware of this. Now they invest heavily to reposition themselves and to develop
their good names to real power brands.
3.3

Brand structures for services industries

As for services, literature suggests to use the companies name a so called corporate brand as the overall family
brand for all the services offered. Murphy (1990) calls this the monolithic approach. He argues that especially for
companies which offer an enormous array of services (e.g. consultants, banks) corporate names must be used to
deliver more generalised benefits of quality, value and integrity. de Chernatony (1996) comes to the conclusion that
corporate brands are a crucial means to help make the service offering more tangible in consumers minds and can
enhance consumers perceptions and trust in the range of services provided by the company.
One disadvantage of corporate brands little opportunity for developing second or sub-brands for differentiated
product lines applies more to branded products. However Murphy (1990) states that many companies have chosen
an approach of local autonomy but group-wide coherence as a system whereby individual divisions and products
are largely free-standing but mention is made in all literature and on all stationery and products that company A is
member of the XYZ group. This approach is very common amongst the Big Five accounting and auditing firms. It
allows their national member firms, to exploit the groups brand name and their own (brand) name at the same time.
Many member firms that had joined the global firms have long traditions and a good reputation of their own. For
them it is important to demonstrate their clients that these qualities are not lost, on the contrary other qualities
and services are added.
Kelly (1998) sees three obstacles to develop a strong global corporate brand for the large accounting firms:

National partnerships value their individuality over corporate discipline

National regulations and cultures make it difficult to work smoothly under one global set of values

The diversity of services offered makes specific branding impossible.

The first two points closely relate to quality and consistency, two issues that customer value in a brand. They need to
be monitored and controlled carefully. I think that under the pressure to globalise and with ongoing integration of
national member firms at least the Big Five will be able to overcome these obstacles to a greater extend. The third
point should be tackled with a strong corporate brand that stands for all services. The Big five see one competitive
31

advantage over smaller firms in their ability to offer every service their client might need in every place of the
world.3.4
Choosing a brand name
The decision for a brand name has to be taken carefully because it can have a long term influence on the success of
the branded product or in the case of a corporate brand of the whole company. Murphy (1990) and Dibb (1997)
give a list of factors to take care for:

To pick out one issue of the process of developing a brand name, there is a big choice in the spectrum from
descriptive to free-standing
standing names which are often artificial words with no obvious relation to the good or service.
Free standing or arbitrary namess are more suitable if they are to stand for a variety of services since there are no
initial associations with this name. In addition they are the potentially strongest form of trademark in legal terms.
(Murphy 1990)
As for professional services firms a common theme in the brand names is the use of the companys founder's names.
For instance the name KPMG stands for Klynveld, Peat, Marwick and Mitchell, Goerdeler. In the process of the
merger between Price Waterhouse and Coopers & Lybrand they had to develop
develop a new name for the new company
that would exploit the reputation and heritage from both old names. This was important for the relationship with the
existing customers as well as for the relationship with all employees. The result was the name
PricewaterhouseCoopers.
erhouseCoopers. This corporate name is formed out of three names of founders of companies where the
new company originates from (Price, Waterhouse, Coopers). Both names are completely free-standing.
free
Thats why
they properly address the issues of suitability
suitability for different media, different markets and cultures and different
products as well as the issue of imitation and legal protection.

32

3.4
Marketing a service brand
In general marketing strategies for services add three more Ps to the marketing mix, which stand for Process,
Physical evidence and People. The same principles apply to the branding of services.
de Chernatony (1996) emphasises the importance of the people as the provider of the service. The careful selection
and training off staff firstly assures a higher level of quality of the service that is depicted by the brand. It is up to the
people to give the processes more reliability and thus to assure a higher homogeneity between the quality of the
service and the personality and message of the brand. Furthermore people have contact with the customer. They
have to be aware of the brands objectives so that they can live them and communicate them to the customer. It is
not enough to communicate the message of the brand externally to the customer; the first step has to be internal
communication.

Here the principles of internal marketing play an important role. Staff is seen as the first customer of the brand.
Kotlers (1999) typology of marketing in service industries applies equa
equally
lly to the marketing of brands in service
industries:
The theme here is that the customer not only receives the message from the companies external marketing activities,
but also the message from the behaviour of the staff he has contact with. The impression
impressi the customer gets from the
service, from the company and thus from the personality of the corporate brand is also influenced by the friendliness
and responsiveness of staff, their perceived qualification and how the staff lives the philosophy of the corporate
c
brand.
The element of physical evidence is about the environment in which the service is offered and consumed, it is about
the customers feelings (Dibb 1997). As for branding services, the physical evidence is closely related to the
personality of the brand, which can be described as an emotional bond to the customer that grows out of the
perceived characteristics of the brand. To give the service a differentiation advantage it is important to create a
distinguishable atmosphere that the custome
customerr can relate to the service provider. This can be achieved by the use of
corporate brand signs, corporate colours and several other themes that are common for all outlets, all employees
everywhere the company presents itself to the public.
As for branding
ng auditing and consulting firms, physical evidence is more than just to have a visible corporate
identity. It is about bringing a message across. In this industry the message of the brand has to establish the
emotional bond to the customer which is one of the few ways for differentiation. Kelly (1998) gives an good example
33

when he says Some clients may ask how brand building sits alongside the traditional virtues of a professional
partnership skilled individuals with independent minds able to solve problems on a case by case basis. The real
challenge is turning that into a brand. Up to now many accounting and auditing firms use their job advertisements
to send out their brand personality. Job ads for professional services are much more than a means of attracting
qualified people. They allow the companies to present themselves with some unique personality. Todays job
advertisements not only use corporate colours and logotypes, they tell little stories, transfer messages, describe
corporate cultures, and the skills and experiences of the people in these firms. For the companies the job
advertisements are a good way to present the variety of services offered when they search specialists for a certain
position. In that way the firms can make their brand and its personality more known amongst possible employees
and possible clients.
Processes are very important in services industries since in most cases the customer is directly involved in the
processes. Aspects that especially apply to the auditing and consulting industry are extremely high quality,
confidentiality, timing/availability, consistency and the avoidance of the abuse of insider knowledge. The internal
processes that assure these characteristics are less important for the customer. For him it is important that these
characteristics are met. Again a brand can provide more confidence in the choice of a service provider. It allows
identifying a provider with a good reputation for high quality processes and results. As with most other services the
quality of the auditing or consulting processes can not be tested in advance. Moreover, you can change your
hairdresser if you are not satisfied but it is much harder to change your auditor since public normally perceives this
as some sort of sign for alert.
On the other hand, even if necessary, there are dangers in relating a brand to closely to the quality of processes. Poor
quality in only one single case can affect the whole brand. Many of the professional services firms have faced the
problem that one of their major clients went into bankruptcy or was accused for some illegal activity. In such
situations the media often ask about the quality of the auditing processes.
We can see that the processes that deliver the service closely relate to consistency as one of the issues customers
value in brands.
4
Summary
This assignment has shown that a strong brand can be an important means of differentiation. It increases the value
of a product and/or its provider and helps the consumer to make his choice.
Thus a brand is highly valuable for services that dont have any physical characteristics the consumer could look at,
touch and assess. In service industries often the companies name is used as a corporate family brand for all services
offered. This approach allows transferring the reputation and fame of one service to others. In addition it allows
transferring the personality and the created physical evidence of the brand to all services. This is especially
important since it is much more difficult to give personality and evidence to services than to goods.
In the accounting and consulting industry there is a growing trend to exploit and further develop the existing brand
values of the big names. These brands are featured by a homogenous set of messages, ideas, values, visual aids and
communication tools. With these efforts the organisations aim to raise awareness of themselves and the variety of
services offered, to improve their market position and to attract qualified people.
34

I.a.1 ROLE OF BRANDS

Role of brands is to
I.a.2 scope of branding
I.c.3 brand attributes
Attributes and perceptions
Attributes are those physical aspects of a Brand which can be relatively easily described. For example
name
logo style
pack format
label design
product appearance, texture, smell
performance characteristics
price
Perceptions are trickier. Unlike Attributes, they tend not to be susceptible to objective, scientific observation
although they can certainly be measured, thanks to market research. Perceptions are what consumers think about a
particular brand, which may be a whole lot different from how a Technical Manager might describe the product as it
appears on a shelf. For example
image
reputation
trustworthiness
suitability
effectiveness
nice-to-use
value for money
feel on the skin
These aspects of a brands persona are not mere after-thoughts, nice-to-have but not essential, somehow bolted on
by the advertising agency. They are fundamental to consumers acceptance or rejection of the brand. If this sounds
almost too basic a statement to make, I would have to point out that I have frequently heard formulators bemoan the
fact that their product is outsold by competition, yet Its so much better than theirs! Better? Says who? Beauty is in
the eye of the beholder, surely, or more correctly, in the eye of the purchaser.
Yet the same R&D people who say that their particular skincare product is technically superior and thus deserves
better treatment at the hands of the consumer, will quite happily go on to express their own strong preferences in
terms of, say, beer or breakfast cereals. Who says that such-and-such a brand of beer is better? The person who
dreamt up the recipe? No, the person who drinks it! His judgement is final, and is queried at the brewers peril.
All this is not to suggest that formulation is in any way un-important in Skincare. Indeed, it is one of the key drivers
of both attributes and perceptions. But there is a need, nevertheless, to recognise that attributes and perceptions are
also complex aspects of any brands franchise with the consumer, and unless there is a clear understanding of exactly
what they are, a manufacturer can lose a franchise much faster than ever it took to build it consumers vote with
their feet, or rather, with their shopping baskets.
35

Understandingly the attributes and perceptions that make up a particular brands franchise, is the job of the Brand
Manager, to whom we will return to later in this article. But also part of a Brand Managers responsibility is the
sharing of that understanding with his or her colleagues in R&D.
And when it comes to R&D, understanding consumers likes and dislikes is a whole lot more difficult than it may
seem. The language of Perception is so much less precise than the vocabulary used to describe Attributes, and
requires experienced interpretation.
For example, a new material may give a feeling on the skin which is different from the norm, i.e. from what the
consumer expects, based on her experience of existing brands. A number of questions then arise
How
does
she
describe
this
new
skin

What
does
she
really
mean
by
the
words
she
Regardless of her comparisons with what she may have expected, is the new skin feel nice, or nasty?

feel?
uses?

Then very importantly, if the new formulation is intended for an existing brand
Is this new skin feel consistent with her perceptions of that brand? Or is it dissonant?
Consumers have long memories
Once consumers likes and dislikes have been clearly understood, and their perceptions correctly interpreted,
technical excellence is obviously of paramount importance in creating formulations in response.
Consistency over time is important, too, because consumers have long memories. One wrong move, which goes
against consumers basic perceptions, can often take years to overcome as all good politicians know only too well.
If consumers expect a particular brand of skincare to always be smooth, soft, caring, never strident, etc, and
suddenly a re-launch formulation appears which is perceived as decidedly sticky, with a brash new fragrance, the
resulting damage can take years to overcome if indeed the brand survives that long!
TRUST is a key element of any consumer franchise, and one which is invariably built up over time, but which can
equally be destroyed in just one bad experience of the product.

I.b.1 defining brand equity

Brand equity
Brand offerings are a third responsibility of a marketing manager. The other two being-positioning offerings &
modifying marketing mix offerings.
A brand name is any word-design-sound-shape-color or combination of these. That is used to identify an offering and set
it apart from competing offerings.
Managerial implication of brand offering:
 Consumer goodwill derived from buyer satisfaction and favorable associations with a brand can lead to
brand equity-the added value a brand bestows on a product or service beyond the functional benefits provided.
This value has 2 distinct marketing advantages for the brand owner:
1. brand equity provides the marketing advantage
Sunkist label on oranges signifies quality citrus fruits
Gatorade name signifies sports drinks
36

2. Consumers are often willing to pay a higher price for a product with brand equity-represented by the
premium a customer will pay for one brand over another. When functional benefits are identical.
Duracell batteries, Kleenex tissues-Coca Cola-Louis Vuitton luggage, Bose Audio systems, MS software all enjoy price
premiums.



Brand equity doesnt just happen-it has to be carefully crafted and nurtured by marketing programs that
forge strong, favorable, unique customer associations and experiences with a brand.
Brand equity resides in the minds of the consumers and results from what they have learned, felt, heard and
seen about a brand over time.

Marketers recognize that brand equity is not easily or quickly achieved. It arises from a sequential building process
consisting of 4 steps as shown under:

Customer-based brand equity pyramid

4. Relationship=
What about you
& me?

consumer brand
resonance

intense, active loyalty

3. Response=

consumer consumer
judgments
feelings

positive, accessible
reactions

What about
You?

2. Meanings=
What are you?

1. Identify=
Who are you?

Brand
Performance

Brand
imagery

Brand salience

Strong, favorable and

unique brand
Association

deep, broad brand

Awareness

1st step is to develop positive brand awareness and an association of the brand in consumers mind with a
product class or need to give brands an identity. [Kleenex & Gatorade have done this in their product classes]
 2nd step is to marketer must establish a brands meaning in the minds of the consumers. Meanings arise from
what a brand stands for and has two dimensions:
a. a functional, performance-related dimension
b. an abstract, imagery-related dimension
Nike has done this through continuous product development and improvement and links to peak athletic performance
to its integrated marketing communication program.
 3rd step is to elicit proper consumer responses to brands identity and meaning. Here attention is placed on
how consumers think and feel about a brand. Thinking focuses on brands perceived quality, credibility and
superiority relative to other brands.
Michelin elicits both responses for its tires. Not only Michelin is thought of as a credible, superior-quality
brand but also consumers acknowledge a warm and secure feeling of safety, comfort and self-assurance
without worry or concern about brand.

37

4th and final step is most difficult. It has to create a consumer-brand resonance and the personal
identification consumers have with the brand.
Harley-Davidson and Apple have achieved this status. So also eBay and Toyota.
 Brand equity also provides a financial advantage for brand owner. Successful brand names such as:
Gillette- StarBucks-Cambell-Amul-Dettol-J&J-SIA
Have an economic value because they represent intangible assets. These assets enable their owners to enjoy
competitive advantages to create earnings and cash flows in excess of their return on tangible plant and equipment
assets to achieve a high rate of return with respect to their competitors.
 The recognition that brands are assets and have economic value is apparent in marketing decisions to buy
and sell brands.
Oracle buys i-Flex, P&G buys Hawaiian Punch brand from Del Monte for $150 m and sold it to Cadbury Schweppes for $
203 million 9 years later.
 Brands unlike tangible assets that depreciate with time and use, appreciate in value when managed effectively.
Or lose value when not managed effectively-see what has Colgate done to Cibaca? This was a premium brand for
good part of 40 years!


Benefits of brand equity

1.
2.
3.
4.
5.
6.

Allows manufacturer to charge more for their products.

creates higher gross margins
provides power with retailers and wholesalers
Captures retail shelf space.
serves as a weapon against consumers switching due to sales promotion
Prevents erosion of market share.

Brand equity-is a set of characteristics unique to a brand that allows the company to charge a higher price and
retain a greater market share than otherwise be expected for an undifferentiated product.
What it does?
1. Power to company as it deals with retailers.
2. This power in turn leads to an improved position in terms of shelf space and displays.
3. Influences wholesalers by affecting what they stock and which brands they encourage their customers
to purchase.
4. Wholesalers will often stock several brands but place greater emphasis on high-equity brands.
5. In B-2-B markets, brand equity often allows a firm to charge a higher price.
6. It helps in buying decisions process.
7. Products with strong brand equity are often selected over products with low brand equity.
8. Same scenario is present in international markets.
9. Brand equity opens doors of foreign firms, retailers and brokers and provides privileges that low equity
ones dont get.
10. Its s strong weapon that might dissuade a consumer from looking for a cheaper product.
11. Prevents erosion of products market share, despite promo efforts by competitors.
I.b.2 Brand equity models

BRAND EQUITY
The positive differential effect that knowing the brand name has on customer response to product or service
1. Measure is the extent to which consumers are willing to pay more for the brand.
2. Brand Valuation-is the process of estimating the total financial value.

38

3.Brand equity has emerged as key strategic asset-firms see it as a source of control & a way to build
stronger relationships with customers-high brand equity provides CA, firm has more leverage in
bargaining with resellers-because consumers expect the stores to carry the brand.
4. Firm can easily launch line & brand extensions-the brand name carries high credibility.
5. It offers defense against fierce price competition
6. CUSTOMER EQUITY-is the fundamental asset-underlying brand equity-the value of the customer
relationship it creates.
7. A powerful brand really represents a set of loyal customers-the proper focus of marketing is building
customer equity, taking brand management as a major marketing tool
8. Branding poses a challenging decisions to the marketer:
1.
2.
3.
4.
Brand positioning
Brand name selection
Brand sponsorship
selection
MFRS. Brand
line XTNs
Benefits
protection
PVT. Brand
brand XTN.
Beliefs & values
licensing
multiband
Co-branding

Brand develop Attributes

New brands

9. Major brand decisions involve brand positioning-name selection-brand sponsorship-brand

development.

BRAND VALUATION APPROACH-

Prof. Pherwani

. THE INTERBRAND MODEL

[Interbrand-leads the pack in brand evaluations, since 1988.its an advertising agency-takes responsibility for the
brands it helps to create-in India it is represented by Equitor Management Consulting]
Introduction
 Brands arouse expectations in mind of customers about quality, price, purpose and performance and this
translates into price, she is willing to pay for the pleasure the brand provides. This in turn translates into cash
flows for the brand owner.
 The key complication in brand valuations is that with each brand being a distinct property, there is virtually
no market basis for valuation. It is also extremely difficult for accurately segregate the historical costs for
building the brand to arrive at a value. Brands therefore have to be valued based upon their future cash flow
generating ability.
Brand value
1. It is similar in approach to assess business value used by financial analysis on the basis of free cash flows
they produce. Discounted back to net present value.
2. Free cash flow discounted to present value means?
In the future a brand may earn more or it may earn less than what it is earning presently.
3. How to measure?
1st assess the earnings being created by the brand
2nd to calculate the appropriate discount rate to apply to
Forecast brand earnings.
39

4. Brand value is being created at the point of contact with the customer, the Interbrand approach is designed to
capture any variation in the way the brand operates-in different areas of operation, the influence on customer
decision making and his behavior, its durability varies, though there is invariably only one brand. It is a bottomup way, and most effective, as it captures the difference between customer groups in terms of how they use
brands that represent the basic building blocks of the brands value.
5. The value is calculated by dividing the branded revenue streams into separate segments in which customer
decision-making processes are broadly homogeneous. Brand value is then calculated within each one &
consolidated to the overall figure.
6. The Interbrand concept
It based on the premise that the brand, when well managed, influences customer purchase decision in a way that
creates an economic benefit for the brand owner. Brands provide a security of demand for their owners and thus
of their earnings, that they wont enjoy if they didnt own it.
The valuation itself comprises 5 steps:
Market segments

Financial analysis

Intangible
Earnings

Brand
Earnings

demand drivers
competitive
Bench marking

role of
branding

brand
strength

Brand
discount rate

Brand value
Net present value of future earnings

STEP I market segmentation

Brands influence customer choice-it differs by markets

BRAND VALUATION PROCESS
Divide the market in which the brand is sold into mutually exclusive & materially relevant segments-these
enable us to determine the variances in the brands economic value across specific customer profiles-this
knowledge has broad strategic application in building & measuring customer relationships.
STEP II intangible earnings

Accurate forecast of earnings is crucial-because we define brand value as the net present value of
future earnings-brand creates customer demand that translates into revenue for the underlying
business-financial analysis starts with the capture of total economic value created by business segmentthis is defined as the level of earnings from the business less a fair charge to reflect the cost of capital
40

employed to support the business [its same as EVA-economic value added-used by many companies as
their primary performance indicator]

Capital employed= [F.C+ O.C.] & [ROCE=O.R/CE]
OR has to be greater than the capital tied up in business it cant be said that the brand is adding
value

Brand is assessed in terms of purchase price, volumes, & frequency.

To forecast the future sales & revenue generated- a detailed review of brands equity, industry &
customer trends, historical financial performance for each segment. From branded revenues we
deduct operating cost to derive earnings before interest & tax [EBIT]-also deduct the taxes & a charge
for the capital employed- leaving the intangible earnings-the earnings that can be attributed to the
intangible assets of the business.
STEP III deriving brand earnings

Brand earnings are derived by identifying the portion of intangible earnings that is solely attributed to brand:
BRANDING ANALYSIS
In heavily branded businesses like perfumes & packaged foods, most of the intangible earnings are attributed to
the brands, in absence of any other significant intangible in the business
In more technically complex businesses-the ability to earn profits in excess of a base return on tangible assets is
only partly a function of branding-other intangibles-patents, technologies, expertise, sales force, database,
distribution agreements.
Role of brand-will vary between brands-in single brand firms; it will vary between product category & between
countries.
Co-branded products- brand will generate business depending upon the following factors:
1. Degree to which price is the determinant of sales
2. Whether the consumer perceives it to be high value added or a commodity product.
3. Whether the consumer is highly knowledgeable about product thru previous experience with the product
4. Whether the product is technically distinguishable from the competitors or generally interchangeable.
Key drivers of demand:
What would be lost if brand were lost as an asset of business-this measure is called branding index to intangible
earnings-continuous ownership of the brand is the driver of demand for the branded business
STEP IV BRANDING STRENGTH

Brand assessment will be undertaken of the fundamental strength of the brands market position to
determine the likelihood that brands forecast earnings will be realized

Brand Risk-is assessed thru the brand strength analysis, by extensive competitive bench marking against a
notional ideal brand according to following 7 core areas:
1. Market assess its size, growth prospects, volatility, & barriers to entry
2. Stability-stability is assessed according to longevity of the brand-the perceived quality of its offerings,
brand awareness, customers loyalty and overall how it has endured competition
3. Leadership-how brand influences its market-it takes into account its brands market share-its ability
to command distribution-price premium & whether brand is perceived to set trends in the market
with respect to innovation. Product development and major price points
4. Trend-we assess the overall long-term trend of the brand & its ability to remain contemporary &
relevant to customers-one of the measure is development of its market share over time.
5. Support-assesses marketing investments made in the brand-includes size & consistency of mktg.
spends as well as the long-term consistency of the brand message.
6. Geography- the brands general capability to cross cultural & national barriers & in particular its
ability to generate earnings in different marketing regions-assessment also influenced by the
importance of geographic markets.
7. Protections-this attribute assesses legal protection of the brand as a whole & its elements.

41


Next step is to apply industry & brand equity metrics to determine a risk premium for the
brand-its overall brand discount rate is derived by adding a brand risk premium to the risk free
rate, represented by government bonds.

Brand discount rate is applied to the brand earnings to derive the net present value of brand
earnings-stronger the brand, lower the discount rate & vice versa.

Net present value of the expected future earnings is calculated by assessing the risk profile of
the brand earnings & determines the discount rate.
If 2 brands offered the same amount of future earnings, but one was strong & the other a
recently launched, fashionable, relatively unproven brand [say, Coca Cola & Maaza] the value of
the 1st would be greater than 2nd because value of brand reflects not only what earnings it
expected to generate in future but also its ability to meet the promise-the difference in risk
profile of the same brand earning forecast is reflected in appropriate discount rate which
represents the Brand risk.
Step V Brand value
Brand value is the present value of the forecast brand earnings discounted by the brand discount rate. The NPV
calculation comprises both the forecast comprises both the fore cast period and period beyond reflecting the ability
of brands to continue generating future earnings-also used to BRAND VALUE MODELLING:

Predicting the effect of mktg. & investment strategies

Communication budgets-formulation

Calculate return on brand investment

Opportunities in new or unexplored mkts.

Tracking brand value management
CONCLUSION
INTERBRAND developed usages of economic value 15 years ago, has now become widespread & generally is endorsed &
used by constituencies the world over-accounting firms-financial & corporate analysts-management consultants-stock
exchanges-tax authorities-government bodies-academics

II. DSP Merrill Lynch Brand valuation

Approach
 Merrill Lynchs valuation is more tightly focused on cash flows [ Interbrand, an ad agency at heart, views
customers as primary driver of value]
 there are three distinct components to a brand valuation:
1. Identification, separation and quantification of cash flows attributable to the brand.
2. capitalization of these cash flows
3. Valuation perspective.
1. Identification, separation and quantification of cash flows attributable to the brand.
The economic benefits of owning the brand must be distinctly identifiable. While valuing a detergent brand, one
should be able to segregate the portion of profits earned strictly because of the brand as against profits earned
through manufacturing and distribution assets.
While this concept is easy to describe in theory, its practical application can be quite tricky. To begin with all
historical financial information that is available with respect to brand is primarily derived from accounting MIS
records that capture information according to set accounting standards and do not throw up brand-only cash flows.
Brands are inextricably linked to other elements-a possible approach is to identify separate cash flows is to treat the
business as a collection of distinct elements.
In pharmaceutical brand these elements might be
42

Intangibles, Intangibles also include not only trade mark but also the trade relationships & doctor goodwill
which are linked to the brand & there fore valued as a basket of intangibles.
 manufacturing assets
 & distribution assets.
Brand revenues [net of excise duties and sales tax] we deduct 1st direct expenses-raw materials, packaging materials,
advertising, sales promotion expenses. Resulting brand contribution we deduct a manufacturing charge and a
distribution charge-includes all directly allocable costs-apportioned overheads, a capital charge towards the assets. A
brand owner out sources the manufacturing & distribution of the brand to 3rd parties & compensates them for costs &
assets ownership.
In pharmacy and FMCG sectors, there is a reasonably efficient contract manufacturing market & prevailing market
rates for unit conversion rates can be a good proxy for manufacturing charge on the brand distribution.
A typical distribution network does not exist on the back of single brand but rather a basket of brands. Estimation of
distribution charge is I tricky. Apportioned charge [salary of sales force, traveling, communication expenses, leasing of
rented distribution infrastructure-warehouses and sales offices, prevailing margins] can be allocated.
Resulting cash flow is then converted to after-tax brand cash flow. Consideration of a brand is subject to a 25% WDV
depreciation charges that can be adjusted against pre-tax brand profits.
Capitalization of brand cash flows
Capitalization of after-tax cash flows is the forecast period over which the brand cash flows are estimated and the
capitalizing factor. Length of forecast period is the stage in brand lifecycle-obsolescence risks, threat of substitution and
ability of the brand to migrate to a new platform and thereby reinvent itself without losing brand equity
[Microsoft Windows has retained its brand equity even after so many new up gradation.
Brands like Coca-Cola & Lifebuoy soap dont have a defined limited life and significantly long competitive advantage
& cant be valued this way while non-OTC pharma face the biggest challenge in terms of obsolescence with brand life
shrinking with each successive generation of molecule.]
After-tax brand cash flows are discounted over a length of the forecast period using an appropriate weighted-averagecost-of-capital. The attempt is to estimate an appropriate discounting factor that covers the perceived risk in brand
cash flows as well as capital structure. Present value of the discounted cash flow is the estimated brand equity.
Factors to consider while valuing brands
1. subject brand valuation to sensitivity analysis on various elements
2. highlight assumptions to confirm to robustness of assumptions and key risks in the brand
3. its not purely a financial exercise-it involves market research, meet players in the industry across complete value
chain-trade suppliers, customers, distributors, competitors, companys management to understand brand
strategy. The market-strategy information is then converted into financial terms through development of a
business plan.
4. Benchmarking of peer brands and comparison of financials. Idea is not impose theoretical cost structure of the
brand but to explain significant deviation from an average.
5. pay-back period and average ROCE is tested to test the reasonableness of brand value
6. Perspective is either from an owner [calculated on as-is-basis stand-alone improvements are also estimated].
In brand sale transaction, this typically represents the minimum price that brand owners would expect for the
property
7. Or buyer of a brand-an additional estimation of the synergies that would accrue to the buyer on purchase of
the brand is made-in form of increased sales, higher profitability & represents a strategic premium of the brand
to the buyer. A summation of sale-side value that a buyer would be willing to pay for the brand. Synergies would
be different for each buyer.
8. Conclusion-brand valuation is a professional assessment based upon rigorous analysis and market research
aimed at determining the brands economic potential-making suitable assumptions. Each brand is a distinct
property; it is a transition thru time. It uses generic measures-price/sales multiples to make the value
assessment. It needs to be customized for each industry to base economic decisions.


III. Ernst & Young brand valuation method

43

You have to separate brand from rest of the business, or you cant value it. For organizations wanting higher
shareholder value, brands are a critical factor. Brands ensure dedifferentiation from competition and attract customer
loyalty. Popular successful brands are able to generate a reliable flow of future earnings, thereby creating shareholder
value.
Valuation concepts:
 Unique assets may suffer
fer in value because they have little use
 A brand can be valued on existing use basis or on available use basis-incorporating
basis incorporating the features of extendibility.
 Value to the customer-A
A valuable brand builds up customer loyalty by creating value for the customers
custom as well.
By superior quality of product/service, better technology, integrity, packaging, higher consistency across time
and space, extensive advertising/PR campaigns. Consistency of brand experience in the past is a significant
factor in building up a brand name as well as the reputation about integrity of the brand owner. He evokes the
trust & loyalty of customer in the brand and helps create expectancy of consistent experience in the future as
well. Enhances possibility of brand extension/versatility.
extension/versatility Examples Infosys-Progeon,
Progeon, Tata products.
 Value to the owner-can
can be attributed to an identified brand or any other intangible asset, if strategic and
operational ability ,
To generate sustainable future economic benefits
benefits-M.S.
M.S. in
industry with high entry barriers. Possession of a
trade mark to generate profits and excess returns in comparison to others. Creates economies of scale
scale-extend
products lines, erect entry barriers.
 Criteria for prerequisite for a brand valuation exercise
exercise-to
to allocate fair value to the brand out of total value of
the owner 4 fundamental criteria must be satisfied:
1. Separability-where
where the brand is legally separable asset, clearly distinguishable from other assets, in
some case it may be difficult, i.e. corporate brands if used for product also like Tata salt.
44

2. Transferability-whether the asset can be identified and sold or licensed to others without disposing off
the business as whole.
3. Legal protection-rights to brand should be legally owned or controlled and capable of protection.
4. Enduring nature-it can be properly regarded as a capital asset with enduring value creation ability
rather than the carryover effects of a recent capital expenditure.
4. David aakers model of measuring brand equity
Brand equity measure
David Aaker says there are 5 levels of customer attitude towards a brand:
a. Customer will change brands specially for price reasons-no brand loyalty
b. Customer is satisfied and has no reason to change brand.
c. Customer is satisfied and would incur costs by changing brand
d. Customer values brand-sees it as a friend.
e. Customer is devoted to the brand.









Brand equity is highly related to how many customers are in c, d, and e class above
It is also related to degree of brand name recognition, perceived brand quality, strong mental and
emotional association, patent trademark, and channel relationships.
Customers pay more for a strong brand
It is an asset
It results in customer preference of one product over others when they are identical basically
Its measure is the premium the customer is willing to pay more for a brand
It is distinguished from brand valuation [financial value of a brand]
Companies acquire brand-rich portfolio of products

Nestles
 Row entree UK
 Carnation USA
 Stouffer USA
 Buitoni, Italy
 Perrier, France.
Its now the worlds largest food company.
 Brand value x market cap. US companies dont list brand equity on their P&L-UK, HK, and
Australian companies do.
 Estimate is based on price premiums it commands into extra volume it moves over average
brands.
 Competitive advantage manages so that equity doesnt depreciation to improve awareness,
quality, positive associations, and excellent service.
 They arent subject to PLC- major enduring asset outlasts company.
I. c. Brand elements
Brand elements are those trademark able devices that serve to identify and differentiate the brand.
Characteristics of brand elements:
o Most strong brands employ multiple brand elements.
o Their brand building ability is what consumers think or feel about the product, if they new only about the
element.
o It provides a positive contribution to brand equity.
o Consumers assume some valued association or response
Choice criteria of brand elements
There are 6 criteria:
1. Memorable
2. Meaningful

characterized as brand building

45

3. Likable

4. Transferable
5. Adaptable
6. Protect able.

more defensive, characterized as how

Brand equity contained in an element
Can be leveraged & preserved in face
Of opportunities and constraints.

1. Memorable
How easily brand element is recalled? How easily recognized? Is this true at purchase and consumption stage?
Short names can help-LUX, L.G., IBM, and TAJ.
2. Meaningful
To what extent the brand element is credible and suggestive of corresponding category? Does it suggest
something about its product ingredient or type of person who uses it? Consider the inherent meanings?
Fair & Lovely, Close-up, Mothers Recipe

BRAND ATTRIBUTES

Say something about

Product benefits
Kleenex

Easy to pronounce
Sony

46

Short name
Easy to remember
LUX

Extendable
Amazon.com

Unique
Lexus

Distinctive
Fuji, Oracle

Avoids translation
Traps
Exxon

says something
about user
Cover girl makeup

Capable of registration & legal protection

IBM

3. Likeability
How aesthetically appealing do consumers find the brand element? Is it inherently likable, visibly, verbally and in
other ways? Do they evoke such imagery?
Sony, Scorpio, Splendor, Swift, Esteem
4. transferability
Can the brand element be used to introduce new products in the same or different categories? To what extent
brand element add to brand equity across geographic boundaries?
Volkswagen named its SUV as TOUAREG-after a tribe of Saharan nomads. Unfortunately historical probing revealed
they were also notorious slave drivers-this created a negative backlash all over.
5. adaptable
How adaptable the brand element?
Lifebuoy was the original carbolic acid soap with its distinctive brick-red color & cresylic perfume. Nirma ruined the
game by showing a whole football team bathing with one soap in the mens locker room showing only men
connoting a mass usage. City dwellers dont respond very well to mass messages, as the ay are directed to no one in
particular.

47

Levers had to re-launch it with a different variant and perfumes. The brand elements have changed with consumer
perceptions
and
continues
to
maintain
its
core
value
proposition-health.

Nirma a Pakistani actress too

6. protect able
can the brand element be legally protect able? How is competition in the market? Is it that names become
synonymous with product categories?-retain their r trademark rights and not become generic?
KLEENEX, Xerox, Scotch tape, Fiberglass.
I. c. Developing brand elements
Marketer needs to identify his products and he has many choices. he debates the name; test these by MR. Name
research includes:
o association tests-images coming to mind
o learning tests-ease of pronunciation
o memory tests-name recall
o preference tests-how liked
o pre-usage research-has someone already used it before
memorable and meaningful names reduce consumer burden of brand awareness and linkage of brand associations.
Likeability and appeal of brand name also contribute to equity. They capture the brands intangible characteristics.

LIC

MRF
48

Slogans are also powerful brand elements-Gods Own Country, The complete man

Sun blanched white seashore. Endless beaches. Incessant blue waves mostly calm but sometimes
boisterous clamoring and vanishing among white splashes. Green groves of coconuts just stop short and
border the beaches with frills

From babies and puppies to teachers and recently, dolphins, Raymond's advertising has used many images to create
its image of a complete man

o primary input must come from product, service and other marketing inputs. Elements are secondary.
o Brands are not built by advertising alone.
o Consumers come to know of a brand from other contact points.-personal observations, usage, word-of-mouth,
company personnel, online experiences, and payments modes, transactional. Etc.
BRANDS-that stand out in the overloaded environment
Brand is the key-Stephen of PWC

CORPORATE IDENTITY
49

Portfolio of services offered

Name

Premises Fascia

Logo

Premises environ.

Corporate

CUSTOMER

Advtg.

identity
Staff uniforms

Brochures

staff

Carrier bags

fleet of vehicles

Letterheads

III.

BRAND MANAGEMENT

Brand management
Brand Management, as distinct from Product Management, should be about managing one of the companys
principle assets, namely a Brand. Just as Production Managers have responsibility for managing the company
physical assets, represented by plant and machinery, so Brand Managers responsibilities lie with in-tangible assets,
represented by consumer franchises, brands.
The word should is used advisedly, because regrettably these days, the Brand Management function tends to be
pushed further and further down the organisation. The role is often performed by a relatively junior executive, 3 or 4
years out of university, bright as a button, but singularly lacking in experience. Consequently, he or she tends to
compensate for lack of any real understanding of what makes their brand franchise tick, by producing endless
statistical analyses of sales and contribution. Indeed, they are frequently encouraged to do so, by a system which is
more geared to financial housekeeping than to brand health.
In the same way that a Production Manager needs to have a thorough understanding of a production machine, before
attempting to take it to bits, a Brand Manager should not start stripping his brand down for a re-launch until he
knows how to put it back together again.
For example, to tinker with elements of a formulation in hopes of saving a few pennies without knowing precisely
what part each element plays in the brands franchise with the consumer is to court disaster. Most of us can think
of examples where the so-called Salami effect has been in operation, i.e. test A versus B, no change; test B versus C,
no change; test A versus C significant difference!
50

Market research tools

Incisive market research tools can go a long way towards helping understand a) what makes a brand tick, and b)
how it might be made more successful.
One such tool is the European Toiletries and Cosmetics Database run by Europes leading research practitioners,
Taylor Nelson Sofres. They conduct 7,000 interviews every six months, across the five largest EC countries, covering
consumers usage habits over most personal care categories.
The figure Male skin problems 1998 is a good example of the sort of learning that can be obtained, in terms of
providing direction for R&D effort. It shows those skin problems that male consumers have identified as applying to
themselves. The relatively high figures for minor problems in France and Germany is worth noting. The figure has
been relatively high in Germany for some years, perhaps a function of Beiersdorfs skilful advertising for their Nivea
brand, subtly reinforcing its suitability for generally keeping you looking good as opposed to specific problem
solving. However, the French figure has increased from 6 percent in 1995 to 22.5 percent in 1998 interestingly,
during that time, Beiersdorf have launched Nivea for Men in France, and LOreal have introduced their Start male
toiletries brand

External corporate communications-Logo is its core identity-its a prime interface between organization & its core
audience.
Brands build assets for future-tactical programs address current problems-brands are the organizations future
security.
o Brand contact-any information bearing experience a consumer has with the brand in the market. Any of
these experience can be positive or negative.
o Company must put effort in managing these experiences as it does in producing these ads.
o Strategies and tactics in marketing programs have changed-firms are creating brand contacts and brand
building equity through many avenues:
Trade shows, events, sponsorships, product placements, factory visits, PR, press releases, product endorsements,
social cause marketing.
II. a. Three important themes in designing these brand-building marketing programs are:
1. PERSONALIZATION
2. INTEGRATION
3. INTERNALIZATION
1. PERSONALIZATION
Internet dispersion has created opportunities to personalize marketing. It is about making sure how brand & its
marketing are as relevant as possible to as many consumers as possible-when no two are alike.
o Marketers are abandoning mass-marketing practices that build brand powerhouses in 1960s, 2000s.
o We get thrown back to practices from a century back when traders knew their each customer
literary by name.
o To adapt to each customers desire for personalization the marketers have embraced such
experimental marketing as one-to-one, permission marketing.
o These concepts are getting consumers more actively involved with a brand by creating intense,
dynamic relationships.

51

Can you recognize your customers?

2. INTEGRATION
Integrating marketing is about mixing and matching marketing activities to maximize their individual and collective
effects.
 Traditional marketing approach of marketing mix [the 4Ps] is not adequate. Marketers need a variety of
different marketing activity to reinforce the brand.
 Integration is critical with respect to market communications-which needs to be judged with respect to
effectiveness and efficiency with which it creates brand awareness and strengthen its brand image with
happy customers.
 Brand awareness is consumers ability to identify the brand as reflected by brand recognition and brand recall
 Brand image-is the perception and beliefs held by consumers as reflected in associations in consumer
memory.
 Different communication options have different strengths.
 A company not only creates a promo to get the customer, but back it with extra satisfaction creating activities
unique to the outlet for memory retention and brand association due to that experience.
52





Product companies can reinforce it further by sponsoring activities and convey a durable association, so that
brand is seen as contemporary and up-to-date.
Marketing communication program is put together so that the whole is greater than sum of the parts.
Matching of options is such that one ad option is enhanced by the other.

INTERNALIZATION
II. a. Brand decisions-To brand or not
 Branding is strong force today. Hardly anything is sought unbranded.
 Commodities do not have to remain commodities-a commodity is a product so basic that it cant be physically
differentiated in the mind of the consumer.
 Over the years, a number of products, essentially commodities have become highly differentiated and
emerged as strong brands:
Captain Cook, Tata salt, Sunkist Oranges, Amul milk, Vijaya Ghee, Milma in Kerala, Nandini in Karnataka, Aavin in
TamilNadu.
 Brand names depend upon 4 strategies:
1. Individual names-P&G has several individual brands in different categories- Vicks {healthcare},
Whisper
{feminine hygiene}, Ariel & Tide {fabric care}, Pantene, Head & Shoulders, Rejoice {hair
care}, and Pampers {baby care}.
Company doesnt tie its reputation to the products. If it fails or appears to have low quality, P&Gs reputation doesnt
get hurt, it may just quit from the category. Some use different brand name for different quality lines within same
product class.
2. Blanket family name-it uses blanket family name for diverse product lines. Tatas use family name
and parent company Tata Sons charges royalty of 5% of its turnover for each group firm-say Tata
Motors.
Here development costs are low due to common name and ad expenses. Sales are strong if family name is goodeven for newly introduced product.
Microsoft uses MS Vista for the latest extension of O/S after XP.
Marks & Spencers, Trent are other examples for blanket family names for all products displayed inside their retail
format.
 The above two are called House Brands or a branded house, representing two ends of a brand
relationship.
3. separate family name
Aditya Birla Group follows this trend-Hindalco Aluminum, UltraTech cement, Grasim suiting, Graviera.
4. Corporate family name combined with individual family name.
This is sub-brand policy. The company name legitimizes and the individual name individualizes the product.
Kelloggs Raisin Bran, Kelloggs Rice Crispies, Kelloggs Corn Flakes.
The above two strategies are combination of family name and corporate name.
Branded house
House of brands
Does the brand contribute to the offering Is there compelling need for a separate
by adding:
brand because it will:
-Associations enhancing the value -create and own an association?
proposition?
-represent a new different offering?
-credibility
through
organizational -deal with channel conflict?
associations?
-communication efficiencies?
Will the master brand be strengthened Will the business support a new brand?
by associating with the new offering?
Selecting a brand relationship position
53

4 key customer touchpoints where social media adds value

McKinsey
In order to use social media to influence purchasing habits you need to embed it at key customer touchpoints.
Using McKinseys customer journey model as a base, weve looked at how and where you can use social media at key
customer touch points.
1. Initial consideration
Whats
happening
at
this
stage?
Something has triggered a need for the customer to start thinking about making a purchase. The consumer considers
an initial set of brands based on brand perceptions and exposure to recent touch points.
How
can
social
media
be
used?
This is an important position for brands to secure. According to McKinsey, people are three times more likely to
purchase a brand that was in the initial stages of their purchasing journey in comparison with those that were added
later.
Social media can play a part in this early stage by positioning a brand in the forefront of consumers minds at all
times. Stumbling across a brand on a Facebook page, reading a tweet about a good experience someone has had with
a brand, reading a blog post or forum thread online about a branded product not only does this help spread wordof-mouth, but the brand that a consumer is most likely to recall is one that has a constant place in their mind.
2. Active evaluation
Whats
happening
at
this
stage?
The consumer is actively seeking more information about the products they have in mind. Consumers add or
subtract brands as they evaluate what they want and dont want.
How
can
social
media
be
used?
Two-thirds of the touch points during the active-evaluation phase involve consumer-driven marketing initiatives
something which social media excels at.
Reviews and recommendations from people like me play an integral part of the customer decision making process.
A good review by an influential blogger, or a comment by a social media influencer who appeals to the consumer
audience can be more valuable than thousands of pounds worth of advertising. By interacting and engaging with
influencers, brands can build up their presence and appeal among their target audience.
54

3. Postpurchase experience
Whats
happening
at
this
stage?
After purchasing a product or service,the consumer builds expectations based on their previous experience, as well
as hands-on experience of product itself, to inform the rest of their journey.
How
can
social
media
be
used?
Post-purchase relations are very important. According to McKinsey, more than 60% of consumers (of facial skin care
products) go online to conduct further research after purchase and if a product is marketed effectively online, or has
been reviewed or discussed in social media, its most useful functions and features can be discovered at this touch
point.
4. Loyalty loop
What
happens
at
this
This is where a consumer moves from making a one-off purchase to developing loyalty with a brand

stage?

How
can
social
media
be
used?
In todays world consumers can influence marketing and opinions about brands and social media can be the glue
that keeps customers loyal to your brand. A customer who has liked your Facebook page, follows you on Twitter and
contributes to your company blog is half-way to becoming brand loyal. A careful balance of interaction with
consumers through social media and a great product or service could be the extra step needed to maintain loyalty,
turning impulse one-off purchasers into loyal customers. Happy customers can also turn into brand advocates and
focusing on retaining repeat consumers can help attract new or prospective customers.

Brand Loyalty
is a scenario where the consumer fears purchasing and consuming product from another brand which he does not
trust. It is measured through methods like word of mouth publicity, repetitive buying, price sensitivity, commitment,
brand trust, customer satisfaction, etc. Brand loyalty is the extent to which a consumer constantly buys the same
brand within a product category. The consumers remain loyal to a specific brand as long as it is available. They do
not buy from other suppliers within the product category. Brand loyalty exists when the consumer feels that the
brand consists of right product characteristics and quality at right price. Even if the other brands are available at
cheaper price or superior quality, the brand loyal consumer will stick to his brand.
Brand loyal consumers are the foundation of an organization. Greater loyalty levels lead to less marketing
expenditure because the brand loyal customers promote the brand positively. Also, it acts as a means of launching
and introducing more products that are targeted at same customers at less expenditure. It also restrains new
competitors in the market. Brand loyalty is a key component of brand equity.
Brand loyalty can be developed through various measures such as quick service, ensuring quality products,
continuous improvement, wide distribution network, etc. When consumers are brand loyal they love you for being
you, and they will minutely consider any other alternative brand as a replacement. Examples of brand loyalty can
be seen in US where true Apple customers have the brand's logo tattooed onto their bodies. Similarly in Finland,
Nokia customers remained loyal to Nokia because they admired the design of the handsets or because of userfriendly menu system used by Nokia phones.
Brand loyalty can be defined as relative possibility of customer shifting to another brand in case there is a
change in products features, price or quality. As brand loyalty increases, customers will respond less to
competitive moves and actions. Brand loyal customers remain committed to the brand, are willing to pay higher
55

price for that brand, and will promote their brand always. A company having brand loyal customers will have greater
sales, less marketing and advertising costs, and best pricing. This is because the brand loyal customers are less
reluctant to shift to other brands, respond less to price changes and self- promote the brand as they perceive that
their brand have unique value which is not provided by other competitive brands.
Brand loyalty is always developed post purchase. To develop brand loyalty, an organization should know their niche
market, target them, support their product, ensure easy access of their product, provide customer satisfaction, bring
constant innovation in their product and offer schemes on their product so as to ensure that customers repeatedly
purchase the product.
Bought Loyalty vs. Earned Loyalty

Acquiring new customers is hard work, but turning them into loyal
customers is even harder. The acquisition efforts can usually come almost solely from the Marketing department, but
customer retention takes a village. And all those villagers have to march to the beat of a strategy that effectively
balances the concepts of bought loyalty and earned loyalty.
I first heard the concepts of bought and earned loyalty many years ago in a speech given by ForeSee Results CEO
Larry Freed, and those concepts stuck with me. Theyre not mutually exclusive. In the most effective retention
strategies Ive seen, bought loyalty is a subset of a larger earned loyalty strategy.
So lets break each down a bit and discuss how they work together.
Bought loyalty basically comes in the form of promotional discounts. We temporarily reduce prices in the form of
sales or coupons in order to induce customers to shop with us right away.
Bought loyalty has lots of positives. Its generally very effective at increasing top line sales immediately (especially in
down economies), and customers love a good deal. Its also pretty easy to measure the improvement in sales during
a short promotional period, and sales growth feels good. Really good.
And those good feelings are mighty addictive.
But as with most addictions, the negative effects tend to sneak up on us and punch us in the face. The 10% quarterly
offers become 15% monthly offers and then 20% weekly offers as customers wait for better and better deals before
they shop. Top line sales continue to grow only at the cost of steadily reduced margins. Breaking the habit comes
with a lot of pain as customers trained to wait for discounts simply stop shopping. Bought loyalty, by itself, is fickle.
56

But it doesnt have to go down that way.

We can avoid a bought loyalty slippery slope when we incorporate bought loyalty tactics as part of a larger earned
loyalty strategy.
We earn our customers loyalty when we meet not only their wants but their needs. After all, retail is a service
business. We have to learn a lot about our customers to know what those wants and needs are so that we align our
offerings to meet those wants and needs. Which, of course, is easy to say and much more difficult to do. But do it we
must.
To earn loyalty, we have to provide great service and convenience for our customers. But we have to know how our
customers define great service and convenience and ensure were delivering to those definitions. Earning loyalty
means offering relevant assortments and personalized messaging, but its only by truly understanding our customers
that we can know what relevant and personalized mean to them. And a little bit of bought loyalty through truly
valuable promotions can provide an occasional kick start, but we have to know what valuable promotion means to
our customers.
We earn loyalty when the experience we provide our customers meets or even exceeds their expectations. As such,
our earned loyalty retention strategies have to start before weve even acquired the customer. If we over-promise
and under-deliver, we significantly reduce our ability to retain customers, much less move them through the
Customer Engagement Cycle weve discussed here previously.
But earned loyalty cant just be the outcome of a marketing campaign. Its much bigger than that, and it doesnt
happen without the participation of the entire organization. Clearly, front line staff in stores call center agents and
those who create the online customer experience have to be on board. But so too do corporate staff, including
merchants for assortment and marketers for messaging. And financial models for earned loyalty strategies inevitably
look different than those built solely for bought loyalty.
Since customer expectations are in constant flux, we have to constantly measure how well were doing in their eyes.
Those measures must be Key Performance Indicators held in as high a regard as revenue, margins, average order
size and conversion rates. (Shameless plug: the best way I know to measure customer experience and satisfaction is
the ACSI methodology provided by ForeSee Results). Our customers perceptions of our business are reality, and
measuring and monitoring those perceptions to determine whats working and whats not is the best way to
determining a path towards earning loyalty.
Earning loyalty requires clear vision, careful planning, a little bought loyalty, lots and lots of communication (both
internally and externally), and some degree of patience to wait for its value to take hold. But when the full power of
an earned loyalty Customer Engagement Cycle kicks in, its effects can be mighty. The costs of acquiring and retaining
customers drop while sales and margins rise. Thats a nice equation

How Companies Create a Brand

Regardless of size, many business owners want to create a brand around their business. A brand is the collective
impact or lasting impression from all that is seen, heard, or experienced by customers who come into contact with a
company and/or its products and services. In creating a brand, or "branding," you have to manage the effect that
your product or service is having on the customer. We'll look at the hands-on process of creating a brand in this
article, as well as what it can mean as an investor. (For related reading, see Well-Established Brands worth
Billions.)TUTORIAL:

Investing

101
57

Define

Your

Business,

Define

Your

Brand

to get an idea of what your brand may look like, write down three things that define your business. For example, a
dry cleaning company that specializes in suits and higher-end clothing might choose: 1) Properly cleaned attire 2)
Same day service 3) Safe cleaning technique, whether it be silk, satin, cashmere or cotton. This would then boil down
to: Clean, Quick and Safe. (For related reading, see Economic Moats: A Successful Company's Best Defense.)
Consistency
you want your brand to have the same message and effect on all your customers. Bar none, the best example of this
is McDonald's. You can go to Bangkok and pick out a McDonald's just by looking for the golden arches. After you go
inside,

you

will

be

able

to

order

burger

and

fries

without

speaking

word

of

Thai.

Moreover, you will know how that burger is going to taste before you take the first bite. This is because McDonald's
has a standard menu that is the same all over the world. There is a smaller regional menu that is up to the owners of
the franchise, but every restaurant has to offer the same basics (cheeseburger, Big Mac, etc.).
People don't go to McDonald's because it is healthy. They go there because they know what to expect and they like it.
You want to create this same message of consistency: "when you use/purchase my product or service, you will get
exactly

what

you

want

every

time."

(For

more,

see

McDonald's:

History

of

Innovation.)

Differentiation
Brands that are successful create a gap between themselves and their competitors in the minds of the consumers.
Generally speaking, companies in the same industry usually offer products that are 99.9% identical to nonspecialists the difference is in the brand. For example, how many people would notice if you tore the label off a pair
of

Levi's

and

sewed

on

Calvin

Klein

label?

In differentiating your brand, you will have to work against other brands in your field. You need to find that small
difference between your service or product and that of your competitors. After you have discovered it, hype it up
every way you can in your marketing campaigns. If consumers are given two identical choices as far as price and
quality, they will merely go to the one that is closest at that time. By differentiating your brand, you will encourage
them to seek you out instead of your competition. (For further reading, see Competitive Advantage Helps.)
Creativity
Innovative ideas and unique messages delivered through creative mediums will always enhance the status of a
brand. From 2000-2010, Apple computers underwent a significant upsurge in sales. There are many reasons for this,
but an important one is that they had changed their brand to embody creativity. Apple ran ads that associated their
computers with people on the cutting edge.
Free Trading Guide - GFT
When people first saw the 1985 Super Bowl commercial of blindfolded businessmen marching off cliffs or the ads
run with images of the Dalai Lama and Einstein, it was clear that Apple was for innovators and Windows was for
58

lemmings. This message has been pounded into consumers' minds over the following decades with multiple
campaigns

enforcing

the

same

theme.

(For

related

reading,

see

The

Power

of

Emotional

Steve

Jobs.)

Connection

you want people to connect to your products or services on an emotional level. If customers can tie using your
product or service back to a positive time in their lives, you have a much better chance of building brand loyalty. It
doesn't

necessarily

have

to

be

direct

connection.

Tampax ran a series of ads showing events in history (Woodstock and such) with the simple message "Tampax was
there." Folgers associates itself with a different pastoral scene every commercial it produces hockey in the winter,
walking up to a summer sunset, camping in the mountains who could possibly watch that without having positive
memories

invoked.

It doesn't always have to be a positive connection either, just an emotional one. Insurance companies do this well by
showing the aftermath of disasters like floods and fires and then showing their agents walking about consoling
people.

The

voiceover

says

something

like,

"we

will

always

be

there

for

you."

The simple truth is that your brand will endure far longer if you can get away from the purely rational side of
people's brains and find your way into the emotional side. Try to enhance the emotional appeal of your brand with
every marketing campaign you undertake. (It is a blanket term that represents, in one lump sum, the value of brand
names, patents, and customer base loyalty. For more, see Can You Count On Goodwill?)
Creating a Brand
To attract customers who fit your customer profile, your business's image should align with your customers' needs
and expectations. An image makes a company distinctive, or unique, compared to others in the market. By
emphasizing your competitive advantage as part of your image, you can position your products or services to stand
out in the market and attract more customers.
What's an image? An image describes how customers feel about your business. But you don't want to leave this
emotional response to chance. You can have some influence on your business's image by creating a brand.
A brand establishes an identity for a product, service, or business. It creates a visual, emotional, and cultural
connection between customers and the company. A brand conjures up powerful images for customers, both
consciously and subconsciously. It paints a picture about the company, the product or service, and the type of
customer it represents. For example, Disney has a strong brand as the family entertainment leader. It strives to
portray a positive business image and ensures that customers' experiences keep them coming back. Disney
communicates messages of family fun, clean environments, and service excellence. Employees are referred to as
"cast members" and attend Disney University to learn their roles, responsibilities, and service standards.
When customers buy a brand, they buy its values and promises, and feel that their expectations are aligned with the
company. The product or service the customers buy and the quality experience they receive is what persuades them
to buy the same brand again. The product or service and brand have a direct reflection on one another.
A number of companies have successfully created a brand that stands out in customers' minds. A successful brand
has a positive association, a recognized name, and a higher perceived value than its competitors. For example,
59

Apple commands higher prices than its competition because it has a loyal following that appreciates its innovative,
counter-culture image. The Volvo brand is identified with a widely sought vehicle attribute-safety. This strong,
focused image has guaranteed it steady sales.

Monitoring

Your

Brand

as you establish and grow your brand, you will have to watch it carefully. You don't want to have your competitors
infringe upon or take over essential elements of your brand. Here's how to prevent it.
Free Trading Guide - GFT
Review

Materials

all the promotional materials for your business should have the same look, feel, and message. If you have materials
that don't match, for example a wordy green poster and a sparsely written blue pamphlet, you are sending a mixed
signal on several levels that will confuse customers. Make sure there is sameness to all the material, and that it
matches

your

business

as

well.

(For

related

Review

reading,

see

Advertising,

Crocodiles

and

Company

Moats.)
Culture

if you have employees, they too become documents that send out your brand's message. If you are running a health
food chain, you are going to want employees who have a lifestyle that exudes good health. If you run an accounting
firm,

you

are

likely

going

to

want

employees

that

exude

sense

of

responsibility.

You have to keep this in mind while you are hiring as well as when you are setting up the office environment. Ask
yourself what kind of office - from benefit policies to working conditions - will attract and keep the employees you
want.

(For

further

reading,

see

Qualitative

The

What

Makes

Company

Great?)

Review

a
1.

Analysis:

simple
Test

2.
3.
4.
what

out

Review

formula
new

follow

ways

what

Enhance
Repeat

to
to

went
on

the
it

when

market
right

and
and

the
first

Process
building
brand

three
means

your

what

image

a
product
can

you
steps

until
for

brand
or

be

is:
service.

improved.

already

have.

it

works
Investors

as an investor, it is difficult to put a dollar figure to the value of a brand. For companies like Coca-Cola and Apple, the
time and effort they put into branding has a palpable impact on their bottom line and creates an economic moat
around

them.

Interestingly enough, it will be easier for you to approach brand evaluation as a consumer than it is as an investor.
By looking at a company's products, seeing how their displays are set up, and keeping your eyes out at the
supermarket for products that are attracting attention, you may be able to spot new companies with strong potential
60

brands

before

they

reach

the

valuations

that

Bottom

Apple

and

Coke

demand.
Line

Good brands take time to develop. You will not go from being a corner store cobbler to overthrowing Nike in one
year. You have to be patient and keep refocusing your campaigns and improving the quality of the product or service
you are trying to brand. From an investing standpoint, companies that spend time and money on effective branding
have the potential to pay off in the future.

II.b. Brand audit

Reveals brands need to be re-positioned because of changing customer preferences.
Audit strengths & weaknesses-does our brand excels at truly delivering benefits that customers value?
Is brand properly positioned? Do all of the consumer touch points support this positioning Does it
receive proper, sustained support? Do brand managers understand what the brand means to
consumers?
It may call for re-branding a product; service or company-recent flurry of M&A activity has setoff
corporate re-branding campaigns.
Re-educating customers, & building a new image is a huge undertaking- a 4-week ad campaign cost
VERIZON $ 21m. To announce new name, repaint its fleet of 70,000 trucks, garage, service centers,
relabeled 250,000 pay phone booths, redesign 91 million customer billing statements, produce
videos & in-house material.

Zensar-was erstwhile ICL

Bell Atlantic + GTE became Varizon-as a master brand since neither represented proper positioningthey had to leave all their names behind-old name conjured up an old-fashioned company image & created
too much confusion helped in venturing into new areas of technology Internet & Wireless services-today
it is # 1 provider of wireless phone services with M.S of 22%.
# 2 is Cingular Wireless-Bell South & SBC Communications merger.ESSO became EXXON, after the
Valdez disaster, while in India it became Hindustan Petroleum, after nationalization in 1970s- Burmah
Shell became Bharat Petroleum, IOL became Caltex.
ISPL became GILLETTE.

What is a Brand Audit?

Understand brand building, and the importance of a well-defined brand to the
61

Success of any product or company. Everything we do is considered within the broader context of brand strategy, to
make sure that all the parts of a marketing program work in coordinated support of each other to maximize their
value.
We know that everything a company does, the way they do it, and, in many cases, what a company doesn't do, acts to
reinforce or undermine the unique position in a customer's mind. Frequently, personnel changes, the introduction of
new products or services, or simply the passage of time can cause a company's protection of its valued brand to
decline. Here's a simple audit of your branding practices to see if you're doing everything you can to maximize your
efforts:
Consistency
a key component of successful branding is consistency. Give yourself 10 points for every statement
That accurately describes your company:
My company has a logo.
The logo always appears with the same colors and typeface.
We use the logo on our business cards and stationery.
We use the logo on every piece of printed material that is seen by a customer.
My company has standardized colors.
We use the same standardized colors on every promotional piece seen by a customer.
We have a written policy on graphic standards that defines the use of logo and company colors.
Everyone in my company knows and follows the graphic standards policy.
My company has a standard typeface that we use on our written communications
My company has standard language that we use to describe the key elements of our positioning
Or sales pitch.
Your Score
Communication
many companies fail to take advantage of opportunities to reinforce their brand image.
Give yourself 10 points for every statement that accurately describes your company:
We have a sign at work that tells people who pass by what we do.
Everyone in the company has a business card.
We have a company brochure.
We advertise.
We participate in key industry trade shows or conferences.
We have a website.
We use our website to collect information about the people who visit it.
We answer the phone the same way every time.
The people who work here all know what we do better than anyone else.
The people who work here know our mission statement or values statement.
Your Score
62

If you've identified some areas of your branding that need help, call Tribe Design. We can work with
You to make the most of what you currently have, or help you create a new program to help you
Achieve your business goals. Brand Audit
Brand Audit Model
This model allows us to dissect your Brand while identifying key strengths and vulnerabilities. By
conducting
A thorough Brand Audit a solid Brand Strategy emerges which can help to build sales and profits.

A factual

63

When many people hear the word audit they automatically think of an unpleasant, painful and expensive
experience. But conducting a brand audit can be just the opposite. A brand audit is an in-depth look at your brand
from several perspectives.
Why might your B2B brand need an audit? All too often it seems, brands can be operating on auto-pilot. Theyre
cruising right along, doing what theyve been doing. But we all know that things never stay the same, as competitors
change and enhance their offerings, and as new technologies emerge to compete. Or perhaps your companys
strategy adjusts to changing times. Brands need to stay fresh and relevant. A brand audit is a chance to take a fresh
look at your brand from a number of perspectives. A brand audit involves a close examination of some, or all, of the
following:
1. External Partners and Customers
2. Internal Stakeholders
3. Competitive Review
4. Brand Value Proposition
5. Brand Identity
6. Brand Architecture
7. Communications/Messaging
8. Budgeting/Allocation
The best way to begin the process is to identify the specific issues and areas that need to be explored, and then
determine what activities can be handled internally or by an external resource. For example, in interviewing external
partners, it is often helpful to have an independent firm conduct the audit so that both your company
representatives and external partners are not put in an uncomfortable position discussing sensitive topics.

. External Partners and Customers. This includes your distribution channel partners, independent sales reps,
strategic supplier partners and most importantly your customers. Getting their feedback can be via oneon
one telephone or in person interviews, Internet or mail surveys, etc.

64

. Internal Stakeholders. Understanding how your sales force and customer service people perceive the brand is
important because theyre in direct contact with customers; but it is equally important for product development,
manufacturing and other groups to have a clear picture of what the brand stands for.

. Competitive Review. Since your brand doesnt live in a vacuum, its often instructive to compare its image, message
and product or service scope with the competition. Ask your channel partners in the

xternal audit for their thoughts on competitors, compare messaging in ads and literature. Take a deep, long look into
their new product initiatives, programs and value-added services.

. Brand Value Proposition. What is your brand promising to deliver? Is the promise still important to customers? Is
it based on real strengths? Does it reflect a real competitive advantage? Now might be a good time to check.

. Brand Identity. Do people know what your brand stands for? Nows the time for a reality check on just how well the
core essence (or personality) of the brand is resonating.

. Brand Architecture. Brand architectures can get out of alignment over time. Take the time to reflect

On how your brand is portrayed at the Master Brand level, and if it confuses or encourages clarity at the

Product Brand level. Also check that there is no confusion between the Corporate Brand and other company brands or
branded features.

. Communications/Messaging. When many managers think about consistency in marketing

ommunications, they think about visual consistency. And while visual brand consistency is certainly important, its
also the most obvious. Take it a step further: what does your brand actually say? If you picked several
communication pieces and read them, would they portray a consistent message?
9. Budgeting/Resource Allocation. Its one thing to see what you are spending money on,
10. But its quite another to see what you should be spending it on. Program continuity
11. over time is important, but dont forget to look beyond the obvious to make sure
12. That your investment stays focused.
By taking the time to engage in a systematic brand audit, you might begin to see new opportunities for your brands,
and new ways to make it resonate both internally and externally. So go ahead and get audited.
You just might find you, and your brand, enjoy the experience.
65

Brand Audit
In determining the strengths and weaknesses of an existing brand, or to
cover all your bases when establishing a new brand, our brand audit
checklist will prove of value. A generalized list of audit categories follows,
follows
but we go much further into the issues
issue you see below when conducting
an audit for a client.
Brand Audit Checklist: This is an amalgamation of branding
considerations and issues gleaned from many sources. I am particularly
indebted to the writings of David Aaker, David Arnold, Geoff Ayling, Ca
Carl
Obermiller, Tom Peters, Al Ries, Jack Trout, Lynn Upshaw, and Sergio
Zyman. Selected works by several of these authorities are referenced in
Branding Resources.
The chart below is a Mind Map, a technique created by Tony Buzan to
depict relationships and present them in a rather organic form. You can
click on any blue or green word or phrase to get more detail from the list
that follows. You may also bypass
ss the Mind Map and go directly to the
linear checklist.
Brand Audit Mind Map

66

Brand Audit Checklist

Below are the elements to be considered in a brand audit. They are listed here
in a linear fashion, although the audit process is not necessarily linear. We just
had to make decisions to create the checklist. One significant aspect of the
audit is to assure that all elements are geared toward consistent objectives and
help reinforce the positive identity for which customers and prospects can
ultimately develop a loyal relationship.
Your Brand: This is the hub from which six subject categories are spun. Those
categories, plus competitive strategies and actions, determine how customers
and prospects perceive and react to your brand, and how successful your
brand is in contributing to your revenue and growth prospects. ,
Competitive Brand(s): A single hub for a competitive brand is depicted, but
each significant competitive brand will want to be considered in the audit. The
audit should consider all six categories as best you can, but specifically Market
Segments, Differentiators, Personality and Positioning should be studied and
profiled for each competitor because these are the areas in which competitive
impact is most direct and significant.
II. b. Brand tracking
Tracking studies collect information from consumers on a routine basis over time.
Method
 They employ quantitative measures to provide marketers with current information as to how
their marketing programs and brands are performing on the basis of a number of key
dimensions:
1. product appeal
2. repeat purchase
3. frequency of purchase
4. source of brand knowledge
5. likeability of communication messages
6. retail display
7. availability
8. convenient packs
9. performance to expectations
10. quality
11. opinion about competing brands
12. Suggestions for improvements.





Tracking studies are means of understanding where, how much, and in what ways brand value
is being created.
It provides managers consistent baseline information to facilitate day-to-day decision making.
Changes made in the marketing program over time, it is important to monitor the health of the
brand and its equity.
Varied market activity surrounds the brand, so it is difficult and expensive to conduct tracking
studies.

II.b. Brand reinforcement



A companys major enduring asset- a brand-has to be carefully managed so that value doesnt depreciate.
67

 Many brands of last century are still todays brand leaders:

Coca Coal, Wrigleys, Pears, Heinz, Campbell soup, Amrutanjan. They have done so by constantly striving t improve
their products, services and innovation.
 Branding principles according to Scott Bradbury in context of STARBUCKS AND NIKE are:
1. relying on brand awareness has become marketers tools gold-smart brands are more concerned with
brand relevance and brand resonance.
2. you have to know before you grow it-most brands dont know who they are and where have they been,
and where they are going.
3. always remember the spandex rule of brand expansion-just because you can doesnt mean you should.
4. great brands establish enduring customer relationships-they have more to do with emotions and trust
than with footwear cushioning or the way a coffee bean is roasted.
5. everything matters-even your restroom!
6. all brands need good parents-unfortunately; most brands come from troubled homes.
7. big is no excuse for being bad-truly great brands use their superhuman powers for good and place
people and principles before profits.
8. Relevance simplicity, and humanity-rather than technology-will distinguish brand in future.
 Brand equity is reinforced by marketing actions that consistently convey the meaning of the brand to
consumers in terms of:
a. what the brand represents-what core benefits it supplies-and what needs it satisfies
b. How brand makes those products superior and which strong, favorable and unique brand
associations should exist in the minds of consumers.
Nivea, one of the strongest European brands has expanded its scope from a skin-cream brand to a skin-care and
personal care brand through careful designed and implemented brand extensions reinforcing the Nivea brand
promise of mild, gentle and caring in a broader arena.
 Reinforcing brand equity requires innovation and relevance throughout the marketing program.
 Marketers must introduce new products and conduct new marketing activities that truly satisfy their target
consumers.
 Brand must always move forward in the right direction.
 Marketing must always find new and compelling offerings and ways to market them. Brands such as Kmart,
Levi Strauss, Montgomery ward, Oldsmobile, and Polaroid, Vimal , Binny find their leadership disappearing.
 Consistency of marketing support the brand receives. It doesnt mean uniformity and no changes. Strategic
thrust can be maintained by tactical changes.
 There is little need to deviate from successful positioning. Source of brand equity should be vigorously
preserved and defended.

Volvo story
AB Volvo
68

Type

Public

Founded

1927

Headquarters

Gothenburg, Sweden

Key people

Leif Johansson

Industry

commercial vehicles

Products

trucks
buses
construction
equipment
drive systems for marine and
industrial
applications
aerospace
components
service
financial services

Employees

81,000

Volvo Cars, the automobile manufacturer, has been owned by the Ford Motor Company since 1999.
Volvo is Latin for "I roll" or "I turn." The name Volvo was originally registered in May 1911 as a separate company
within SKF AB and as a registered trademark with the intention to be used for a special series of ball bearing,
b
but this
idea was only used for a short period of time and SKF decided to use "SKF" as the trademark for all its bearing
69

products. The company Volvo AB had no activities until the 10 August 1926 when the SKF Sales Manager Assar
Gabrielsson and Engineer Gustav Larson, after one year of preparations involving the production of 10 prototypes,
set up the car-manufacturing business Volvo AB within SKF group. Volvo AB was introduced at the Stockholm stock
exchange in 1935 and SKF then decided to sell its shares in the company.
The first series produced Volvo automobile, called 'V4' (ppen vagn (Open wagon)-4 cylinders) left the factory on
14 April 1927. Just 996 cars were produced between 1927-1929. 'V4' was replaced by model PV651 in April 1929.
Volvo's first success in the automobile production came with the PV444 that was introduced in September 1944.
The Volvo Group today has more than 81,000 employees, with manufacturing in 25 countries and sales in more than
185 markets. The group provides complete solutions for financing and service. The Volvo Group's net sales 2004
amounted to 22 billion. Renault owns 20% of the Volvo Group.
Change of strategy
Among the reasons why Volvo took the initiative to sell the automobile manufacturing was the increasing
development costs for new car models, coupled with the fact that it was a relatively small producer. The strategy was
instead to grow as a truck manufacturer where it had a stronger market position. The buyout of Volvo Cars was
announced on January 28, 1998. In the following year acquisition was completed at a price of $6.45 billion USD.
Volvo used the funds from the sale of the automobile division to finance the purchase of Scania, another leading
Swedish truck manufacturer, but the deal was stopped for competition reasons by the European Union. Instead
Volvo acquired the commercial vehicles division of French Renault and the American truck manufacturer Mack
Trucks.
Volvo Automotive's motto is "Volvo for life" attributed to the reliability and safety of their cars.
Combined with their company symbol, (it could represent either the male symbol, the symbol of Mars or the metal
related to the planet Mars, iron; in fact, the same symbol) which actually refers to iron ore, stands for "Rolling
Strength"
The Volvo trademark
The Volvo trademark is now jointly owned (50/50) by Volvo and Ford. One of the main promotional activities for the
trademark is the sailing contest Volvo Ocean Race, formerly the Whitbread Around the World Cup. There is also a
Volvo Baltic Race.
Volvo companies

The (ex-China Motor Bus, Hong Kong) Volvo Heavy Duty Recovery.

70

Volvo double Decker bus in Hong Kong

'Feel' TV Ad For The All New Volvo C70 Coupe/Convertible
Volvo C70

An impactful, new TV advertising campaign for the all new Volvo C70 coup/convertible themed FEEL started this
week ahead of the cars official public launch and arrival in dealer showrooms from Saturday 18 March.
The advertisement, filmed in Hawaii, is a key part of the marketing campaign for the launch of the all new Volvo C70
and will be seen at cinemas, in an interactive TV ad, in magazine and national press advertisements, as well as online
at www.volvocars.co.uk/feel.
The FEEL theme to the launch campaign is designed to inspire people to reawaken their senses, see life in a new
light and open their minds to the pure pleasure the new Volvo C70 coup/convertible brings.
Retracting the new C70s unique three-piece folding hardtop conveniently turns it from a stylish and secure coup to
a sensual convertible in 30 seconds, which makes you FEEL more connected with the world around you and makes
your senses FEEL life in a more intense way.
The TV ad features three friends driving a new C70 in bad weather with the roof up, but as their route takes them
above the low clouds, the sun comes out, the roof goes down, an awesome 910W Dynaudio Premium Sound
System gives them an ear-popping experience - and their senses FEEL the difference, the exciting environment
around them - and life!
"Coups and especially convertibles are all about emotion and sensory experience," explained Paul Walder, Volvo Car
UK Limiteds UK Marcomms Manager. "We believe that the all new C70 invites you to FEEL this experience, with the
added bonus of an elegant conversion from coup to convertible in 30 seconds. The new FEEL campaign perfectly
encapsulates this," he continued.
SUBARU BORROWS FROM VOLVO TO TOUT SAFETY FEATURES
71

DETROIT (AdAge.com) -- Subaru of America, in a quest to broaden its reach, is lifting a page out of Volvo's playbook
to advertise its all-wheel drive models for 2006.
An integrated campaign breaking today on national TV will tout safety awards the
carmaker has won from independent third parties. The focus of the campaign will be on
active and passive safety, a hallmark of Ford Motor Co.'s Volvo. Subaru inked a one-year
deal with singer Sheryl Crow to use her song "Every Day Is a Winding Road" in all its TV
and radio ads, said Tim Bennett, director-advertising. In addition to new broadcast
commercials, the song will also be laid over existing ads.
II. b Brand revitalization
Why?
1. Changes in consumer tastes and preferences
2. emergence of new competitors
3. emergence of new technologies
4. emergence of new marketing environment.
5. in any product category there are once prominent and admired brands that have fallen on hard times or
disappeared.
Examples
ambassador cars, Fiats, Lumsa-chocolate-tea, Ramtirath brahmi tel, Bush baron TV
smith-CORONA, zenith, TWA, Iridium.
6. many have managed to come back impressively, as marketers have breathed new life into their customer
franchise-Onida has successfully turned around so also www.amazon.com
7. reversing a brands fortune requires either that it returns to its roots and lost sources of brand equity
restored or new sources of brand equity discovered.
8. Brands on the come-back trail have to make revolutionary rather than evolutionary changes.
Process of brand vitalization
first thing to do to turn around the fading brand is to understand what sources of brand equity
Are positive associations losing their strength or uniqueness?
Have negative associations got linked to the brand?
Decisions must be made whether to retain or establish new positioning.
If new marketing program needs to be applied, if it is the source of problem, because it is falling to deliver on
brand promise-back-to basics strategy may work.
Harley Davidson example.

IV.

c. brand strategy formulation

BRAND STRATEGIES

Product category
72

Existing
Existing

Line
Extension

New
Brand
Extension

Brand name

New

Multi brands

new brands

2.2
Branding strategies
Besides the more general decision for the use of brands the decision for the branding strategies is important. There
are several aspects to be considered:

Ownership of brands

Structure of brand systems

Regarding the ownership, Dibb (1997) and Kotler (1999) differentiate between five categories:

These decisions need to be taken carefully. They offer not only large opportunities but also various risks:
A company which has strong manufacturer brands may decide to sell the same or
similar products to retailers for use as their own label brands. If consumers become
aware of this they might change their perception of the manufacturer brand:
I get the same product for a lower price under my retailers brand. or
They sell the same thing under another name very cheap. This product is not
exclusive anymore. I go for another brand then
then.
Extensive permissions for the licensed use of a strong brand for other products can
73

destroy the value of the brand. Pierre Cardin has lost lots of its luxury appeal since
various goods with this name can be found in every department store.
The structure of brand systems describes how an organisations products and brands are related. Dibb (1997)
distinguishes between:

BRAND EXTENSION VS. LINE EXTENSIONS

Brand Extension is often confused for Line Extension and vise versa. So lets clarify these two terms with a few
examples.

Virgin

Godrej
74

Diet Coke

Amazon

Brand Extension is a marketing strategy according to which, a well known brand uses the same brand name to
enter into a totally unrelated product category. It is done primarily to leverage on the existing brand equity. Some
marketers argue that since building a brand is costly affair, once you have built a brand you should leverage its value
by using the same brand name to other new categories as well. For example, Virgin, which was initially a record
label, entered into other line of business like aviation, game stores, video stores, telecom, etc. Godrej, which was
initially a brand which signified locks and cupboards, later on entered into whole new product categories like
refrigerators, furniture and real estate.
Line Extension (or product extension) is a marketing strategy according to which the scope of the product a brand
represents is increased i.e. when you are adding varieties or variations or flavors of the same branded product, you
are basically doing line extension. Like brand extension, line extension is also done to leverage on the brand equity
by targeting a bigger chunk of the user base. When Coke introduced Diet Coke to target the diet conscious people,
they did line extension. When Amazon, started selling various other products other than books, they also did line
extension.
While there are some benefits to both line and brand extension, marketers today believe that both strategies dilute
the brand positioning widening their focus Experts like Jack Trout and Al Ries have argued against both the
strategies saying that in an age when brands are becoming more and more niche and specific it is not a very good
idea to dilute the brand by trying to be something to everyone, instead of being everything to someone.
III.
LINE EXTENSIONS
2. A company has 4 choices when it introduces additional items in a given product category in the same
brand name-new flavors, forms, colors, ingredients, package size, new overseas market.
3. Vast majority of new-product activity is line extensions-as a low-cost, low risk way to introduce new
product or meet new consumer demand for variety-utilize excess capacity-command more shelf-space at retail
point.
Risks
75

An over-extended brand name can loose its meaning, cause consumer confusion or frustration-there is
profusion of brands-up to 150 or more in consumer products like biscuits, bottled water.
Sale may come at the expense of some other items in the line-cannibalizes its own product- works
best when it takes away sales of competing brands.
II.d. brand extension advantages and disadvantages
II. BRAND EXTENSIONS
Involves use of successful brand name to launch new or modified products in new category:
Barbie Doll brand of Mattel was extended-Barbie home furnishings-Barbie cosmetics-Barbie hair bandbeyond pink-Barbie electronics-Barbie books-.
& Barbie sporting goods.

HONDA- cars, motorcycles, generators, snow blowers, marine engines, snowmobiles-it advertises-we can fit six
Hondas in a 2-car garage.

An extension gives instant recognition & faster acceptance -saves high advertising costs to build a new
brand-BRINKS-home security systems made entry into India & extended to Cash management
systems for bank ATMs.
Research must precede any attempt to transfer a brand name to ascertain degree of fit with brand
association.
Risks in Brand Extensions
BIC pantyhose-Heinz pet food-Lifesavers gum- Clorox laundry detergent-all met early deaths.
If brand extension fails it may harm consumer attitudes to other products carrying the same brand
name.
A brand extension may not be appropriate to a product even if it is well made-Castrol milk?
Fem ice cream? Dettol biscuits? Colgate boot polish?
A brand name may lose its special positioning in the consumers mind through overuse.
Brand extensions advantages and disadvantages
I. Advantages:
Facilitate new product acceptance
1. Improve brand image
2. reduce risk perceived by customers
3. increase probability of gaining distribution and trail
4. increase efficiency of promotional expenditure
5. Reduce cost of introductory and follow up marketing programs.
6. avoid cost of developing a new brand
7. allow for packaging and labeling efficiencies
8. Permit consumers variety-seeking.
Provide feedback benefits to the parent brand and company
1.
2.
3.
4.
5.

clarify brand meaning

enhance the parent brand image
bring new customers into brand franchise and increase market coverage
revitalize the brand
permit subsequent extensions

Why extend a brand?

76

Sources of growth for a firm can be explained by Handoffs matrix

Lets study Ansoffs Matrix:

Figure 4-5: Three Intensive Growth Strategies:

Ansoffs Product-Market Expansion Grid

Here we review whether nay opportunities exist for improving our existing business performance. Ansoff has
proposed a framework for detecting new intensive growth opportunities called product-market expansion
grid.
Company considers whether it could gain more market share with its existing products and current markets.
This is called market-penetration strategy. Next it considers whether it can develop or find new markets fro it
current products. This is called market-development strategy.

The experience of Iridium is a clear demonstration of how difficult it is to introduce new products and how new
products must be carefully designed branded, and marketed. When a firm introduces new products it has three main
choices as to how to brand it:
1. it can develop a new brand, individually chosen for the new product
2. It can apply in some way one of its existing brands.
3. It can use a combination of a new brand with an existing brand.
A brand extension is when a firm uses an established brand name to introduce a new product.
Sub-brand is when a new brand is combines with an existing brand.
Parent brand is when an existing brand gives birth to a brand extension.
Family brand is if the parent brand is already associated with multiple products through brand extensions.
Brand extension can be classified into 2 general categories:
I.
line extension
The parent brand is used to brand a new product that targets a new market segment within a product category
currently served by the parent brand. A line extension often involves a different flavor or ingredient variety, a
different form or size or a different application for the brand [Head &shoulders dry Scalp shampoo].
II.
category extension
77

The parent brand is used to enter a different product category from that currently served by the parent brand [Swiss
army watches]
1. Most new products are extensions-typically 85% in any one year [Microsofts Xbox, apple iPod digital
music player, BMW mini automobile, Motorolas Motoraz etc]
2. Many new products are introduced as new brands [Gleevec oncology drug, ReplayTV digital video
recorders, Harmony Low-fat cereal]
7 general strategies for establishing a category
1. Introduce the same product in a different form-Parker Pen, ball point pens and ink.
2. Introduce products that contain brands distinctive taste, ingredient or component- Hagan Daaz cream
liqueur, Amul Cheese spread.
3. Introduce companion products for the brand- Colemans camping equipment and Duracells Durabeam
flashlights
4. Introduce companion products for the brand-Gerber insurance and Visa travelers checks.
5. Introduce products that capitalize on firms perceived expertise- Honda Lawnmowers and Canon
photocopying machines.
6. Introduce products that reflect the brands distinctive benefit, attribute or feature-Lysols deodorizing
household cleaning products and Ivorys mild cleaning products.
7. Introduce products that capitalize on the distinctive image or prestige of the brand-Calvin Klein clothes
and accessories and Porsche sunglasses.
II. Disadvantages of brand extensions
1. Can confuse or frustrate consumers
2. Can encounter retailer resistance
3. Can fail and hurt parent brand image
4. Can succeed but diminish identification with any one category.
5. Can succeed but hurt image of parent brand
6. Can dilute brand meaning
7. Can cause the company to forgo the chance to develop a new brand.
Category extensions-successful and unsuccessful
Sl.no Successful category extensions
Unsuccessful extension
1
Ivory shampoo & conditioner
Campbells tomato sauce
2
Vaseline Intensive care skin lotion
LifeSavers chewing gum
3
Hershey milk chocolate
Cracker Jack cereal
4
Jell-O Puddings Pops
Harley-Davidson wine coolers
5
Visa travelers checks
Hidden Valley ranch frozen entrees
6
Sunkist orange soda
Bic perfumes
7
Colgate toothbrushes
Ben-Gray aspirins
8
Mars ice cream bars
Kleenex diapers
9
Arm & Hammer toothpaste
Clorox laundry detergent
10
Bic disposable lighters
Levis Tailored classic suits
11
Aunt jemima pancake syrup
Nautilus athletic shoes
12
Honda lawn mowers
Domino fruit-flavored bubble gum
13
Smuckers ketchup
14
Fruit-of-the-Loom laundry detergent
Baseline conditions when evaluating a brand extension strategy
1. Consumers have some awareness of and positive associations about the parent brand in memory. It is difficult to
expect consumers to form favorable expectations of an extension, unless there exists some type of beneficial
consumer knowledge about the parent brand.

78

2. At least some of these positive associations will be evoked by the brand extension-consumers are likely to infer
associations similar in strength, favorability and uniqueness to the parent brand when the brand extension is seen
as being similar or in close fit to the parent.
3. Negative associations are not transferred from parent brand-ideally they may be left behind and not play a
prominent role in evaluation of extension.
4. Negative associations are not created by brand extension-and not seen as negative-they dont infer any new
attribute or benefit associations that didnt characterize the parent brand but which they see as a potential
drawback to extension.
The more these four assumptions hold true, the more likely it is that consumers will form favorable attitude to
extension.
1. Brand development
Company has 4 choices when developing brands:

Product Category
Brand Name
existing
new
Existing
Line
extension
New
Multibrands

Brand
extension
New
brands

o Line extensions-existing brand names to extend to new forms, sizes, flavors of an existing product
category-Danone put 7 new yogurt flavors- a low cost low-risk way to introduce new product or meet
consumer desire for variety or utilize excess capacity or command more shelf-space. An over extended
brand might be risky too causing consumer frustration or confusion-it may come at expense of other item.
A line extension works well when it is taking share away from competitors & not cannibalize.
o Brand extensions-existing brand names extended to new product categories-Mattel has extended its
Barbie doll into houses, furnishing, cosmetics, electronics, and books under the same Barbie name. Honda
ads say-you can park six Hondas in a 2-car garage-automobiles, lawnmower, marine engine, snowmobile,
snow blowers, and motorcycle.
Key research findings on brand extensions
Successful brand extensions occur when the parent brand is seen as having favorable
associations and there is a perception of fit between parent brand and the extension product.
There are many bases of fit: product-related attributes and benefits related to common usage
situations or user types.
Perception of fit may be based upon technical or manufacturing commonalities depending upon
consumer knowledge of the category or more surface complementary reasons.
High-quality brands stretch farther than average-quality brands although both types of brands
have boundaries.
A brand that is seen as prototypical of a product category can be difficult to extend outside the
category.
Concrete attribute associations can be more difficult to extend than abstract benefit
associations.
Consumers may transfer associations that are positive in original item class but become
negative on extension.
It can be difficult to extend to into a product class that is seen as easy to make.
A successful extension can not only contribute to the parent brand image but also enable a
brand to be extended even further.
An unsuccessful extension hurts the parent brand only when there is a strong basis of fit
between the two.
79

An unsuccessful extension doesnt prevent a firm from backtracking and introducing a similar
extension.
Vertical extension seems difficult and requires sub-branding strategies.
The most effective advertising strategy is one which emphasizes on extension rather than the
original.

I.e. brand portfolios

A brand portfolio is the set of all brands and brand lines a particular firm offers for sale to buyers in a particular
category. Different brands may be designed and marketed to appeal to different market segments.
III. MULTIBRANDS.

Firms introduce additional brand in the same

Offers a way to establish different features & appeals to different buying motives
Lock up more retail shelf-space.
Firm protects its main brand by setting flanker or fighter brands-Seiko uses different brand names for its
higher-priced watches-Seiko LaSalle & lower-priced watches-Pulsar-to protect flanks of its main Seiko brand.
Firms should reduce brands to set up tighter screening.
RISKS
1. Each brand might obtain a small M.S.
2. None may be profitable.
3. Firm may end up spreading resources to many brands.

IV. NEW BRANDS

Creates a new brand name when it enters a new product category where none of existing fits.
Firm believes that power of its existing brand is waning-it needs a new brand name.
As with multi brands, offering too many brands, it can spread its resources too thin-retailers
are also concerned with brand proliferation with too few differentiation-specially in FMCG
sector.
Large firms are pursuing mega brand strategy-weeding out weaker brands & focusing on only
those, which are #1 or #2 in their categories.

Lexus-Honda created the Lexus luxury car brand to differentiate from the established Honda line.
Matsushita-uses separate name for different family of product-Technics-Panasonic-National &
Quasar.

Managing Brands
2. Brands must be continuously communicated to consumers.
3. Brand awareness, & build loyalty, & preference is created by huge ad spend-GM spends $1bn. annually to
promote Chevrolet brand-McDonalds spends $ 0,75bn.
4. Such ads campaigns create name recognized, brand knowledge & preference-but the fact is a brand is not
managed by advtg.but by the brand experience.
80

5. Customer comes to know about a brand by various touch points- wide range of contacts-word-of-mouthpersonal interactions with company people-telephone-Web pages- firm needs to manage them carefully.
6. Any of above can have positive or negative impact on brand perceptions & feelings
7. Everyone in the company lives the brand or the brands positioning wont hold fully firm trains its
employees to be customer-centered. -Build pride regarding firms products & services-the enthusiasm spills
over to customers-success story relates to Nordstrom-Dell-Lexus-Harley Davidson-they have become
brand builders-employees understand, desire, & deliver on the brand promise.
8. Brand assets cant be left only to brand managers-who dont have enough scope to do all things necessary to
build a brand-usually pursue short-term results, while managing brand as an asset calls for long-term
strategy.

Canada Dry & Colgate-Palmolive-setting up brand asset management teams-Brand Equity manager [to protect
brand image, association &quality to prevent short-term actions by over-eager brand managers from hurting the
brand].
HP-for each of its 2 divisions-Consumer & B-2-B has a senior executive in charge of customer experience-job is to
track, measure, and improve customer experience with HP-report directly to division President.
A brand portfolio must be judged by its ability to maximize brand equity. In An optimal brand portfolio is one where
each brand maximizes equity in combination with all other brands in the portfolio.
In designing the optimal portfolio marketers generally need to trade off market coverage and these other
considerations with costs and profitability. Its profits can be increased by dropping brands in a portfolio if it is too
big. Or adding brands if it is not big enough.
Aim-to maximizes market coverage so that no potential customers are being ignored. and to minimize brand overlap.
so brands are not competing to gain customer approval.
Each brand should be clearly differentiated and appealing to a sizable enough market segment to contain marketing
costs.
Brand portfolios need to be carefully monitored over time to identify weak brands and kill unprofitable ones.
Brand lines with poorly differentiated brands are likely to be characterized by much cannibalization and need
pruning.
Detergents in India
Unilever has Surf Excel, Rin, Sunlight, P&G has Arial, SPIC has Henkel
There are many clones in the market which are poor imitations-Hippoline, Nirma,Ghari,T-series.
In umpteen product categories like salt, tea, coffee, flour, masala there are local, regional and national brands-all
poorly differentiated. Buyer has abundance of choice while for the seller it is hyper competition. It is all brand
confusion.
I.e. brand portfolios
Brand portfolio is the set of all brands and brand lines a company offers for sales in a category. Different brands
from this stock are designed to cater to different consumer classes.

All brands have boundaries-a brand can be stretched so far.

Multiple brands are necessary to pursue multiple market segments
Any one brand is not viewed equally favorable by all market segments firm wants to target.
Reasons for multiple brand introductions are :
1. increase shelf space and retailer dependence
2. To attract consumers seeking variety-who will switch to others from tired brands.
3. increase firms internal competition and create organizational agility
4. To yield economies of scale in marketing-advertising-merchandizing-physical distribution.
A brand portfolio must be judged by its ability to maximize brand equity
An optimal brand portfolio is one where each brand increases brand equity in combination.
81

Portfolio design involves a tradeoff between market coverage and costs.

Portfolio is too big if profits can be increased by dropping some brands. A portfolio is not big enough if profits
can be increased by brands.
General principle is to maximize market coverage so that potential customers are not being ignored.
Minimize brand overlap so brands are not competing to gain customer approval.
Each brand should be clearly differentiated and appealing to sizable enough market segment to justify cost of
brand maintenance.
Carefully monitor brand portfolios over time to identify weak brands.
Brands can play different roles as part of brand portfolio where there is abundance of choices to consumersflankers-cash cows-low-end entry level, high-end prestige.
Roles of brands in the brand portfolio
1. To attract a particular market segment not currently being covered by other brands of the firm.
2. To serve as a flanker and protect the flagship brand.
3. to serve as cash cow and milk for profits
4. To serve as a low-end entry-level product to attract new customers to the brand franchise.
5. To serve as a high-end prestige product to add prestige and credibility to the entire portfolio.
6. To increase shelf presence and retailer dependence in the store.
7. To attract consumers seeking variety who may otherwise shift to another brand.
8. To increase internal competition within firm.
9. To yield economies of scale in advertising, sales merchandizing and physical distribution.
Fords Brand portfolio-Global Anthem, ad campaign with a global road block showing a 2-minute image ad at 9p.m
local time on every commercial TV network around the world.

SEIKOS SEGMENT of watch market

Brand Segments based on price
Luxury brands-Rolex, Piaget, Cartier
Up-market brands-Omega, Longines
Mid-price brands-Bulova, Tissot, Citizen
Mass-market brands-Swatch, Timex
Commodity watches HK LCDs

LaSalle
Credor, Seiko
Seiko, Pulsar
Pulsar, Lorus

The main reason to adopt multiple brands is to pursue multiple market segments. These different segments may be
based upon all types of considerations:
Different price segments
Different channels of distribution
Different geographic boundaries.
Liz Claiborne was founded in 1976 to make affordable and fashionable apparel for the working women. Sales
surpassed $1bn in 1989 in absence of advertising support. 1991, Liz Claiborne occupied over half of womens floor
space in most department stores.
Brands styles were getting outdated. And the merchandize was hard to sell without discounts.
Liz Claiborne, who retired in 1989 to become a wildlife activist, criticized the brands dowdiness, saying it had become
a mothers brand that didnt reach out to younger consumers. Here Im 70 and I dont want to wear those clothes.
Concerned that Claiborne has achieved maximum penetration, the company sought to stretch the brands
Liz Claiborne brand portfolio
Claiborne: mens wear and optical
Crazy Horse: affordable casuals
Dana Bachmans top-end designer of womens business suits and sports wear
Elisabeth: Plus-sized clothing for women and sports wear Emma James: value-priced womens clothing
82

First Issue: clothes, shoes, and optical sold exclusively at Sears.

Laundry by Shelli Segal: womens evening wear acquired in 1999
Liz Claiborne: flag-ship brand includes jeans, casual swimwear, sportswear, golf apparel, intimate wear, and
dresses.
Lucky Brand-hip jeans wear for women and men
Meg Allen-casual clothing line sold exclusively at Target stores.
Mexx-European mass merchandiser
Monet group-fashion jewelry
Russ-Budget brand found exclusively at Wal-Mart
Sigrid Olsen-upscale womens clothing.
Villager-relaxed styles sold primarily at Kohls stores
Licensed brands
DKNY jeans: Hip designer of jean wear for teenagers also licenses DKNY active.
Kenneth Cole: trendy womens lines Kenneth Cole New York and Reaction Kenneth Cole.

Range with a number of acquisitions and brand extensions to include products suitable for downscale retailers as
well as up market boutiques.
Company acquired faded brands Russ Crazy Horse and Villager from bankruptcy court in early 1990s. These brands
were originally positioned as 2nd tier department store brands, but were unable to compete with similarly-priced
private label brands.
So Liz Claiborne marketed them in stores like JC Pennys, Kohls and Wal-Mart, where they flourished.
1999 they accounted for $250 million sales out of Claibornes $2,8bn.
During 1990s it added other brands to its portfolio and inked deals with two fashion-forward brands DKNY &
Kenneth Cole.
2000, WSJ declared it to be P&G of fashion. 20% of sales were from non-flagship.
Cannibalization was inevitable, but it is much better to steal market share from you than to sit back and let somebody
else do it. Says-CEO Paul Charron.
Power of brands speech:
Five times everyday someone buys a product created by Liz Claiborne Inc. Our current roster of brands is richer
and more diversified than a year ago. Our current strategy recognizes that growth comes from offering brands
that speak to different attitudes at different price points in different retail channels. Wherever consumers
choose to shop, there is a brand form Liz Claiborne Inc. to meet their need for fashion and value.
Type of brands

How To Re-Boot Your Brand or How To 1.Recognize A Stressed Brand

A powerful brand identity

83

All brands get tired. After years of carrying out business, a brand grows and shrinks with time. Business life has a
way of delivering body blows to a brand. Sometimes the culture changes, your audience grows up or competition
erodes your positioning strategy.
Has your advertising replaced Nyquil as a sedative?
Does your message still resonate with your audience? Dont be another company that advertises because they feel
they must. Advertise because youve got a story to tell. Put your message where your audience is looking. Just
because you or your ad agency doesnt understand the media is no excuse to ignore its potential. Maybe its time to
change agencies and attitudes internally.
Are you playing follow-the-leader in your category?
If youre not the leader, youre not trying hard enough. Branding wants you to be the leader, and if thats not possible
then come up with a new category where you can claim the leadership position. You want to eliminate alternatives.
Choice may be good for customers, but its hell for brands. There is no room for followers here.
Is your image stuck in the 70s?
The last time your brand image excited anyone the public were arguing over the benefits of Betamax versus VHS.
Nobody had a cell phone, a personal computer, or air bags for their cars. Brands have to be relevant in every way.
Recognize whom you are speaking with, and direct your brand image to address this market. Relevance and
consistency across all marketing is crucial.
Is your sales department just going through the motions?
The sales staff just arent hungry anymore. There is nothing about your brand that excites them anymore. It probably
doesnt stand for anything particularly, and nobody can explain the brand message if their job depended on it. The
sad truth is; their job DOES depend on it. So does your job. You cant blame the economy for everything except your
reason to get your brand off life-support.
Are you begging your employees to take business away from you?
Are you doing your utmost to save a nickel only to create an environment where employees are just waiting for the
right opportunity to jump ship or worse yet start their own business and take your best customers with them? Dont
do your brand huge long term damage by finding clever ways to shave costs at the expense of those who make you
money. Now is the time to invest in better equipment and training. Position your brand for growth. Dont add to a
culture of fear, but inspire your human assets to seek out opportunities by embracing a rejuvenated brand.
Are you letting relationships with your customers slide?
This doesnt mean you have to date anyone. Do your customers only see you as a cheap price or as a brand that is
there to help them grow and become more profitable? If you are just a price to them then your brand is at its lowest.
Anybody can beat your lowest price even if it means they have to buy the business. Relationships lifts a brand out of
commodity hell and allows you to make more money because of what additional value your brand brings to them.
Do you market out of fear?
A brand with no positioning strategy is rudderless. Dont just market because you cant afford not to, but because
you have a compelling message for your customers. Fear marketing is wasted money. Other than awareness, youre
not getting much value for your money.
84

Is invisibility your strongest brand value?

Any community enjoys seeing businesses involved with giving back to their customers. It shows that your brand sees
the big picture. It shows that you consider the community important. Being part of the fabric of the community,
means that your brand recognizes its stake in the community. It has plans to stay, and its priority isnt in another
locale. Take advantage of the economy to react to local culture. If you are a financial institution, and there are big
layoffs locally, you could implement special payment programs that sympathize with the hardship forced on
mortgage and loan holders.
If it werent for customers, wouldnt business be a blast?
If youve lost touch with your customers, changes are they moved on also. If there is no dialog, then theres no
growth in your brand strength. Getting feedback alerts you to problems, and gives your brand, consumer insight.
Your customers should be an active member of your team. If you want to see and benefit from their love, youve got
to give first before you can receive. Regular satisfaction surveys are a good first step. How often does sales take
customers for lunch to see how their businesses are doing. See what you can do to help them by coming right out and
asking.
Is your brand personality grumpy?
At this point in your brand history, what would you say is the personality of your brand. To come to grips with this
question, youre going to have to picture your brand as a person walking down the street. How would you and your
stake holders describe this person? That description will give you a good benchmark of how your personality fares.
If the description is complimentary, then take pride in that light, but if it is negative, then take heed and realize that it
is probably costing you money.

How

Can

You

Mend

Broken

Brand?

In recent months, many household brand names and retailers have harnessed the power
of licensing to pull them through a difficult time. Most notably, formerly defunct or
bankrupt brands like The Sharper Image, Circuit City, Fortunoff, Linens n Things and
Polaroid, among others, have either announced plans or are already working to license
products in order to maintain a place in the market and retain vitality as consumer brand
names.
By using third-party licensees to manufacture new products and services that reflect their
signature brand attributes, these names have a chance to remain relevant to consumers,
even after the brands respective bankruptcies. Licensing has now become their business
strategy and their reason for being.
In addition to these formerly bankrupt brand names, many brands across a variety of
struggling industries could take a page from licensings proverbial play book. Industries
like education, automotive, luxury, travel, the media and non-profits are among the most
troubled, with countless brand names and companies under stress in our current
economy. Could implementing a licensing strategy save these companies and strengthen
their respective industries?
85

Few tools seem very effective in improving the performance of these industries in this
economic climateincluding traditional business methods, promotions or advertising.
Perhaps the power of licensing can be tapped to help these ailing industries effectively
reach consumers and maintain relevance through the tough times. Some brands in these
industries have already harnessed licensingand are using it well. However, as a whole,
these industries could greatly benefit from licensings ability to attract new consumer
segments across a variety of categories and retailers, as well as its ability to raise brand
awareness, introduce new products and generate additional revenue streams with little or
no risk.
Take higher education institutions, for instance. Creating new online learning platforms
through third-party technology providers could guarantee students receive an education
at a more profitable margin with the highest excellence in Web 2.0 learning. By branding
third-party platforms with institution namesensuring the quality of education and
experience is comparable to that within the classroom settingthe respective schools
gain new consumers (students) while generating new revenue (tuition) and building
longer-lasting brand loyalty (alumni).
Luxury is another product category that has obviously taken a hit in recent months. In
fact, according to market research firm Bain & Co., global sales of luxury goods will decline
7 percent in 2009this coming off a 9 percent growth in 2006, a 6.5 percent growth in
2007 and a 3 percent growth in 2008. Licensings role for luxury products is simple: create
more affordable options, whether that means new accessory lines from well known
apparel brands or more moderately priced bridge lines or collections. Luxury remains a
viable category. Consumers simply want to know that the products they are buying are
priced right and worth it. Many brands are doing just thatcreating jewelry, eyewear,
shoes and handbagsat a variety of price points. Historically these new entries arent
meant to drive these brands business, but rather are meant to engage the consumer in
new product categories and use them as brand ambassadors or human media as the
overt branding in many of these categories publicizes their brand adherence. In our
current environment, amidst the precipitous drop in the luxury market, many brands
bridge lines may actually turn into their lifelines.
Media brands have recently adopted licensing to create strategic and experiential new
offerings, including new services and retail experiences. A few examples include USA
Today airport news and convenience stores, Better Homes & Gardens furniture at WalMart, and Food Network kitchenware products at Kohl's. These and many other licensing
initiatives from storied media brands help the in-print or on-air experience evolve from
static to experiential. Licensing helps these brands to interact directly with consumers
outside of flipping pages or watching programs. Not only that, licensing also helps create
new media consumersin some cases within new demographics entirelywhile at the
same time effectively communicating core brand qualities. In addition, with advertising
revenues down, it is not unthinkable that some media properties may actually find
themselves converting to a 100 percent licensing strategy, ceasing to publish and instead
86

licensing their names to relevant consumer products.

The travel industry is also suffering, as leisure and business travelers alike are cutting
back on their number of trips. With fewer traveling, airlines, hotels, rental cars and tourist
destinations are in dire need for enhanced consumer awareness and improved consumer
perception. One licensing strategy that could be adopted by well-known airline and hotel
brands might be to develop a free, added-value, travel-agent-like mobile application to
provide consumers with a seamless planning experience. This might encompass
everything from booking airfare or hotel reservations to renting a vehicle or
recommending restaurants, activities or itineraries at select destinations. This branded
mobile application would permit consumers not even using the brands core services to
derive value from it. Over time, they may come to view the brand as possessing significant
travel expertise. This could help to build a more loyal consumer base and effectively
position the brand as reliable, trustworthy and accommodatingattributes that will pay
dividends when leisure and business travel begins to rise and the travel industry bounces
back (which it will do).
How about the automotive industry? Ford recently announced it is exploring a new
Mustang licensing program to engage tween girls. For Fords popular Mustang brand, this
program not only creates new touch points for young people and their parents at retail, it
also creates and further develops an affinity for the Mustang brand at a young age. When
the tween girls purchasing Pony Girl by Mustang products grow up, they also may feel
predisposed to want to drive a Mustang. This is one way in which licensing is helping Ford
ensure it is top of mind amidst a new generation of drivers.
Perhaps most interesting of all is the role licensing can play for not-for-profit groups or
organizations, such as the American Red Cross, American Kennel Club (AKC) or Sierra
Club. For all of these brands, licensing has not only allowed each organization to create
new revenue streams and introduce new brand attributes at retail, it has also allowed
each to further promote their respective cause by encouraging consumers to adopt the
behaviors each organization supports. For example, the American Red Cross developed a
licensed line of health and safety items that actually encourages consumers to be prepared
and respond quickly in a crisisdirectly parallel to the organizations mission. AKC has a
line of licensed agility products designed for tweens and children to help them take better
care of their animals while at the same time helping pets live a healthier, happier life. The
products help advance AKCs vital mission. The Sierra Club recently launched a line of ecofriendly apparel. These sustainable clothing items not only create additional awareness
for the non-profit, but they help consumers identify and buy products that are better for
the environment, a sort of do good licensing.
Whether or not brands are experiencing declines, licensing can play an important role in
building brand awareness, reaching new consumers, communicating new brand attributes
and even generating additional revenue. In the last decade, brand extensions
particularly for corporate brandshave become more sophisticated and strategic,
87

ensuring licensing has a greater piece of the marketing pie and making it possible for
licensing to become a strategic part of a businesss success, or at least one of the most
productive tools in the marketing arsenal.
Brand themes
More often than not, a companys vision and mission statements fail to capture the true nature of what the
organizations core purpose is, what makes them different, relevant and authentic. Successful brands are those who
understand that the brands core concept serves as a compass, guiding the organization, their partners and their
consumers.

Brands are essentially shared understanding of a singular meaning. Without a shared understanding of what the
brand represents, employee and partner actions are set adrift. It is therefore, critical that the brand team has a
theme to guide their efforts.
The brand theme ensures shared understanding by providing a singular concept that acts as lighthouse and litmus
test. Your brand theme must be clearly understood by everyone throughout your organization. Your theme must
define and articulate the essence of your brand in a clear, concise and compelling manner.
A successful brand theme defines the brands core purpose as one, simple and succinct concept that is both quickly
understood and easily remembered. This provides brand consistency because ideas work towards it and can be
measured against it.

88

Example: Apples theme could very well be Einstein meets Picasso. This A meets B format provides a spectrum of
influence which juxtaposes characters to provide two extremes that work in harmony, here reflecting Apples
position of artful technology. This forms a unique vocabulary that centers the brand team around a single vision.
Despite the task a partner or employee is asked to perform, the question is always How would the collective mind of
Albert and Pablo approach this problem? Would they agree with this solution or start anew? Have we focused too
much on Einstein and ignored Picasso?
The very process of developing a brand theme forces the team to align their focus by providing both a common
purpose through analogy, simile or metaphor. However, unlike an advertising theme or Big Idea this is an internal
language. It may be shared with the outside world but it is by no means a tagline or slogan. This ultimately drives the
organizations thinking and actions, not merely messaging and campaigns.
How does your organization discuss concepts relating to your brand? Do you share a common purpose, or is your
core purpose lost in translation? Creating a brand theme will help to guide your team and ensure that they stay on
track
Brand Theme

Too often the internal mission for the organization (or brand team) is not connected to how it wants to be viewed by
its consumers so the employees day-to-day actions are not aligned with the desired reputation of the brand. This
results in a confused and inconsistent brand image. A brand theme solves this problem because this one idea acts as
the mission internally and the positioning externally. Just as the theme of a novel must inspire the author to write
the book and also touch the reader, so should a brand theme inspire employees and consumers through one
compelling idea.
The brand theme should drive all of the companys decisions, not just those related to communication. It should
determine what you do not just what you say. Ultimately, the brand strategy and the core business strategy need to
merge

Our synthesis model is one of a few innovative constructs that are central to our approach. It illustrates how we
strive for deep insight in each of three vital areas: the company, the consumer and the product/service itself. We
hold ourselves to the highest standards of analysis in each of these areas but the real power of our model is in the
89

way we use it to find a single powerful idea at its center. Finding one powerful idea at the center is difficult, but that
very process of re-combining insights (synthesis) is the essence of creativity
Gap Makes a Mess of its Identity
: Brand Updates

In a hugely surprising move last week, Gap unveiled a new logo. My first emotion, before even seeing it, was one of
excitement (with a side of: why would they mess with such an iconic identity?)
I was disgusted, like everyone else, to see what Gap considered worthy enough to be the new face of their brand. I
am all for refreshing your brand, but be respectful. A company like Gap or Coca-Cola or McDonalds should realize
that they arent just brands, they are huge parts of our culture and have very significant emotional meanings to
people all over the world. Its because of this that such a lashing out has occurred.

For what many people consider to be the leader in fashion trends (actually, I would argue against that) to put such
a heinous face on their brand throws their fashion credibility into serious question!

kellogg's

brand

update

This past week, Kelloggs unveiled a fresh new visual identity for the companys 106 year old brand. In a proactive
90

move for Kelloggs, the company partnered with Interbrand, Leo Burnett, and digital agency VML to update the logo,
zero in on the brands mission, consolidate 42 websites, rebrand all marketing materials and create the tagline, Lets
Make

Today

Great.

This image has been resized to fit in the page. Click to enlarge.

Ensuring that an iconic and hugely successful 106-year-old consumer brand is as relevant today as when it
was first launched is no easy feat. Refreshing the Kelloggs brand, which has been trusted by generations of
consumers, required careful research and thinking, and these changes help us better convey our brands
purpose and values to todays consumers, said Mark Baynes, Kellogg Companys chief marketing officer.

91

The new brand identity relies on bright graphics, vivid colors and real stories to convey the optimism of a
new day, and to remind consumers of the importance of a good breakfast. Kelloggs also reaffirms the close
relationship they have established with consumers by placing information about their community projects,
such as Team Kelloggs and their Share Your Breakfast program, directly on the homepage banner.

Interbrand Design Forum Ranks the Most Valuable U.S. Retail Brands; Wal-Mart Remains the Top Retailer, Target
Leaps to Second Report shows that the strong brands got stronger, while the bottom 25 fell.
Brand purpose

92

The Brand Purpose

We started with our Tactical Gap Analysis. Using these findings, our brand challenges were unearthed, and
combining these challenges with the feedback from our peers, we emerged with a new and refined brand purpose. A
purpose which will revitalize Cadbury Dairy Milk and will reinvigorate the brand.
This purpose
se didnt emerge from our own minds, however. True Happiness is a subset of Joy, a positioning that
Cadbury has adopted globally. Hopefully by adapting this new purpose to the Singaporean market we can achieve
our goals and bring Cadbury back to its origin
original pedestal.
The New Brand Purpose: True Happiness
Dairy milk when first produced in 1905 was different. Different because of its positioning, and because of the
ingredients that went into it (glass and a half full of milk). It was always meant to be an indulgence,
in
and this is a
message of the brand that has withstood the test of time. Even the packaging of Dairy Milk has changed minimally
since its inception in 1905. With that in mind, the fundamental essence of Dairy Milk being the ultimate comfort food
shouldnt be changed.
The deep dive exercise gave us some important insights. We found that while people were receptive to the idea of
Cadbury positioning itself as a quirky and hip brand, they felt that such an image didnt ideally suit its sub
sub-brand
Dairy Milk as it came across as a more warm and sincere product. While they admitted that they enjoyed the eye
brow ads and the ads that featured the Gorilla, they suggested that these were perhaps better suited to Cadburys
brand image as a whole and that Dairy
iry Milk, while it needed more publicity, should not be positioned in conjunction
with these kind of ads.

93

A concern we faced was that many Singaporeans felt that Dairy milk was a fading brand, because of its absence from
the media off late. The airtime for Dairy Milk commercials had reduced considerably and there werent any new
initiative since they launched the Shioklaty campaign. Even this was a one off deal which they felt didnt garner
enough public attention. The only reason that Dairy Milk still contained some value in their minds was because of its
historically strong position and product. That being said, our visitors had indicated that these two aspects would also
slowly diminish if Dairy Milk were to continue to remain quiet.
The question, then, is how do we fix this? How do we reconnect our consumers with Dairy Milk?
The answer is True Happiness. True Happiness for YOU.
In life, you are defined by those that shape you. Be it your parents, influential teachers or coaches. Life is a marathon
with many short bursts, and its important to remember all of those people whove helped you along the way. Dairy
Milk helps you do that because its is so rich and pure that it isnt meant to be shared with just anyone and everyone.
Its for those special people whove shaped you because in todays busy world, its important to take a step back and
remember those that have contributed to you being where you are. They are the ones that give you happiness; True
Happiness.
Dairy Milk is something that gives its consumers true happiness. How do we know that?
All of our survey respondents, visitors, friends, and family mentioned that Dairy Milk is a sweet indulgence, an
inexpensive paradise, a stress relief, that takes you away from the problems and gives you a moment of true
happiness.
But what exactly does true happiness mean?
From consumption to post consumption, it reminds them of the true meaning of life, the simple things that make
them happy. Because life has many big moments, but Dairy Milk is for those small moments, the extra special ones
that rekindle the inner flame. And it isnt all surface level. It has the ability to completely change ones mood, to
revitalize and re-energize and to make one nostalgic. This is what Dairy Milk has always been about and what it
should always remain to be.
So then what led to this true happiness campaign and what were the factors, locally and internationally that had to
be considered while positioning CDM this way?
Globally Cadbury has always been positioned around Joy; from their Joyville website to their fun and quirky ads.
However, they have focused on different aspects of joy in differing markets.
When we look at the European market, we see the emphasis on fun and quirkiness with a focus on an individualistic
connotation. Yet while this positioning was hugely popular in Europe, their main Western market, it received plenty
of criticism in the Asian context. This was because of the perceived lack of connection between quirkiness and the
actual product which came across as a pure and true chocolate. This was highlighted to us multiple times through
the feedback that was given to us in the frenzy as well as through casual conversation with our peers.
In Asia, however, Dairy Milk has focused more on the collectivistic meaning of joy as it struck a deeper chord with
Asians. It still focuses on aspect of joy, but with greater significance given to happiness, sharing and the overarching
theme of a celebration. Yet we feel that extrapolating this directly to the Singaporean context wouldnt be apt as
brands like Ferrero Rocher are already market leaders when it comes to the theme of celebration.
Traditionally, the Asian society has been more collectivistic than societies in the western world. There is greater
emphasis placed on the society on the whole, with particular importance placed on the family with many members
94

of the family being involved in an individuals decisions, regardless of its magnitude. This is in contrast to western
societies where individuals are allowed and encouraged to make their own decisions and be unique.
Furthermore, in the Singaporean society where the work-life balance problem is perennial, its important for every
individual to remember who/what they are working for and what its taken for them to have reached where they
currently are in their lives. Hours are long, the environment is competitive, yet the main reason that they manage to
push and constantly motivate themselves is by thinking of the well being of those they most care about- the people
that define the You. Hence, what defines a person and gives him true joy is based on the people that have helped
him throughout his journey. This forms the truest and most fundamental part of a person, just like Dairy Milk which
provides chocolate in the truest and most unadulterated form.
Hence on the whole, we believe that such a positioning that is meaningful and relevant to Dairy Milks consumers
and products while still maintaining Cadburys global brand message of joy will be ideal for a western influenced yet
intrinsically Asian society like Singapore.

Putting social media to work for consumer packaged goods brands

95

Social media, in case you hadnt noticed, is huge. According to Nielsen, people spend 25 percent of their
media time online;1 more than 500 million people devote 700 billion minutes per month to Facebook (with
its 30 billion pieces of content and 10 billion photos).2 Twitter boasts 200 million registered users tweeting
110 million tweets a day.3
I want me some of that action, think marketers. The 2011 CMO survey indicates that 5 percent of all marketing
spending currently goes to social media, with growth predicted to reach 18 percent in five years.4
And marketers are more than ready to try something new. Just as superbugs have become resistant to antibiotics, so
consumers have developed immunity to standard marketing approaches, rejecting them as commoditized and
unappealing. Social media, by contrast, offers tantalizing new possibilities.
But its not been all fun and games for marketers. Chasing social media opportunities has often turned into a
frustrating and fruitless endeavor; brands and their spokespeople find themselves unwanted guests at the party.
Nowhere is the frustration more acute than for those marketing consumer packaged goods. CPG brands, created in
and perfectly tuned for the mass-marketing era, are struggling to adjust to a new world thats all about relationships
and customer experience.
What is the most effective way for CPG brands to approach social media? What are its real opportunities? The
answer starts with a realistic and honest assessment of where a brand stands in its relationships with its customers.

The challenge for consumer packaged goods brands

The brands generally acknowledged as social media starsStarbucks, Nike, Zappos, and the likehave something
most CPG brands dont: deep and engaging relationships with consumers.
96

This allows them to take advantage of social media opportunities: creating strong communities, setting up Facebook
pages people will like, and having content generated by an avid tribe of followers. When a brand reaches a certain
level of consumer engagement, it can spend its time nurturing supporters, nudging and channeling their social media
activity.
Though every CPG brand might wish to be loved so intensely, few reach the top of the relationship ladder. When you
come right down to it, who wants a relationship with a bar of soap? Or as one commenter put it, responding to a blog
post on the death of branding: They buy something to drink because theyre thirsty. Not because they f****ng LOVE
Coke!
Simply mimicking the behavior of brands that have highly engaged audiences doesnt work; social media
applications have to be aligned with the strength of a brands consumer relationships. There are too many examples
right now of brands assuming that their customers care about them when the reality is that most customers couldnt
care less.
Its sad to see brands trying too hard. Of all the social media options, Twitter is perhaps the most difficult to use
effectively without a resonant relationship. Too often the absence of anything meaningful to talk about leads to
vacuous tweets like TGIF Tweeps! What flavor are you celebrating Fridays arrival with this morning?

Theres got to be an angle

If you think of social media as being primarily about communication, its difficult to see how most CPG brands can
use it effectively. But if you view social media as an infrastructure supporting a wide range of activities based on
connection, then more opportunities present themselves.
The spectrum extends from co-creation to entertainment, expert advice, customer service, and pure sales. Even for
this wider field of options, the depth of a brands relationship with its consumers is still the critical consideration:
The less love for a brand, the narrower its choices.
Approach 1: Recruit and support
Though many CPG brands are way down the ladder of love, some do have the strong consumer relationships that
open up the whole gamut of social media opportunities. These are the usual suspects; the brands that have worked
hard over the years to build loyalty, often in categories where people like to express their individuality through their
selections. Are you a Pepsi person or a Coke person?

97

For these lucky few CPG brands, social media presents a chance to tap into existing consumer passion and spread the
love around. If you ask passionate consumers for their help, theyre likely to not only give it, but to become even
more engaged as a result.
Coca-Cola Facebook page: Coca-Cola realized early both the perils and opportunities presented by social media.
When the Diet Coke and Mentos Experiment video exploded on YouTube back in 2006, Cokes initial reaction was
disapproval: The video didnt fit the established brand image. Some 13 million views later, Coke reevaluated its
stance and adopted the Fans First policy now in place, allowing it to capitalize on the love many consumers have for
the brand. When a couple of fans from Los Angeles set up a Facebook page devoted to Coke, the company worked
with them to build and improve it, rather than trying to shut it down or take it over. To date, over 29 million people
have likedthis page, making it one of the most popular product pages on Facebook and the 11th most popular page
overall.5

Coca-Cola Expedition 206: After this early success, Coke began exploring other ways to create compelling online
content. For Expedition 206, its most significant project to date, Coke recruited three happiness ambassadors to
visit the 206 countries and territories where Coca-Cola is sold, searching for happiness and recording their findings
on Facebook, YouTube, and Twitter. The campaign, which ended in January 2011, racked up 650 million media
impressions and engaged billions of people.6
Doritos: Among the highest-profile examples of consumer recruitment are the Doritos Super Bowl ads. For the last
five years, Doritos has run a contest encouraging consumers to produce their own Doritos ads for the big game,
holding online voting to select the winners. The ads have not only been successful in generating engagement, theyve
been big hits with Super Bowl viewers, consistently ranking at the top of ad chartsa great example of combining
social with traditional media.
Vitaminwater: Vitaminwater asked its Facebook audience to choose and name the flavor the company would launch
next. Black cherry and lime, named Connect, hit the shelves in 2010 after 40,000 Facebook users contributed input
to design the product.7
Evaluation: Recruit and support
Positives: Puts your loving fans to work for free and recruits others to the cause. Leverages brand love and presents
the most value-added ways to use social media.
Negatives: Only works if you already have passionate consumers who are prepared to invest their time in your
brandnot true for most CPG brands.

98

Approach 2: Have purpose

But what if your brand isnt one of the fortunate few who already enjoy the love and loyalty of consumers?
One possibility is to move your brand up the relationship ladder so that social media becomes a more viable option.
To this end, a growing number of companies are attempting to build purpose into their brands by associating them
with good causes.
Its true that people dont want to form a relationship with a bar of soap. But they might well be interested in
protecting the environment. Or promoting self-esteem. Or helping those in need.
Procter & Gamble has launched major efforts to build purpose in all its brands. At the 2010 Cannes Lions
International Advertising Festival, P&Gs Marc Pritchard said the company has committed itself to purpose-inspired
brand building. In his words, Consumers have a higher expectation of brands and want to know what they are doing
for the world. But it has to be authentic with a genuine desire to do it. Our brands individual purposes are brought
to life by ideas that touch peoples hearts and get them to participate in a brand community.8
Tide is just one of the P&G brands going beyond traditional advertising to establish a stronger relationship with its
consumers. The Tide Loads of Hope program provides mobile laundriesbranded vans and trucks equipped with
washing machinesso that those affected by natural disasters such as Hurricane Katrina can have clean clothes to
wear.

Doves Campaign for Real Beauty: Unilevers Dove set out to create brand purpose back in 2004 before social
media was much of a consideration, and its breakthrough Campaign for Real Beauty has inspired many other brands.
The campaigns message focused not on Dove products but on the women who use them, celebrating their real
beauty and supporting their self-esteem. The launch ad, featuring normal women of many shapes and sizes, has
become an iconic brand image.
SunChips: Few brands have boosted their green credentials as successfully as SunChips. Building on its brand name,
SunChips made commitment to the environment its core idea, even taking its Casa Grande manufacturing plant
mostly off the grid. (SunChips made by solar energy! Perfect!) More recently, the brand has launched fully
compostable packaging.
Pepsi Refresh: Pepsi, like Coke, is one of the privileged brands with a dedicated fan base. Rather than spend money
on Super Bowl ads this year, it launched the Pepsi Refresh Project, one of the largest cause-related social media
initiatives to date. Pepsi is giving away millions of dollars to fund ideas that refresh the world, using popular tools
such as online voting to encourage participation. Frank Cooper, PepsiCos chief consumer engagement officer, points
99

out that its not purely altruistic:The whole idea of allowing people to do good through our platform, we believe, will
actually serve us at the shelf. I believe we will see a sales lift coming from this.9
Evaluation: Have purpose
Positives: Aligns your brand with something larger; moves it up the relationship ladder while providing the
opportunity to do good for society at the same time.
Negatives: Difficulty of building a solid, credible connection between your brand and issues consumers care about.
Risk of exceeding consumers capacity to give a damn.
(I dont know about you, but as a consumer Im filled with dread at the thought of hundreds of product brands each
having its own brand purpose and higher level of meaning. Just as consumers have protected themselves against
relationship marketing by tossing out the deluge of direct mail and blocking email messages, so theyre likely to
defend themselves against brands with more purpose than they can handle.)
Approach 3: Entertain
Online audiences seem to have an insatiable appetite for entertainment and content, and some CPG brands have
tried, like Seymour with Audrey II in Little Shop of Horrors, to feed this appetite. For brands lower down the
relationship ladder, entertainment is the lighter version of Approach 1 (recruit and support), asking for less from
consumers while still achieving a level of interaction.

Skittles: Skittles, a pioneer in social media, continues to push the envelope with games and other entertainment to
engage consumers. It has one of the highest ranked Facebook pages (over 18 million fans), and famously turned its
website (skittles.com) over to teenage consumers for content. (The initial disastrous results were corrected with
editorial guidance.) One recent campaign involved David Phoenix, a character who challenged fans to bury him in
Skittles by clicking on the site; more than 1 million Skittles were poured onto him.10

Old Spice: Old Spice had a reputation as a musky-smelling something for Granddad until the hunky, towel-clad
Isaiah Mustafa rode into town. The man your man could smell likesucceeded and the commercials went viral not
only because people loved and wanted to share them, but because of their strong connection to the brand. That
100

award-winning campaign boosted the overall North American Old Spice deodorant business by 19 percent and the
global deodorant business by 17 percent.11 )
Evaluation: Entertain
Positives: In tune with the medium; feeds the appetite for new content; doesnt require a lot of existing brand
engagement.
Negatives: Tough to develop quality content; consumers may enjoy the entertainment but give your brand very little
attention for providing it. Impact difficult to assess, similar to that of sponsorship or event marketing.
Approach 4: Be useful
Within their categories, many brands have credible expertise to share. Giving advice is a relatively comfortable way
to test the social media waters and deliver on-brand content. (As entertainment is the light version of recruit and
support, so "be useful" is the lighter version of "have purpose.") This route is particularly effective for brands that
are respected and trusted by their customers. So we find Purina offering online advice for pet care and selection,
Tide providing expert fabric care suggestions, Neutrogena dispensing beauty tips, and Colgate giving dental health
information. Two brands have been particularly active in this arena.

Kraft Foods: Kraft is prolific in developing content for social media, including a Facebook page (recipes, meal ideas,
and the opportunity to chat with Kraft Kitchen experts), daily tips sent out via Twitter, and a library of how-to videos
on YouTube. In addition to its strong social media presence, Kraft now offers a mobile app with more than 7,000
recipes for its products, cooking videos, shopping lists, and a store locator.

101

Pampers: Launched in 2008, the Pampers Village website is a community forum for expectant mothers, providing a
wealth of information about children from newborns to preschoolers. There are downloadable appsHello Baby
gives detailed images of a typical babys weekly growth as well as a complete pregnancy calendarand purposeful
campaigns such as the Little Miracle Mission, which has supplied over 30,000 care packages to families and babies in
neonatal intensive care units.12 The site has a strong commercial aspect as well, with discounts, rewards, and a buy
now link. Although the Village itself is a website, its content carries over to Facebook, Twitter, and YouTube.
Evaluation: Be useful
Positives: Most likely to connect with the brand and build on its strengths.
Negatives: May have limited impact because it's seen or appreciated only by existing brand users.
Approach 5: Sell
More and more consumers are starting to shop for their groceries online. According to Nielsen, CPG sales were $12
billion in 2010 and sales are increasing about 25 percent every year.13Amazon is already a top 10 retail account for
Pampers.14As online shopping becomes more important, social media provides forward-thinking marketers new
opportunities to engage with consumers.
But what kind of engagement? Its generally nothing fancy. What most consumers want from CPG brands is, you
guessed it: money off. When asked, What do you want brands to offer you online? 65 percent of respondents to an
AdAge survey said coupons, ranking the opportunity to save money much higher than customer service (42 percent)
or games and entertainment (28 percent).15 The number of digital coupons available at major distribution sites
increased by over 33 percent last year.16
But once youve recruited a Facebook audience, why not continue marketing to these consumers using a social media
twist?
Huggies: According to research conducted by Colloquy,17 child care is the category where people rely most on advice
and referrals from friends and family. Huggies took advantage of this by offering parents a two-for-one choice: either
an immediate, no-strings-attached coupon for $1.50, or a $3.00 coupon to consumers who told three friends about
the deal via Facebook, instant messaging, or email.
Kleenex: At the height of the cold season, Kimberly-Clark introduced a softer version of Kleenex tissue. Its Softness
Worth Sharing promotion let people send product samples to friends and family by signing up at kleenex.com or at
participating retailers. (They could also send virtual tissues to Facebook friends.) Over 1 million mini-boxes of
tissues were distributed, increasing its share by almost four share points during the campaign period.18
102

Evaluation: Sell
Positives: Easy to measure impact; can drive sales; doesnt require strong brand engagement.
Negatives: Subject to the same drawbacks as normal sales promotions: coupons risk reducing the premium value of
the brand.
Approach 6: Listen and respond
If all else seems out of reach, you should at least be online to find out what consumers are saying about your brand.
Listening in on the social chatter is, in fact, often the first step in the adoption curve of social strategy for many
companies. Listening eventually leads to a stronger commitment, such as incorporating social media channels into
customer service and support. If consumers are complaining, suggesting, or generating ideas, you can be there to
respond.
Molson Coors: Many providers have developed platforms allowing companies to listen to and engage with
consumers across the entire social media spectrum, such as the program Radian6 built for Molson Coors. Our goal is
to be the go-to brewer in North America, and to do that we need to demonstrate a willingness to quickly respond to
consumer questions, concerns, comments, and love for our brands, explained Adam Moffat, manager of marketing
and brand public relations for Molson. We want to add value to their experience with our company and beers by
being present, engaged, and human.19
Chobani: As more and more shoppers go online, all sorts of opportunities will open up to interact with them, and
brands will have to pick and choose which ones make the most sense. How about a social network just for CPG?
Thats the idea behind Consumer, described by AdAge as the Yelp for packaged goods. Chobani, along with AriZona,
jumped in early on this particular initiative and will be giving Foursquare-like badges (called flair) to encourage
users to add information and reviews to the site.20
Evaluation: Listen and respond
Positives: A good first step; a valuable addition to traditional customer service.
Negatives: Nothing more than a toe in the water where social media is concerned.
Is it worth the effort?
Social media is far from being the only marketing activity where ROI is difficult to measure. But as with any new
medium, sensitivity to its effectiveness is particularly acute. Is it worth taking money from traditional, tried-andtested marketing programs to fund social media initiatives? Are we jumping on a bandwagon without a clear idea of
what were doing? Will it pay off in the long run?
Social media activity can be quantified, but may not be directly traceable to sales and the bottom line. What does a
well-supported Facebook page really give you? Are those fans likely to change their purchasing habits in your favor?
And even maintaining the activity level can be an uphill battle. With a high degree of commitment and energy
(measured by people liking posts or making comments), Skittles is the top CPG brand on Facebookyet less than 1
percent of its fans are active in any month (only 0.5 percent in May 2011).21 Keeping fans engaged can feel like
blowing up a tire with a hole in ita nonstop, exhausting, and ultimately fruitless activity.
Set realistic goals and keep trying

103

Social media will always be something of a force fit for CPG, given that it thrives on relationships and engagement
these brands do not naturally command. A few lucky brands that do have the requisite amount of love have found
some creative ways to take advantage of the medium, using a variety of approaches from fan pages to co-creation.
But many other CPG brands only go through the motions on Twitter, Facebook, or YouTube. These efforts often fail
because they lack a clear purpose and make unrealistic assumptions about the depth of consumer relationships. Just
copying what successful brands have done wont work. Better not to dress up if you arent invited to the party.
The good news is that social media also offers marketing opportunities that are less dependent on strong brand
relationships and therefore more appropriate for the average CPG brand. Entertainment, advice, social selling, and
just listening and responding to consumers may seem more prosaic and less ambitious than what you had in mind
for social media. But they may well be more compatible with your brand and therefore stand a better chance of
actually working.
BRAND IMAGE
Brand image is the current view of the customers about a brand. It can be defined as a unique bundle of associations
within the minds of target customers. It signifies what the brand presently stands for. It is a set of beliefs held
about a specific brand. In short, it is nothing but the consumers perception about the product. It is the manner in
which a specific brand is positioned in the market. Brand image conveys emotional value and not just a mental
image. Brand image is nothing but an organizations character. It is an accumulation of contact and observation by
people external to an organization. It should highlight an organizations mission and vision to all. The main elements
of positive brand image are- unique logo reflecting organizations image, slogan describing organizations business in
brief and brand identifier supporting the key values.
Brand image is the overall impression in consumers mind that is formed from all sources. Consumers develop
various associations with the brand. Based on these associations, they form brand image. An image is formed about
the brand on the basis of subjective perceptions of associations bundle that the consumers have about the brand.
Volvo is associated with safety. Toyota is associated with reliability.
The idea behind brand image is that the consumer is not purchasing just the product/service but also the image
associated with that product/service. Brand images should be positive, unique and instant. Brand images can be
strengthened using brand communications like advertising, packaging, word of mouth publicity, other promotional
tools, etc.
Brand image develops and conveys the products character in a unique manner different from its competitors image.
The brand image consists of various associations in consumers mind - attributes, benefits and attributes. Brand
attributes are the functional and mental connections with the brand that the customers have. They can be specific or
conceptual. Benefits are the rationale for the purchase decision. There are three types of benefits: Functional
benefits - what do you do better (than others ),emotional benefits - how do you make me feel better (than others),
and rational benefits/support - why do I believe you(more than others). Brand attributes are consumers overall
assessment of a brand.
Brand image has not to be created, but is automatically formed. The brand image includes products' appeal, ease of
use, functionality, fame, and overall value. Brand image is actually brand content. When the consumers purchase the
product, they are also purchasing its image. Brand image is the objective and mental feedback of the consumers
when they purchase a product. Positive brand image is exceeding the customers expectations. Positive brand image
enhances the goodwill and brand value of an organization.
To sum up, Brand image is the customers net extract from the brand.

104

Brand Identity

Brand Image

Brand identity develops from the source or the

company.

Brand image is perceived by the receiver or the

consumer.

Brand message is tied together in terms of brand

identity.

Brand message is untied by the consumer in the form of

brand image.

The general meaning of brand identity is who you

really are?

The general meaning of brand image is How market

perceives you?

Its nature is that it is substance oriented or

strategic.

Its nature is that it is appearance oriented or tactical.

Brand identity symbolizes firms reality.

Brand image symbolizes perception of consumers

Brand identity represents your desire.

Brand image represents others view

It is enduring.

It is superficial.

Identity is looking ahead.

Image is looking back.

Identity is active.

Image is passive.

10

It signifies where you want to be.

It signifies what you have got.

11

It is total promise that a company makes to

consumers.

It is total consumers perception about the brand.

Focus on shaping your brand identity, brand image will follow.

105