Detecon Opinion Paper International Brand Positioning and Insight From Brain Research

> Opinion Paper
International
Brand Positioning
and Insight from Brain Research
2009 / 08
www.detecon.com
International Brand Positioning and Insights from Brain Research
Table of Contents
1 Executive Summary............................................................................................. 2
2 Power of the Brands – from Errors in Perception? .............................................. 3
3 Importance of Brands on Technology Markets.................................................... 4
4 Internationalization and Export of Brands............................................................ 6
5 The Non-Rationality of the Decision and the Dominance of the Implicit.............. 9
6 Understanding the Implicit System – Levels and Processes............................. 13
7 Differing Evaluations and Decisions According to Culture and Age .................. 18
8 Case Study: Export of an Emotional Positioning ............................................... 20
9 Recommended Reading.................................................................................... 23
10 The Author......................................................................................................... 24
11 The Company .................................................................................................... 25
Opinion Paper 1 Detecon International GmbH

1 Executive Summary
Are buying decisions made consciously and rationally, optimizing the benefits realized by the
purchaser? No – in actual fact, the rational actor who decides consciously and economically
is a myth. We rarely make our decisions on the basis of strictly rational deliberation. 95% of
our decisions are made at the sub-conscious level, catalyzed and steered by our emotions.
Evolution has allowed itself the luxury of control by the conscious mind for only a few
decisions.
What influence do brands have on buying decisions? If an established brand is available,

brain activity for making a rational decision is restricted even further because the decision-
maker has already found a "good" solution. Complex buying decisions in particular are made
in the sub-conscious because the capacity of the conscious mind for processing information
is limited.
The telecommunications market is characterized by rapid transformation and a large number

of complex products of similar quality, often requiring explanation. The complexity and
relatively high price of the products heighten the significance of the corporate brand for the
buying decision which is made primarily at the sub-conscious level. The corporate brand
anchors the company in this changeable market – it stands for stability and consistency.
A global corporate brand must offer consistent recognition value across national borders. In
other words, the brand positioning must be consistent over time, geographic regions, and
brand expansions during the internationalization process. The brand must not "feel" different
in the various countries; it must be positioned consistently when incorporating emotional
values, especially with respect to the sub-conscious decision-making system.
The article describes the emotional value positioning of the brand of one of the
internationally leading mobile network companies in its national companies. Over the course
of time, these companies – before their acquisition – had established differing emotional
focal points for their brands. But a mishmash of value positions in the different national
companies must not be allowed to continue under an international brand.
Taking as his example the market entry of an internationally successful provider into
emerging markets, the author analyzes the difficult brand positioning of a newcomer while
facing the competition. Findings from neurology offer valuable information. The values of the
international brand must promise the national consumers a better reward than the brands of
the competitors do.

2 Power of the Brands – from Errors in Perception?
Human perception does not provide an exact picture of reality. Incoming stimuli are
perceived and immediately interpreted in their perception. Although this lightens the
cognitive burden, it implicitly allows room for errors in interpretation. In fact, the perception of
a stimulus is dependent on the context in which it is received. The perceived attributes of a
stimulus are a mixture of the actual attributes of the stimulus and the past and
simultaneously perceived other stimuli.
There are simple experiments which reveal the interpretation errors in perception. The
results of such an experiment were used by Daniel Kahneman in his Nobel Prize speech in
2002. He demonstrated the limited rationality of human judgment and decision-making.
Figure 1 shows the effect of framing on the left-hand side. Two small, gray squares, each of
them embedded in larger squares of a different color, are shown here.
Optical Illusion Used in the Nobel Framing Illustrated by the Example of

Prize Speech by Daniel Kahneman in Two Mobile Network Operators in
2002 Great Britain
Pay as you go Pay as you go
Source: Daniel Kahneman, Nobel Prize Speech 2002, Detecon 2008
Figure 1: The Framing Effect
The graphic causes the viewer to make two errors in his perception: the inner squares
appear to lie in front of the large squares, and they appear to be different shades of gray.
Neither of these perceptions is correct! The color of the inner squares is the same, and the
squares are not raised. Our perception, our brain interprets these graphics on the basis of
our experience and attributes meanings and features to the inner squares that they do not
possess at all. The background – in this case, the large squares – really does influence our
perception of the figures in the center. The background radiates effects onto the figure, the
inner square.
This figure-background principle serves as an analogy to the effect of brands. Brands have
the effect of a background. A corporate brand in the background radiates an effect onto the
products offered by this firm. A product brand influences the perception of the product
properties.
The right-hand side of Figure 1 illustrates the interpretive perception of products. A fictitious
mobile network product line in Great Britain, easymobile, is shown on the far right. People
who know the British market will attribute a higher value to the Vodafone product than to the
product of the same name from easymobile, even though the product names are identical!
And yet the person who knows the brand prefers the Vodafone product, provided the price is
the same. This decision is a consequence of the radiant effect of the corporate brand in the
background.

3 Importance of Brands on Technology Markets
Fa soap, Palmolive dishwashing liquid, or Kellogg's Corn Flakes are products which have
been available in the categories soap, dishwashing liquid, or corn flakes for decades.
Product categories for consumer goods develop very slowly; the creation of new categories
is rare. That is why brands in this sector are derived above all from product categories.
Proctor & Gamble, for example, one of the most successful consumer goods companies in
the world, prefers a "house of brands" brand architecture. The spotlight is clearly on product
brands such as Pampers, Ariel, Duracell, Head & Shoulders, or Gillette. But people rarely
know that these brands all belong to Proctor & Gamble. The corporate brand is relatively
unimportant for the purchase.
This permanence of product categories and of the related quality products does not exist on
technology markets, which are characterized by rapid transformation and progress. Product
categories come and go, frequently within a period of just a few years. And even if the
categories remain relatively stable, e.g., broadband Internet access, the products belonging
to the category quickly become obsolete. Only a few years ago, access of the third
generation in mobile networks was still regarded as the non plus ultra; today, the marketing
of products trumpets the advantages of 3.5G or 4G almost exclusively.
The corporate brand dominates telecommunications
The rapid transformation and continuous innovation on technology markets lead to

enormous importance of the corporate brand for technology companies. "Branded house"
brand architectures have become established on these markets. The corporate brand
dominates. Virtually no one has any associations with the prominent product brands "Callya",
"Pay as you talk anynet", "Best for texter", or "Best for talker" apart from the corporate brand
Vodafone. So it is not surprising to find that many of the most valuable corporate brands in
the world are those of technology companies.
The corporate brand anchors the company on technology markets – it stands for stability and
consistency. It represents the important umbrella brand, and its constant, representative
brand value puts its stamp on the company products. More dynamic sub-brands oriented to
transformation and change are developed at lower levels of the brand hierarchy. They
provide the ability to deal with leaps in technology, changes in customer behavior, and the
addressing of selected customer segments. The essential point is that the positioning of the
umbrella brand opens the way to flexibility in the sub-brand positioning. Otherwise, an
umbrella brand will not be able to host various sub-brands at the same time. Moreover, the
umbrella brand must remain sharp enough in its focus to guarantee sustained differentiation
from the competition.
No unequivocal determination of brand value
The value of a corporate brand is inherent in its commercial benefits. The "background" of
the brand alone makes it possible for the company to charge higher prices for its products in
comparison with a no-brand provider. The brand can also be regarded as an intangible asset
in a company's balance sheet. Although accounting principles do not allow a corporate brand
which has grown organically to be disclosed as an asset, it is permitted to show the
intangible value of an acquired company's brands.

There are many different ways to determine the value of a corporate brand. They are just as
varied as the differences in their results.1 The results of the company Interbrand are often
used for the evaluation of global brands. Among the ten most valuable brands shown in its
study "Best Global Brands 2008", six of them are technology brands: IBM, Microsoft, GE,
Nokia, Intel, and Google. The corporate brand IBM is said to have a value of $59 billion,
corresponding to about 50% of the IBM market capitalization in the middle of 2009.
If you change from one brand evaluation model to another, you may find substantial
differences in the corporate brand value. According to Millward Brown Optimor and its study
"Brandz Top 100 Most Powerful Brands" from 2007, IBM, for example, had a brand value of
$33 billion. The difference in brand value between this and the Interbrand result is a hefty
$26 billion. These differences as a consequence of the different models must be taken into
account when interpreting the results. Cross-model interpretations must generally be
regarded with more than just a grain of salt.
Brands of telecommunications operators among the most valuable in the world
Is it surprising that not one telecommunications company is to be found among the top 10
brands worldwide in the Interbrand study? In terms of brand value at any rate! Interbrand
introduced a "global criterion" during its preliminary brand selection: at least 33% of the
company's revenues must be generated outside of the home market. Not a single
telecommunications company exceeded this threshold value.
Brand values of mobile networks providers can be found in other studies. Millward Brown
Optimor has calculated the following brand values:
China Mobile $41 billion

Vodafone $21 billion
NTT Docomo $19 billion
Verizon Wireless $16 billion
Orange $10 billion
TIM $8.5 billion
Movistar $4.6 billion
In Russia, Interbrand evaluated Beeline at $5.5 billion in 2006 and MTS at $4.8 billion,
making the two brands of these mobile network operators the most valuable brands of any
kind in Russia.
1
Several hundred different evaluation models are mentioned, ranging from strictly finance-oriented approaches to
behavior-oriented and complex combination models. The descent into a description of the methods employed in
these models is not necessary for the purposes of this article.

4 Internationalization and Export of Brands
The internationalization of a telecommunications operator generally leads to the

internationalization of its brands. Vodafone, T-Mobile, Orange, or Telefónica's mobile
network spin-off movistar are well-known examples. After a number of acquisitions, Zain
holds management control over mobile network providers in 21 countries. The brand Zain
was introduced across the board in all of the countries in 2008. Even strong corporate
brands such as Celtel which had been absorbed disappeared in the course of the acquisition
and restructuring. Why is that? The commercial benefits of a brand are decisive. If the
"global value" of the corporate brand is greater than the sum of the benefits from various
corporate brands at the national level, the internationalization of the corporate brand is called
for. Having a global brand can make it possible to realize synergies. Effects of scale result in
cost reductions, e.g., in the use of media and brand production. Besides the potential for cost
savings in various areas, increased demand from the use of the global brand causes a
relevant rise in sales. Another major factor can be seen in the discounting synergies
resulting from the reduction of the business risk when a globally strong brand is used.
Trend to using corporate brands internationally
After decades of slumber in the monopolistic structures of state-owned companies, the

activities of international telecommunications providers today are heavily influenced by
international capital markets, and the significance of financial parameters – such as a high
brand value – has risen enormously.
Legend:
= 0% – <25% = ≥25% – <50% = ≥50% – <75% = ≥75% – <100% = 100%
Source: Informa 11/2007, Detecon Research 2008
Figure 2: Share of National GSM/3G Mobile Network Providers with an International Corporate Brand
Used on the Mobile Network
Figure 2 depicts the utilization of international brands of mobile network operators on their
national markets. The consolidation of mobile network operators worldwide is advanced and
is usually tied to the transfer of an international brand to a new local market.

Dos and don'ts for the internationalization of brands
Important fundamental principles of global brand management have been distilled from the
experience gained during the internationalization of brands. A global corporate brand must
offer internationally consistent recognition value. The brand must not "feel" different in the
various countries. During the internationalization process, the brand positioning must be
consistent over time, geographic regions, and brand expansions. The positioning can be
localized for the particular market, but the global brand message must remain credible.
Consumers expect more from a global brand than from a national brand:
Q Higher quality in the products. If the consumers do not determine any
difference to the national brand, the brand will not be successful;
Q Leadership in innovation. Global brands must be the innovation leaders in the
categories they occupy: first and best on the market.
Price strategies are best drawn up locally; after all, the price-benefit advantage over direct
competitors must be clearly discernible. In summary, the brand management must be
standardized globally to achieve consistency and credibility. At the same time, it must be
supported by localization of the pricing, in sales, and the integrated marketing approach so
that the required flexibility in competition is assured.
Brand identity and the export of its elements
What elements of a corporate brand must be left untouched when it is "exported" to new
markets? And in what areas can and must fine adjustments be made so that the consistency
of the brand positioning will not be questioned by consumers?
Let us look at the market Brand Benefit Promise

entry of an operator into a
market on another
continent as an example. Vision
The brand promises the
customer a selected Personality Values
Brand
target position in the
Brand Identity Communica-
market context. That is tion
why the brand identity is Competences Origin
communicated to the
consumers. Performance
Source: Burmann und Meffert 2005
Figure 3: Brand Identity – Promise of Brand Benefit

What makes up a brand identity of this kind? In the related literature, a distinction is made
among a number of dimensions:
Q Brand origin: "Where does the company come from?" The regional, cultural, and
institutional brand origin and company history are illuminated, creating credibility and
authenticity. A reference to good regional performance such as the success story of
Dubai as the showcase for successful Arabic economic policy boosts the standing of an
Arabian brand. However, cultural origin frequently proves to be ambivalent because
there are few role model cultures which are perceived exclusively in positive terms.
Religions differ from one another, and in developing countries in particular, tribal
affiliations shape daily life. So the market entry of an Arabian company in an African
country was welcomed by the Islamic part of the population, while the Christian
participants in discussion groups expressed skepticism and mistrust at the very mention
of the Arabian name of the company.
Q Brand management: "In what areas is the company competent?" Expectations for an
international brand are high. In particular, successes which are evidence of the
company's capabilities as a high-quality service provider are used in the brand
communication.
Q Brand vision: It describes the long-term development of a brand. Innovation and
technological leadership are usually highlighted. This is appropriate for the export of the
brand, especially since the competition on emerging markets frequently struggles with
quality problems.
Q Brand personality: "If the company were a person, how could it be described?" People
have a tendency to anthropomorphize inanimate objects, leading to a simplification of
interaction. The image campaigns for corporate brands in particular realize this personal
representation. Certain character traits often used can be transferred to the international
level: calm, firm, likable, and successful are pleasant traits of the representative figures.
Such traits can often be used across cultural boundaries. But the advertising material
which is used generally changes fundamentally owing to differences in clothing, skin
color, and appearance. The thoughtless use of picture material in other cultures and
regions can be disturbing and create distance.
Q Brand performance describes the functional customer benefits of the products offered on
the market. If an international provider with high ambitions enters a mobile network
market with a low-quality product for the poorer classes of the society, this will
undoubtedly undermine his global brand positioning.
Q Brand values are the emotional components of the brand identity. The latest findings
from psychology and brain research prove that they are of great, perhaps even
dominant, importance for the buying decision. Just like decisions made for non-rational
reasons, interpreting human perception results from emotionally based processes in the
brain. That is why a neural evaluation system based on emotions is the key to
understanding the way a brand functions and what power it has.
Important rules for brand management will be derived from this understanding in the
following chapters.

5 The Non-Rationality of the Decision and the

Dominance of the Implicit
Is there a relationship between emotions and buying behavior? Buying decisions are made
consciously and rationally, optimizing the benefits realized by the purchaser – aren't they?
No; in actual fact, the rational actor making conscious, economic decisions is nothing more
than a unreliable simplification by economists for the purposes of their work. During the last
two decades, a number of different experiments have thrown more light on the way the
decision-making process works. People tend to avoid losses, risks, and uncertainties to a
degree which is not rationally explainable. They also tend to make decisions according to the
framework of the particular situation – the concept of framing.2
The discovery of just how much people tend to be fair and reject unfairness is
groundbreaking in this respect. Experiments have been conducted in countries with a low
per capita income. People are willing to do without a substantial amount of money if, by
doing so, they can prevent an unknown and unfair opponent from receiving a larger sum of
money. If the opponent were obviously a computer, they would accept the money even if this
meant that the computer would win. This is completely illogical in the sense of optimization of
benefits by an economic actor.
The economic actor who decides rationally is a myth
For a long time the observation of this "anomaly" was not enough to replace the image of the
rational agent. It was not until insights from behavioral research and into the actual
processes taking place in the brain became available that the necessary foundation for the
latest research and revolutionary postulates was laid. We rarely make our decisions on the
basis of rational deliberation. The reality is that we have brain structures in which – catalyzed
and steered by emotions – decisions are made without us consciously noticing.
How can such a decision-making process be described if not as rational? What are the
driving factors, and what predictions can be made? Putting it differently, how can this new
knowledge be utilized to predict and influence buying decisions through brand management?
The hypothesis, based on empirical facts derived from behavioral experiments, has been put
forward that there are at least two different systems2 in the human brain which play a role in
making decisions: the implicit and the explicit system.
Two systems in the brain making decisions: implicit and explicit
The explicit system is the controlling consciousness known to us which rationally – on the
basis of analytical capabilities – makes decisions. So what is the implicit system which
makes decisions? It is a system which allows decision-making processes to run
automatically in our brains, faster than any conscious deliberations. We human beings do
not have any conscious access to these processes and therefore do not have any control
over them.
2
Kahneman calls them System 1 and System 2.

This implicit system has developed over the course of our evolution and is also found in
animals. It became a part of our being because it enabled living creatures to make decisions
vital for survival rapidly and to solve problems quickly. It was not important during this
evolutionary development to implement logic in its pure form or to follow normative axioms.
So when a person makes a decision without the participation of his or her controlling, rational
consciousness, reason in its pure form is not reflected in that person's behavior. That is why
we find inconsistencies between empirically observed decisions and predictions made on the
basis of an assumption that people act economically and reasonably.
We make 95% of our decisions without conscious thought
How does this implicit system work? Using neurological technologies such as functional
magnetic resonance imaging or positron emission tomography, researchers have succeeded
in revealing more of the secrets of the "black box" known as the human brain. The implicit
system – our autopilot – functions through emotions. Emotions are specific, consistent
conditions in the brain. Feelings are the personal perception of these emotions. But not all
emotions induce feelings. Many emotions remain below the threshold of perception. In fact,
the greater part of the implicit control system works below the perception level, as described
above. Studies show that 95% of our decisions are made sub-consciously, i.e., by the
implicit system.
Why has evolution allowed itself the luxury of accepting control by the conscious mind in only
a few cases? The answer is simple: it is above all an issue of energy efficiency and capacity.
The conscious mind has a capacity problem when processing information. Every second, the
brain receives 10 million bits from the eye, 1 million bits from the ear, 100,000 bits from the
olfactory organ, and another 100,000 bits from the senses of touch and taste combined. So
in total a person perceives about 11 million bits of information per second. The estimated
capacity for the conscious mind for information processing is 40 bits per second. In other
words, 10,999,960 bits per second must be processed, filtered, then sorted and evaluated
according to relevance in the brain without "bothering" the consciousness. These stimuli
which come in lead to a large number of sub-conscious decisions, and only 0.0004% of the
information is actually "escalated up" – owing to its assessed importance – to the
consciousness.
The conscious mind has limited capacity, is slow, expensive, and unique
Yet the consciousness gobbles up enormous amounts of energy for this low capacity of
information processing.3 From an energy technology viewpoint, it is efficient to ask the
expensive consultant "consciousness" for advice only in selected situations and otherwise to
be sparing in its use. Nevertheless, the development of the consciousness has paid for itself
for human beings from an evolutionary viewpoint.
3
The brain makes up about 2% of our body weight and consumes about 5% of the body's own energy when in
"automatic mode", i.e., when the consciousness is not being used. But if a person is thinking consciously and
intensively about something, the brain suddenly consumes 20% of the body's energy. In terms of energy
management, this is a catastrophe for an organism. This increased expenditure of energy must be compensated
by a corresponding increase in the intake of food, and food is a rare resource. So the consciousness plays the
role of a very expensive, high-class consultant for the body. When it is utilized, asked for advice, the answer is
usually helpful, but the costs of its engagement are also a burden.

Ultimately, this is what has made it the most powerful, dominating living being on the planet.
But is also true that the majority of decisions are made at "low cost" from an energy
technology view – without the consciousness.
Figure 4 depicts the decision-making process from perception to information processing. The
pyramid shape has been selected to illustrate roughly the large number of decisions made
sub-consciously in contrast to the low number of decisions made consciously.
Information Processing/Decision-making Strategy
5% made by the consciousness
Analytical
Evaluation
40 bit/s
Conscious Feelings
95% of
Decisions
decisions
are made by
the implicit Extrinsic
Factors
system (e.g., Situation)
Emotions/Sub-
conscious
Feelings Intrinsic
Factors
(e.g., Mood)
11 million bits/s Perception
Stimuli
Source: Detecon analagous to Plassmann, Kenning: "How Brands Twist Heart and Mind"
Figure 4: Perception, Information Processing, and Decision-Making
What influence do brands have on the decision-making process? Subjectively strong brands
relieve the burden on the consciousness when decisions are being made. The brain activity
of rational decision-making is restricted if a "good" solution has already been found. The
more strongly a brand is perceived subjectively, the more the implicit system takes over the
decision.
Subjectively strong brands lighten the load on our consciousness
In 2004, a distinct negative correlation between familiarity with a brand and the time required
for a buying decision was proved. The more familiar a brand is, the more quickly the buying
decision was made. This observation is also an indication of how the consciousness is
relieved of unnecessary burdens because sub-conscious processes run substantially faster.
A surprising finding was that the response time became longer the simpler the buying
decision was. The simplicity of a buying decision is a function of the number of product
properties which are to be compared. Why should the consciousness be consulted more
frequently when the comparison involves fewer product properties?

It appears that the limited capacity of the conscious mind for information processing means
that complex decisions are increasingly left up to the implicit system. Research shows that
the more people are under time pressure, overwhelmed by the information, have little
interest, or the more uncertain they are about a decision, the more the implicit system takes
charge. Psychology teaches that a maximum of five bits of information can be processed
simultaneously by the consciousness. This makes it especially suitable for making simple
decisions for which time is not critical and in which the person is interested.
Stress during the purchase weakens the role of the consciousness in making the
decision
What does all of this mean when transferred to technology markets? The markets are
characterized by rapid transformation and by a large number of complex products, requiring
explanation in part, of similar quality. Moreover, the high acquisition prices of products such
as cell phones and the related cards mean that they have the nature of investment goods.
They are expensive in comparison with other products such as food or cleaning agents
which are in demand. The high price puts stress on people because of the financial
significance of the decision. Extrapolating from the comments above, we can expect the
implicit system to become more deeply involved in such buying decisions than would be the
case for consumables with simpler products. So the owner of a strong brand may well find it
to be strategically sensible to step away from the comparability of the products. Greater
complexity of the decision weakens the position of the consciousness and strengthens the
brand as a decision criterion during selection through the implicit system.
The results are surprising because the importance of the consciousness for us human
beings is appraised as higher. Since we subjectively experience only the tip of the iceberg
through our consciousness, namely, the explicit decision-making system, we automatically
overplay the significance of this system and, with it, the significance of conscious control and
decision-making.

6 Understanding the Implicit System – Levels and

Processes
Implicit and Explicit System — Iceberg Analogy
Explicit System Above the

Q Opinion
Consciousness Surface
Q Reflection
Conscious
Consciousness Threshold Q Rationalization
Q Personality
Psychology Q Concept of Self
Q Mood
Implicit System Below the
Consciousness Surface Q Imprints
Culture Q Symbolic Meanings
Q Context
Q Brain Structures
Neurology Q Hormones
Q Neurotransmitters
Source: Analagous to Scheier, Held: "Was Marken erfolgreich macht", 2007
Figure 5: Components of the Implicit System
How does this powerful implicit system work? Understanding the way it functions opens the
doors to possible manipulation. If strong brands have the proven effect of lightening the
cortical load, how can they be placed best and structured in their significance for the implicit
system?
Figure 5 shows the essential components of the implicit system as described by

Scheier/Held. It is determined by three levels: neurology, culture, and psychology.
Everything builds on the recognition of patterns and attribution of meaning
The neurological view of the implicit system shows brain structures, hormones, and
neurotransmitters. Stimuli are perceived at the neuronal level and their meaning is
determined. When we speak of determining meaning, that first includes the recognition of
patterns. Are the perceived stimuli congruent with patterns which have previously been
recognized and stored? If the stimulus combination does not fit stored patterns, the
consciousness is called in.
If patterns, such as color, are recognized, a meaning is attributed to them neuronally. This
meaning is attributed implicitly, i.e., without conscious thought. The meanings of these
patterns are mostly established in early childhood. The particular culture is especially
important in attributing an implicit meaning to patterns. Patterns established specifically to a
culture and their meanings have been analyzed by cultural studies authorities such as
Hofstedte. Examples of such patterns include the frequently quoted symbols, rituals, and
heroes which are indications of cultural values and imprintings at a deeper level.
There are significant interpretation differences between cultures. Meanings specific to the
culture can even be attributed to colors, for example. The color red is a warning signal in the
United States of America, while in China it stands for happiness.

Sensory Symbolic
Q Noises Q Status symbols
Q Colors Q Persons (real or fictional)
Q Shapes such as heroes, role models
Q Structure Q Rituals and gestures
Q Images
Carriers of Meaning
Q Context of the experience Q Words and foreign words
Q Stories Q Accent and dialect
Q Sentences and idioms
Q Names
Temporal (contexts) Linguistic
Figure 6: Carriers of Meaning
Learning meanings through personal experience and in cultures
Meanings are also learned through personal experience; after all, the Pavlov reflex is simply
the recognition of a pattern with a learned attribution of meaning and its (positive – there is
something to eat) evaluation. The carriers of meaning, which are also used in brand
management, are shown in Figure 6. Besides simple sensory stimuli as in the case of the
Pavlov reflex, language, symbols, and contexts are relevant.
Scheier/Held determine: "The decoding of the entire cultural meaning compressed into one
signal takes a mere 1.7 seconds." The decoding here is a completely implicit process, that is,
one that runs automatically without any involvement of the consciousness. Reading an
advertising slogan in a picture advertisement usually takes much longer. The implicit
meaning of the picture is already known when the viewer begins to read, so the message is
understood against the background of the cultural meaning. The functional process of the
implicit system is broken down neurologically in Figure 7. Once the meaning of a pattern has
been decoded, the next step in making a decision in the implicit system is to follow up the
meaning with an evaluation. Are the pattern and its meaning positive or negative? Is it a
reward or a punishment? In terms of a brand, the question comes down to this: Is this brand
a reward for me?
A subjectively good brand is a reward for the brain
Experiments have determined a correlation between positive decisions and increased

activity in the reward centers of the brain, the same centers which become active when, for
example, a person eats a piece of chocolate. No activation of the reward centers is observed
in the case of negative decisions and negative stimuli; there may even be an activation of
pain centers such as the amygdala in the limbic system. So spending money really does
cause pain.
In the implicit system, the opportunity costs of spending money are evaluated in the
perception of pain. In the end, a buying decision in the implicit system comes down to the
question of whether the weighing of the factors shows a net balance of a reward. A brand is
effective when it promises a reward to the implicit system.

Perception &
Interpretation
Stimulus Recognition Effect
& Evaluation
of Pattern
Q Visual Q Pattern recognition Q Attribution of meaning Q Decision

Q Acoustic Q Comparison with Q Examination of rewards Q Attitude
previous experience
Q Taste
Q Odor
Q Touch
Source: Based on Dr. Christian Scheier, Dirk Held: "Was Marken erfolgreich macht"
Figure 7: Stimulus, Perception, Interpretation, Effect
The third level of the implicit system, the psychology, is important during evaluation. The
analysis of the potential for a reward is conducted simultaneously with the evaluation of the
general mood. If the person is in a bad mood or if he or she is under stress, the stimulus of a
brand, for example, encounters a "negative preset" in the evaluation system. The probability
that a positive buying decision will be made under these conditions is undoubtedly lower
than in a person with a positive attitude who has already evaluated the situation itself as
rewarding.
The motive systems are the jurors in making the decision
During the subsequent evaluation – to put it in simple terms – various evaluation systems
are consulted, each of which can for itself produce a degree of reward or pain. There are a
number of different so-called motive systems, independent of one another, which are
consulted at the same time. Motive systems have been given this name because they have
the task of creating a specific emotional condition in the body. One example of such a motive
system is the fear-flight safety system, which we will describe below as the balance system,
analogously to literature. Over the course of evolution, this motive system, the most
important one, has developed to assure the organism's survival and health. The goal of the
system is to protect the organism from injury, risks, threats, and, in the worst case, death.
The emotional condition it seeks to bring about is security and calm. Values which are
accordingly evaluated by the balance system as positive or desirable and therefore as
rewarding are stability, safety, home, family, friendship, a feeling of security, loyalty, and
tradition.
If a German traveler arrives at her home airport in a positive mood, eagerly looking forward
to seeing her loved ones again, and she sees a Deutsche Telekom ad with the slogan,
"Home, sweet home", the following process is triggered: once the slogan has been
perceived, it is recognized as a well-known stimulus pattern.
The cultural use of the phrase in situations of returning home and relaxation after arrival are
reflected in its meaning and forwarded to the motive systems for evaluation. The balance

system will evaluate the situation, the ad, and consequently the brand associated with it as
rewarding because it addresses many of the values which are regarded as positive.
Value models generate a map of motive systems and attributed values
Adventure Thrill
Extravagance Rebellion
Impulsivity Courage
Illustration of Rewards Model
Creativity Risk-willing Victory

Stimulation Fight
Dominance
Individualism
Spontaneity Power
Elite
Based on Häusel®
Variety Autonomy Enforcement

Fun Type Fame Performance
Freedom
Curiosity
Pride Status Efficiency
Ease Honour Diligence Ambition
Tolerance Functionality Logic Obstinacy

Openness Precision
Pleasure Fraternity
Flexibility Obedience
Poetry Justice Discipline
Cleanness Duty
Dreaming Sincerity Friendship Moral
Fa Family Fidelity Hygiene Asceticism
Sensuality Trust
Pl nta Nostalgia Health Thrift
ea sy Reliability
su Sociability e
re Homeland Quality lin
cip ol
Nature Security Tradition Dis ntr
Co
Balance
Freedom Discovery
Illustration of Rewards Model
Carefree, Fun-loving Active, Energetic

Cheerful, Lively Adventurous, Risk-taking
Free-spirited, Outgoing Unconventional,
Based on TNS®
Open-minded
Friendly, Approachable, Ambitious, Successful Empower-

Harmony Practical, Down-to-earth Assertive, Determined
Impressive, Respected ment
Open, Honest
Considerate, Thoughtful Accomplished, Capable

Trustworthy, Dependable Intelligent, Discerning
Quiet, Cautious Precise, Methodical
Stability Control
Source: Scheier, Held "Was Marken erfolgreich macht", 2007; Häusel, Brainscript 2006; TNS 2008
Figure 8: Examples of Value Maps
A specific situation is evaluated in its significance by a motive system along with the
"promised reward potential" of other motive systems:
Q Reward potential determined individually in the motive system – how positively
is the situation evaluated by the balance system, for example?
Q Importance of the individual motive system – how important is the balance
system in comparison with other systems?

Value models make it possible to describe the motive systems in their entirety.4
Figure 8 shows an overview of the reward systems used in research. The Häusel
model and the Needscope model from TNS are shown in graphic form. Taking
these models as a basis, we can work out the value-related, emotional position of a
brand in comparison with competing brands as well as rules for emotional
positioning.
Value maps are cross-cultural because genetically determined
In the same situation, different motive systems will conduct evaluations on the basis of
differing analysis criteria. Each motive system answers for itself the question, "How closely
does the meaning of the recognized stimulus pattern correspond to the emotionally desired
condition or promise to achieve this condition?"
Values which are neighbors in these models address certain motive systems in similar ways,
while they do not address at all other motive systems which are farther away. If values on
the value map are located at positions across from each other, they will lead to reward
promises only in differing motive systems. From the standpoint of a motive system, a "close"
value is rewarding while the "far away" value repels. Since these types of reward models
have been developed primarily on a neurological basis, the value map is applicable across
all cultures because of its genetic determination.
4
Generally, three basic rewards or the three most important motive systems are used as the overarching axes for
a value space. In the Zurich model of Bischof, the three basic rewards are labeled as security, autonomy, and
arousal, while the illustrative model of Hans Georg Häusel calls them balance, stimulance, and dominance.
Frequently quoted reward models and their authors:
• Kenneth Davies, Jaak Panksepp, Larry Normansell:

"Affective Neuroscience Personality Scales (ANPS)", 110 points;
• Norbert Bischof: "Züricher Modell mit KISMET", 90 points;
• Hans Georg Häusel: "LIMBIC", 50 points;
• Edmund T. Rolls: “Emotion explained";
• TNS: "Needscope-Model"

7 Differing Evaluations and Decisions According to

Culture and Age
Cultural differences are found not only in the meaning of interpreted patterns such as heroes
or symbols, but also in the importance of the motive systems. Figure 9 depicts the
distribution of consumer types and their value focus when making decisions on an emerging
market and in Germany.
Adventurer
Stimulation, Dominance,
freedom seeker status seeker
3% 6% 20%
11% 8%
6%
19%
13% 13% 10%
Control
Pleasure seeker 24% 22% seeker
32% 13%
Traditionalist,
Harmony seeker
security seeker
Legend:
= Proportion of consumer types in Germany according to used value, motive system focus when making decisions according to Häusel
= Proportion of consumer types in emergency market example according to used value, motive system focus when making decisions
Source: Emerging Market Primary Market Analysis 2007, Detecon Research 2008, Hans Georg Häusel 2008, LIMBIC ® in TWDI 2006/2007
Figure 9: Consumer Types According to Value Focus When Making Decisions in Various Countries
The variance in focus can be clearly seen. The example of the emerging market, according
to the culture studies of Hofstedte, is host to cultures of a highly collectivist nature. Belonging
to a group is important, and private life is strongly oriented to family and the social
framework. Nevertheless, the part of the population with the emotional focus "social
relationships, friendship, family, and tradition” is lower than in Germany. This is largely a
consequence of the differences in the age curve of the population.
The population in the example of the emerging market is younger. Finding a partner and
competition are more important for the population in comparison with Germany because of
their age. Finding the best partner and securing the most resources for the young are the
main drivers of people's behavior there. That is why 20% of the consumers on the emerging
market make their decisions primarily with the aim of achieving their own goals and
improving their own status. The short-term focus is more pronounced because the social
position is not as high. It is important to have control over scarce resources. Consequently,
the number of people seeking this control in the emerging market example is higher than in
Germany.

Culture, age, and sex determine the importance of the motive system
Age has a major influence on the emotional orientation and the way decisions are made in
our lives. The sharp rise in the levels of the stress and fear hormone cortisol as people grow
older means that resistance to stress declines. This encourages in turn decisions
emphasizing security, e.g., the higher quality of services demanded of mobile networks.
The relationship between the concentration of the stimulating dopamine and interest in
innovation or the utilization of innovative products is also clear. The older a user is, the more
rarely he will utilize innovative services. Such striking characteristics of usage behavior in
mobile networks based on age have been conclusively demonstrated.
As a consequence, mobile network providers have long been using the criterion of age and
the related changes in hormonal balance and behavior for market segmentation. Figure 10
shows the frequent use of the parameter "age" as a segmentation dimension. When the
significance of hormonal balance on the making of decisions is presented so clearly, it
comes as no surprise when it is pointed out that the evaluations differ between men and
women as well.
Dimension age dominant Values & usage dominant
Providers
Segment
criterion
Misr
Age
Values
Income
Usage
Work status
Unused segmentation criterion Primary segmentation criterion
Source: Detecon Research 2008
Figure 10: Age as Determining Variable in Making Decisions

8 Case Study: Export of an Emotional Positioning
What conclusions for the positioning of an internationally successful mobile network provider
brand on a major emerging market can be drawn from all of this? Valuable recommendations
can be derived on the basis of our knowledge about the function and importance of the
implicit system in decision-making, the awareness of local, cultural conditions, and the
insights from international brand management.
At the start, the positioning of the international brand must be worked out. As described
above, elements of the brand identity can be transferred to the target country. The
consistency of the brand in its international identity must be preserved, but local relevance
must also be included. The "imported" emotional values of the international brand promise a
reward to the consumers. This reward must be analyzed in a national context. The emotional
target values in this example are energy, openness, optimism, care, simplicity, reliability, and
making things possible. In the region of origin, they enable a solid brand position as a former
monopolistic provider. What does this mean? Former monopolists cannot credibly claim
many of the values. In particular, values from the area of "stimulance" and "adventure"
simply do not fit. Former monopolists do not introduce new impetus and the feeling of a new
age to the market, but instead cultivate the less exciting, conservative image, but one of
strong performance, which they have always had. As a consequence, the balance and
dominance motive systems are addressed during their brand positioning. How important are
the above-mentioned emotional values on the new market? Reference has been made to the
cultural differences in the importance of motive systems and their values. So the first step is
the analysis of the relevance of the values for the local target population. Figure 9 shows that
the values imposed by the international brand are relevant for the majority of the people in
the target country.
Second place is not enough!
Does this emotional position also work for newcomers with respect to the competition?
Answering this question requires the analysis of the positioning of the competitive brands
with respect to implicit meanings and reward promises. The brain is dominated by pigeon-
hole thinking. One pigeon hole is set up for a product category, another is dominated by a
brand.
In the pigeon hole "mobile communication", the new brand competes with the established
competitors. Each of these competitors has charged his brand emotionally, promising the
implicit system a reward for the decision in favor of his product. It has been noticed during
neurological studies that only the preferred brand – the first choice – has the effect of
reducing cortical levels. The preferred brand is like the sheet of paper on top in the pigeon
hole: the buyer sees it first and takes it or makes a decision, but the sheet underneath is
hidden and relatively unimportant. There is ample verification that only the first-choice brand
influences the buying decision. Being second in the pigeon hole is unimportant. It has also
been verified that the brand preference remains fairly stable over time. Once a brand has
positioned itself as rewarding in the implicit system, this brand can be pushed aside and
replaced only by a great effort.
What does that mean for our brand positioning?

Me-too strategy leads to failure! Differentiation is absolutely essential.
To begin with, a newcomer does not benefit at all from the pursuit of a me-too strategy and
solely the emotional occupation of the same values as established competitors. In this case,
consumers are not enticed by the promise of any new or better potential rewards and the
temporal stability of the originally preferred brand will dominate.
The promise of a reward must include prospects of substantial improvement if the brand
preference is to be changed. Differentiation in the positioning on the value map is necessary.
Nor can a newcomer credibly occupy emotional values such as tradition, reliability, and
loyalty owing to the brevity of his presence on the market and his innovative character.
Figure 11 depicts the positioning of the brands of the three relevant competitors on the
mobile network market which is to be penetrated; the interpreting perception of the emotional
values of the new provider's brand by the population is shown at the same time.
This presentation illustrates the complexity of the positioning task. There is little maneuvering
room for creation of a differentiating position if one follows solely the emotional values of the
international brand.
Adventure
Thrill
Extravagance Rebellion
= Emotional brand
Stimulation Dominance positioning
Impulsivity Courage of first provider
Creativity Risk-willing Victory
Individualism Fight Power = Emotional brand
Spontaneity Elite positioning
Variety Autonomy Fame Enforcement of second provider
Fun Type Freedom Status
Curiosity Pride Performance
Efficiency = Emotional brand
Honour
positioning
Ambition
Diligence of third provider
Obstinacy
Ease Functionality
Precision
Order Enabling = Interpretation of the
Logic
Pleasure Openness Tolerance Discipline emotional values of the
Justice
Simplicity Duty international corporate
Poetry Flexibility Moral brand of the new mobile
Dreaming Obedience Asceticism
F Hygiene network operator by the
Pl ant e
Sincerity
ea as Sensuality Trust
Friendship
Fidelity Cleanness lin population on the new
su y Family Thrift cip r ol
Reliability s t market
re Sociability
Homeland Health Quality D i on
Nature Nostalgia
C
Security Tradition
Balance
Source: Depiction in value map acording to Häusel 2008, MLI Ltd 04/2008, Detecon
Figure 11: Brand Positioning and Emotional Values of the Newcomer's International Brand
The challenge for brand management is also great when an international brand is drawn
over a recently acquired company which is already well established on a national market. In
the worst case, the emotional position of the original brand is diametrically opposed to the
focus of the new brand. This means that current customers will feel repelled by the new
brand owing to their emotional value preference. The first step here will frequently be to
leave the original focus of the emotional positioning untouched.

The consistency commandment forbids a mishmash of emotional positionings under

one brand
Figure 12 depicts the emotional value positioning of the brand of one of the internationally
leading mobile network companies in its national companies. The emotional focus of the
positioning of the national companies results from their history.
Freedom
Discovery
Goal of the
brand positioning Brand
international positioning
Country C
Harmony Empowerment
Brand positioning Brand positioning

Country D Country A
Bran
d po
Cou sitionin
ntry g
B
Stability Control
Source: TNS, Detecon
Figure 12: Disjunct Positioning of an International Corporate Brand in Wireless Networks in Various
National Companies
This sort of mishmash of value positions in the different national companies must not be
allowed to continue under an international brand as the consistency of the international
brand would otherwise be violated and its credibility would suffer, especially if there are few
barriers in terms of language and culture among the various countries. The drafting of an
internationally desirable emotional target positioning of the brand must, in this case, follow
an intensive national analysis. Finally, migration strategies for the emotional positioning must
be developed at the national level so that the synergy opportunities which are concomitant
with the international use of a brand can actually be realized in their full scope. The
inevitable negative consequence of a radical migration is a loss of current customers.
The goal must be for the brand essence of an international brand to generate a relevant,
emotional tie to the consumers across national boundaries. if the brand essence is
consistent and credible, there will be maneuvering room allowing slight adjustments of the
positioning on a local market.
Once the brand target position with the desired reward promises has been defined, the next
step, taking into account any migration which may be necessary, is the preparation of the
brand messages so that they can be communicated to the target segments.

9 Recommended Reading
Q Ambler; Braeutigam; Stins; Rose; Swithenby "Salience and Choice: Neural
Correlates of Shopping Decisions", 2004
Q Bargh, John: "Losing Consciousness: Automatic Influences on Consumer
Judgment, Behavior, and Motivation“, Journal of Consumer Research
Q Burmann, Christoph; Meffert, Heribert, "Theoretisches Grundkonzept der
identitätsorientierten Markenführung" in Markenmanagement: Identitäts-
orientierte Markenführung und praktische Umsetzung mit Best Practice-
Fallstudien, ed. Heribert Meffert, Christoph Burmann, and Martin Koers,
pp. 37-72, 2005
Q Camerer, Colin; Loewenstein, George; Prelec, Drazen "Neuroeconomics: How
Neuroscience Can Inform Economics”, Journal of Economic Literature, Volume
XLIII, 2005
Q Cameron, Lisa A. "Raising the Stakes in the Ultimatum Game: Experimental
Evidence from Indonesia“, Economic Inquiry, 1999
Q Damasio, Antonio R. "Fundamental Feelings", Nature, 413 (6858), 781, 2001
Q Häusel, Hans Georg "Brainview – Warum Kunden kaufen!", 2008
Q Hardy-Vallee, Benoit: "Decision-Making: A Neuroeconomic Perspective", 2007
Q Interbrand Zintzmeyer & Lux, "Best Russian Brands 2007", 2007
Q Interbrand Zintzmeyer & Lux, "Best Russian Brands 2008", 2008
Q Kahneman, Daniel: "Maps of Bounded Rationality: A Perspective on Intuitive
Judgment and Choice", Nobel Prize Lecture, 2002
Q Kahneman, Daniel: "A Psychological Perspective on Economics", 2003
Q Kenning; Plassmann; Deppe; Kugel; Schwindt: "Die Entdeckung der kortikalen
Entlastung" 2002
Q Millward Brown Optimor, "2007 Brandz – Top 100 Most Powerful Brands",
2007
Q Norretraders, T., "The User Illusion"
Q Plassmann; Kenning; Deppe; Kugel; Schwindt; Ahlert: "How Brands Twist
Heart and Mind: Neural Correlates of the Affect Heuristic During Brand Choice"
Q Sawhney, Mohanbir: "Branding in Technology Markets", Chaper 11, Kellogg on
Branding
Q Scheier, Christian; Held, Dirk: "Was Marken erfolgreich macht"
Q Slovic; Finucane; Peters; MacGregor: "Rational Actors or Rational Fools?
Implications of the Affect Heuristic for Behavioural Economics", 2002

10 The Author
Dr. Bert Kiel is Managing Consultant in the Competence Practice Strategy & Marketing at
Detecon. After obtaining his degree in physics at the University of Bonn, he earned a
doctorate in nuclear physics at the University of Erlangen-Nuremberg and, at the same time,
a degree in business administration at the University of Hagen, focusing on marketing,
organization and planning, and environmental economics. He joined Detecon in 2000.
Dr. Kiel has had extensive experience in the establishment of mobile network operators and
interim management and has comprehensive expertise in corporate strategy, marketing and
sales, and wholesale for fixed and mobile network operators. He has worked for a large
number of international telecommunications providers and regulatory authorities.
He can be reached at: +49 228 700 1575 or bert.kiel@detecon.com

11 The Company
Detecon International GmbH
Detecon International is a leading worldwide company for integrated management and

technology consulting founded in 2002 from the merger of consulting firms DETECON and
Diebold. Based on its comprehensive expertise in information and communication
technology (ICT), Detecon provides consulting services to customers from all key industries.
The company's focus is on the development of new business models, optimization of
existing strategies and increase of corporate efficiency through strategy, organization and
process improvements. This combined with Detecon's exceptional technological expertise
enables us to provide consulting services along our customers' entire value-added chain..
The industry know-how of our consultants and the knowledge we have gained from
successful management and ICT projects in over 100 countries forms the foundation of our
services. Detecon is a subsidiary of T-Systems, the business customers brand of Deutsche
Telekom.
Integrated Management and Technology Competence
We possess an excellent capability to translate our technological expertise and

comprehensive industry and procedural knowledge into concrete strategies and solutions.
From analysis to design and implementation, we use integrated, systematic and customer-
oriented consulting approaches. These entail, among other things, the evaluation of core
competencies, modular design of services, value-oriented client management and the
development of efficient structures in order to be able to distinguish oneself on the market
with innovative products. All of this makes companies in the global era more flexible and
faster – at lower costs.
Detecon offers both horizontal services that are oriented towards all industries and can entail
architecture, marketing or purchasing strategies, for example, as well as vertical consulting
services that presuppose extensive industry knowledge. Detecon's particular strength in the
ICT industry is documented by numerous domestic and international projects for
telecommunications providers, mobile operators and regulatory authorities that focused on
the development of networks and markets, evaluation of technologies and standards or
support during the merger and acquisition process.
Detecon International GmbH

Oberkasselerstr. 2
53227 Bonn
Phone: +49 228 7000 E-mail: info@detecon.com
Internet: www.detecon.com

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> Opinion Paper

and Insight from Brain Research

Opinion Paper 1 Detecon International GmbH

What influence do brands have on buying decisions? If an established brand is available,

The telecommunications market is characterized by rapid transformation and a large number

Opinion Paper 2 Detecon International GmbH

2 Power of the Brands – from Errors in Perception?

Optical Illusion Used in the Nobel Framing Illustrated by the Example of

Pay as you go Pay as you go

Source: Daniel Kahneman, Nobel Prize Speech 2002, Detecon 2008

Figure 1: The Framing Effect

Opinion Paper 3 Detecon International GmbH

3 Importance of Brands on Technology Markets

The corporate brand dominates telecommunications

The rapid transformation and continuous innovation on technology markets lead to

No unequivocal determination of brand value

Opinion Paper 4 Detecon International GmbH

Brands of telecommunications operators among the most valuable in the world

China Mobile $41 billion

Opinion Paper 5 Detecon International GmbH

4 Internationalization and Export of Brands

The internationalization of a telecommunications operator generally leads to the

Trend to using corporate brands internationally

After decades of slumber in the monopolistic structures of state-owned companies, the

Source: Informa 11/2007, Detecon Research 2008

Opinion Paper 6 Detecon International GmbH

Dos and don'ts for the internationalization of brands

Brand identity and the export of its elements

Let us look at the market Brand Benefit Promise

Source: Burmann und Meffert 2005

Figure 3: Brand Identity – Promise of Brand Benefit

Opinion Paper 7 Detecon International GmbH

Opinion Paper 8 Detecon International GmbH

5 The Non-Rationality of the Decision and the

The economic actor who decides rationally is a myth

Two systems in the brain making decisions: implicit and explicit

Opinion Paper 9 Detecon International GmbH

We make 95% of our decisions without conscious thought

Opinion Paper 10 Detecon International GmbH

Information Processing/Decision-making Strategy

5% made by the consciousness

11 million bits/s Perception

Figure 4: Perception, Information Processing, and Decision-Making

Subjectively strong brands lighten the load on our consciousness

Opinion Paper 11 Detecon International GmbH

Opinion Paper 12 Detecon International GmbH

6 Understanding the Implicit System – Levels and

Explicit System Above the

Source: Analagous to Scheier, Held: "Was Marken erfolgreich macht", 2007

Figure 5: Components of the Implicit System

Figure 5 shows the essential components of the implicit system as described by

Everything builds on the recognition of patterns and attribution of meaning

Opinion Paper 13 Detecon International GmbH

Temporal (contexts) Linguistic

Figure 6: Carriers of Meaning

Learning meanings through personal experience and in cultures

A subjectively good brand is a reward for the brain

Experiments have determined a correlation between positive decisions and increased

Opinion Paper 14 Detecon International GmbH

Q Visual Q Pattern recognition Q Attribution of meaning Q Decision

Figure 7: Stimulus, Perception, Interpretation, Effect

The motive systems are the jurors in making the decision

Opinion Paper 15 Detecon International GmbH