craven8ed chap9

8/8/2019 Craven8ed Chap9

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Chapter Nine

Strategic Brand

Management

McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.


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STRATEGIC BRAND

MANAGEMENT

f Challenges in Building

Strong Brands

f Strategic Brand Analysis

f Brand Identity Strategies

fManaging

Products/Brands

fManaging the Brand

Portfolio


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A product is anythingthat is potentially valued

by a target market for

the benefits orsatisfaction it provides,

including objects,

services, organizations,places, people, and

ideas

CHALLENGES IN

BUILDING STRONGBRANDS


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A brand is a name, term, sign,symbol, or design, or combinationof them, intended to identify thegoods or services of one seller orgroup of sellers, and to

differentiate them from those ofcompetitors.

American Marketing Association

Goods Versus Services

Services are intangibleconsumed at the time they are

produced, often linked to thepeople who produce theservices.*

* Leonard Berry, Services are Different, Business, May-Jun 1980, 24-30.


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Strategic Role of BrandsA strategic brand perspective requires

managers to be clear about what rolebrands play for the company increating customer value and share-holder value.

FOR BUYERS, BRANDS CAN: reduce customer search costs by

identifying products quickly andaccurately,

reduce the buyers perceived risk byproviding an assurance of quality andconsistency (which may then betransferred to new products),

reduce the social and psychologicalrisks associated with owning and usingthe wrong product by providingpsychological rewards for purchasing

brands that symbolize status andprestige.


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FOR SELLERS, BRANDS CANFACILITATE:

repeat purchases that enhance thecompanys financial performance becausethe brand enables the customer to identifyand re-identify the product compared toalternatives,

the introduction of new products, becausethe customer is familiar with the brandfrom previous buying experience,

promotional effectiveness by providing a

point of focus, premium pricing by creating a basic level of

differentiation compared to competitors,

market segmentation by communicating a

coherent message to the target audience,telling them for whom the brand is intendedand for whom it is not,

brand loyalty, of particular importance inproduct categories where loyal buying is animportant feature of buying behavior.

Source: Marketing Science Institute Report No. 97422, 1997


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Brand Management

Challenges*Internal and external forces createhurdles for product brand managers intheir brand building initiatives:

Intense Price and Other CompetitivePressures

Fragmentation of Marketsand Media

Complex Brand StrategiesandRelationships

Bias Against Innovation

Pressure to Invest Elsewhere

Short-Term Pressures

*David A. Aaker, Building Strong Brands, 1996, 26-35.


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Product/Brand Management

Planning, managing, and

coordinating the strategy for aspecific product or brand

Product Group/Marketing

Management Product director, group

manager, or marketing manager

Product Portfolio

Management

Chief executive at SBU

Team of top executives

Responsibility for

Managing Products


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Marketings Role inProduct Strategy

1. Market sensing

2. Identifying the

characteristicsandperformance features ofproducts

3. Guiding target market andprogram-positioningstrategies

Strategic brand managementdecisionsare relevant to allbusinesses, including suppliers,producers, wholesalers,

distributors, andretailers.


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Strategic BrandManagement

Brand Identity

Identity Implementation

Brand StrategyOver Time

Managing the

Brand Portfolio

Leveraging theBrand

BrandEquity

StrategicBrand

Analysis


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Strategic BrandAnalysis

Analyses Product Product

Line

Portfolio

of

Product

Lines

Market and

Customer

Competition

Brand(s)


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Tracking Product

Performance

Set PerformanceObjectives

Select Method(s) forProduct Evaluation

Identify ProblemProducts

Decide How toEliminate the

Problems


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AnalyzingBrand

Performance

Product life cycleanalysis

Financial

analysis

Product

gridanalysis

Research

studies Standardizedinformationservices

BrandPositioning

maps


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Relevant issues in PLCanalysis include:

Determining the length andrate of change of the PLC

Identifying the current PLC

stage and selecting theproduct strategy thatcorresponds to that stage

Anticipating threats andfinding opportunities foraltering and extending thePLC

Product Life Cycle

Analysis


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Product Grid Analysis Managements performance

criteria

Strengths and weaknesses relativeto portfolio

Brand Positioning Analysis Perceptual maps for brand

comparison

Buyer preferences

Other Product AnalysisMethods

Information Services

Research studies

Financial analysis


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Brand EquityEffective strategic brand management requires that we

understand brand equity and evaluate its impact whenmaking brand management decisions:

Brand equity is a set of brand assetsand liability linked to a brand, its name,and symbol, that add to or subtract

from the value provided by a product orservice to a firm and/or to that firmscustomers.*

Measuring Brand Equity. Several measures areneeded to capture all relevant aspects of brandequity.**

loyalty (price premium, satisfaction/loyalty),

perceived quality/leadership measures (perceivedquality, leadership/popularity),

associations/differentiation (perceived value, brand

personality, organizational associations), awareness (brand awareness), and

market behavior (market share, price anddistribution indices).

These components provide the basis for developing

operational measures of brand equity.* David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15.**Ibid, 102-120.


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BRAND IDENTITY

STRATEGIESBrand identity isaunique set ofbrandassociations that the brandstrategist aspires to create or

maintain. These associationsrepresent what the brandstandsforand imply a promise tocustomers from the organizationmembers.*

Four Brand Identity Perspectives

Product

Organization

Person

Symbol

* David A. Aaker, Building Strong Brands, 1996, 68.


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SpecificProduct

Line

ofProducts

PrivateBranding

CompanyName

Basis

of

Identification

CombinationBasis

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MANAGING

PRODUCTS/BRANDS

Building the

Product/Brand OverTime

Product Line Strategies

Product/Brand PortfolioStrategies

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Strategies for

Improving Product

Performance

Product mix strategy

Product lineStrategy

Add

new

product(s)

Cost

reduction

Product

improvementAlter

marketing

strategy

Eliminate

specific

product(s)

Delete

product

line(s)

Change

product linepriorities

Add new

product

line(s)

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Strategies for Brand

Strength Brand-Building Strategies

Developing the brand identification

strategy Coordinate identity across the

organization

Brand Revitalization

Find new uses for mature brands Add products related to heritage

Strategic Brand Vulnerabilities

Brand equity can be negative

Retailer private brands compete withmanufacturer brands

Major shifts in consumer tastes

Competitive actions

Unexpected events

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Motivation for changing the

product mix:

Increase the growth rate of the

business Offer a more complete range of

products to wholesalers and

retailers

Gain marketing strength andeconomies in distribution,

advertising, and personal

selling

Leverage an existing brand

position

Avoid dependence on one

product line or category

Product Mix

Modifications

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BRANDEXTENSION

LINEEXTENSION

Extensions of thebrandname toother product

categories--Similar

--Dissimilar

Minor variants of a

single product aremarketedunder thesame brandname

Brand Leveraging

Strategy

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LINEEXTENSIONS BR

AND

EXTENSIONS

Horizontal

Extension

Vertical

Extension

Another

ProductClass

RangeBrand

Co-

Branding

Up from

Core

Brand

Down from

Core

Brand

Leveraging

Alternatives

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BRAND LEVERAGING

EVALUATION CRITERIABrand Relevance/Differentiation

Capabilities/Perceived ValueMatch

Market/Segment Opportunity

Cannibalization Risks

Potential for Core Brand Damage

Clarity of Product OfferingsEstimated Financial Performance

Brand Equity Impact

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MANAGING THE BRAND

PORTFOLIO

Objectives:

Leverage commonalities to

generate synergy

Reduce damage to brand identity

Obtain clarity of product offering

Enable change and adaptation

Guide resource allocations among

brands

Source: Aaker, Building Strong Brands, 1996.

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GLOBAL BRANDS

International markets:strategic brandingchallenges

Global brands supported byincreasingly cosmopolitanconsumers in manycountries

Dont build global brands butstrive for global brandleadership

Challenge for MNCs:managing brand systemscontaining global, regional,and local brands

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Internet Brands

Interactivity enhances brand

relationships and corporate

reputation

Guidelines for a website used toreinforce an existing brand

Create a positive experience (ease

of use, value, interactive,

personalized, timely)

Reflect and support the brand

Synergy with other communication

programs

Provide home for loyalists

Differentiate with strong sub-

branded content

Source: Aaker and Joachimsthaler, Brand Leadership, 2000, 242.

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HOW MANY

BRANDS?1. Is it different enough

to merit anew name?

2. Will the brand identityadd value?

3. Are there risks inusingan existing brandname?

4. Is the new brandaviable businessventure?

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SEVEN DEADLY SINS OF


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SEVEN DEADLY SINS OFBRAND MANAGEMENT*

Failure to fully understand themeaning of the brand.

Failure to live up to the brand

promise.Failure to adequately support the

brand.

Failure to be patient with the brand.

Failure to adequately control thebrand.

Failure to properly balance

consistency and change with thebrand.

Failure to understand the complexityof brand equity measurement

and management.*Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736.

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