Chapter 2 IMC PDF

Brands Since the early days of marketing, brands have always been important. Consistent and long- term investment in brand awareness and brand image resulted in famous brands that sur- vived the storms of changing marketing environments and were powerful instruments of marketing...

Brands Since the early days of marketing, brands have always been important. Consistent and long- term investment in brand awareness and brand image resulted in famous brands that sur- vived the storms of changing marketing environments and were powerful instruments of marketing strategy. Later, the pressure for short-term results and the changing power balance between manufacturers and retailers has led to a situation in which patient and long-term investment in brand value no longer seems to be a priority. Short-term pro t goals seem to be at least as important as long-term investments in goodwill. However, the value of brands in modern marketing strategy, and the important role of marketing communications in build- ing and maintaining brand value, are still recognised. Brands are powerful instruments of strategic marketing and important vehicles on the road to long-term pro tability. What is a good brand? What are suitable branding strategies? Why are brands so impor- tant, and for whom? What is the value of a brand (often referred to as brand equity)? What is a brand portfolio and what different functions can brands ful l in a portfolio? And, last but not least, what is the role of marketing communications in building and supporting brands? A brand is a name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers, and to differentiate them from those of a competitor. A brand is a set of verbal and/or visual cues, and as such it is a part of a product’s tangible features. A brand name is that part of a brand that can be spoken, including letters, words and numbers, like BMW, Danone or HP. A brand mark is the element of a brand that cannot be spoken, often a symbol, design or speci c packaging, like the Mercedes logo or the Absolut Vodka bottle (Photo 2.1). A trademark is the legal designation indicating that the owner has exclusive use of the brand. Other de nitions emphasise different key elements of a brand that go beyond the basic brand elements. For instance, a brand has been de ned as ‘an identi able product, service, person or place augmented in such a way that a buyer or user perceives relevant, unique added value which matches their needs quite closely’,1 or as ‘a set of attributes that have a meaning or image and produce associations with the product when a person is considering that brand or product’,2 or ‘user imagery the brand has in terms of people’s cognitive and affective disposition to the brand’.3 These de nitions basically describe a brand from the customer’s point of view: as a web of meaningful and valuable cognitive and affective asso- ciations. Keller de nes a brand as an identi er that adds either rational and tangible dimen- sions (related to product performance) or symbolic, emotional and intangible dimensions (related to what the brand represents) that differentiate it from other products designed to ful l the same need.4 Brand associations are, in other words, intrinsic (functional: shape, taste, performance, price...) and extrinsic (imagery, lifestyle, symbolism, personality). Intrinsic dimensions are also called brand skills, whereas extrinsic dimensions are sometimes referred to as brand charisma. As to the latter, brands fi fi fi fi fi fi fi fi fi fi fi are used by consumers as a means of self-expression, to express their actual, desired or ideal self. Consumers also develop rela- tionships with brands; there is attachment, interdependence, intimacy, commitment, love, and hence loyalty. This relationship is an essential element of branding and brand value. Brand names, as well as other brand elements such as logos, URLs, symbols, characters, spokespeople, jingles, packages and signages, should be memorable, meaningful, likeable, adaptable, transferable and protectable.5 A good brand name is easy for customers to say, spell and recall. Excellent examples are Dell, Bic, Apple and Ford. To enhance brand recog- nition and avoid brand confusion, a brand name should also be distinctive and be able to differentiate the product from the competition. Besides being memorable, it is an advantage that brand elements are meaningful; for example, Mr Clean cleaning product, Vanish stain remover, Head & Shoulders shampoo and Newsweek magazine reinforce an attribute or bene t association related to the brand positioning. Brand elements should also be tested on their visual and/or verbal likeability or, in other words, on their aesthetic appeal. Over time, brand elements may lose their appeal, calling for an update. As a consequence, logos, symbols, characters and even brand names often have to be adapted (Figure 2.1). Preferably a brand is transferable both across product categories and geographic bounda- ries. The more speci c the brand name, the more dif cult it may be to extend the brand to other product categories. Nivea could easily extend its brand to the shampoo, skin care and other markets, but it will be dif cult for Head & Shoulders to extend its shampoo brand into skin care. To build a successful global brand, the brand name should be easy to pronounce in different languages. This is not the case for the soft drink brand Mountain Dew in many non-English-speaking countries nor the Polish vodka brand Wyborowa in non-Polish-speaking countries. Global brand names also have to be culture- or language- neutral in the sense that they do not evoke strange or undesirable connotations in foreign languages. Mars and IBM are good examples of this linguistic neutrality. On the other hand, the Rolls-Royce Silver Mist model name sounds strange in Germany (where Mist means manure), as does the Finnish defroster Super-Piss in certain European countries, and the toilet paper brand Kräpp in English-speaking parts of the world. Other examples are the Spanish bread brand Bimbo that is associated with an attractive, unintelligent lady in English; the Dutch bread brand Bums reminds English-speaking people of a person’s backside and German-speaking people of sex; the Egyptian airline company Misair is not appealing to French-speaking consumers because misère means misery to them.6 Finally, a brand should be available and easy to protect through registration. Therefore, no generic words should be used. Really successful brand names often become household names, i.e. the brand name is used to indicate the product category in which it was a pioneer. Examples are Xerox, Aspirin and Hoover.. Three categories of brands can be distinguished: fi fi fi fi  1. Manufacturer brands are developed and marketed by manufacturers of the product. They are supported by integrated marketing, including pricing, distribution and communica- tions. Levi’s, Danone and BMW are examples of manufacturer brands. 2. Own-label brands (also called private label brands, store or dealer brands) are developed and marketed by wholesalers or retailers. There is no link between the manufacturer and the brand. Retailers develop own-label brands to gain more power. It enables them to enhance their store image, generate higher margins and be more independent of the manufacturers of premium brands. Examples are Great Value (Walmart, US), Everyday (Colruyt, Belgium) and Tesco brand (Tesco, UK). Originally, they only competed on the basis of a price bene t compared with manufacturer brands. Several retailers have thematic private labels, such as a health and wellness sub-brand (e.g. Tesco Organic, Car- refour Bio) and a culinary sub-brand (e.g. Fior Fiore from Coop Italia, De Nuestra Terra from Carrefour Spain). Some retailers have upgraded their private labels to premium brands competing with existing premium manufacturer brands, thus without using the price argument. Examples are the Tesco venture brands. These are an advanced form of private label brands launched by Tesco in 2011 that do not carry the retailer name. Tesco venture branded goods are available in a wide range of product categories, such as Chokablok (chocolate) and Parioli (Italian dining products). In many product categories, own-label brands pose a serious threat to well- established manufacturer brands. Some retailers are using their own-label brands as the key element in their marketing strategy, and support their own brand with a limited number of well- established manufacturer brands to optimise their store image and consumer traf c. Private labels can stimulate store loyalty and store dif- ferentiation. They can improve turnover and margins, and strengthen the negotiation position of retailers vis-à-vis manufacturers. In Europe, private label brands hold high market shares.8 Brand manufacturers have to take the competition of private labels seriously at all times. Six strategic options can be chosen: (1) increase distance from private labels through innovation; (2) increase distance from private labels by investing in brand equity (offer ‘more value for money’ by stressing brand image, changing packaging, etc.); (3) reduce the price gap; (4) introduce a value- anker as a me-too strategy; (5) wait and do nothing; and (6) produce (premium) private labels. A study in the Netherlands shows that the best strategy for national brands might be to react by investing in innovations and brand image. This is preferred to ‘wait and do nothing’, although the latter may sometimes be effective (e.g. wait until the company is ready to come up with the next innovation). Producing private labels may also be a viable option, especially in product categories with high private label market shares or many possibilities for technological differentiation. Producing private labels for retailers has the advantage that it strengthens the ties with the retailer. Furthermore, it can also be pro table for the manufacturer if it has excess capacity. Finally, companies seem to react to the competition with private labels in a subtler way than to other brands. Decreasing the distance from private labels by price reductions and value- ankers is less fi fi fl fl fi  used. Obviously the latter would sour the relationship with the retailer. Further- more, it often also seems to have a detrimental impact on the company’s and market pro tability.9 3. Generic brands indicate the product category. In fact, the concept is a contradiction in terms. Generics are in fact brandless products. They are usually sold at the lowest prices. In pharmaceutical products, generics are quite successful. The end of the legal protec- tion of a patent allows the introduction of generics at lower prices. Depending upon the country, generics account for a substantial share of pharmaceutical product sales. Successful brands Giving a product a brand name does not always guarantee success. Successful brands have to meet a number of conditions:10 Successful brands are differentiated. Consumers clearly perceive them as having unique bene ts and being different from the competition. Top brands are positioned on quality and added value. Superior product quality is a prerequisite for successful branding. Often it is not only the product that is superior but also the additional service, which is less easily copied by competitors. Leading brands continually innovate to answer changing consumer tastes and to keep ahead of the competition. A leading position can only be sustained by having full support and complete commit- ment of both management and employees. Every brand contact matters: how a call to a helpdesk is answered, what happens when advice is sought or when a complaint is raised, a company’s employees and the engagement they show to the brand, etc. Especially in service branding, internal marketing (i.e. training and communicating with internal staff to convince them of the basic strategic priorities and keep them tuned to the brand prom- ise) is vital. The success of a bank, an airline or a restaurant largely depends upon the motivation and quality of the service provider (bank clerk, steward or waiter) to satisfy the customer. Brands cannot become success stories without long-term, consistent communications support, making customers aware of their uniqueness and keeping the brand’s value trustworthy. Both long-term support and the signi cant contribution of communications are important. Successful brands are not built overnight. Long-term communications, and more particularly advertising support, are a key factor in the development of suc- cessful brands. As already mentioned, brand managers are often tempted to cut invest- ments in brands to increase short-term pro tability, thereby affecting the long-term pro t potential. Table 2.1 gives an overview of Interbrand’s 2018 ranking of the world’s 30 fi fi fi fi fi  most valuable brands. Remarkably, 8 out of the 20 and 5 out of the 10 top brands are technology brands, with Apple and Google as top brands with values that largely exceed the other brands in the top 20. By far the fastest growing brand in terms of brand value is Amazon (+56%), but also most technology brands show double-digit value growth gures. The luxury brand Louis Vuitton has also grown by 23%. The biggest loser is GE (General Electric). Its value dropped by 26%. Brand strategies A brand strategy starts with the decision whether or not to put a brand name on a prod- uct. It can be argued that, for some product categories, branding is not essential and may even be useless. This is especially true for undifferentiated and homogeneous products. Since branding is an essential element in pull marketing strategies, the products for which a push strategy is indicated have less need of formal branding. The latter may be the case for industrial products such as steel and raw materials, or complex machinery like transmis- sion equipment or capacitors. However, except for generics, hardly any brandless consumer product can be imagined, even in consumer product categories such as fresh fruit, vegetables, meat and bread. Marketers cannot live with undifferentiated products and will always look for extra marketable value. A brand is an excellent vehicle by means of which a product can be differentiated from the competition. Once the decision to go for branded products has been taken, a company must decide on its overall brand strategy. This strategy will also guide the branding of new product intro- ductions. Figure 2.2 shows the basic brand strategies. First of all, a product can be given one brand name, or several (mostly two) brands can be used to position it. In the case of one brand name, four different strategies can be followed. Sticking to existing product categories and using the same brand name for all new product introductions in a product category is called line extension. This strategy is used very frequently. Examples are Magnum Signature, Coca-Cola Zero Sugar, Apple iPad and Carlsberg 0.0%. Marketers may want to expand the variety of their offerings, try to accommodate the needs of new consumer segments, react to successful competitive products, crowd the product space and deter competitive entry, enhance the image of the parent brand or try to command more shelf space from retailers. Overall, it improves the competitive position of the brand by offering consumers more vari- ety, as a result of which they are not inclined to look to competitive brands to satisfy their needs. Line extension strategies have a number of advantages. The favourable image of the brand is carried over to the new products that are marketed with the same brand name, and the past communications investments in the brand are more ef ciently used to market more products. However, a line extension also has a number of disadvantages, the most important of which is the loss of clear positioning.12 Another disadvantage is the risk of cannibalisa- tion. A new product may cannibalise the company’s other products instead of taking market share away from the competition, the net result of which could be that the line extension is not very pro table. An unsuccessful extension can also harm sales of fi fi fi  the parent brand.13 Finally, too many line extensions can lead to over-choice, confusing consumers about which option would be ideal for them, the end result of which could be that consumers put off their choice or become less satis ed with their nal choice (with too many options around, choosing means losing...).14 Brand extension, or brand stretching, occurs when an existing brand is used to market products in a different product category. Examples are Callaway (golf clubs) footwear and apparel, Dyson (vacuum cleaners) desk lamps, Fender (guitars) earbuds and Ferrari (sports cars) theme parks. The basic rationale behind brand extensions is the same as the one behind line extensions, i.e. limiting the risk of failure of new product introductions by capitalising upon the image and reputation of a successful existing brand, and at the same time trying to save the huge advertising expenses of launching a totally new brand. Research indicates that brand extensions tend to be more effective than new brand introductions in the sense that they capture more market share and require less advertising.17 However, the risks of brand extensions are great. First of all, if the brand image does not t well with the new product category or the new market segments the new introduction may not be successful.18 This parent brand – extension t can be effectuated on the basis of different dimensions. It can be product-category related, for instance a snack brand extending into the related category of ice cream, or it can be symbolic, for instance transferring the parent brand personality to a new product in a different product category. For instance, Harley Davidson transferred its lifestyle and personality associations to deodorants for men. Some- times extensions fail because of lack of t. Bic tried to launch a low-price perfume and failed. The same thing happened when the company launched Bic underwear. These new products could not effectively be linked to the traditional Bic values. Probably the two prod- uct categories were not functional enough and too affect-laden to be easily associated with the very functional Bic brand. Ahluwalia found that some individuals are more sensitive to incongruent fi fi fi fi fi  extensions than others. Consumers from East Asian countries and females, for example, are more likely to seek a connection and consequently respond more positively to moderate incongruent extensions than Western consumers and males.19 Secondly, there is the risk of brand dilution. This occurs when the brand name is used for so many differ- ent product categories that the brand personality becomes fuzzy and the brand’s value deteriorates.20 If Virgin had not continuously articulated the symbolic characteristics of its origin (i.e. fun, hip and subversive) in all its products, it could have been detrimental to use the brand name Virgin for products so fundamentally different as airlines, compact discs and soft drinks. By stressing its symbolic characteristics, Virgin seems to become virtually product independent, embodying a mere brand concept or image.21 There are numerous examples of brand extensions that were not very well received. Parhal Santana, a brand extension consultancy, took a poll of 11,000 Adweek readers. They had to pick their top three from a list of ten ‘bad’ brand extensions identi ed by Parham Santana. Among the ‘winners’ were Samsonite (suitcases) outerwear, Smith & Wesson (guns) apparel, Dr Pepper (soft drink) marinade, Zippo (lighters) The Woman perfume, and Eva Longoria’s (actress) SHe steakhouse for women.22 54 CHAPTER 2 BRANDING A special case of an extension strategy is corporate branding. In this case, the name of the company is used for all the company’s products. This strategy is often used by service companies like banks and insurance companies for which the reputation and the endorse- ment of a reliable company is very important. For the same reason, it is also very valuable for high-technology products. Potential customers have more faith in a long-established and experienced company with a good reputation, which will be able to offer consistent high-quality support in the future. Corporate branding is very similar to the other exten- sion strategies and therefore has the same advantages and disadvantages. One additional disadvantage is that a corporate branding strategy is relatively in exible. Speci c niches that are not associated with the corporate reputation cannot be ef ciently targeted on the basis of a corporate branding strategy.23 A brand strategy in which different brands are used for products or product ranges in the same product category is called multi-branding. This is frequently used by companies like Procter & Gamble and Mars. Procter & Gamble, for instance, has a number of different deter- gent brands. However, the traditional multi-branding companies also use brand stretching. For instance, Fairy and Dreft are brands used in both dishwashing liquids and laundry deter- gents. The advocates of multi-branding argue that this strategy permits ner segmentation and positioning. The key feature is differentiation: every possible segment should be serviced with a new brand. Each brand is fully capable of building its own personality and perceived bene t and of appealing to the speci c segment it is targeted at. The disadvantage of this strategy is that individual brands cannot bene t from the leveraging effect of existing brands. Companies using the multi-branding strategy will also be inclined to use new brands when they introduce a product in a new product category. But introducing new brands fi fi fi fl fi fi fi fi may also be called for when none of the company’s brands is suitable for use in the new product category. For instance, Toyota established a new name for its luxury car range, the Lexus. When a company introduces a product abroad, it can also choose between an extension or a ‘new brand’ strategy. If the existing brand has the required global characteristics, is already known in the new country, or if the company is committed to building global brands (Photo 2.2), a global strategy will be used. Globalisation increases the value of the brand and enables the company to bene t from transnational ef ciencies in advertising, since TV channelstargetedatconsumersegmentsindifferentcountries,suchasEurosportandMTV, increase the ‘footprint’ of ads broadcast through these channels. Examples of global brands are Coca-Cola, Nike and Gillette. Global brands can range from being globally consistent to locally adapted. Gillette is consistent around the world because men’s shaving needs are, worldwide, more or less the same. YouTube can be situated in the middle of the continuum: it has global reach, but pursues a localisation strategy because it realises that people shar- ing the same culture will be more likely to share content. McDonald’s is locally adapted: it does use the same logo and colours, but adapts its service and products to t local needs. For example, it is an upscale delivery service in Brazil, offers teriyaki chicken strips in Japan, and its German coffee shops outsell Starbucks.24 Local brands often have a long tradition in speci c countries and are often market lead- ers in their home country. Thumbs Up is the leading soft drink in India leaving Coca-Cola behind; Efes Pilsen and Cola Turka are strong brands in Turkey; Dreft is a powerful deter- gent brand and Côte d’Or a very attractive chocolate brand in Belgium and the Nether- lands; DBS and Crescent are popular bicycle brands in Norway and Sweden, respectively. Local brands bene t, among other things, from: (1) the deep-rooted and powerful bond that has been established with local consumers (i.e. consumers often buy the brand their parents bought), (2) being perfectly adapted to unique local tastes or needs, (3) local operational and logistical advantages and (4) strong community ties. These local brands are very attractive for global companies, and more and more global companies extend their brand portfolio with local brands.28 Whether consumers prefer such a local brand above a global brand depends on whether they are global- or local-minded. The tendency towards a global or local mindset is related to people’s desire to be different (local) versus similar to others (global). Consequently, companies bene t from positioning their products in a way compatible with the mindset of their target group. Companies can also opt for dual branding strategies. Three categories of dual strategies can be distinguished. In endorsement branding two brand names of the same company are used, one of them serving as a quality label or endorsement.29 In fact, this strategy can be situated somewhere between an extension and a multi-brand strategy, and combines the advantages of both, although the disadvantages of the two combined strategies should be taken into account. An example is Kellogg’s (Corn akes, Rice Krispies, Coco Pops, etc.). fi fi fi fi fl fi fi  With ingredient branding, a brand of a basic ingredient of the product is mentioned next to the actual product’s brand name. Examples are Intel, Nutrasweet, Woolmark, Gore-Tex and Tetrapak (Photo 2.3). The advantages are that both brands can bene t from the syn- ergy effects of combining the two strong brands. Furthermore, communications costs can be shared. A prerequisite for ingredient branding is that the ingredient has to be essential, differentiating and of consistently high quality.30 Finally, in co-branding, two or more brands strategically cooperate. Co-branding can range from advertising multiple brands in one ad (e.g. featuring Shell and Ferrari together) to offering brands together and co-developing a product. Forming an alliance may be driven by the desire to leverage positive brand equity of the partner brand, to share or decrease advertising or development costs, or to gain access to new markets or distribution chan- nels. Obviously, the combination should result in a perfect perceptual t, from a product or image point of view. Brand portfolio Building a strong brand is one thing, sustaining brand equity in the long run is something else. Besides a well-balanced marketing programme and continuous and consistent inte- grated marketing communications support, it may be necessary to adapt the brand portfolio over time. A brand portfolio can be de ned as the set of all brands and brand lines that a company possesses. The rationale behind every brand portfolio should be threefold. First of all, a company should try to maximise market coverage in the sense that different market segments can be serviced. Secondly, brand overlap has to be minimised in such a way that brands are not competing among themselves. Furthermore, some overlap may be necessary, or as the CEO of Liz Claiborne put it: ‘Cannibalization is inevitable, but it’s much better to steal market share from yourself than to sit back and let somebody else do it.’33 Thirdly, every brand in the brand portfolio should have an added value for the company. For example, in 2000 Unilever decided to trim its brand portfolio from about 1,600 to 400 leading brands. Two criteria were used to select the leading brands: (1) brand appeal, meaning the appeal of the brand to the consumer and how well the brand meets the expected consumer needs over ve to ten years; and (2) prospects for sustained growth, indicating the brand potential to justify signi cant investments in technology, innovation and brand communications. Brands in a portfolio usually serve different functions and can be classi ed as bastion, anker, ghter and prestige brands (see Figure 2.3). Bastion brands provide most pro t for the company, often follow a premium price strategy, are characterised by a high level of psycho-social meaning and are generally considered as high-performance brands. In order to protect bastion brands, anker, ghter or prestige brands can be introduced. A anker brand follows a similar price–pro t ratio as the bastion brand, is also characterised by a high psycho-social meaning and perceived performance level, but usually appeals to a different, smaller market segment (niche). Fighter brands are sold at a lower price, situated between the price of the bastion and discount brands. Their quality perception is usually fl fi fl fi fi fi fi fi fi fi fi fl fi  lower than that of the bastion and anker brands. Prestige brands are high-quality, luxury brands targeted at a smaller segment, looking for status and high psycho-social meaning.34 Procter & Gamble’s shampoo bastion brand is Pantène, while Head & Shoulders can be considered as a anker brand. Philip Morris introduced Basic as a ghter brand to protect Marlboro, just as Procter & Gamble launched Bonux to protect Dash, and the Volkswagen Group acquired Seat and Skoda to safeguard Volkswagen. Finally, Toyota and Nissan have Lexus and In nity as prestige brands.35 Brand equity In the previous sections it has been argued that brands are valuable assets for marketing. Brand equity is a concept that is used to indicate the value of a brand. It is the value added to a product by virtue of its brand name.36 A distinction should be made between consumer brand equity and nancial brand equity.37 The latter refers to the nancial value of the brand for the company, the former to the underlying customer- and marketing-related components of brand equity. In practice, the concept of brand equity is used to describe both. Eco- nomically speaking, the value of a brand is the sum of all discounted future income streams attributable to the brand. Financial brand equity When looking at the balance sheet of companies marketing branded products, one generally nds only buildings, machines and inventories there. Seldom is the goodwill built up in well- known brands shown. However, whenever a company is involved in mergers or acquisitions, the nancial value of the brand portfolio becomes of great importance. Some say that the brand portfolio is the most valuable asset of a company. fi fl fi fi fi fl fi fi  John Stuart, former president of Quaker Oats, illustrated this by stating: ‘If we were to split up the company, you can have all the buildings, I will take the brands. I am sure I will be more successful than you.’ As a result, huge amounts of money are paid for brand portfolios. Nestlé took over Rowntree (KitKat, After Eight, Rolo) for $4.5 billion, while analysts estimated the value at $3 billion. Similarly, the physical assets of Jaguar represented only 16% of the price Ford paid for it.38 This brand value can also easily change. How can the nancial brand value be calculated? Different calculation methods exist. Interbrand, one of the leading brand valuation companies, valuates brands based on three key components: an analysis of the nancial performance of the branded products or services, of the role the brand plays in purchase decisions, and of the brand’s competitive strength. The nancial analysis measures the overall nancial return to a company’s investors, or its economic pro t. The role of the brand measures the portion of the purchase decision attribut- able to the brand as opposed to other factors such as price, convenience or product features. The Role of Brand Index (RBI) quanti es this as a percentage. RBI determinations are based on three methods: primary research, a review of historical roles of brands for companies in that industry, or expert panel assessment. Brand strength measures the ability of the brand to create loyalty and, therefore, sustainable demand and pro t into the future. Brand strength analysis is based on an evaluation across ten factors, relative to other brands in the industry and relative to other world-class brands. The ten brand strengths are based on both internal dimensions and external dimensions. They are summarised in Table 2.2.39 Consumer brand equity For a marketer, consumer brand equity is more important than nancial brand value. The former type of brand equity, representing the ‘marketing value’ of a brand, can be measured in different ways, all of them trying to capture the extent to which the brand gives the product extra marketing strength. Figure 2.4 presents a framework of the components of consumer brand equity.40 Each of the brand equity factors is determined and in uenced by marketing communications strategy, and leads to a number of bene ts. These are discussed in the fol- lowing sections. In this section, the components of brand equity are looked at more closely. Table 2.2 Interbrand’s internal and external dimensions of brand strength Internal dimensions External dimensions Clarity Authenticity What the brand stands for in terms of its The brand is based on an internal truth and values, positioning, proposition, target capability. It has a well-grounded value set and it audience, consumer insights and drivers Commitment can deliver the expectations that customers have of Relevance Internal commitment and belief in the The t with customer needs, desires and decision importance of the brand; the extent to which criteria the brand receives support in terms of time fi fl fi fi fi fi fi fi fi fi fi Governance Differentiation The extent to which the organisation has the The degree to which customers perceive the brand skills and an operating model that enable to have a differentiated proposition and brand effective and ef cient deployment of brand Responsiveness experience Consistency The ability to constantly evolve the brand The degree to which a brand is experienced as and business in response to or anticipation of consistent across all touchpoints and formats challenges and opportunities and market Presence The degree to which a brand feels omnipresent and is perceived positively by customers and opinion formers across media Engagement The extent to which customers show a deep understanding of, active participation in, and a strong sense of identi cation with the brand A well-known brand is more valuable than an unknown brand. Consumers have more faith in a well-known brand. A distinction can be made between deep and broad brand awareness. Deep brand awareness means that the brand comes to mind easily and enjoys high top-of-mind awareness. Broad brand awareness refers to the fact that the brand comes to mind often, in different usage situations.41 Deep and broad awareness are necessary to penetrate the consideration set of consumers. The more a brand is in the consideration set of consumers, the greater the chance that it will be purchased and that consumers will fi fi  become loyal to it.42 Furthermore, brand awareness leads to more interest and processing of advertising for the brand, thereby enhancing the effectiveness of marketing communica- tions.43 Brand awareness is more than just being aware of the fact that the brand exists. It also includes knowing what the product stands for, and its attributes and characteristics, such as the brand logo, the manufacturing company, functional, situational and symbolic characteristics, price, quality, performance and advertising characteristics. Performance refers to the extent to which the product meets the customer’s utilitarian, aes- thetic and economic needs and wants.44 The utilitarian needs are largely grasped by the attrib- utes and the bene ts that the product provides (number of calories, customer friendliness, number of ights a day, a smooth shave, etc.). Besides attributes and bene ts, there are also other dimensions that differentiate the brand and determine a brand’s performance. A nice style and design can be important to ful l the consumer’s aesthetic needs (think of how Apple changed the computer landscape by introducing colours and frivolous designs). Price is impor- tant because consumers may infer from the price whether the product is cheap or expensive, and whether they can trust it or not. Perceived quality is the consumer’s subjective judgement about a product’s overall quality, its excellence and superiority relative to alternatives.45 Qual- ity and superiority are extremely important because they largely determine brand purchase.46 Brand imagery47 is related to how well the brand ful ls consumers’ psychological and social needs. It refers to how consumers think about a brand in an abstract way rather than to what consumers believe the brand really does. Brand imagery pertains to intangible brand aspects that can become linked to the brand by customer experience, marketing communi- cations, word of mouth, etc. A rst intangible association that consumers can make with a brand is user image. A brand’s user image should correspond to the target group’s actual or ideal self to be effective.48 A second type of intangible association pertains to usage imagery. Usage imagery indicates which usage situations consumers associate with a brand or prod- uct. For example, most consumers would think that it is more appropriate to drink a soft drink in the afternoon or evening than at breakfast. Likewise, a smoking jacket would be highly unsuitable to visit an amusement park, but has a perfect t with a gala party. Private label products may also be perfect for private use, but not for gift giving. As a third type of intangible associations, brands can also have a symbolic meaning or a personality. Brand personality can be de ned as the set of ‘human personality traits that are both applicable to and relevant for brands’.49 A brand’s personality is stronger if its ele- ments are deliberately co-ordinated and if the personality is kept consistent over time. In 1997, Jennifer Aaker developed the Brand Personality Scale (BPS) to measure a brand’s per- sonality.50 The BPS distinguishes ve personality dimensions: (1) sincerity (down-to- earth, honest, wholesome and cheerful), (2) excitement (daring, spirited, imaginative and up-to- date), (3) competence (reliable, intelligent and successful), (4) sophistication fi fl fi fi fi fi fi fi fi  (upper class and charming) and (5) ruggedness (outdoorsy and tough). In her US study, MTV scored highly on excitement, CNN on competence, Levi’s on ruggedness, Revlon on sophistication and Campbell on sincerity. However, in a later cross-cultural study in Japan and Spain, only three of the ve factors emerged. Furthermore, Aaker did include not only personality items in her scale, but also user characteristics such as male, female, upper class, Western, etc. To solve the foregoing shortcomings, a new scale was developed and it proved to be robust in the USA and the ten different European countries in which it was tested. The new measure also consists of ve dimensions, but shows more af nity with the Big Five of human per- sonality than Aaker’s dimensions do: (1) responsibility (down-to-earth, stable, responsible), (2) activity (active, dynamic, innovative), (3) aggressiveness (aggressive, bold), (4) simplicity (ordinary, simple) and (5) emotionality (romantic, sentimental).51 In the current competitive environment, engineering brand symbolism and a brand personality are becoming more important. The success of Lego, for example, is linked not only to its physical attributes, being the simple and distinctive Lego bricks, but also to the psychological meaning of a company committed to fostering creative imagination.52 Finally, brand feelings or consumers’ emotional responses to the brand are an important element of brand equity. For example, warmth, fun, excitement, self-respect, social approval and security are considered as important types of brand-building feelings.55 These feelings may have become associated to the brand by means of its marketing communications programme or the experiences the consumer had with the brand. They may also stem from the attributes or bene ts consumers associate with the brand. The relation between attributes and consumers’ end-values/feelings can be revealed by the ‘means–end chain’. The structure of the ‘ladder’ of meanings that a brand can deliver is often presented as a ‘means–end chain’, with six levels (associations).56 First of all, a brand suggests a number of both concrete and abstract attributes. Concrete attributes can be the Absolut Vodka bottle or the lubricating strip on a Gillette razor. Abstract attributes can be the level of safety technology in a Volvo car or the good taste of Danone yoghurt. These attributes lead to functional and psycho-social bene ts. A functional bene t of Elsève hairspray is that you avoid sticky hair. The psycho-social bene t of Nespresso coffee may be that guests feel happy and have more fun drinking it. Finally, brands are also associated with instrumental and end-values. Using Dolce & Gabbana perfume may enable you to impress others (instrumental values), leading to a higher level of self-esteem (end-value). The concept of means–end chains is derived from the fact that the attributes (means) lead to bene ts, which eventually lead to values (ends). For instance, Dorito crisps are made of corn and have a special avour; as a result, they are tasty and guests have more fun and enjoy visit- ing you, which makes you a good host, leading to the desired end-value of higher self- esteem. The nal goal of consumption and brand choice is to satisfy end-value needs. In assessing brand association structures, not only should the evoked associations be measured, but also their desirability, strength and uniqueness,57 i.e. the extent to which customers value the associations they make, and the extent to which the brand is perceived to be the only one that evokes that particular set of associations. fi fi fl fi fi fi fi fi fi fi  Other assets also determine brand equity, such as the number of stores carrying the brand, the percentage of people that have easy access to the brand, shelf space, patents and trademarks, quality of staff, labels, etc. The rst four factors of brand equity do not imply any real behaviour on the part of the consumer. Evidently, real brand strength will be translated into consumers buying the brand and being loyal to it. Behind every powerful brand stands a group of loyal consumers. In fact, the real company asset is brand loyalty, not the brand itself. Different levels of loyalty can be distinguished (Figure 2.5). Evidently, a strong brand implies that as many customers as possible are satis ed, committed buyers. Not only will committed buyers repurchase the brand, but also they will actively promote your brand to others and function as real ambas- sadors. Striving for customer loyalty is also a cost-saving strategy. Research indicates that the cost of attracting new customers can be as much as six times greater than the cost of retaining existing customers.58 One way to retain loyal customers and committed buyers is to address marketing programmes in such a way that consumers are offered an experi- ence instead of a product. For example, marketers and consumers can jointly build brand communities where brand experiences can be built and/or shared. A brand community is ‘a specialised, non-geographically bound community, based on a structured set of social relationships among users of a brand’.59 Jeep, for example, organises brand fests such as Jeep Jamborees (regional rallies focusing on off-road trail driving), Camp Jeep (national rally offering lifestyle and product-related activities) and Jeep 101 (off-road driving course), all attracting a wide range of Jeep owners and their friends. Even Jeep owners who come to the event with a feeling of being different from the others seem to leave the event believing they belong to a broader community. Brand communities also exist for Harley-Davidson (Harley Owner Groups, HOGs) and Apple. By managing their communities in the right way, companies can build erce loyalty, enhance marketing ef ciency and increase their brand’s equity.60 Certainly, customers who feel they belong to a brand community will remain brand loyal. Moreover, the experiences gathered by means of the brand community increase word of mouth, leading to many friends also buying the brand. fi fi fi fi  Bene ts of branding Strong brands have a number of bene ts for the company, the retailer and the consumer.61 They help the consumer to locate and identify products and evaluate their quality. This makes it easier for the consumer to develop attitudes and expectations. A brand name serves as a shorthand label for a large bundle of associations and the whole brand personality. Branding makes shopping more ef cient in that it reduces the amount of decision-making time required and the perceived risk of purchase, as a result of the fact that a brand prom- ises a constant level of quality. It gives consumers the ability to assess quickly the value and quality of new products by association with a well-known brand name. Furthermore, the consumer derives a psychological reward, since some brands, like Rolex or Lexus, are regarded as status symbols. Finally, branding increases the innovation potential of manu- facturers, thus leading to more variety and consumer choice. Retailers also bene t from strong brands because they improve the image of the store, and as a result attract customers. Strong brands often result in lower selling costs and a higher inventory turnover. Furthermore, retailers bene t from the marketing support the brand gets, by means of advertising, sales promotion and in-store communications. Last but not least, manufacturers bene t greatly from high-equity brands. In Table 2.3, the bene ts for the manufacturer are summarised per brand equity component. High brand awareness puts the brand in the evoked set of many consumers, and may even give it a promi- nent place in this evoked set. The more a brand is in the evoked set of consumers, the more probable it becomes that the consumer is going to buy it. Promotional support is facilitated. Well-known brands are also capable of developing favourable attitudes and perceptions more easily, again leading to more sales. Additionally, well-known brands can lead to more interest and trust by retailers, resulting in easier access to the distribution channel. Well- known brands also increase the power of the manufacturer over the retailer. As already mentioned, a brand name serves as a shorthand signal for favourable brand associations. Brand awareness also gives the company and the brand a sense of trustworthiness and the image of commitment. Good product performance and higher perceived quality give the consumer a good reason to buy the product, but also the right user image or brand personality induces people to buy the product. Higher perceived quality as well as a positive brand personality and higher customer loyalty give the company the opportunity of charging a premium price. Further- more, it protects the company against future price competition. Positive brand imagery, strong brand-evoked feelings, good performance and high-quality perceptions enable the manufacturer to create a differential advantage, to build up a defence against the competi- tion and to target and position products in a more sophisticated way. The same brand equity fi fi fi fi fi fi fi  Table 2.3 Brand equity components and branding bene ts Brand equity components Bene ts Brand in evoked set In uence on attitude and perceptions Brand awareness Anchor for associations Signal of substance/commitment Price premium Differentiation/positioning Product performance/perceived quality Reason to buy Channel member interest Brand extension potential Differentiation/positioning High price premium Imagery associations (user type, brand Memory retrieval potential personality, history, feelings) Reason to buy Brand extension potential Reduced marketing costs Trade leverage High brand loyalty Attracting new customers Time to respond to competitive threats fi fl fi  components also give the manufacturer an ef cient base for line or brand extensions. The image and personality of the brand are easily carried over to the new product, giving it a head start. An extensive set of brand associations helps the consumer retrieve information from memory, thus facilitating the purchasing process and biasing it towards the brand. A strong brand is capable of fostering brand loyalty. It is a vehicle in forging stable relationships between the consumer and the manufacturer. It reduces the marketing cost, because it is cheaper to retain an existing loyal customer than to win over a new one. Brand loyalty leads to more support from the distribution channel and makes the company less vulnerable to competitive action. Overall, the most important consequence of possessing strong brands is that it can generate higher and more stable sales and pro ts. Marketing communications and brand equity Marketing communications are the voice of a brand. In general, the role of marketing communications is to inform, persuade and remind consumers of the brand essence and associations, to engage consumers in a dialogue and to build relationships, or even a brand community. Marketing communications play a vital role in building, maintaining and devel- oping brands. A number of communications tools can be used to build and reinforce brand equity. Others, however, should be avoided or used carefully. High advertising spending and invest- ing in corporate social responsibility initiatives are examples of brand-building activities. Frequent use of price promotions, on the other hand, dilutes the brand in the long run and can therefore be classi ed as a brand-harming activity. Indeed, price cuts and other types of immediate material incentives may reduce the quality perception of brands and the potential of the brand to command a premium price. On the other hand, loyalty promotions may serve both as a reward for loyal customers and as a means of enhancing the loyalty-creating effect of brand strength with new customers. Direct mailings used in a ‘junk mail’ way could also harm the brand. A beautiful and convincing image campaign may be completely overturned and destroyed by frequent, straightforward, hard sell direct mailing campaigns. On the other hand, public relations, if well handled, and corporate image-building can be valuable brand-building activities for corporate brands. McDonald’s did not open a restaurant in Moscow because of its imme- diate pro t potential. The worldwide coverage of the event in the media gave it massive free publicity and positioned the company as very international and forward-looking. On the other hand, Perrier reacted so clumsily to the problem of benzene in its mineral water that the image of the brand was seriously damaged.62 Consistent corporate identity and corporate image-building through packaging and design add to building and maintaining the long-term network of associations, one of the factors of brand equity. BUSINESS INSIGHT Marketing communications are crucial contributors to brand equity in several ways. A rst step in brand-building is creating deep and broad brand awareness.63 Deep awareness means that the brand fi fi fi fi fi is strongly linked with its product category and enjoys high top-of- mind awareness. Frequent advertising using slogans, baselines or jingles that make reference to the product category help to build top-of-mind awareness. British Airways, for example, used as a baseline ‘the world’s favourite airline’. Broad awareness refers to the fact that con- sumers easily think of the brand in different situations. When Febreze was launched, P&G used ads showing that the product could be used to prevent bad odours in laundry, in shoes, in curtains, in carpets, in cars, etc., which stimulated broad awareness. Once a brand node is well established in memory, it is easier to create additional links. Therefore, focusing on brand meaning or brand image comes in only after brand awareness has been established. Also for building brand image, advertising is an excellent tool. Brand image communica- tions can focus on product performance (stressing ingredients, attributes, bene ts such as product reliability, product durability, service, style, price, etc.) or on imagery (who is the typical user, when and where the product can be used, brand personality and brand val- ues, brand history, feelings, etc.). Miele, for example, works more on performance than on imagery, stressing the durability of its products. In general, print, factual ads are better for performance-building, and TV and cinema advertising are more suited to build imagery. For more on speci c advertising types (e.g. emotional ads, demonstrations, etc.), see Chapter 5. BUSINESS INSIGHT Alternating performance and imagery communications To form a rich network of associations around a brand, it is advisable to alternate performance and imagery com- munications. For example, when the Belgian airline Brussels Airlines was founded, it used print ads to create per- formance. The performance ads stressed how convenient it is to book a Brussels Airlines ticket, its cheap price, etc. Further, TV ads and online communication were used to create imagery. For example, the passionate personality of the airline was shown in an emotional TV ad where the ground crew hurried to form the sentence ‘Mr Jones, it’s a boy’ on the tarmac, when the passenger could not be reached by phone because the ight had just taken off. This same ad was used in online campaigns allowing consumers to adapt the ‘it’s a boy’ message and send it to their partner, friends, etc. Also, when a brand has been on the market for a long time, investing in communica- tions that strengthen deep and broad awareness, and that reinforce brand performance and imagery, remains necessary.64 For example, for many brands, enhancing the breadth of awareness is an important basis for future growth. If consumers choose Special K cereals not only for breakfast, but also as a snack in the afternoon, this can seriously drive up sales volume. Also, when a brand node is not regularly accessed it will become less likely that it is activated in purchase situations. Although advertising is the key tool of marketing communications when it comes to building and sustaining strong brands, it is not the only tool that can or should be used. In the spirit of integrated marketing communications (see Chapter 1), different communica- tion tools should be mixed and matched to reach an optimal effect. Red Bull, for example, invested more in below- than above-the-line communications to support its brand.65 It used buzz or rumour marketing (e.g. one of the product’s ingredients, taurine, was not allowed at rst in the EU; this created a forbidden fruit effect: What would the product be like? Would it really give an energy boost? Would it be harmful?, etc.), outdoor marketing (e.g. Minis driving in the city with a big can of Red Bull installed on the vehicle, hiring youngsters to put empty cans in discotheques and trendy places), point-of-purchase materials (e.g. Red Bull insisted on having its own fridge in discotheques and fancy clubs), and sampling in colleges and universities to create awareness. Its TV ads also served to build awareness, but added a humorous touch at the same time, which helped to fi fl fi fi convey the brand personality. Sponsoring of extreme sports events and sports athletes helped to build credibility that the brand indeed revitalises the body. Fuel nozzles in petrol stations broadened brand awareness and reminded people that Red Bull is not only about energising the body, but also the mind. No doubt, the combined effect of all these communications tools on Red Bull’s brand equity was higher than any single communications tool could have generated. In current times, social media should also not be forgotten. Involving customers and potential customers, providing them with both interesting and fun information, and having them generate unexpected or cool experiences are crucial to build a bond, make them revisit the web page and have them not only press the ‘like’ button but talk about the brand to other people. In the next chapter and the chapters on speci c communications tools, these issues will be explored in more depth. Summary A brand is a bundle of meanings; it adds either rational and tangible aspects, or symbolic, emotional and intangible dimensions to a product that differentiate it from competing prod- ucts. Brand names should be memorable, meaningful, likeable, adaptable, transferable and protectable. There are different categories of brands. To compete with manufacturer brands, distributors introduce own-label brands and generic products. Successful brands have a number of common characteristics. The products are original, of good quality and differ- entiated from the competition, and the brand is supported by the management and employ- ees, and characterised by additional service and integrated communications support in a long-term perspective. Companies can choose different strategies for their brands. Besides co-branding with other brands, an extension or multi- brand strategy can be adopted. Also corporate branding, i.e. using the same company name for all company products, is a pos- sibility. Not only does brand equity have to be built, but also it has to be sustained over time. In this respect, the brand portfolio may have to be adapted once in a while. It is important that the portfolio maximises market coverage, minimises brand overlap and is ef ciently composed. To protect the main brand (bastion brand), anker, ghter and prestige brands may be useful. Brand strength is measured on the basis of a number of factors, such as authenticity, relevance and differentiation. The marketing value of a brand, or brand equity, is composed of ve factors: brand awareness; product performance and perceived quality; imagery associations and brand feelings; high brand loyalty; and other assets such as legal protection and a good distribution network. Strong brands lead to a number of bene ts for the company, the consumer and the retailer. Brand equity is developed and supported by means of consistent, long-term, integrated marketing communications. It is important to build deep and broad awareness rst before creating a positive image. fl fi fi fi fi fi fi