Kotler 2020 - Chapter 9: Branding

CHAPTER 9 – Branding: developing strong brands Mini contents Company case -Creating a premium brand: the Audi success story ◦ Best practice - The employees' social network: a great marketing A branding perspective opportunity Branding strategy: building strong brands Company case- Brand sponso...

CHAPTER 9 – Branding: developing strong brands Mini contents Company case -Creating a premium brand: the Audi success story ◦ Best practice - The employees' social network: a great marketing A branding perspective opportunity Branding strategy: building strong brands Company case- Brand sponsorship: Nordea Scandinavian Masters Chiquita: using the brand as a bridge for Company case L broadening the brand width Cornerstones of a strong brand Chapter preview Now that you've had a good look at customer-driven marketing strategy, we'll take a deeper look at branding. In recent decades, branding has become one of the major concepts in marketing theory and practice. To get it right with the marketing mix it is crucial to understand the brand the organization represents. Chapters 10-13 will deal with the marketing mix: product, pricing, marketing channels and marketing communications The brand and what it stands for provides an important background for all marketing mix decisions, hence, it is introduced here. At the start of the chapter, we take a look at an interesting branding story, that of Audi Here's a tale about one strong brand that has made a transition from being a weak derivative product of a strong and popular volume brand, to being one of the strongest premium brands in its industry. Learning objectives After reading this chapter, you should be able to: 1. Describe the fundamentals and characteristics of a brand perspective 2. Describe different situations in which brands are essential to successful marketing. 3. Discuss branding strategy - the decisions companies make in defining and managing their brands 4. Describe the fundamentals of strong brands - the decisions companies make in building and managing their brands. ____________________________________________________________________________ A branding perspective Brands are more than just names and symbols. They are a key element in the company's relationships with consumers. Brands represent consumers' perceptions and feelings about a product and its performance - everything that the product or service means to consumers. As one well-respected marketer once said, 'Products are created in the factory, but brands are created in the mind.' Brand – A brand represents everything that a product, service, organization, employer, region or person means to consumers. For example, when you hear someone say ‘IKEA', what do you think, feel or remember? What about "Pret-Á-Manger", 'Helsinki’, 'Ariana Grande’, or ‘Donald Trump'? They are also brands, and associations might be positive or negative, or a mixture. Some analysts see brands as the major enduring asset of a company, outlasting the company’s specific products and facilities. John Stewart, former CEO of Quaker Oats, once said, 'If this business were split up, I would give you the land and bricks and mortar, and I would keep the brands and trademarks, and 1 would fare better than you.' A former ceo of McDonald's declared, 'If every asset we own, every building and every piece of equipment were destroyed in a terrible natural disaster, we would be able to borrow all the money to replace it very quickly because of the value of our brand... The brand is more valuable than the totality of all these assets. Thus, brands are valuable and powerful assets that must be carefully developed and managed. In this section, we examine the key strategies for building and managing brands. But first, we`1l introduce the branded society, a concept that explains our society's strong focus on brands and why organizations attempt to build strong brands. The branded society A more globalized economy, faster communication, new vehicles for dispersing knowledge and substantial demographic change make it necessary for every organization be they multinational companies, small and medium enterprises, public organizations or NGos - to focus on branding. With the enormous amount of information and opportunities that are available, citizens need effective tools to pick up the important and meaningful messages out of all the commercial noise - that's why attractive brands have become increasingly impor- tant and there are no signs this will change in the future. The more global the markets, the, more opportunities there are, and the faster the pace of change, the more important it will be for companies to have a strong and attractive brand. The branded society refers to societies overcrowded with commercial messages and a never- Ending supply of choices and opportunities inspired by the consumption sphere, popular culture and work life to name but a few. Its emergence entails changing attitudes and power patterns. Not only business consultants and PR agencies but also marketing researchers speak of the branded society. They share the idea that navigating successfully through this constantly developing landscape of branding and market communications is difficult. Branding is much more than offering superior services and products within S known framework. The champions of branding - sometimes referred to as "icons' or 'gurus' - understand that they are in the ideology business. Thereby, they could be considered as offering people hope, community, and extraordinary stories about the near future. In this perspective, branding should no, longer be reduced to signs, graphic design, and marketing communications. Where does a branding perspective apply? We all know that companies have brands - but other organizations, e.g. municipalities, churches and unions also have brands, both in relation to their 'customers' and in relation to their employees The latter is called employer branding. Countries, regions and cities have brands, and many of them also engage actively in brand building. Universities and schools, like any other organization, have brands and they are extremely important. One can judge the status of a university by getting a list of its co-opera- tion partners. Most universities would love to co-operate with, say, Harvard Business School or London School of Economics - while few would seek to co-operate with unknown schools or those with a poor reputation, Individuals have brands, too – just think of Ariana Grande, the Pope, Jeff Bezos, Zlatan Ibrahimović or Sofia Vergara. In the past decade, there has been an increased focus on personal branding, a reflection of our brand-oriented society and indi- viduals' need to profile themselves. Employer branding Employer branding is crucial to the success of most organizations. Think of a successful organization and you will probably arrive at the conclusion that to a great extent their success relates to their employees, Successful organizations are likely to understand the mechanisms of employer branding, and because of their resulting appeal will find it easy to hire qualified people. Skilled employees like to work for organizations with strong employer brands, and with successful employer branding the organization is likely to benefit from less absenteeism, better retention levels, greater staff satisfaction and engagement, and higher profitability.^ Employer branding – Branding that builds the appeal of an employer - successfully done, this will lead to employees with better skills, less absenteeism, better retention levels, greater staff satisfaction and engagement, and higher profitability. People increasingly define their careers by who they would like to work for rather than what they would like to work with. Strong brands have always been a competitive advantage in the labour market, as underlined by a Mercedes-Benz dealership in Sydney: 'Traditionally, a car salesman was not an occupation that was viewed very highly, but I think there is a difference if you say to someone T'm a car salesman", or if you say "Tm a Mercedes-Benz salesperson" The product brings certain standards to the occupation. So we don't have much problem with recruiting sales staff.'s Young people appear to be even more sensitive to brand messages than others. First, they have grown up in a heavily branded world. From an early age, they will have started internalizing brand messages and thus for them judging brands is a normal thing. They are therefore well aware of the advantages of strong brands in terms of image, reliability and quality. Secondly, knowing what a strong brand can achieve, they will use that in planning their careers. They will have a clear idea of which companies look good on the curriculum vitae and which don't. Thus, organizations need more than ever to develop a posi- tive, authentic market image that appeals to young people. Branding strategy: building strong brands Brand equity - The differential effect that knowing the brand name has on customer response to the product or its marketing. Brand equity and brand value Brand equity is the differential effect that knowing the brand name has on consumer response to the product and its marketing. A powerful brand has high brand equity. Its a measure of the brand's ability to capture consumer preference and loyalty. A brand has positive brand equity when consumers react more favourably to it than to a generic or unbranded version of the same product. It has negative brand equity if consumers react less favourably than to an unbranded version Brands vary in the amount of power and value they hold in the marketplace. Some brands such as BMw, Coca-Cola and IKEA - become larger-than-life icons that maintain their power in the market for years, even generations. ABBA, Madonna and Rihanna may well be around for the next generation and the generation after that. Other brands create fresh consumer excitement and loyalty, brands such as Google, YouTube, Apple and Wikipedia. These brands win in the marketplace not simply because they deliver unique benefits or reliable service; rather, they succeed because they forge deep connections with customers. Advertising agency Young & Rubicam's Brand Asset Valuator measures brand strength along four consumer perception dimensions: differentiation (what makes the brand stand out), relevance (how consumers feel it meets their needs), knowledge (how much consumers know about the brand) and esteem (how highly consumers regard and respect the brand). Brands with strong brand equity rate highly on all of these dimensions. A brand must be distinct or consumers will have no reason to choose it over other brands. But the fact that a brand is highly differentiated doesn't necessarily mean that consumers will buy it. The brand must stand out in ways that are relevant to consumers' needs. But even a differentiated, relevant brand is far from being a guaranteed winner. Before consumers will respond to the brand, they must first know about and understand it. And that familiarity must lead to a strong, positive consumer-brand connection. A brand with high brand equity is a very valuable asset. Brand valuation is the process of estimating the total financial value of a brand. Measuring such value is difficult. According to Millward Brown's 2020 brand value list, Amazon is $334.6 billion, Apple $303.4, Google $303.2, Microsoft $261.1 and Visa $187.9 billion. AS late as in 2014, Google topped the Millward Brown list with a value of $158.8 billion, followed by Apple with $147.9 billion. In only six years time, the value of the highest valued brands have more than doubled. High brand equity provides company with many competitive advantages. A powerful brand enjoys a high level of consumer brand awareness and loyalty. Because consumers expect stores to carry the brand, the company has more leverage in bargaining with various actors in the supply chain, including suppliers and stores. Because the brand name carries high credibility, the company can more easily launch line and brand extensions. A powerful brand offers the company some defence against fierce price competition. Building strong brands Branding poses challenging decisions to the marketer. Figure 9.3 shows that the major brand strategy decisions involve brand positioning, brand name selection, brand sponsorship and brand development. Brand positioning Marketers need to position their brands clearly in target customers' minds. They can posi- tion brands at any of three levels. At the lowest level, they can position the brand on product attributes. For example, p&G invented the disposable nappy category with its Pampers brand. Early Pampers marketing focused on attributes such as fluid absorption, fit and disposability. In general, however, attributes are the least desirable level for brand positioning. Competi- tors can easily copy attributes. More importantly, consumers are generally not interested in attributes as such; they are interested in what the attributes will do for them. A brand can be better positioned by associating its name with a desirable benefit. Thus, Pampers can go beyond technical product attributes and talk about the resulting containment and skin-health benefits from dryness. There are fewer wet bottoms in the world because of us,' says Jim Stengel, Procter & Gamble's (P&G) global marketing officer. Some successful brands positioned on benefits are Volvo (safety), FedEx (guaranteed on-time delivery), Chanel (design) and Lexus (quality). Globally operating advertising agency Saatchi & Saatchi, founded in London, suggests that brands should strive to become lovemarks, products or services that inspire loyalty beyond reason. Brands ranging from Disney, Apple, Nike, and Coca-Cola to Google and Pinterest have achieved this status with many of their customers. Lovemark brands pack an emotional wallop. Customers don't just like these brands; they have strong emotional connections with them and love them more or less unconditionally. For example, Disney is a classic lovemark brand. As one Walt Disney World Resort regular affirms: 'Walking down Main Street and guarantee and rely on. A constant in my life. No matter what I'm going through... suddenly seeing Cinderella's castle for the first time always makes my heart jump. It's a moment I can the world is filled with magic and wonder and possibilities all over again, and I feel a wave of happiness flow over me and a smile creep back onto my face easily, not forced or painted on. A real, true smile.'10 When positioning a brand, the marketer should establish a mission for the brand and a vision of what the brand must be and do. A brand is the company's promise to deliver a specific set of features, benefits, services, and experiences consistently to buyers. The brand promise must be clear, simple, and honest. MTR, for example, offers safe and efficient travel on a limited number of routes with clean trains and punctuality that beats that of main competitor sJ (Statens Järnvägar). In contrast, Sofitel hotels offer luxurious rooms and a truly memorable experience but do not promise low prices. The strongest brands go beyond attribute or benefit positioning. They are positioned on strong beliefs and values. These brands pack an emotional wallop. Brands such as Amazon, BMW and Victoria's Secret rely less on a product's tangible attributes and more on creating surprise, passion and excitement surrounding a brand. Successful brands engage customers on a deep, emotional level. When positioning a brand, the marketer should establish a mission for the brand and a vision of what the brand must be and do, A brand is the company's promise to deliver a specific set of features, benefits, services and experiences consistently to the buyers. The brand promise must be simple and honest. Brand name selection A good name can add greatly to a product's succeSS. However, finding the best brand name is a difficult task. It begins with a careful review of the product and its benefits, the target market and proposed marketing strategies. After that, naming a brand becomes-like so often in marketing - part science, part art and a measure of instinct. Desirable qualities for a brand name include the following: (1) It should suggest something about the product's benefits and qualities (e.g. Beautyrest (mattresses), Lagamati (cooking appliances store), Intensive Care (lotion). (2) It should be easy to pronounce, recognize and remember (e.g. Avis and Dollar Store). (3) The brand name should be distinctive (Lexus, Zara). (4) It should be extendable: Amazon.com began as an online bookseller but chose a name that would allow expansion into other categories. (5) The name should translate easily into foreign languages. Chevrolet Nova didn't achieve the desired success in South America since "no va^ means 'doesn't run', and Honda had to change the name of the Honda Fitta into Honda Jazz before it was launched in Europe. (6) It should be capable of registration and legal protec- tion. A brand name cannot be registered if it encroaches on existing brand names, a rule that applies in various legal frameworks around the world. Choosing a new brand name is hard work. Once chosen, the brand name must be protected. Many firms try to build a brand name that will eventually become identified with the product category. Brand names such as Levi's, Rollerblades, Google, Gore Tex and Scotch Tape have succeeded in this way. However, their very success may threaten the company's rights to the name. Many originally protected brand names-"such as cellophane, aspirin, nylon, kerosene, linoleum, yo-yo, trampoline, escalator and thermos are now generic names that any seller can use. To protect their brands, marketers present them carefully using the word 'brand' and the registered trademark symbol. After a few decades of choosing quirky names (Yahoo!, Google) or trademark-proof made-up names (Novartis, Sanofi-Aventis, Accenture), contemporary marketing practice suggests building brands around names that have real meaning. For example, names like Silk (soy milk), Method (home products), Smartwater (beverages), and Snapchat are simple and make intuitive sense. But with trademark applications soaring, available new names can be hard to find. Try it yourself - pick a product and see if you can come up with a better name for it. How about Moonshot? Tickle? Vanilla? Treehugger? Simplicity? Mindbender? Google them and you`'ll find that they are already taken. To protect their brands, marketers present them care- fully using the word brand and the registered trademark symbol. Companies often go to great lengths to protect their names and brand symbols. Brand sponsorship A manufacturer has four sponsorship options. The product may be launched as a national -brand (or manufacturer's brand), as when Sony and Kellogg's sell their output under their own brand names. Or the manufacturer may sell to resellers who give the product a private brand (also called a store brand or distributor brand). Although most manufacturers create their own brand names, others market licensed brands. Finally, two companies can join forces and co-brand a product. NATIONAL BRANDS VERSUS STORE BRANDS National brands (or manufacturers' brands) have long dominated the retail scene, In recent times, however, an increasing number of retailers and wholesalers have created their own store brands (or private brands). Store brand sales are soaring. In fact, they are growing much faster than national brands. In all, private brands now capture a significant amount of supermarket sales. Private-label apparel brands (EMv: egna markes-varor) capture 24-36 per cent share of ICA, Hemkop and Coop sales. In slightly more than a decennium, the private label share has increased from 23.7 to 29.6 per cent in the Swedish market. Store brand (private brand) – A brand created and owned by a reseller of a product or service. Store brands offer greater selection and higher quality. Rather than simply creating low-end high involvement generic brands like Coop Xtra, ICA I Love Eco, ICA Gott Liv and ICA Selec- tion, all these options represent the higher end in terms of quality and price. As store brand selection and quality have improved, so have consumer confidence and acceptance. In the so-called battle of the brands between national and private brands, retailers have many advantages. They control what products they stock, where they go on the shelf, what prices they charge, and which ones they will feature in local circulars. Retailers often price their store brands lower than comparable national brands, thereby appealing to the budget- conscious shopper in all of us. They can source from various suppliers and have their own brand names on the products, hence exploring opportunities to squeeze suppliers while maintaining high margins. So, although store brands can be hard to establish and costly to stock and promote, they also yield higher profit margins for the reseller. Retailers can thus use their market power and run reversed auctions where any supplier that fulfils certain quality criteria may get a supplier contract. And they give resellers stronger brands as well as exclusive products that cannot be bought from competitors,resulting in greater store traffic and loyalty. In the long run, the power of store brands may undermine the opportunity for small players to maintain their brands. First, they don't get the product exposition they Onice got before private brands got a foothold in the market. Secondly, prices and margins are lower than they used to be.12 When private brands get stronger, manufacturer brands must invest in R&D to bring out new brands, new features and continuous quality improvements. They must design strong advertising programmes to maintain high awareness and preference, e.g. Felix and Heinz Ketchup with less sugar, or Arla's broad range of crème fraiche with various tastes. LICENSING Most manufacturers take years and spend millions to create their own brand names. However, some companies license names or symbols previously created by other manufacturers, names of well-known celebrities, or characters from popular movies and -books. For a fee, any of these can provide an instant and proven brand name. Apparel and accessories sellers pay large royalties to adorn their products - from blouses to ties, and linens to luggage - with the names or initials of well-known fashion innovators such as Calvin Klein, Tommy Hilfiger, Gucci or Armani. Sellers of children's products attach an almost endless list of character names to clothing, toys, school supplies, linens, dolls, lunch boxes, cereals and other items. Licensed character names range from classics such as Disney and Asterix to Hello Kitty and Harry Potter characters. For instance, consumer products carrying the Kodak name are no longer made by Eastman Kodak, an American technology company that produces camera related products with its historic basis in photography where it once dominated the market. Eastman Kodak now focuses exclusively on printing-related commercial equipment and technology following its bankruptcy a few years ago. But the Kodak brand name and associated Kodak moments' still resonate powerfully with consumers. So even though Eastman Kodak has dropped its consumer lines, we'll still be seeing a lot of Kodak-branded consumer products made by other companies under licensing agreements. For example, Sakar International makes Kodak cameras and accessories, and video monitoring company Seedonk makes and sells a Kodak Baby Monitoring System. Thus, the venerable old Kodak name still has value to both Eastman Kodak and the licensees who put it on their products. For Kodak, brand licensing agreements earn the company upward of $200 million a year. In turn, licensees get a name that's immediately familiar and trusted – it will be a lot easier to market a Kodak baby monitoring system than a Seedonk one. It was difficult to find a brand that resonated - family values, taking care of loved ones,' says a Seedonk executive. Then the Kodak opportunity came up. Kodak Moments, these are things that are important to our customers. CO-BRANDING Co-branding – The practice of using the established brand names of two different companies on the same product. Although companies have been co-branding products for many years, there has been recent resurgence in CO- branding. Co- branding occurs when tWo established brand names of different companies are used on the Same product. For example, financial services firms often partner with other companies to create CO- -branded credit cards, such as Nordic Choice Club MasterCard or sJ MasterCard (both issued by SEBanken so there is a third brand involved). Audi – known for its four-wheel drive – teamed up with the Swedish Ski Team, and Nike and Apple CO- branded the Nike+iPod Sport Kit, which lets runners link their Nike shoes with their iPod nanos to track and enhance running performance in real time. Co- branding offers many advantages. Because each brand dominates in a different cate- gory, the combined brands create broader consumer appeal and greater brand equity. Co- branding also allows a company to expand its existing brand into a category it might otherwise have difficulty entering alone. And sometimes it is difficult to reach a particular – say architect students or busy lawyers – but through CO- branding it may be easier, because an arrangement can be set up with another company to which the target group has a relationship. Co-branding also has limitations. A risk is that one of the companies does something bad, which harms the other brand, and there are often complex legal contracts and licences to consider. The case of Nordea sponsorship earlier in the chapter illustrates some issues related to co-branding and the risks involved. Co-branding partners must carefully co-ordinate their advertising, sales promotion and other marketing efforts. And both companies may have bureaucracy that can Slow down great initiatives. Finally, when co- branding, each partner must trust that the other will take good care of its brand. Brand development A company has four choices when it comes to developing brands (see Figure 9.4). It can intro- duce line extensions, brand extensions, multi-brands or new brands. LINE EXTENSION Line extensions occur when a company extends existing brand names to new forms, colours, sizes, ingredients or flavours of an existing product category. The vast majority of all new- product activity consists of line extensions. Arla has engaged heavily in line extensions, as has Mer, Festis, Coca-Cola and Head & Shoulders. New sizes and flavours are typical line extensions. Line extension – Extending an existing brand name to new forms, colours, sizes, ingredients or flavours of an existing product category. A company might introduce line extensions as a low-cost, low-risk way to introduce new products. Or it might want to meet consumer desires for variety, to use excess capacity or Simply to command more shelf space at resellers. However, line extensions involve some risks. An over. extended brand name might lose its specific meaning. For example, Land Rover offers nothing less than six different suv models for model year 2020- Range Rover, Ranger Rover Sport, Range Rover Velar, Range Rover Evoque, Discovery, and Discovery Sport. It's unlikely that many customers will fully appreciate the differences across the many rather similar models, each coming in various versions with different equipment and engine options. Sales of an extension may come at the expense of other items in the line, and many products in a line increase administrative, logistics and sales costs. It requires more store shelf space and the risk of running out of stock for individual items increases. A line extension works best when it takes sales away from competing brands, not when it 'cannibalizes' the company's other items. Cannibalization has become more common as companies have broadened their product portfolios and intensified attempts to expand into new product categories. BRAND EXTENSIONS A brand extension extends a current brand name to new or modi- fied products in a new category. For example, many clothing brands have extended to perfume and accessories, while Kimberly-Clark extended its market-leading Huggies brand from disposable nappies to a full line of toiletries: from shampoos, lotions and nappy rash ointments to baby wash, disposable washcloths and disposable changing pads. Victorinox extended its venerable Swiss Army brand from multi-tool knives to products ranging from cutlery and ballpoint pens to watches, briefcases, fragrances and apparel. A brand extension gives a new product instant recognition and faster acceptance. It also saves the high advertising costs usually required to build a new brand name. At the same time, a brand extension strategy involves some risk. Brand extensions may confuse the image of the main brand. And if a brand extension fails, it may harm consumer attitudes towards the other products carrying the same brand name. As with co-branding. using a brand in new context e always carries a risk. Brand extension – Extending an existing brand name to new product categories. MULTIBRANDS Companies often introduce additional brands in the same category. Thus, Procter & Gamble markets many different brands in each of its product categories. And Volkswagen markets Škoda, Volkswagen and Seat cars in the same size segments, but with different brand profiles. Multi-branding offers a way to establish different features and appeal to different buying motives. It also allows a company to lock up more reseller shelf space. A major drawback of multi-branding is that each brand might obtain only a smal market share, and none may be very profitable. The company may end up spreading its resources over many brands instead of building a few brands to a highly profitable level. These companies would benefit from reducing the number of brands they sell in a given category and set up tighter screening procedures for new brands. Electrolux had 149 brands in the portfolio but decided to focus on the strong brands and now has about 30 brands. More brands mean more complexity in all areas and means cannibalism - but may on the other hand mean more busi- ness opportunities, so this is obviously a tricky balance. NEW BRANDS A company might believe that the power of its existing brand name is waning and a new brand name is needed. Or it may create a new brand name when it enters a new product category for which none of the company's current brand names are appro- priate. For example, Toyota created the separate Lexus brand, targeted at the premium car market. As with multi-branding, offering too many new brands can result in company spreading its resources too thin. And in some industries, such as consumer packaged goods, consumers and retailers have become concerned that there are already too many brands, with too few differences between them. Thus, Unilever, Frito- Lay, Nestlé and other large consumer- product marketers are now pursuing mega-brand strategies-weeding out weaker or slower- growing brands and focusing their marketing resources only on brands that can achieve the number-one Or number-l two market share positions with good growth prospects in their categories. Managing brands Advertising campaigns can help to create name recognition, brand knowledge and perhaps even some brand preference. However, the fact is that brands are not maintained by advertising but by the brand experience. Today, customers come to know a brand through a wide range of contacts and touch points. These include advertising, but also personal experience with the brand, word of mouth, company web pages and many others. The company must put as much care into managing these touch points as it does into producing its adverts. The brand's positioning will not take hold fully unless everyone in the company 'lives' the brand. Therefore the company needs to train its people to be customer-centred. Even better, the company should carry out internal brand building to help employees understand and be enthusiastic about the brand promise. Many companies go even further by training and encouraging their distributors and dealers to serve their customers well. Cornerstones of a strong brand Having read this chapter, you will be well aware of the fundamentals of building a strong brand. Here, we discuss what characterizes brands that consistently deliver higher brand equity and higher brand strength than their competitors. A strong brand is likely to be more attractive not only in relation to consumers, but also to employees, suppliers and other stakeholders.' A strong brand is more likely to have a choice in terms of marketing channels, employees and co-operation partners. Strong brands are likely to enjoy a higher level of trust and confidence, which makes it easier for others to invest in the brand. If H&M or Zara were to hire a downtown retai] space, it gives some prestige to the landlord and it is likely they will stay in the location for many years. Strong brands are more profitable and thus more likely to think long-term. They have the money to invest in customer relationships and they don't become desperate during financial turbulence Since strong brands have a high and stable demand, they don't need to discount heavily to win customers. There is a natural demand for the products. In industries with high overcapacity, in particular-.g. the car industry with estimations of production capacity exceeding actual demand by 60 per cent - this is important. Natural demand makes it possible to adjust prices to get the desired production level. The attractiveness of the brand gives Q sense of pride among retailers and others who represent the brand. Relationships among channel members are likely to be better than with a weak brand, and thus competition among retailers will be more constructive, e.g.competing on customer satisfaction and good service rather than on price. SUMMARY In building brands, companies need to make deci- sions about brand positioning, brand name selection, brand sponsorship, and brand development. The most powerful brand positioning builds around strong consumer beliefs and values. Brand name selection involves finding the best brand name based on a careful review of product benefits, the target market, and proposed marketing strategies. A manufacturer has four brand sponsorship options: it can launch a manufactur. er's brand (or national brand), sell to resellers who use a private brand, market licensed brands, or join forces with another company to co-brand a product. A company also has four choices when it comes to developing brands.It can introduce line extensions, brand exten- sions, multibrands, or new brands, Companies must build and manage their brands carefully. The brand's positioning must be continuously communicated to consumers. Advertising can help. However, brands are not maintained by advertising but by the brand experience. Customers come to know a brand through a wide range of contacts and inter- actions. The company must put as much care into managing these touch points as it does into producing its ads. Thus, managing a company's brand assets can no longer be left only to brand managers. Finally, companies must periodically audit their brands* strengths and weaknesses. In some cases, brands may need to be repositioned because of changing customer preferences or new competitors. Strong brands give enormous benefits to companies in many ways: higher profitability, higher attractiveness in relation to different stakeholders and a greater freedom in terms of strategies and the destiny of the organiza- tion. With a weak brand, the inherent level of attractive- ness is low and one is left to survive on its own. Key terms Brand equity Brand exter Co-branding Employer branding Line extension Store brand (private brand)