Chapter 10: Building Strong Brands PDF

# Chapter 10: Building Strong Brands ## Brands are one of the most valuable intangible assets of a firm, and it is incumbent on marketers to properly manage their value. Building a strong brand is both an art and a science. It requires careful planning, a deep long-term commitment, and creatively...

# Chapter 10: Building Strong Brands ## Brands are one of the most valuable intangible assets of a firm, and it is incumbent on marketers to properly manage their value. Building a strong brand is both an art and a science. It requires careful planning, a deep long-term commitment, and creatively designed and executed marketing. A strong brand commands intense consumer loyalty—and at its heart is a great product or service. Building a strong brand is a never-ending process, as demonstrated by the marketers of Amul during the last 75 years. ### Amul: - A brand that resonates trust among Indian consumers, was established in 1946 as a cooperative dairy to protect the rights of farmers and rural milk producers. - Amul model of dairy development helped India transition from a milk-deficient nation to the world's largest milk producer. - The secret behind the success of Amul representing its tagline 'The Taste of India', lies in its strategic brand positioning as a domestic, homegrown brand for everyone right from its inception. - It has a wide range of milk-based offerings for everyone's need, irrespective of their economic status. - With its authentic taste, quality products, and competitive pricing, Amul has evolved into an exemplary brand. - Amul follows a 3-layered intensive distribution system with 6000 exclusive distributors that ensures the reach of its products such as milk, curd, buttermilk, sweets, ice-creams to even small towns with around 10,000 population. - Innovative product-specific and topical advertisements helped the brand to win over the trust of its customers across all product categories. The universally familiar 'utterly Butterly Delicious' slogan and 'Blue-haired Amul Girl' connect all products under Amul's umbrella branding approach. - Ranked among the top five advertisers in India, spent 1% of its ₹52,000 crore turnover in 2019-202 on advertisements on TV, print, outdoors, radio and digital. - The brand has invested in strengthening its social media presence and its live recipe content on Amul's Facebook page attracts over 10 million views daily. - Content and communication in regional languages and Arabic through social media handles have built stronger bonds with customers across the country and in the Middle East. - In 2020, Amul launched 60 new products and 120 stock keeping units (SKU) and introduced another 33 new products in 2021 as it aims to double the turnover in the next five years. - A comprehensive portfolio of quality products, intensive distribution, affordable pricing, and brand visibility drives Amul's special connect with millions of consumers in India and abroad. ## Strategic Brand Management - Identifying & establishing brand positioning - Planning & implementing brand marketing - Measuring & interpreting brand performance - Growing & spreading brand value ## How Does Branding Work? Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, enhance, and protect brands, whether established brands such as Mercedes, Sony, and Nike or new ones like Warby Parker, Casper, and Tovala. The American Marketing Association defines a brand as "a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors." The ultimate purpose of the brand is to create, for consumers, the company, and its collaborators, value that goes beyond the value created by the product and service aspects of the offering. ## The Essence of Branding Branding is the process of endowing products and services with the power of a brand. It's all about creating differences between products. Marketers use brand names and other brand elements to inform consumers “who” and “what” the product is and why consumers should care. Effective branding creates mental structures that help consumers organize their knowledge about products and services in a way that clarifies their decision making and, in the process, provides value to the firm. Branding has been around for centuries as a means to identify the goods of one producer and distinguish them from those of another. Medieval guilds in Europe required that craftspeople put trademarks on their products to protect themselves and their customers against inferior quality. In the fine arts, branding began with artists signing their works. Brands today play a number of important roles that improve consumers' lives and enhance the financial value of firms. ## How do you "brand" a product or a service? Although firms provide the impetus for brand creation, a brand is also rooted in reality but reflecting the views and idiosyncrasies of consumers. For branding strategies to be successful and create brand value, consumers must be convinced that there are meaningful differences among brands in the product category. Brands differ, often related to attributes of the product itself. Gillette, Mothercare, and 3M have led their product categories for decades, in part because of continual innovation. But brands also create competitive advantages through non-product-related means. Gucci, Chanel, and Louis Vuitton have become category leaders by understanding consumer motivations and desires and creating relevant and appealing imagery around their stylish products. A successful brand makes itself a real part of its customers' lives. Once a faded preppy afterthought, J. Crew tripled its revenue by becoming a highly creative force in fashion. By constantly introducing new styles while retaining its authentic taste, the brand enjoys intense loyalty, numerous fan blogs, and high-profile celebrity supporters like Michelle Obama and Anna Wintour. ## Marketers can apply branding virtually anywhere a consumer has a choice. It's possible to brand a physical good (Tesla automobile or Lipitor, a cholesterol medication), a service (Singapore Airlines or Blue Cross Shield medical insurance), a store (Nordstrom or Dick's Sporting Goods), a place (the city of Sydney or the country of Ireland), an organization (U2 or the American Automobile Association), or an idea (abortion rights or free trade). ## Branding has been of great importance in sports, arts, and entertainment. One of the world's top sports brands comes from Madrid, Spain. ### Real Madrid: - Surpassed Manchester United in 2013 to become the world's most valuable team in soccer — or football, as it is known outside the United States — with an estimated value of $3.3 billion. - Also known by fans as "Los Merengues," began to thrive when the billionaire construction tycoon Florentine Perez took over in 2000. - Perez's strategy was to attract some of the very top players in the game, brand names in their own right, such as David Beckham, Zinedine Zidane, and, later, Cristiano Ronaldo. - Success on the pitch (field) allowed Perez to develop three distinct and lucrative lines of business: broadcast rights, sponsorship and endorsement revenue, and match-day revenue. - Real Madrid is truly a global brand and derives much of its revenue abroad. - Sponsorship includes high-profile deals with Adidas, Emirates Airlines, and Spanish banking group BBVA. ## The Role of Brands Brands identify the maker of a product and allow consumers to assign responsibility for its performance to that maker or distributor. Brands perform a number of functions for both consumers and firms. ### Brands' Role for consumers - A brand is a promise the firm makes to the consumer. - It is a means to set consumer expectations and reduce their risk. - In return for customer loyalty, the firm promises that its products or services will reliably deliver a predictably positive experience and a set of desirable benefits. - A brand may even be “predictably unpredictable” if that is what consumers expect, but the key is that it fulfills or exceeds customer expectations in satisfying their needs and wants. - Consumers may evaluate the identical product differently depending on how it is branded. - For example, consumers might be willing to pay $100 for a generic (unbranded) leather bag but ten times more for the same bag carrying the brand of Louis Vuitton, Hermès, or Gucci. - They learn about brands through past experiences with the product and its marketing program, finding out which brands satisfy their needs and which do not. - As consumers' lives become more rushed and complicated, a brand's ability to simplify decision making and reduce risk becomes invaluable. - Brands can also take on personal meaning for consumers and become an important part of their identity - They express who consumers are or who they would like to be. - For some consumers, brands can even take on human-like characteristics. 10 Brand relationship, like any relationship, are not cast in stone, and marketers must be sensitive to all the words and actions that might strengthen or weaken consumer ties with the brand. ### Brands' Role for Firms - Brands also perform valuable functions for firms. First, they simplify product handling by setting a certain level of quality so that satisfied buyers can easily choose the product again. - Brand loyalty provides predictability and security of demand for the firm and creates barriers to entry that make it difficult for other firms to enter the market. - Loyalty also can translate into customer willingness to pay a higher price-often even 20 percent to 25 percent more than the price of competing brands. - Although competitors may duplicate manufacturing processes and product designs, they cannot easily match the lasting impressions left in the minds of individuals and organizations by years of favorable product experiences and marketing activity. - In this sense, branding can be a powerful means to secure a competitive advantage. Sometimes marketers don't see the real importance of brand loyalty until they change a crucial element of the brand, as the classic tale of New Coke illustrates. - Consumer behavior represents enormously valuable pieces of legal property that can influence consumer behavior, can be bought and sold, and offer their owner the security of sustained future revenues. - Companies have paid dearly for brands in mergers or acquisitions, often justifying the price premium on the basis of the extra profits expected and the difficulty and expense of creating similar brands from scratch. - Wall Street believes strong brands result in better earnings and profit performance for firms, which, in turn, create greater value for shareholders. ## Brand Equity and Brand Power The value created by a brand is captured by two key concepts: brand equity and brand power. We discuss these two concepts and the relationship between them next. ### Brand Equity - The monetary value of a brand is called brand equity and reflects the premium that is placed on a company's valuation because of its ownership of the brand. - Brand equity encompasses the net present value of the total financial returns that the brand will generate over its lifetime. - Understanding the concept of brand equity, managing its antecedents and consequences, and developing methodologies to assess brand equity are of the utmost importance for ensuring a company's financial well-being. - In the spate of mergers and acquisitions in the 1980s, including the $25 billion RJR Nabisco buyout, companies spent millions of dollars on brand building with no established accounting procedures to measure brand equity. - Putting a fair dollar amount on the brand assets that a firm has accrued through the years is vital, because the value of its brands is not reflected in the company's books and could exceed its tangible assets. - Brand equity is included in the accounting term goodwill, which is the monetary value of all intangible assets of a company. - Goodwill not only documents the company's tangible assets, such as property, infrastructure, trademarks, and copyrights, but also incorporates the intangible assets that company owns, including brands, patents, practices, know-how, licenses, and assets that company culture, and management practices. - Thus, goodwill is a much broader term than brand equity and includes both the value of the company's brand and the value of the company's other intangible assets. ### Measuring Brand Equity Although the importance of brand equity is undisputed, there is no universally agreed-on method for assessing the equity of a brand accurately. Several alternative methods exist, all of which emphasize different means of gauging brand equity. The cost approach, the market approach, and the financial approach are the three most common methods of measuring brand equity. - **The cost approach** calculates brand equity by examining the costs of developing the brand, such as marketing research, brand design, communication, management, and legal costs. - The cost method can hinge on the historical costs of creating the brand, which include an estimate of all relevant brand-building expenditures; alternatively, it can be based on the brand's replacement cost — the monetary expense of rebuilding the brand — at the time of valuation. - **The market approach** estimates brand equity by measuring the difference between the sales revenues from a branded offering against those of an identical unbranded offering, adjusted for the expense of building the brand. - Assessing the value of the Morton Salt brand, for example, would entail comparing the sales revenues generated by the Morton product with the sales revenues generated by its generic equivalent — regular salt — minus the cost of building and managing the brand. - **The financial approach** evaluates brand equity as the net present value (NPV) of a brand's future earnings and usually encompasses three key steps: computing the company's future cash flow, estimating the brand's contribution to the comp future to the brand. - Each of the three approaches has its advantages and shortcomings. - Therefore, a company can benefit from using multiple methods and alternative approaches to measuring brand value. - Such approaches must take into account the strategic value of the brand and, specifically, the brand's power to influence the behavior of different market etities. ### Brand Power - Also referred to as customer-based brand equity, is the ancillary value contributed by the brand to a product or a service. - Brand power reflects the degree to which the brand influences the way consumers think, feel, and act with respect to the brand. - Brand power is thus the differential effect - that brand knowledge has on consumer response to the marketing of that brand. - A brand has positive power if consumers react more favorably to a product and the way it is marketed when the brand is identified than when it is not identified. - A brand has negative power if consumers react less favorably to marketing activity for the brand under the same circumstances. - Brand power arises from differences in consumer response that a brand evokes. - If no differences occur, the brand-name product it is essentially a commodity, and competition will probably be based on price. - Furthermore, differences in response are a result of consumers' brand knowledge, as well as of all the thoughts, feelings, images, experiences, and beliefs associated with the brand. - Brands must create strong, favorable, and unique brand associations with customers, as have Toyota (reliability), Hallmark (caring), and Amazon.com (convenience and wide selection). - Finally, brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand. - Stronger brands earn greater revenue. ### The key benefits of brand power include: - Improved perception of product performance, greater loyalty, less vulnerability to competitive marketing actions and marketing crises, larger margins, - More inelastic consumer response to price increases and more elastic consumer response to price decreases, greater trade cooperation and support, increased effectiveness of marketing communications, additional brand extension opportunities, improved employee recruiting and retention, and greater financial market returns. ## The challenge for marketers, therefore, is to develop programs to create the desired thoughts, feelings, and brand knowledge. In an abstract sense, we can think of brand equity as providing marketers with a vital strategic bridge from their past to their future. ### Marketers should also think of marketing dollars spent on products and services each year as investments in consumer brand knowledge. The quality, rather than the quantity, of that investment is the critical factor. It's possible to overspend on brand building if money is not spent wisely. Consumers' brand knowledge dictates appropriate future directions for the brand. Consumers will (or will not) grant permission to any marketing action or program. New-product ventures such as Kellogg's Bisquick, Cracker Jack cereal, Frito-Lay Lemonade, Fruit of the Loom Lemonade, and premium ketchup all failed because consumers found them inappropriate extensions of the brand. ## Measuring Brand Power - How do we measure brand power? - An indirect approach assesses potential brand extensions. - A direct approach assesses the actual impact of brand knowledge on consumer response to different aspects of the marketing. - The two general approaches are complementary, and marketers can employ both. - In other words, for brand power to perform a useful strategic function and guide marketing decisions, marketers need to fully understand (1) the sources of brand equity and how they affect outcomes of interest and (2) how these sources and outcomes change, if at all, over time. - Brand audits are important for the former, brand tracking for the latter. - A **brand audit** is a focused series of procedures to assess the health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity. - Marketers should conduct a brand audit when setting up marketing plans and when considering shifts in strategic direction. - Conducting brand audits on a regular basis, such as annually, allows marketers to keep their finger on the pulse of their brands so they can manage them more proactively and responsively. - A good brand audit provides keen insights into consumers, brands, and the relationship between the two. - In **brand tracking**, the brand audit is used as input to collect quantitative data from consumers over time, providing consistent, baseline information about how brands and marketing programs are performing. - Brand-tracking studies help us understand where, to what degree, and in what ways brand value is being created to facilitate day-to-day decision making. ## Mahindra and Mahindra is a leading conglomerate with a legacy of more than seven decades, it operates in 100+ countries with over 150 companies in sectors ranging from aerospace, automobiles, farm equipment to financial services, real estate, and software services. - In 2011, the company initiated a new brand positioning program 'Rise' to project a singular voice for all its businesses. - Extensive studies across the globe helped the marketing team at Mahindra identify its customers' desire to rise, to succeed, and create a better future for themselves. - Mahindra Rise was chosen to reflect the customers desire as a company that empowers them to 'Rise'. - Founded on the three pillars of accepting no limits, alternative thinking and driving positive change, 'Rise' also sought to unite over 100,000 employees of the group as creators of world-class offerings. - The company spent ₹120 crore in the next three years to promote the new initiative across employees and customers of its global entities. - With its new logo, the group created an identity of a 'technology and innovation — led global, federation of companies that provide a wide range of products, services, and possibilities to people, enabling them to 'Rise'. - The repositioning campaign reinforced the identity of a new, emerging global brand while preserving its heritage attributes and contemporary value system. ## Marketers should distinguish brand equity from brand valuation, which is the job of estimating the total financial value of the brand. - In well-known companies, brand value is typically more than half the total company market capitalization. - John Stuart, cofounder of Quaker Oats, said, "If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trademarks, and I would fare better than you." - US companies do not list brand equity on their balance sheets, in part because of differences in opinion about what constitutes a good estimate. - However, companies do give it a value in countries such as the United Kingdom, Hong Kong, and Australia. ## Designing the Brand Marketers build brand equity by creating the right brand associations in consumers' minds. The success of this process depends on all brand-related contacts with consumers—whether marketer-initiated or not. ## Defining the Brand Mantra To focus brand positioning and guide the way their marketers help consumers think about the brand, firms can define a brand mantra. A brand mantra is a three- to five-word articulation of the heart and soul of the brand and is closely related to other branding concepts like “brand essence” and “core brand promise." The mantra's purpose is to guide the actions of all employees within the organization, and of all external marketing partners, by ensuring that they understand what the brand fundamentally should represent to consumers. - Brand mantras are powerful devices. - By highlighting points of difference, they provide guidance about what products to introduce under the brand, what ad campaigns to run, and where and how to sell the brand. - Their influence can even extend beyond these tactical concerns. - Brand mantras can guide the most seemingly unrelated or mundane decisions, such as the look of a reception area and the way phones are answered. - In effect, they create a mental filter to screen out brand-inappropriate marketing activities or actions of any type that may have a negative effect on customers' impressions. ## Brand mantras must economically communicate what the brand is and what it is not. - What makes a good brand mantra? - McDonald's (Food, Fun, and Family), for examples, from Nike and Disney, show the power and utility of a well-designed brand mantra. ### Nike - The Nike brand has a rich set of associations for consumers, based on its innovative product designs, its sponsorship of top athletes, its award-winning communications, its competitive drive, and its irreverent attitude. - Internally, Nike marketers adopted the three-word brand mantra "authentic athletic performance" to guide their marketing efforts. - Thus, in Nike's brand mantra "authentic athletic performance," Nike has expanded its brand associations from “running shoes” to “athletic shoes” to “athletic shoes and apparel” to “all things associated with athletics (including equipment)." - Each step of the way, however, it has been guided by its "authentic athletic performance" brand mantra. - For example, as Nike rolled out its successful apparel line, one important hurdle was that the products' material, cut, and design must be innovative enough to truly benefit top athletes. - At the same time, the company has been careful to avoid using the Nike name to brand products that do not fit with the brand mantra (such as casual “brown” shoes). ### Disney - Disney developed its brand mantra in response to its incredible growth through licensing and product development during the mid-1980s. - In the late 1980s, Disney became concerned that some of its characters such as Mickey Mouse and Donald Duck, were being used inappropriately and becoming overexposed. - The characters were on so many products, and were marketed in so many ways, that in some cases was difficult to discern what the rationale behind the deal could have to start with. - Moreover, because of the characters' broad exposure in the marketplace, many consumers had begun to feel Disney was exploiting its name. - Disney moved quickly to ensure that a consistent image-reinforcing its key brand associations-was conveyed by all third-party products and services. - To that end, Disney adopted the internal brand mantra "fun family entertainment" to filter proposed ventures. - Opportunities that were not consistent with the brand mantra—no matter how appealing—were rejected. (As useful as that mantra was to Disney, adding the word magical might have made it even more so.) ### Unlike brand slogans meant to engage consumers, brand mantras are designed with internal purposes in mind. - Nike’s internal mantra, "authentic athletic performance," was not directly communicated to consumers, who were presented, instead, with the slogan "Just Do It" that aimed to capture the brand mantra. - There are three key criteria for a good brand mantra. - First, a good brand mantra should communicate what is unique about the brand. - It may also need to define the brand’s category (or categories) and set brand boundaries. - Second, it should simplify the essence of the brand: It should be short, crisp, and vivid in meaning. - Finally, it should inspire by staking out ground that is personally meaningful and relevant to as many employees as possible. - For brands anticipating rapid growth, it is helpful to define the product or benefit space in which the brand would like to compete, as Nike did with “athletic performance” and Disney with “family entertainment.” - Words that describe the nature of the product or service, or the type of experiences or benefits the brand provides, can be critical to identifying appropriate categories into which to extend. - For brands in more stable categories where extensions are less likely to occur, the brand mantra may focus exclusively on points of difference. ## Other brands may be strong on one, or perhaps even a few, of the brand associations that make up the company's brand mantra. - However, for a mantra to be effective, no other brand should singularly excel on all its dimensions. - Part of the key to the success of both Nike and Disney is that for many years, no competitor could really deliver on the combined promise suggested by their brand mantras. ## Choosing Brand Elements - Brand elements are devices that identify and differentiate the brand. - Most strong brands employ multiple brand elements, which can be trademarked. - Nike has the distinctive “swoosh” logo, the empowering "Just Do It" slogan, and the “Nike” name from the Greek winged goddess of victory. - Marketers should choose brand elements that build as much brand equity as possible. - The test of the appropriateness of a particular brand element is what consumers would think or feel about the product or service if the brand element were all they knew. - Based on its name alone, for instance, a consumer might expect Snack Well's products to be healthful snack foods and Panasonic Toughbook laptop computers to be durable and reliable. ## There are several factors to consider when choosing brand elements. - They should be memorable, meaningful, and likable as well as transferable, adaptable, and protectable. - The first three characteristics are brand-building. - The latter three are defensive; they help maintain leverage and preserve brand equity against challenges. - **Memorable**: How easily do consumers recall and recognize the brand element, and when? At both purchase and consumption? - Names such as Tide, Crest, and Puffs are memorable brand elements. - **Meaningful**: Is the brand element evocative? Consider the inherent meaning in names such as DieHard auto batteries, Mop & Glo floor wax, and Lean Cuisine low-calorie frozen entrées. - The brand name of New Zealand's 42BELOW vodka refers to both a latitude that runs through New Zealand and the drink's alcohol content. - The packaging and other visual cues are designed to leverage the perceived purity of the country to communicate the positioning for the brand. - **Likable**: How aesthetically appealing is the brand element? - A recent trend is toward playful names that also offer a readily available URL, especially for online brands like Flickr, Instagram, Pinterest, Tumblr, and Dropbox. - **Transferable**: Can the brand element introduce new products in the same or different categories? - Does it add to brand equity across geographic boundaries and market segments? Although initially an online bookseller, Amazon.com was smart enough not to call itself "Books 'R' Us." - Choosing the name of the world's biggest river allowed the company to grow into its now staggeringly diverse range of products. - **Adaptable**: How adaptable and updatable is the brand element? - Logos can easily be updated. The past 100 years have seen the Shell logo updated 10 times. - **Protectable**: How legally protectable is the brand element? - How competitively protectable? - When names are in danger of becoming synonymous with product categories—as has happened to Kleenex, Kitty Litter, Jell-O, Scotch Tape, Xerox, and Fiberglass—their makers should retain their trademark rights and not allow the brand to become generic. ## Brand elements can play a number of brand-building roles. - If consumers don't examine much information in making product decisions, brand elements should be easy to recall and inherently descriptive and persuasive. - The likability of brand elements can also increase awareness and associations. - But choosing a name with inherent meaning may make it harder to later add a different meaning or update the positioning. - Often, the more important brand elements are those that capture intangible, less concrete characteristics. - Many insurance firms use symbols of strength for their brands (the Rock of Gibraltar for Prudential and the stag for Hartford) or symbols of security (the “good hands” of Allstate, the Traveler's umbrella, and the hard hat of Fireman's Fund). ## Like brand names, slogans are an extremely efficient means of building brand equity. - They can function as useful "hooks" to help consumers grasp what the brand is and what makes it special, as in "Like a Good Neighbor, State Farm Is There," "Nothing Runs Like a Deere," and "Every Kiss Begins with Kay" for the jeweler. ## Firms should be careful about replacing a good slogan. - Citi walked away from its famous "Citi Never Sleeps" slogan, replacing it with "Let's Get It Done," only to return to the old slogan when the new one failed to catch on. - After 50 years, Avis Car Rental dropped "We Try Harder" for "It's Your Space." - The new slogan had much less staying power—to say nothing of the inherent message—of the one it replaced. - The brand name and other identifiers can be protected through registered trademarks, manufacturing processes can be protected through patents, and packaging can be protected through copyrights and proprietary designs. - These intellectual property rights ensure that the firm can safely invest in the brand and reap the benefits of valuable asset. ## Choosing Secondary Associations To build strong brands, marketers link brands to other meaningful information in the memories of consumers. - These linked associations become secondary sources of brand knowledge. ## The Magic of Brand Characters - Brand characters have a long and important history in marketing. - The Keebler elves reinforce home-style baking quality and a sense of magic and fun for the company’s line of cookies. - In the insurance industry, the Aflac duck competes for consumer attention with GEICO’s gecko, and Progressive’s chatty Flo competes with MetLife’s adorable Peanuts characters. - Michelin’s friendly tire-shaped Bibendum—the “Michelin Man” — conveys safety for the family and is credited with helping the brand achieve 80 percent awareness around the world. - Each year Michelin distributes a "Passport" for Bibendum that sets boundaries on the character’s advertising use by marketers. - Bibendum is never aggressive, for example, and never delivers a sales pitch. ## Brand characters represent a special type of brand symbol—one with human characteristics that both enhance likability and tag the brand as interesting and fun. - Consumers can more easily form relationships with a brand when it is represented by a human or other character. - Brand characters typically are introduced through advertising and can play a central role in ad campaigns and package designs. - M&M’s “spokescandies” are an integral part of all advertising, promotion, and digital communications for the brand. - Some brand characters are animated, like the Pillsbury Doughboy, Peter Pan (peanut butter), and numerous cereal characters such as Tony the Tiger and Snap, Crackle, & Pop. - Others are live-action figures like Juan Valdez (Colombian coffee) and Ronald McDonald. - Because they are often colorful and rich in imagery, band characters can help brands break through marketplace clutter and communicate a key product benefit in a soft-sell manner. - Characters also avoid many of the problems associated with human spokespeople: They don't demand pay raises or misbehave. - Offering the opportunity to shape the brand's personality and facilitate consumer interactions, brand characters play an increasingly important role in a digital world. - The success of Mr. Peanut in viral videos led to the introduction of a new peanut butter line. - Even old-timers are making their way onto the web. First introduced in 1957, Mr. Clean has amassed over a million Facebook fans. ## These “secondary” brand associations can link the brand to sources such as the company itself (through branding strategies), to countries or other geographic regions (through identification of product origin), and to channels of distribution (through channel strategy), as well as to other brands (through ingredient or cobranding), characters (through licensing), spokespeople (through endorsements), sporting or cultural events (through sponsorship), or some other third-party sources (through awards or reviews). ## How do you "brand" a product or a service? - Although firms provide the impetus for brand creation, a brand is also rooted in reality but reflecting the views and idiosyncrasies of consumers. - For branding strategies to be successful and create brand value, consumers must be convinced that there are meaningful differences among brands in the product category. - Brands differ, often related to attributes of the product itself. - Gillette, Mothercare, and 3M have led their product categories for decades, in part because of continual innovation. - But brands also create competitive advantages through non-product related means. - Gucci, Chanel, and Louis Vuitton have become category leaders by understanding consumer motivations and desires and creating relevant and appealing imagery around their stylish products. ## A successful brand makes itself a real part of its customer’s lives. Once a faded preppy afterthought, J.Crew tripled its revenue by becoming a highly creative force in fashion. ## By constantly introducing new styles while retaining its authentic taste, the brand enjoys intense loyalty, numerous fan blogs, and high-profile celebrity supporters like Michelle Obama and Anna Wintour. ## Marketers can apply branding virtually anywhere a consumer has a choice. - It’s possible to brand a physical good (Tesla automobile or Lipitor, a cholesterol medication), a service (Singapore Airlines or Blue Cross Shield medical insurance), a store (Nordstrom or Dick’s Sporting Goods), a place (the city of Sydney or the country of Ireland), an organization (U2 or the American Automobile Association), or an idea (abortion rights or free trade). ## Branding has been of great importance in sports, arts, and entertainment. - One of the world’s top sports brands comes from Madrid, Spain. ### Real Madrid: - Surpassed Manchester United in 2013 to become the world’s most valuable team in soccer — or football, as it is known outside the United States — with an estimated value of $3.3 billion. - Also known by fans as “Los Merengues,” the iconic but floundering club began to thrive when the billionaire construction tycoon Florentine Perez took over in 2000. - Perez’s strategy was to attract some of the very top players in the game, brand names in their own right, such as David Beckham, Zinedine Zidane, and, later, Cristiano Ronaldo. - Success on the pitch (field) allowed Perez to develop three distinct and lucrative lines of business: broadcast rights, sponsorship and endorsement revenue, and match-day revenue. - Real Madrid is truly a global brand and derives much of its revenue abroad. - Sponsorship includes high-profile deals with Adidas, Emirates Airlines, and Spanish banking group BBVA. ## The Role of Brands - Brands identify the maker of a product and allow consumers to assign responsibility for its performance to that maker or distributor. - Brands perform a number of functions for both consumers and firms. ### Brands' Role for consumers: - A brand is a promise the firm makes to the consumer. - It is a means to set consumer expectations and reduce their risk. - In return for customer loyalty, the firm promises that its products or services will reliably deliver a predictably positive experience and a set of desirable benefits. - A brand may even be “predictably unpredictable” if that is what consumers expect, but the key is that it fulfills or exceeds customer expectations in satisfying their needs and wants. - Consumers may evaluate the identical product differently depending on how it is branded. - For example, consumers might be willing to pay $100 for a generic (unbranded) leather bag but ten times more for the same bag carrying the brand of Louis Vuitton, Hermès, or Gucci. - They learn about brands through past experiences with the product and its marketing program, finding out which brands satisfy their needs and which do not. - As consumers’ lives become more rushed and complicated, a brand’s ability to simplify decision making and reduce risk becomes invaluable. - Brands can also take on personal meaning for consumers and become an important part of their identity. - They express who consumers are or who they would like to be. - For some consumers, brands can even take on human-like characteristics. - Brand relationships, like any relationship, are not cast in stone, and marketers must be sensitive to all the words and actions that might strengthen or weaken consumer ties with the brand. ### Brands' Role for Firms: - Brands also perform valuable functions for firms. - First, they simplify product handling by setting a certain level of quality so that satisfied buyers can easily choose the product again. - Brand loyalty provides predictability and security of demand for the firm and creates barriers to entry that make it difficult for other firms to enter the market. - Loyalty also can translate into customer willingness to pay a higher price-often even 20 percent to 25 percent more than the price of competing brands. - Although competitors may duplicate manufacturing processes and product designs, they cannot easily match the lasting impressions left in the minds of individuals and organizations by years of favorable product experiences and marketing activity. - In this sense, branding can be a powerful means to secure a competitive advantage. - Sometimes marketers don’t see the real importance of brand loyalty until they change a crucial element of the brand, as the classic