Strategic Brand Management PDF

Strategic Brand Management: Building, Measuring, and Managing Brand Equity Fifth Edition, Global Edition Chapter 1 Brands and Brand Management...

Strategic Brand Management: Building, Measuring, and Managing Brand Equity Fifth Edition, Global Edition Chapter 1 Brands and Brand Management Copyright © 2020 Pearson Education Ltd. All Rights Reserved Learning Objectives 1.1 Define “brand,” state how brand differs from a product, and explain what brand equity is 1.2 Summarize why brands are important 1.3 Explain how branding applies to virtually everything 1.4 Describe the main branding challenges and opportunities 1.5 Identify the steps in the strategic brand management process Copyright © 2020 Pearson Education Ltd. All Rights Reserved What is a Brand? Brand Elements Brands versus Products Copyright © 2020 Pearson Education Ltd. All Rights Reserved Brand Elements The key to creating a brand: – Able to choose a name, logo, symbol, package design, or other characteristic that identifies a product – Distinguishes it from other products Components that identify and differentiate a brand are brand elements Copyright © 2020 Pearson Education Ltd. All Rights Reserved Brands Versus Products (1 of 3) Five levels of meaning for a product: 1. Core benefit level 2. Generic product level 3. Expected product level 4. Augmented product level 5. Potential product level Copyright © 2020 Pearson Education Ltd. All Rights Reserved Brands Versus Products (2 of 3) A product is anything we can offer to a market for attention, acquisition, use, or consumption: – That might satisfy a need or want – Physical good like a cereal, tennis racquet, or car A brand is more than a product since it can have dimensions that differentiate it from other products Copyright © 2020 Pearson Education Ltd. All Rights Reserved Brands Versus Products (3 of 3) Differences between a product and a brand may be: – Rational and tangible: ▪ Related to product performance of the brand – Or may be more symbolic, emotional, and intangible: ▪ Related to what the brand represents Copyright © 2020 Pearson Education Ltd. All Rights Reserved Figure 1-2: Ten Firms Rated Highly in Innovation 1. Apple 2. Netflix 3. Square 4. Tencent 5. Amazon 6. Patagonia 7. CVS Health 8. The Washington Post 9. Spotify 10. NBA Source: Based on Fast Company’s 2018 List of Most Innovative Companies. Copyright © 2020 Pearson Education Ltd. All Rights Reserved Why Do Brands Matter? Consumers Firms Copyright © 2020 Pearson Education Ltd. All Rights Reserved Consumers (1 of 3) Functions provided by brands to consumers: – Identify the source or maker of the product – Simplify product decisions – Lower the search costs for products internally and externally – Helps set reasonable expectations about what consumers may not know about the brand Copyright © 2020 Pearson Education Ltd. All Rights Reserved Consumers (2 of 3) Brand can signal product characteristics and attributes: – On the basis of attributes products can be classified as: ▪ Search goods ▪ Experience goods ▪ Credence goods Copyright © 2020 Pearson Education Ltd. All Rights Reserved Consumers (3 of 3) Brands can reduce risks in product decision: – These risk can be categorised as: ▪ Functional, physical, financial, social psychological, and time Copyright © 2020 Pearson Education Ltd. All Rights Reserved Firms Brands provide valuable functions to a firm: – Simplify product handling and tracing – Help organizing inventory and accounting records – Offer the firm legal protection for unique features or aspects of the product – Provide predictability and security of demand for the firm and creates barriers of entry for competitors – Provide a powerful means to secure competitive advantage Copyright © 2020 Pearson Education Ltd. All Rights Reserved Figure 1-3: Roles That Brands Play Consumers Identification of source of product Assignment of responsibility to product maker Risk reducer Search cost reducer Promise, bond, or pact with maker of product Symbolic device Signal of quality Manufacturers Means of identification to simplify handling or tracing Means of legally protecting unique features Signal of quality level to satisfied customers Means of endowing products with unique associations Source of competitive advantage Source of financial returns Copyright © 2020 Pearson Education Ltd. All Rights Reserved Figure 1-4: Brand Value as a Percentage of Market Capitalization Company Brand Value (in Total Value (in Brand Value as a $ billions) $ billions) Percentage of Overall Value Apple 184.1 868.88 21% Google 141.7 729.1 19% Microsoft 79.9 659.9 12% Coca-Cola 69.7 195.5 36% Amazon 64.7 563.5 11% Samsung 56.2 300 19% Toyota 50.3 188.2 27% Facebook 48.2 420.8 11% Mercedes 47.8 79.3 60% IBM 46.8 142 33% Sources: Based on Inter-brand, “Best Global Brands 2010.” Yahoo! Finance, February 11. Copyright © 2020 Pearson Education Ltd. All Rights Reserved Can Anything Be Branded? (1 of 2) Physical Goods Services Copyright © 2020 Pearson Education Ltd. All Rights Reserved Can Anything Be Branded? (2 of 2) To brand a product, it is necessary to teach consumers “who” the product is: – Giving it a name and using other brand elements to help identify it – What the product does and why consumers should care Marketers must give consumers a label for the product and provide meaning for the brand Marketers can benefit from branding whenever consumers are in a choice situation Copyright © 2020 Pearson Education Ltd. All Rights Reserved Physical Goods Physical goods are what are traditionally associated with brands: – Mercedes-Benz – Nescafé – Sony Branding has been adopted in a variety of industries: – Industrial business-to-business (B2B) products – Technologically intensive “high-tech” products Copyright © 2020 Pearson Education Ltd. All Rights Reserved Services Branding a service can be an effective way to signal to consumers that a firm has designed a particular service offering that is special and deserving of its name: – American Express – British Airways – Ritz-Carlton – Merrill Lynch – Federal Express Copyright © 2020 Pearson Education Ltd. All Rights Reserved Retailers and Distributors (1 of 2) For retailers and other channel members, brands provide important functions: – Can generate consumer interest, patronage, and loyalty – Create an image and establish positioning within an industry – Yield higher price margins, increased sales volumes, and greater profits Copyright © 2020 Pearson Education Ltd. All Rights Reserved Retailers and Distributors (2 of 2) Retailers can introduce their own brands by: – Using their store name – Creating new names – Some combination of the two Many distributors, especially in Europe, have introduced their own brands Products bearing these store brands or private label brands offer another way for retailers to increase customer loyalty and generate higher margins and profits Copyright © 2020 Pearson Education Ltd. All Rights Reserved Digital Brands Some of the strongest brands in recent years have been born online: – Amazon – Google – Facebook – Twitter Brand building has become more important in recent years to online marketers: – It is critical to create unique aspects of the brand – Brand needs to perform satisfactorily as well Copyright © 2020 Pearson Education Ltd. All Rights Reserved People and Organizations A product category can be a person or an organization: – Naming of this branding is usually straightforward – Usually is accompanied by well-defined images that are easily understood by consumers – The key to a person or organization as a brand is that people outside your industry know who you are and recognize your skills, talents, and attitude: ▪ Lady Gaga ▪ The American Red Cross ▪ Amnesty International ▪ Sierra Club Copyright © 2020 Pearson Education Ltd. All Rights Reserved Sports, Arts, and Entertainment A special case of marketing people and organizations as brands exists in the sports, arts, and entertainment industries: – Sports marketing has become highly sophisticated – Branding plays, for example, has become an especially valuable function in the arts – Movies have become famous for their marketing and branding: ▪ For years, some of the most valuable movie franchises have featured recurring characters and ongoing stories—a classic application of branding Copyright © 2020 Pearson Education Ltd. All Rights Reserved Geographic Locations What has contributed to the rise in place marketing? – Increased mobility of people – Increased mobility of businesses – Growth in tourism Cities, states, regions, and countries actively promote through advertising, direct mail, and other tools Copyright © 2020 Pearson Education Ltd. All Rights Reserved Ideas and Causes Numerous ideas and causes have been branded: – Especially by nonprofit organizations May be captured in a phrase or slogan or represented by a symbol: – Such as AIDS ribbons Copyright © 2020 Pearson Education Ltd. All Rights Reserved What are the Strongest Brands? Brands that are the “strongest” are the brands that are: – Best known – Most highly regarded Maintaining brand relevance and differentiation are important to the success of a brand Copyright © 2020 Pearson Education Ltd. All Rights Reserved Figure 1-5: Twenty-Five Most Valuable Global Brands (1 of 2) 2017 Brand Sector Brand Value Change in Rank Brand Value 1 Apple Technology 184,154$m +3% 2 Google Technology 141,703$m +6% 3 Microsoft Technology 79,999$m +10% 4 Coca-Cola Beverages 69,733$m −5% 5 Amazon Retail 64,796$m +29% 6 Samsung Technology 56,249$m +9% 7 Toyota Automotive 50,291$m −6% 8 Facebook Technology 48,188$m +48% 9 Mercedes Automotive 47,829$m +10% 10 IBM Business Services 46,829$m −11% 11 GE Diversified 44,208$m +3% 12 McDonald’s Restaurants 41,533$m +5% 13 BMW Automotive 41,521$m 0% 14 Disney Media 40,772$m +5% Copyright © 2020 Pearson Education Ltd. All Rights Reserved Figure 1-5: Twenty-Five Most Valuable Global Brands (2 of 2) 2017 Brand Sector Brand Value Change in Rank Brand Value 15 Intel Technology 39,459$m +7% 16 Cisco Technology 31,930$m +3% 17 Oracle Technology 27,466$m +3% 18 Nike Sporting Goods 27,021$m +8% 19 Louis Vuitton Luxury 22,919$m −4% 20 Honda Automotive 22,696$m +3% 21 SAP Technology 22,635$m +6% 22 Pepsi Beverages 20,491$m +1% 23 H&M Apparel 20,488$m −10% 24 Zara Apparel 18,573$m +11% 25 Ikea Retail 18,472$m +4% Sources: Based on Inter-brand, “The 100 Most Valuable Global Brands,” 2017. Copyright © 2020 Pearson Education Ltd. All Rights Reserved Branding Challenges and Opportunities Unparalleled access to information and new technologies Downward pressure on prices Ubiquitous connectivity and the consumer backlash Sharing information and goods Unexpected sources of competition Disintermediation and reintermediation Alternative sources of information about product quality Winner-takes-all markets Media transformation The importance of customer-centricity Copyright © 2020 Pearson Education Ltd. All Rights Reserved Unparalleled Access to Information and New Technologies Technology has created vast amounts of information Over time, as technology becomes more standard, brand marketers may find opportunities: – Utilizing innovative features in designing better brand experiences for their customers Copyright © 2020 Pearson Education Ltd. All Rights Reserved Downward Pressure on Prices As search costs for information become lower, consumers can compare prices more easily: – Thus, they can switch to a different brand more easily – This may cause more commodification of products and services – This creates challenges for brand marketers Copyright © 2020 Pearson Education Ltd. All Rights Reserved Ubiquitous Connectivity and the Consumer Backlash As digital and electronic connectivity becomes ubiquitous, consumers’ attention is lessened and are more vulnerable to intrusions: – Backlash may come as consumers become increasingly resistant to marketers attempts to gain access to them – Software may come available that thwarts marketers efforts to reach consumers Copyright © 2020 Pearson Education Ltd. All Rights Reserved Sharing Information and Goods Technology has offered two phenomena related to branding: – Social media platforms: ▪ While they offer a way for consumer to connect and communicate their preferences for goods or services, the platforms face increased scrutiny by regulatory agencies ▪ Many of the platforms have traditionally not had to obtain permissions for use of customer data – Peer-to-peer sharing: ▪ Napster, Airbnb, Zipcar Copyright © 2020 Pearson Education Ltd. All Rights Reserved Unexpected Sources of Competition The digital world allows easier entry into new markets: – Increased competition – When Amazon Movies began offering streaming services, it faced competition from Netflix and Apple iTunes Copyright © 2020 Pearson Education Ltd. All Rights Reserved Disintermediation and Reintermediation Disintermediation: – Reduction or elimination of intermediaries – The travel industry, for example, has experienced significant decline in the need for travel agencies: ▪ Once offered advisory services and helped make bookings in return for a small fee or commission Reintermediation: – Introduction of new intermediaries that perform some of the same functions or have additional roles in the channel of distribution – Yelp, online consumer guides (Consumer Reports.com), and influential bloggers Copyright © 2020 Pearson Education Ltd. All Rights Reserved Alternative Sources of Information about Product Quality The Internet offers consumers new ways to learn about new products and product quality: – This has reduced the reliance on brands as signals on quality – Brands now have to do more: ▪ Have to be translators of trends, acting on information about changing customer tastes and desires almost instantaneously Copyright © 2020 Pearson Education Ltd. All Rights Reserved Winner-Takes-All Markets A winner-take-all market is likely to permeate other industries and categories outside of sports and entertainment: – Brands which are market leaders within categories are likely to be chosen at an even greater rate Copyright © 2020 Pearson Education Ltd. All Rights Reserved Media Transformation The erosion and fragmentation of traditional advertising media has coincided with: – The emergence of interactive and nontraditional media, promotion, and other communication alternatives Marketers are spending more on nontraditional forms of communication: – On new and emerging forms of communication – Social media – Paid influencers – Sponsored bloggers LaCroix is an example of this Copyright © 2020 Pearson Education Ltd. All Rights Reserved The Importance of Customer-Centricity Brand equity can be vulnerable to destruction if product and service claims are not verified by actual experience: – Review forums – Reviews from peers – Online word-of-mouth Copyright © 2020 Pearson Education Ltd. All Rights Reserved The Brand Equity Concept Principles of branding and brand equity: – Differences in outcomes arise from the “added value” endowed to a product – The added value can be created for a brand in many different ways – Brand equity provides a common denominator for interpreting marketing strategies and assessing the value of a brand – There are many different ways in which the value of a brand can be exploited to benefit the firm Copyright © 2020 Pearson Education Ltd. All Rights Reserved Strategic Brand Management Process Identifying and Developing Brand Plans Designing and Implementing Brand Marketing Programs Measuring and Interpreting Brand Performance Growing and Sustaining Brand Equity Copyright © 2020 Pearson Education Ltd. All Rights Reserved Figure 1-10: Strategic Brand Management Process Copyright © 2020 Pearson Education Ltd. All Rights Reserved Designing and Implementing Brand Marketing Programs Choosing Brand Elements Integrating the Brand into Marketing Activities and the Supporting Marketing Program Leveraging Secondary Associations Copyright © 2020 Pearson Education Ltd. All Rights Reserved Measuring and Interpreting Brand Performance To manage brands profitably, managers must implement a brand equity measurement system Brand equity measurement system involves: – Brand audits – Brand tracking studies – Brand equity management system Copyright © 2020 Pearson Education Ltd. All Rights Reserved Growing and Sustaining Brand Equity Defining Brand Architecture Managing Brand Equity over Time Managing Brand Equity over Geographic Boundaries, Cultures, and Market Segments Copyright © 2020 Pearson Education Ltd. All Rights Reserved