Value of Brands PDF

Value of Brands Value of Brands 1. Manufacturer Brand is a product launched by a Manufacturer and marketed with its own Brand. The manufacturer is the owner of the brand. Almost every industry has manufacturer brands. Like in Food and Beverages sector there is Coca-Cola: Soft drinks and beverag...

Value of Brands Value of Brands 1. Manufacturer Brand is a product launched by a Manufacturer and marketed with its own Brand. The manufacturer is the owner of the brand. Almost every industry has manufacturer brands. Like in Food and Beverages sector there is Coca-Cola: Soft drinks and beverages, Kraft: Packaged foods, including cheese and condiments. In Electronics sector we have Apple: iPhones, iPads, MacBooks, and other electronic devices, Samsung: Smartphones, TVs, and home appliances. 2. Distributor Brand is a brand name owned by a retailer, wholesaler, or other distributor rather than by a manufacturer. These brands are often referred to as private labels. While the UAE market is dominated by international brands, there are several notable distributor brands that have gained popularity. Here are some examples: Retail Chains and Hypermarkets: LuLu Hypermarket: Offers a wide range of private label products under the "LuLu" brand, covering food, household items, and more. Carrefour: Has its own private label brand called "Carrefour," which includes various product categories. Union Coop: This cooperative society has its own brand, "Union Coop," for a variety of products. Specific Product Categories: Al Maya: Known for its "Al Maya" brand of food products, including dairy, bakery, and processed foods. Al Futtaim: This conglomerate has its own private label brands for various products, including electronics, home appliances, and fashion. Automotive: Al Futtaim Motors: The distributor of Toyota and Lexus in the UAE often offers exclusive models or packages under its own brand. Basic Approaches of Branding There are two basic approaches of brands according to ownership: Manufacturer’s Brands Private / Store Brands They are created and owned by the They are created and developed by producers. retailers, distributors, or wholesalers. Manufacturer promotes its own brand The retailer does not promote one single extensively. brand extensively. He can put the products of different brands on the shelves. Their budgets of research and There is very less budget allocated for ads. development, ads, sales promotion, Similarly, research and development, distribution channels depth etc. are huge. distribution channels depth are lower. Hence, there can be less profit margin. Hence, these brands can have higher profit margins. They are more advanced and work There is no manufacturing technology innovatively on manufacturing technology. involved, hence they can be less innovative. They do not communicate with the They work very closely with consumers, consumers directly. hence they have a better idea on what consumers demand. Understanding the Branding Process When BMW drivers proudly turn the ignition keys for the first time in the ultimate driving machine‘, they are not only benefiting from a highly engineered car with an excellent performance, but are also taking ownership of a symbol that signifies the core values of exclusivity, performance, quality and technical innovation. Purchasers of a Prudential Insurance Policy are not just buying the security of knowing that damage to their home through unforeseen events can rapidly and inexpensively be rectified. They are also buying the corporate symbol‘ of the face of Prudence reminding them of the added values of heritage, size and public awareness, inspiring confidence and sustained credibility. Apple products! While these purchasers in the consumer, service and industrial markets have bought solutions to their individual problems, they have also paid a price premium for the added value provided by buying brands. In addition to satisfy their core purchase requirements, they have bought an augmented solution to their problem, for which they perceive sufficient added value to warrant paying a premium over other alternatives that have satisfied their buying needs. The added values that they sought, however, were not just those provided through the presence of a brand name as a differentiating device, or through the presence of powerful advertisements. Instead, they perceived a total entity, the brand which is the result of a coherent marketing approach which uses all elements of the marketing-mix. It is imperative to recognize that while marketers initiate the branding process (i.e. branding as an input), it is the buyer or the user who forms a mental vision of the brand (i.e. branding as an output), Understanding the Branding Process Strategic branding is concerned with evaluating how to achieve the highest return on investment from brands, through analyzing, formulating and implementing a strategy that best satisfies users, distributors and brand manufacturers. When a man gifts a woman a box of branded chocolates, its not because she is hungry. Instead, he selects a brand that communicates something about his relationship with her. The purpose of branding is to facilitate the organization‘s task of getting and maintaining a loyal customer base in a cost effective manner to achieve the highest possible return on investment. The ultimate assessor of the real value of a brand, however, is not the manufacturer or the distributor, but the buyer or the user. Marketers are able to develop strategies to convey added values to purchasers, but because of what is called the ‘perceptual process‘ the target audience may well focus on what is getting conveyed. It is imperative to recognize that while marketers instigate the branding process (i.e. branding as an input), it is the buyer or the user who forms a mental vision of the brand (i.e. branding as an output), which may be different from the intended marketing thrust. While the marketers talk about the branding effort they are undertaking, they should never lose sight of the fact that the final form of the brand is the mental evaluation held by the purchasers or users. Branding, then, needs to be appreciated in terms of both the input and the output process. Why should Businesses try to Build their Brands? While businesses try and build their brands, there is a definite strategy involved that will benefit their brands. There are many advantages to businesses that build successful brands. These include: Higher prices Higher profit margins Better distribution Customer loyalty Businesses that operate successful brands are also much more likely to enjoy higher profits. A brand is created by augmenting a core product with distinctive values that distinguish it from the competition. This is the process of creating brand value. All products have a series of “core benefits” – benefits that are delivered to all consumers. For example: Watches tell the time CD-players play CD‘s Toothpaste helps prevent tooth decay, or whitens or freshens Consumers are rarely prepared to pay a premium for products or services that simply deliver Core Benefits – they are the Expected Elements of that justify a core price. Successful brands are those that deliver added value in addition to the core benefits. These added values enable the brand to differentiate itself from the competition. When done well, the customer recognizes the added value in an Augmented Product and chooses that brand in preference. For example, a consumer may be looking for reassurance or a guarantee of quality in a situation where he or she is unsure about what to buy. A brand like Mercedes, Sony or Microsoft can offer this reassurance or guarantee. Alternatively, the consumer may be looking for the brand to add meaning to his or her life in terms of Brand Plan Emma Medina, Director of Brand Strategy at Smith Design says; A brand plan aligns everyone in your organization behind the same vision, strategies, tactics, and costs needed to make your brand or business venture a success. In this cluttered world of overwhelming options, writing a brand plan will help you and your team stay focused, guide the way you allocate your limited resources, and consistently express your brand offering to your target consumers. What should your brand plan include? Business Analysis & Issues – specify how your brand or business is currently positioned in the marketplace. Who are your current and/or potential customers? What are their needs and wants? Who are your key competitors and how are they performing? What are your current strengths and weaknesses? What potential opportunities and threats exist that could impact your brand. Objectives – your plan should spell out what it is you want the brand to achieve. Your objectives can be defined both in terms of long and short term goals, for current or future customers and/or specific business outcomes like sales, market share, brand awareness, brand image, customer loyalty or more. Strategies – here you will lay out how you plan to achieve your goals, what channels and tools you will use and how you will focus your resources. Depending on your product or category, key decisions to align on could include which product you will prioritize, how will it be designed or positioned, how will it be sold and priced, and how will you engage your target. Tactics – stemming from your strategies, tactics are the specific tasks you and/or your team will execute to work towards your goal. What will your team work on, what are the resources available and what is the budget and timeline you will allocate to each task. You may only write your brand plan once a year but as a business leader you should always be in planning  Nike Example - What should your brand plan include? Business Analysis & Issues – Positioning Nike tries to portray a brand image of quality and performance. It is these qualities that attract consumers to them. Nike is associated with the world’s most successful athletes such as Rafael Nadal and teams such as Brazil whom and which are known to be excellent performers and winners. Exhibiting Nike is their ONLY choice Objectives – Goal you want to achieve Nike’s communication objective also aims to counter & neutralize competition resulting from rival advertisement, encourage loyalty, obtain trial purchases and encourage increased product usage among consumers Strategies – Strategy to achieve the Goal Nike uses product differentiation, product design, marketing, production efficiency, high quality and supreme air sole technology as the main key competency. Tactics – tasks to achieve the strategy  Instil a culture of innovation and therefore the company invests a lot in research and design and a highly skilled workforce.  The top management have natured a culture of innovativeness and superior performance together with ethics that enables the workforce accept and respect Nikes view of business and appreciate it.  Nike also invests in technology that is durable and hard to imitate by its competitors  the company dedicates over 11% of its revenue towards marketing activities such as promotion Brand Development  Why is it Important to Create Powerful Brands? A brand represents the sum of people‘s perception of a company‘s customer service, reputation, advertising, and logo. When all of these parts of the business are working well, the overall brand tends to be healthy. On the flip side, we all probably know a company that offers excellent products or services, but has a tarnished brand due to poor customer service. Let‘s take a look at the important ways a strong brand impacts your business: 1. Branding Improves Recognition One of major components of your brand is your logo. Think of how we instantly recognize the golden arches of McDonalds or the simple, but powerful eagle of the USPS. As the “face” of a company, logo design is critical because that simple graphic will be on every piece of correspondence and advertising. A professional logo design is simple enough to be memorable, but powerful enough to give the desired impression of your company. 2. Branding Creates Trust A professional appearance builds credibility and trust. People are more likely to purchase from a business that appears polished and legitimate. Emotional reactions are hardwired into our brains, and those reactions are very real influencers. 3. Branding Supports Advertising Advertising is another component of your brand. Both the medium chosen and demographic targeted for advertisements builds a brand. Too narrow an advertising focus, and a company risks being ―pigeon holed‖ and losing their ability to expand into new markets. Too broad a focus and the company fail to create a definable impression of the company in the minds of would be customers. 4. Branding Builds Financial Value Companies who publicly trade on a stock exchange are valued at many times the actual hard assets of the company. Much of this value is due to the branding of the company. A strong brand usually guarantees future business. Whether a company is in the position to borrow funds for expansion or rolling out to an IPO, being perceived as more valuable will make the process advantageous for the owner of the company. The greater a company‘s devotion to build its brand value, the better the financial return from its efforts. Why is it Important to Create Powerful Brands? 5. Branding Inspires Employees Many employees need more than just work— they need something to work toward. When employees understand your mission and reason for being, they are more likely to feel that same pride and work in the same direction to achieve the goals you have set. Having a strong brand is like turning the company logo into a flag the rest of the company can rally around. 6. Branding Generates New Customers Branding enables your company to get referral business. Would it be possible for you to tell a friend about the new shoes you love if you couldn‘t remember the brand? A large reason ‘brand‘ is the word used for this concept is that the goal is an indelible impression. As the most profitable advertising source, word of mouth referrals are only possible in a situation where your company has delivered a memorable experience with your customer. Failures of brand success/ Importance of Brand Planning Some of the characteristics that internally hinder any chance of brand success are: Brand planning is based on little more than extrapolations from the previous few years. Brand Evolution and Value of Brands When it doesn‘t look as if the annual budget is going to be reached quarter 4 sees brand investment being cut (i.e. advertising. Market research, etc.) The marketing manager is unable to delegate responsibility and is too involved in tactical issue Brand managers see their current positions as good training grounds for no more than two years. Strategic thinking consists of a retreat once a year, with the advertising agency and sales managers, to a one-day meeting concerned with next year‘s brand plans. A profitability analysis for each major customer is rarely under taken. New product activity consists of different pack sizes and a rapidly developing ‘me- too‘ offers (a product or business idea that’s jumping into a competitive market where many similar products are already available.) The promotions budget is strongly biased towards below-the-line promotional activity. supplemented only occasionally with advertising Marketing documentation is available to the advertising agency on a need to know basis Issues influencing Brand Potential Factors influencing Brand Potential Issues influencing Brand Potential Manufacturers - Has the organization made full use of its internal auditing to identify what its distinctive brand competences are, and to what extent these match the factors that are critical for brand success? For example, Swatch recognized that amongst fashion-conscious watch owners, its distinctive competences of design and production could satisfy changing consumer demands for novelty watches. Is the organization plagued by a continual desire to cut costs, without fully appreciating why it is following this route? Has the market reached the maturity stage, with the organization‘s brand having to compete against competitors‘ brands on the basis of matching performance, but at a reduced price? If this is so, all aspects of the organization‘s value chain should be geared towards cost minimization (e.g. eliminating production inefficiencies, avoiding marginal customer accounts, having a narrow product mix, working with long production runs, etc.). Alternatively, is the firm‘s brand unique in some way that competitors find difficult to emulate and for which the firm can charge a price premium (e.g. unique source of high quality raw materials, innovative production, process, unparalleled customer service training. acclaimed advertising, etc.). Where consumers demand a brand which has clear benefits, the manufacturer should ensure all departments work towards maintaining these benefits and signal this to‘ the market (e.g. by the cleanliness of the lorries, the politeness on the phone, the promptness of answering a customer enquiry, etc.) Issues influencing Brand Potential Distributors - The brand strategy of the manufacturer cannot be formulated without regard for the distributor. Both parties rely on each other for their success and even in an era of increasing retailer concentration, notwithstanding all the trade press hype, there is still a recognition amongst manufacturers and distributors that long-term brand profitability evolves through mutual support. Manufacturers need to identify retailers’ objectives and align their brands with those retailers whose aims most closely match their own. Furthermore, they should be aware of the strengths and weaknesses of each distributor. Brand manufacturers who have not fully considered the implications of distributors’ longer-term objectives and their strategy to achieve them are deluding themselves about the long-term viability of their own brands. When working with a distributor the brand manufacturer should take into account whether the distributor is striving to offer a good value proposition to the consumer (e.g. Kwik, Save, Aldi) or a value-added proposition (e.g. high quality names at Harrods). In view of the loss of control once the manufacturer‘s brand is in the distributor‘s domain, the brand manufacturer must annually evaluate the degree of synergy through each particular route and be prepared to consider changes. Issues influencing Brand Potential Consumers - To consumers buying is a process of problem solving. They become aware of a problem (e.g. not yet arranged summer holidays), seek information (e.g. go to travel agent and skim brochures), evaluate the information and then make a decision (e.g. select three possible holidays, then try to book one through the travel agent). The extent of this buying process varies according to purchasers‘ characteristics, experience and the products being bought. None the less, clearly consumers have to ‘work‘ to make a brand selection. Brands offer consumers a means of minimizing information search and evaluation. Through seeing a brand name which has been supported by continual marketing activity, relevant information can be recalled by consumers, then, only minimal effort is needed to make a purchase decision. As a consequence of this, brand strategists should question whether they are presenting consumers with a few high quality pieces of information, or whether they are bombarding consumers with large quantities of information and ironically causing confusion. Likewise in business to business markets, it is important to consider how firms make brand selections. Issues influencing Brand Potential Competitors - Research has shown that return on investment (ROI) is related to a product‘s share of the market. In other words products with a bigger market share yield better returns than those with a smaller market share. Organizations with strong brands fare better in gaining market share than those without strong brands. Thus, firms who are brand leaders will become particularly aggressive if they see their position being eroded by other brands. Furthermore, as larger firms are likely to have a range of brands, backed by large resources, it is always possible for them to use one of their brands as a loss leader to under price the smaller competitor, and once the smaller brand falls out of the market, the brand leader can then increase prices. Brand strategists need to have given some thought to anticipating likely competitor response. The marketing environment - Brand strategists need to scan their marketing environment continually to identify future opportunities and threats. How markets are growing, new technology entering the market. Example; Nokia ignored how the consumers were getting spoilt with the Apple phone, they made no changes to their product and thus their very successful brand subsequently failed. The Nature of Relationship with Customers ORGANISATI ON CORPORATE IMAGE  The Nature of Relationship with Customers The nature of relationships with customers The previous slide figure throws light on the nature of the confusion surrounding the relationships that organizations enjoys with their customers. It is a sad reflection on the state of marketing the product, in spite of fifty years of marketing education, ignorance still abounds concerning what marketing is. The following are the major areas of confusion: 1. Confusion with the product management. The belief that, all a company has to do to succeed is to produce a good product still abounds; and neither Concorde, the EMI Scanner, nor the many thousands of brilliant products that have seen their owners or inventors go bankrupt during the past twenty years will convince such people otherwise. 2. Confusion with advertising this is another popular misconception that good advertising can tackle any problem! Several examples such as Dunlop, Woolworths and British Airways who, before they got professional management in, won awards with their brilliant advertising campaigns, while failing to deliver the goods. Throwing advertising expenditure at the problem is still a very popular way of tackling deep-rooted marketing problems. 3. Confusion with customer service The “Have a nice day” syndrome! The banks are amongst those who have spent millions training their staff to be charming to customers while still getting the basic offer fundamentally wrong. Many banks are still closed when the public most needs them open! Likewise, in many railway companies around the world, while it helps to be treated nicely. It is actually much more important to get there on time. Likewise, selling is just one aspect of communication with customers, and to say that it is the importance of product management, pricing, distribution and other forms of communication in achieving profitable sales. Selling is just one part of this process, in which the transaction is actually clinched. It is the culmination of the marketing process, and success will only be possible if all the other elements of the marketing mix have been properly managed. The more attention that is paid to finding out what customers want, to developing products to satisfy these wants, to pricing at a level consistent with the benefits offered, to gaining distribution, and to communicating effectively with our target market, the more likely we are to be able to exchange contracts through the personal selling process. Organisation’s Marketing Assets Marketing assets, typically is the financial assets of a company - assets that are recognized in the balance sheet of the business. So, fixed assets, such as plant and machinery, and current assets, such as inventory or cash, would be typical of this view of assets. In fact, the marketing assets of the business are of far greater importance to the long-run health of the business and yet paradoxically rarely appear in the balance sheet. Ultimately, the only assets that have values, those are that contribute directly or indirectly to profitable sales, now or in the future. Included in our categorization of marketing assets would be such things as: Market “franchise” Distribution network Supplier relationships Customer reactions Technology Base  The Importance of Brands – Why?? The results of a blind test (ie. When the same two drinks were where the brand identity is given to a matched sample in concealed) in which Diet Pepsi an open test (the true identity was compared against Diet of the brands was revealed), the Coke by a panel of consumers: following results were produced: Prefer Pepsi 51 % Prefer Pepsi 23 % Prefer Coke 44 % Prefer Coke 65 % Equal/can‘t say 5% Equal/can‘t say 12 % It’s not the taste alone, its the power of the added The Importance of Brands The difference between a brand and a commodity can be summed up in the phrase “added values”/ Augmented product. A brand is more than just the sum of its component parts, It embodies, for the purchaser or user, additional attributes which, whilst they might be considered by some to be “intangible”, are still very real.  The Importance of Brands How can this be explained if not in terms of the added values that are aroused in the minds of consumers when they see the familiar Coke logo and pack? Basic features 20%impact and 80%cost Added Value whereas in a brand Image, service, styling, support (80% of the impact but only 20% of the cost.) The importance of added value. The Brand-Customer Relationship With global brands around in most product categories, there is an interesting “battle of brands” in the marketing area. Battle of not just brands but a battle based on how effectively they have “penetrated” into the psyche of consumers. For example, Bisleri had become a synonym to mineral water. In the Consumer Buying Behavior (with regard to any product or service, especially in consumer products) the consumer is influenced by the “brand- pull”. This may be because of several reasons and could vary across product categories (from footwear to mobile phones) but certain generalization could be drawn for the kind of behavior. They may be: Historical presence of the product category (Time Frame) Type of product category Concept of Involvement and Branding Consumer Involvement  The Brand-Customer Relationship 1. Time Frame :- There have been brands which have carefully built up their brand equity for a number of years – Colgate, Bata, Vicks, Philips, Bajaj and these brands are likely to enjoy a higher consciousness in the consumer‘s mind in the respective product categories. This has a “rub-off” effect on their relatively recent brand extensions. There may be a number of brands, which have not built up their equity despite of their long presence in the market. These brands have gone out of the “mind-set” of consumers. Few of the reasons may be:- 2. Product Category In a new product or service categories, global brands may create a higher level of brand consciousness among consumers. This may be because of “perceived premium” associated traditionally with foreign brand names. Examples could be Motorola in cellular phones, McDonald‘s in food chains and Citibank in credit cards or you can name many more in the list. Social Value In product categories which are relatively old like ready-made garments, audio products and household appliances, global brand names may make a greater impact on the customers. In this context, the social signaling value of products (In the case of Consumer durables; cars which are bought for personal use have more of signaling value than the geyser, water purifier or contact lens because of the visibility of the products) provides the symbolic association which consumers look for in attempting to give a spur to their ego. Even in the case of non-durables (like cigarettes and pens), consumers look for brands which reflect their lifestyles to the society in general. Brand  The Brand-Customer Relationship 3. Concept of Involvement and Branding In this era of brand personality, brand extensions and brand equity, marketers are attempting to raise the emotional level of consumers not only with regard to brands but also with regard to product categories which were tills recently perceived as commodities. Imagery, positioning styles and a host of behavioral concepts are being attempted. The conflux of branded products in the market overwhelms the consumers and makes the buying choice difficult. Each brand is trying to outdo the other by attempting to create different images for it. Yesterday‘s consumer went to the shop and asked for a new tyre for replacement purposes. Today, the same consumer is faced with a “long playing radicals, anti – skids and wider ones as choices, thanks to the elevated levels of association with the product category of tyres. The routine change of oil as Lubricants for two and fourwheelers has become an area of consumer‘s decision – making with consumers asking for specific brands. Bathrooms have become glamour rooms; pepper and salts are displayed as showpieces on the dining table “Catch”; “Thirty plus” citizens are becoming fitness-conscious!  The Brand-Customer Relationship 4. Consumers’ Involvement It is involvement everywhere with anything from morning tea to airconditioners. The concept of involvement assumes significance against the current marketing scenario. With the battle of brands and minds in any product category, the consumer spends more time and effort in the purchase of product category, products, which have been inspiring to him all these years. The concept of involvement characterizes the difference in the intensity of interest with which consumers make buying decisions. This has an important impact on: The attention given to marketing communication (especially advertisements). The evaluation of information processed by the consumers The behavior of consumers in low-involvement buying situations to levels of higher involvement. While cars, cigarettes, watches, designer wear and consumer durables (like TV, refrigerator, etc) have been traditionally associated with high involvement categories, certain commodity items have got themselves into high – involvement category Ex; Apollo packaged its tyres and tubes in reusable tamper proof packs apart from creating Black Cat, Anti Skid brands – an effort to raise the involvement level of consumers.  The Brand-Customer Relationship 3. Consumers’ Involvement High Involvement Situations When a consumer is in the process of buying a TV or a two-wheeler, he could be in the high involvement situation. He may be interested in knowing the difference in the brands; he may like to objectively assess the claims made by a brand in its advertisements. Critical evaluation by the consumer gets combined with the predisposition of the consumer‘s mind (attitude). A consumer who has received a ‘word-of‘ mouth‘ reference about a brand from his friends will tend to use it at this stage. The ‘store’ image as perceived by the consumer may also matter once he has finalized the brand. Information, which is consistent with the beliefs of the consumer, will make him positively oriented towards a brand. Finally, after the formation of attitude, behavior takes place in the form of buying the brand. Low Involvement Situations In these situations, (typically surrounding consumables) the consumer may have little interest in going through the information regarding brands. It is in this context, marketers are attempting to create interest in their respective brands. Low involvement situations could also be present in some product categories (durables) where competition is not very tense. An example is the sewing machines category. For a long time there have been only a few major players References Brand Management; Knowledge Management and Research Organization Pune. 2015 Prof Abhishek Rai