Week 1 Introduction and brand in context PDF

1.1 Overview and learning outcomes Mark as done Welcome to Week 1 of the Brand Management module. If we're thinking of brands in context, then let's recap how they sit within business and marketing strategy, because brands are a tool of profitability for companies. Of all the definitions of brands...

1.1 Overview and learning outcomes Mark as done Welcome to Week 1 of the Brand Management module. If we're thinking of brands in context, then let's recap how they sit within business and marketing strategy, because brands are a tool of profitability for companies. Of all the definitions of brands, I like really Kapferer's one which simply says, ‘A brand is a great idea backed by a viable business model,’ because that's what we need to think about. If you remember your five forces, the competitive forces by Porter, all of those are bearing down on a market and any piece of that market and all the competitors that are within it. The more similar the products and services that they are selling, the more they become commodity-like, and it's really difficult for any of those companies to create a premium. What brands have always done for us is to create that difference, give us the scope to actually add different types of aspects to products and services that will make them more unique, and therefore allow us to charge a premium. But what's happened in more recent eras is that quality has improved. People have got more possessions, their needs are more easily satisfied, so we have to look for new ways to differentiate because there comes a limit on how much you can innovate on a product itself and actually still be adding value to customers. There's such a thing as over-engineering when it comes to innovation. Brands themselves are looking at new ways of creating value for customers, and these really reflect the era that we're in. We are going to be looking at not only manufacturer brands but we have to consider the branding landscape overall. The competition to manufacturer brands is not just coming from their own competitive set, it comes in from retailers who once were thought of just generics but are now major competitors. It comes in from challenger brands who come in and disrupt our idea of value because they see the shifts in society. They see what's different in our psychologies and behaviors and see niches that they can come into and create new value. That's really what we need to focus on. It's not just what we know about brands already because the principles are there, the principles remain, but the practice of how we're able to create new value and what we really need to do to evolve that, is actually changing in current times. The other thing that's changed is actually part and parcel of having to shift those propositions. It means that as competition has become more complex, propositions also become more complex, and that means that individual companies may find it more difficult to satisfy them on their own. So what happens? They need to ally with other companies and entities to be able to deliver the value to the customer in new ways. What does that mean? It means that apart from just having a common idea of what products they would like to sell, they need to actually have common ground and shared vision and values that's going to make a successful partnership between them, and that's absolutely fundamental as well to modern branding. We'll be looking at those as we go forward. In this first week we take a broad look at some areas we’ll cover in more detail through the course. One of my key objectives will be to bring out some of the brand knowledge that you will have as individuals and in our group. Brands are all around us, we buy them, use them – work for them! We can then draw on this knowledge to share thoughts and issues of special interest in our webinars. So please post into the weekly discussion forum. The self-study content looks at brands in the context of supporting the goals of businesses they belong to - and how brands fit within our daily lives as customers, be that in practical ways or through the psychological benefits we get from them. Broadening out from the customer view, we then move to brands in the context of society more generally. You’ll find various exercises along the route and a short quiz at the end. Look forward to meeting you at the webinar! In this first week we take a broad look at some areas we’ll cover in more detail through the course. One of my key objectives will be to bring out some of the brand knowledge that you will have as individuals and in our group. Brands are all around us, we buy them, use them – work for them! We can then draw on this knowledge to share thoughts and issues of special interest in our webinars. So please post into the weekly discussion forum. The self-study content looks at brands in the context of supporting the goals of businesses they belong to - and how brands fit within our daily lives as customers, be that in practical ways or through the psychological benefits we get from them. Broadening out from the customer view, we then move to brands in the context of society more generally. You’ll find various exercises along the route and a short quiz at the end. Look forward to meeting you at the webinar! Learning outcomes By the end of this week, you should be able to: 1. Assess different definitions of ‘a brand’ and perspectives. 2. Explain the strategic role of brands and the ways they contribute to company profitability. 3. Outline the different roles brands play and the benefits they provide for customers. 4. Reflect on which brands you are most connected to, and why. 5. Discuss how brands have developed to be an integral part of modern consumer society. 1.3 Brands facing change The current events of the global pandemic have had a major impact on people's lives, and brands have had to decide how to react to support their customers. Think about the communications and activities of brands you have seen – which ones do you think have adapted well, and why? Post a short item in the discussion (300 words maximum) and reply to someone else’s. 1.4 What is a brand? The concept of brands and the word ‘brand’ is something we hear frequently. But ask 20 people to define ‘a brand’ and you might get 20 different answers. Reflective activity Before you read further in this section, take a few minutes to write a sentence or two on how you would define ‘a brand’. The origins of the word ‘brand’ go back in history. Developing from early Germanic ‘brinn-an’ meaning to burn, this later appeared in the 15th century when its meaning referred to burning an ownership mark on cattle. By the 19th century, the meaning had transferred to mean a physical verbal-visual mark, appearing first in marketing in the 1920s. Since then, the now commonly-used term has been defined in many ways, but why? There are many reasons: Genuinely different views as ideas have evolved over time: definitions of words may change, taking on new or added meaning as external factors change their use. Brands are multi-dimensional in their characteristics and the roles they play, so different people may focus on different aspects. Definitions Sometimes the definition focuses on brand as the noun, to differentiate a product, place, person etc: The name given to a product to help create an identity and differentiate from other products in the same category. The name should be unique, extendable, pronounceable, global, capable of registration to protect it, plus it should indicate the product or service category and quality. Chartered Institute of Marketing, marketing expert glossary Some definitions focus on the process of branding: Brand is ‘ a tool – a form of evidence of a service firm’s marketing practices …’ Berry and Parasuraman, 1991 Some define a brand as the literal assets a firm holds in proprietary rights in a name or brand artefacts. Another key factor referred to in brand definitions is that a brand representation should evoke an emotion in the person thinking of the brand. the engagement of consumers in a deep, long term, intimate emotional connection with the brand, which is beyond the benefit based satisfaction, and which creates a special trust based relationship for the development of a holistic emotional experience. Morrison and Crane, 2007 The 'mind-space' view of the brand is that of the associations held in someone’s mind as a mental representation. In fact, all these definitions reflect aspects of branding. Understanding how all these aspects are integrated is the theme that runs through this module. Brand roles We can integrate these definitions if we consider the roles that brands play. How brands work to create value at different levels has evolved over time. Products Jayne Heaford To emphasise what you will have learned in Marketing strategy: brand can be attached to products, organisations or people. When we refer to ‘product’, this is not just a physical good, but all aspects of an offering to a customer, ie a physical good plus service and/or experiential elements, or a digital offering – although unless digital products are purely purchased and consumed online, most products have tangible and intangible elements. 1.5 Why do organisations need brands? So, a one-minute reminder of why organisations need brands. [Four circles appear on the screen. They are labelled ‘new entrants’, ‘customers’, ‘substitutes’ and ‘suppliers’ with arrows pointing to a circle in the centre labelled ‘high rivalry, less profit’.] In any market, we know forces are pressing down on it to reduce profit. Because there will be high rivalry if companies are offering very, very similar products and services. So what do brands do for us? Well, the forces will still be present. [The four circles appear labelled ‘new entrants’, ‘customers’, ‘substitutes’ and ‘suppliers’ with arrows pointing to a circle in the centre labelled ‘more difference, more profit’.] But if the owners of those products and services are able to make them different via branding techniques to give them different appearances, different benefits, to create to different people, to attract them, then the pressure of the forces is going to be less and they will therefore be able to get more profit. So how are the brands doing this? [A chart is shown titled ‘The progression of economic value’. The x-axis is labelled ‘Increasing potential for price premium’ with an arrow pointing left to right of the chart. The y-axis is labelled ‘Increasing degree of differentation’ with an arrow pointing from the bottom to top of the chart.] [A box appears in the bottom left of the chart labelled ‘extract commodities’, leading to a box above and to the right of it labelled ‘make goods’, leading to a box above and to the right labelled ‘delivery services’, leading to a box at the top right of the chart labelled ‘stage experiences’.] They're layering on to ordinary commodities and goods. More benefits, a service wrap, and, much more today, really looking at a whole experience that people are getting from the brand. And the more they can actually create those layers. And therefore a difference, the more potential they have for charging a price premium. And that's really, in a nutshell, why we need brands. 1.6 Portfolio exercise – differentiation example Do some research on your local environment to find a brand that has been successfully developed to stand out against its competitors. This differentiation may have made it one of the leaders in its category – but it could be a brand with smaller brand sales but big brand awareness due to some distinctive characteristic. Find a picture or take a photograph and upload it to the discussion forum with: The name of the brand and a product description (brief - maximum 300 words) How has it created its distinctiveness? What is the market/category and geographical location – is this a local brand? Does it have a cultural relevance? (If you are unable to provide a picture or photograph then please only do the written part of the activity). Choose from one of the following categories: a household cleaning product a snack food personal care a local service. Discussion Your contribution to this discussion will be assessed and will count towards the 10 per cent participation mark for this module. Sharing your ideas, perspectives and experiences with others can enhance your learning, as you refine your own thoughts and receive feedback from others. Take the time to read and reply to others’ posts and check the participation marking criteria(opens in a new tab) for details on improving the quality of your discussion contribution. 1.7 What do brands do for customers? The benefits of brands You know by now that brands represent a ‘bundle of benefits’ which can be any mix of: functional tangible psychological intangible. As the functional, tangible attributes are most easily copied, the aim for brands is to be associated with higher-order emotional attachments. Researchers have studied how brands are often used by individuals to help attain different goals, and that creates longer-lasting and deeper mental connections than non-motivational ideas they may hold about a brand. These motivations may be quite practical eg a technology brand that helps you achieve tasks and get a sense of achievement; or goals linked to a desired self-image where the brand is part of moving you towards your ‘ideal-self’. Maslow’s Hierarchy of Needs One way of considering the role of brands as linked to fundamental human motivations is to consider how brand types may align to Maslow’s famous Hierarchy of Needs model (de Chernatony, 2010). Although the model was not backed by scientific research, and we don’t necessarily follow the principle of moving up the stages like a ladder, its simple form is useful in provoking marketers to think beyond the functional needs that their products meet and to consider the underlying motivations they can use to trigger responses. Maslow's Hierarchy of Needs. De Chernatony. Adapted from Swiss Re 1999 1.8 Connecting brands to your own life This small exercise is to help us get a picture of the class profile in terms of most used and loved brands, and any advocates or experts on particular brands. We can consider some of these as live examples when we cover brand theory during the module. We are all surrounded by brands every day. Please simply note down some of those you are in contact with most during an average day. As there will be many types of brand you use and interact with, beside the brand name also note down the type of need it fulfills for you, ie the reason you buy it. Select the ‘Add entry’ tab below to answer the questions. Select the ‘View list’ tab to see responses from other students. When you complete the questions below, your answers will be shared with other students and you can look at other people’s answers too. 1.9 Brands in society Branding today has moved far from its origin of being attached to tangible goods. Branding has become ubiquitous across all types of sectors, in businesses, organisations and ‘people brands’. That does not mean there is one universal model for managing brands. While the underlying principles are transferable, the practical implementation and focus of activities may differ when building brands of different types. This mirrors marketing generally, as the emphasis on which techniques a company uses depends on where it sits within its industry ecosystem and the number and types of partners and customers it deals with. Historically, creating and managing brands was associated with consumer goods companies rather than business-to-business firms, but as a firm’s ‘company brand’ represents its competences and reputation, it has a vital role in guaranteeing performance and reducing risk for business customers and partners. Increasingly, business-to-business companies also raise awareness of their brands to the wider public. Service companies have also become more prominent in economies. Although pure service brands are not selling tangible goods their success depends on tangible cues to signal the quality of their services. As well as highly visible branding in their physical or digital sales and service environments, initiatives to build their brands internally are a key focus for service companies. People as brands are not a new phenomenon, but the rise of the internet has provided platforms for individuals to promote themselves as brands, or ambassadors for brands. Discussion Due to their ability to create value through differentiation, branding has permeated society. Some sectors and categories are listed below, find an article about a brand from one of these categories that has been in the news and add it to the discussion forum. Technology Charity sector Luxury goods Industrial products Pharmaceuticals Retail Services Cultural icons People Consumer goods Education Pure digital services Business-to-business Travel Component or ingredient brands This discussion will NOT be assessed. 1.10 Purpose driven brands Exceptional brand development skills have propelled some companies to be the world’s most valuable firms. As societies have become more aware of the wealth and power such companies hold, so expectations have increased about their ability to affect change, and responsibility to do so. This has led to the concept of ‘purpose-driven’ marketing and brands where the pursuit of profit is aligned with a higher-order goal linked to societal good. In fact, before any brand is launched, even if its goals are wholly commercial, the first question to ask is ‘why does it exist?’ Unless there is a clear idea of what it will add to a category or sector, it is unlikely to appeal to customers and so chances of success are slim. Defining a strong purpose or ‘reason for being’ is the first step to a brand’s ethos that will drive its design and activities. In modern brand management it is common to express brand purpose in broader societal terms. This creates positive associations and brand image to attract customers, so some commentators question how authentic such claims are, and ultimately the only proof is actions linked to the brand. 1.11 Brand purpose SAP is a leading producer of business software, find out more about the company by visiting Purpose and Promise | About SAP SE (opens in a new window)(opens in a new tab). Note how this company expresses its top line Brand Purpose. Choose some stories that interest you on how that purpose actually translates into activity. This is a business-to-business company dealing in enterprise software. Are you surprised to read about the ways it uses its products on projects with major societal impact? Add your observations to the discussion forum. Your contribution to this discussion will be assessed and will count towards the 10 per cent participation mark for this module. Sharing your ideas, perspectives and experiences with others can enhance your learning, as you refine your own thoughts and receive feedback from others. Take the time to read and reply to others’ posts and check the participation marking criteria for details on improving the quality of your discussion contribution. 1.12 Brand match exercise Successful brands become memorably linked to an idea, which will be linked to a key differential value they offer. Can you identify the brands linked to these associations? Note down the brands and then compare your responses to the answers below. 1. A car brand famous for its safety. 2. A global bank that ‘thinks local’. 3. Gives someone shoes. 4. Home exercise with instructors online. 5. Call for a ride home. 6. Intends to spread knowledge and ‘do no evil’. 7. Chinese online sales giant. 8. Technological aesthetics and ease of use. 1.13 Survey: Reflect on your learning Take a moment to reflect on your learning this week. Have you achieved the learning outcomes? This activity aims to help you reflect and action plan to give you a live picture of your progress throughout the week. It also aims to help you identify your strengths and areas for development. Reflect on the questions asked and answer them, then click Submit at the bottom of the screen to save your completed reflection. If you don't want to finish it in one sitting, you can click the Save button and return to complete it later. You can complete this self-reflection as many times as you want and you will be able to review each reflection. You are encouraged to return to this activity after the webinar to see if your knowledge and understanding has progressed. Welcome to week 2 2.1 Overview and learning outcomes Welcome to week 2 of the Brand Management module. This week we start to look at the stages and activities involved in creating a strong foundation for a brand. In other modules you will have looked at examples of how brands have successfully communicated or interacted with customers. As mentioned in week 1, to master the brand building process we must start from a deeper place, inside the organisation. In modern brand management, the customer is not the sole target for brand communications: staff are also seen as targets, as are many types of external stakeholders. This is linked to changes in customer expectations, as companies can no longer think just about a proposition for tangible goods they are designing and delivering ‘out’ for customers to buy. Instead, companies must increasingly consider how customers perceive and evaluate experiences from any encounters they have with the brand, and staff are intrinsically part of that process. Learning outcomes By the end of this week, you should be able to: 1. Explain the key steps in the brand building process. 2. Identify the foundational building blocks of a brand. 3. Apply frameworks to assess how facets of a brand build a congruent identity. 4. Evaluate a brand’s identity versus its competitors. 5. Be aware of common positioning problems to avoid. 2.3 Brand vision This section is concerned with the foundational building blocks needed to develop a strong brand, and how using conceptual models to show how they relate helps managers to coordinate practical activities to work cohesively. Whether it is for a start-up brand, or a large, established company that needs to undertake a major ‘brand review’ to revitalise its future, the first questions to address are in the brand vision model by de Chernatony (2005), who pioneered the idea that companies should build themselves as brands ‘from the inside out’. De Chernatony proposed that the starting questions are: Purpose Why does the brand exist? What does it bring to the world, its sector or category? Envisaged future Where do we want to go? There has to be a sense of direction to steer decisions on how to move forward and know what to avoid. Values How should we behave? On what terms will success be built? There will be times when more profit could be gained, but what are the ethical codes that will ensure decisions don’t lead to actions that are unlawful, unfair or harmful to individuals or society? Brand vision model Together these combine into de Chernatony’s brand vision model. Those fundamental questions apply for owners starting a brand, or for an established brand wanting to review its purpose and future path. Uncovering the brand vision A triangle is shown, the centre is labelled ‘Brand vision’ with arrows point to the top of the triangle and the two bottom corners, the arrows are double-headed so also point back. The top point is labelled ‘Envisioned future’ with the question ‘Where do we want to go in the future?’ The bottom right is labelled ‘Purpose’ with the questions ‘Why do we exist? What unique value do we offer?’ The bottom left is labelled ‘Values’ with the question ‘How should we behave’? Purpose A strong purpose is one that links activities to higher-order societal benefits beyond direct sales and profit goals. Purpose and profitability are linked, however, as staff are more motivated if they can believe their daily tasks contribute to a higher-order picture. This builds self-identity for individuals and helps cultivate a sense of belonging within the company. It also creates positive associations with external parties, and thus improves organisational reputation. Examples of strong purpose and vision Developing the vision The ‘envisioning’ process for a company-level brand is part of the ‘where do we want to go’ stage of strategic planning. To develop clear strategic direction, a team or teams should project thinking out to a timeframe ahead and then create sub- plans backwards to the current day. This ensures short-term objectives work towards strategic goals. The exercise should combine different disciplines and views and involve a mix of analytical and ‘blue-sky’ aspirational thinking so the vision involves a ‘stretch’, to create a sense of excitement to motivate staff. 2.4 The importance of brand values in management to resonate with present and future customers, brands must realise that, apart from market share competition, there is also a values competition. Kapferer, 2012 Values are beliefs that are strong and enduring and shape how we react to the world and therefore they shape our behaviours. In the past two decades many organisations have extended their brand management to include branding initiatives to internal audiences, and often the bigger ecosystem of other entities they collaborate with. The aim is to ensure the organisation as a brand is represented to the outside world in a coherent and consistent way. This is recognising that the external view of the brand is not built solely by communications projected by the organisation, but also by its actions and those of its staff. Developing a unified understanding of the brand’s values serves practical purposes, as managements cannot instruct staff on every action or decision they may need to take. Shared values act as guiding principles on how to behave. How are brand values developed and used in organisations? For a large-scale, strategic review of an organisational brand, it is common to involve a large section of staff in nominating ‘values’ they feel are core to the organisation’s way of working. Staff inputs and buy-in are essential, as often such reviews may occur after mergers or acquisitions, or if a company needs to evolve its strategy. Other ways in which brand values are used as tools for management is in recruiting and managing staff performance. Attracting applicants with similar values is a greater guarantee they will fit the culture and deal with customers as the brand wishes. Aside from including values in hiring, many organisations review staff performance not only on what objectives were achieved, but if the company’s values were upheld. Examples of values The table below is a short extract from how an organisation might use values within a ‘competence framework’ to review a staff member's performance and behaviour in reaching their objectives. Example X-corporation ‘Our values’ Core values Both Facebook and Microsoft have publicly stated their core values. When companies espouse values, they are judged by them. In your view, can you think of any examples of how Facebook and Microsoft's actions have supported, or contradicted, their stated values? Jayne Heaford To sum up, brand values may seem like abstract notions but in fact they drive practical activity by guiding staff behaviour and can be projected through communications – both of which affect how customers and other stakeholders think and feel about the organisational brand. So when Kapferer said companies are now in a ‘values’ competition he meant companies that from a product view may look like ‘head on’ near competitors selling very similar products could each appeal to distinctive customer groups if their values give them a different stance that people identify with. Discussion Note:What are the brand values of an organisation or company you have studied with or worked for? How do you think the brand values influenced staff behaviour? Share your thoughts in the forum below. Your contribution to this discussion will be assessed and will count towards the 10 per cent participation mark for this module. 2.5 Brand alignment and authenticity Clarity about the brand’s core vision and values is linked to the concept of ‘authenticity’, which is increasingly recognised as being a key criteria desired by modern consumers for their buying decisions. Authenticity Authenticity can be defined as a brand being true to itself – ie its origins, purpose and espoused values – and being true to what it conveys to others (Pine, 2004). This relates to keeping its commitments to customers but also, for example, if a brand makes inaccurate claims about eco-friendly policies that were not accurate, it could lose reputational trust. Can you think of any examples of this? Jayne Heaford A famous example of this is Volkswagen’s emissions scandal, where it was found that VW had fitted devices to its diesel cars which meant that the amount of emissions were lower in laboratory testing conditions than when the cars were driven on roads. So aligning the external messages about what the brand can or will do with the internal capabilities to support them is essential. Brand iceberg model Davidson (1997) considered the visible aspects of a brand seen by the outside world as being a small part of the company’s activities. Using an iceberg analogy, he proposed a brand needs a much bigger invisible foundation of functions, capabilities and resources and the key point of his model was that activities above and below the surface must be aligned. The brand is not just the visible elements customers see, brand management is now commonly thought of as coming from and through the whole organisation. An iceberg, the top is visible above the sea and is labelled appearance, this contains the brand name, advertising, products, promises and people. Below the surface of the sea, one side of the iceberg is labelled skills and values and this contains customer focus, integrity, people development and measurement. The other half is labelled substance and this contains high quality, cost consciousness, treatment of people, teamwork and innovation. Brand system model Kapferer’s (2012) conception indicates that a brand must be driven by a strong concept and exceptional value proposition. This model shows the other key aspects that must be coherent but then also emphasises the need to align to the brand semiotics (visible brand artefacts) and the internal activities that deliver the brand promise and experience through products and services. All these must work together in the ‘Brand system’. Source: Adapted from Kapferer (2012) A triangle, the left side of which is labelled ‘Brand name and symbols, semiotic invariants’, with text above. The text reads ‘Traditional area of Graphic Design/Identity agencies and consultancies, graphic design identity, product or service at contact points, delivered by staff or technology.’ The left side of the triangle is labelled ‘Product or service at contact points, delivered by staff or technology’. The top of the triangle is labelled ‘Brand Concept, remarkable value proposition, tangible and intangible values’. 2.6 Kapferer’s Brand Prism Now we’ve seen how modern brand management has come to incorporate internal branding initiatives as a means to deliver a superior brand experience to customers. It also leads to a more comprehensive conceptualisation of ‘brand identity’. Marketers in past eras working on brand identity would be focused on creating a system of visual elements. This included logo, specific types and sizes of fonts, brand colour palette, types of images that were ‘on brand’, and the tone of voice (the style of writing in which the brand would ‘speak’), plus a rigid set of rules on how these could be used. While these remain important, they are only part of brand identity. Imagine a human identity – you would not consider that just on a person’s facial features, how they spoke or the colours they wear. Brands have been anthropomorphised – we ascribe to them characteristics as if they were human. As such, we should build their identities to be complex. Humans all have common elements - but variations of physical and psychological characteristics combine to give individuals their unique identity. Facets of identity – the Brand Prism model (Kapferer) Creating brands as human-like therefore gives marketers many more elements to combine to develop distinctiveness. Moving on from the previous models that considered the internal and external dimensions of a brand; Kapferer's ‘Brand Prism’ model also incorporates other elements such as the brand’s wider relationships and interactions with the environment, and the customer’s view of the brand. He sees brand identity as a prism with six facets. This framework can be used as a scanning tool to diagnose where the brand is strong or where there is scope to further develop the brand. The ‘picture of the recipient’ in the figure refers to the view of the brand from the client’s point of view and the ‘picture of sender’ refers to the view of the business. Kapferer (2012) Model showing a hexagon, the top is labelled ‘picture of sender’ and the bottom ‘picture of recipient’. The sides of the hexagon are labelled: ‘physique’, ‘personality’, ‘relationship’, ‘culture’, ‘reflection’, ‘self-image’. Alongside ‘relationship’ is the word ‘externalisation’, and alongside the word ‘culture’ is the word ‘internalisation’. Brand identity vs brand image Though we may seek to project our desired self-identity through external signals (including through the brands we wear or use) to create an image others see, identity comes from within and is stable over time. Image is how others see us through their eyes. From your consumer behaviour learning you know individuals process incoming information to create a network of associations stored in memory. Together those mental associations are the image of the brand in the mind of an individual. The important point for brand managers is to frequently check that the communications about the brand are creating the image they hoped to create. Brand identity vs brand positioning As brand identity is enduring, deep elements of identity should also be preserved even if a brand needs to reposition itself at some point. As positioning a brand is deciding how to present the brand’s benefits versus those offered by competitors, this may need to change if external market conditions change. Say a person had worked successfully in a job but then conditions became tricky; they may decide to focus on some other skills they have and find a new position, they might change their style – but they would still be the same person, and would not have changed their inner identity. Just like people, brands are presented to the world through a wide mix of factors, some of which will be changeable over time, and others which are the essence of the brand – like its DNA. A key challenge in brand management is for marketers to understand levels of change that can be made without damage to the brand. The issues and processes of identifying core and secondary elements of brands to enable changes are covered in the module. Kapferer’s Brand Prism If we're wanting to create brand identity in a really rounded way, then Kapferer's Brand Prism is a really excellent tool. Now he created this in the form of a prism because he says that brands have multiple facets and we should really be looking at all of those. The facets that he tells us about actually should all be very much related to each other in order to make sure that everything is coherent. He also has different factors along the sides of the prism. The reason he's done this is because he says brands are a way to speak to customers. In other words, the company creates all of the elements and tries to put them out through a communication in order to influence the customer. He says, from communication theory, we always have a receiver and a sender. In the prism, the sender is the brand managers who are creating the individual aspects, that you all know about already, from aspects of the brand icons, the design styles, and all those elements that are created by a brand team. Those are the physique element of the facets, and very closely related to that is the personality, which is also reflecting some of those cues that we get from our sensory perception, but it also is incorporating things that come from inside the brand. Those are going out from the sender side. On the other hand, every communication has, of course, the targets, the receivers. So on the opposite side of the prism, you will see it has reflection and it has self-image. Now, reflection is very interesting because it's actually how brand managers portray their idea or their idealized customer within their marketing materials. This is really a place where it often goes wrong in marketing, and the reason is that that actually has a key aspect of what's going to attract customers based on reference groups theory. What we know is that people are going to associate with things that they resonate with, that they find familiar, and, as I say, that they are drawn to in any aspirational way. The reflection that is in the materials for marketers may not actually be a true picture of their real customer base. But it actually is more and more becoming so because stereotypes have so often been used in the past, that there's now a bit of a rebellion against using images in marketing materials that don't represent the actual population or indeed maybe the actual client base that the brands would like to attract. Some very major companies have taken it upon themselves to actually try to get the reflection in their materials far more diverse and far more representative. On the other side is self-image. Not the same as reflection, because this is actually how customers really see themselves as using that brand incorporated into their lives. Now, the brand's self-connection, as we talked about, is actually the fundamental principle on which branding is created. In other words, we look at brand theory way back and it already acknowledges that we use brands to express ourselves, we use them to extend our personality, and we use them to create the inner relationship that we have in thoughts about ourselves. Brand's identity and our self identity are very importantly correlated. Look at the very important paper I've put on this. It also reflects on how things have changed. If we look at the past, we may think about reflecting ourselves and extending ourselves through our material possessions. You will think of status brands, for example, being symbolic of things that we want to reflect to other people and other aspects of our personality. Now we're in the digital age, things are changing again. Why? Because we're actually changing from a lot of material goods into having virtual goods as well. When I say virtual goods, of course, I mean products, goods, or services. That means that we've got new ways that we are relating to brands, and brands are actually facilitating how we extend ourselves in cyberspace. In the middle of these two areas, we have then relationships and culture. Relationship is obviously going to come out of how the person has actually reflected and been attracted to the brand, and how the brand has actually nurtured that relationship to where it wants to be, because we now, of course, think about relationship marketing and not transactional one-off sales. That relationship, again, is something that will encompass how individuals might use the brand to actually connect with others. On the other side is the culture, and culture is really a continuation of what we've been thinking about in terms of our values that we've studied previously. The culture from inside the company is going to actually influence how it projects itself outside, and also brands are going to be totally drawing from existing culture outside in order to stay contemporary. But also, the greatest brands actually shape culture. They create ideas, they gather opinions behind them, and they can actually have a lasting effect of creating imprints on our memory and our social history. This is a really important model. Look at some examples about how these different facets work and always be using it to see where opportunities are to develop those facets or where there are particular weaknesses that might need improving, and indeed how the whole piece works together, because this is a major diagnostic tool that we can use both to create brands or to assess existing brands and rate them versus their competitors. 2.7 Self-brand connection A core premise about how brands succeed is that they can provide emotional benefits above the functional benefits a product may provide. We have seen that emotional and psychological benefits are derived and it has long been held that brands can build customers’ own desired self-identity, and help them project themselves to others. An early influential paper from Belk (1988) covered how consumers extend their sense of self through material possessions. Kapferer’s Prism includes self-identity and de Chernatony depicted the self-brand connection simply as consumers making brand choices based on a combination of their actual self, their aspirational self and a situational self. ‘Transformational’ experiences As with other aspects of brand evolution, to frame the ‘self-brand connection’ in contemporary terms, there is a more extreme expectation on what customers expect from some brands. As consumers became accustomed to the availability of high quality goods, they came to expect added services to offer more value. But when service expectations are met, they become taken for granted – and over the past two decades experiences became more desirable. Now, as expectations rise again, consumers want more than a transitory experience ‘in the moment’ and seek more brands offering ‘transformational’ experiences. That is, brands that serve the goal of the consumer making a lasting change in their life, through using or or co-creating their future with the brand. Belk is a leading author on how we build our identity through possessions, which is a key premise of brand development theory. He has updated his earlier work that focused on physical possessions to consider how this changed in the digital era as our products become ‘dematerialised’. Read the paper: Belk, R. ‘Extended self in a digital world’: Reflect on how the key author critically analyses others’ diverse opinions on how our self-identity is extended through possessing or accessing physical and virtual goods. Jayne Heaford Did you pick up on the major themes? Belk's earlier papers discussed how our physical possessions act as memory markers and connect us to other people, places and our previous selves. The discussions here are about if we are as attached to virtual goods and how for some these seem just as ‘real’ and are invested in, protected, and also build or reflect personal identity. However, there is also the argument that the digital era gives more potential to extend ourselves, through shaping representations of ourselves that may differ significantly to our physical selves, or the real lives we lead. Another really significant theme covered is the aspect of creating aggregated identities with others in an age when sharing information or access to resources is easier than ever. The paper is full of points to provoke thinking about how we construct our own sense of self – I hope you found it interesting. 2.8 Week 2 quiz This quiz is an opportunity for you to check your understanding of some key points covered this week. There are five questions to answer. At the end of the quiz, you will see your marks out of five. This mark will not count towards your final module assessment – this is purely a self-test. Welcome to week 3 3.1 Overview and learning outcomes You're familiar with the concept and the components of brand equity. Very famous expressions of that are Aaker's model – which is very simply composed of brand awareness, brand associations, perceived quality, and the level of loyalty, and intellectual assets – and Keller was another very influential writer in this area with his brand equity pyramid. Now Kapferer, again, says that perhaps we have moved on to add extra elements because when they were created, the early theory was very much focused on a relationship or a relevance between a brand, which was a product based brand, and an individual. Now, over the course of your module, you're going to have really looked at many modern techniques that are being used in marketing and relating to brands. If we think about, well, what do we abstract from them? What do we actually look at a higher level and say, ‘What's different, what's moved on? What's evolved in brand management?’ What really has evolved is that we are in the societal age of marketing. I've mentioned about new value and I've mentioned about more complex propositions. Now specifically what I mean by this is that whereas before the proposition was made to the individual, for the benefits, to the individual, whatever they may be, they may be functional or emotional. But what is said by Kapferer as the era that we're in now is that we need to have another level built into the propositions. In other words, brands need to make propositions that give the individual benefit, but also a collective benefit. If you analyze some of the propositions that are now about, you will see indeed how many brands are building the societal aspects into their core proposition. This is what has really changed and Kapferer also mentions, if you look at Bonner's model that's in the cultural section, that the reason for this is that there are mentalities that live with different levels of development of societies. In other words, we move from what might be a traditional way of looking at our society, and feeding off of our family, and other influences. As we move on and we get more to status orientation, perhaps more of externally driven, move on again and become very focused on individualism. We will see that is where the west has been for a very long time. But if moving on from that, as those individuals find that they need more meaning than what is created by the material goods that they have, then we're looking at the greater good. We're looking at the wider benefits to society. In other words, the ‘I’ turns into the ‘we’ and the ‘us’. Think about how that really relates to what you've been learning on your program so far. How many techniques are actually all concerned with sharing, about connections. That's what brands are actually doing and have been doing particularly more so since web 2.0 came in about 2005. This is only going to continue and accelerate with our new technologies. Because really brands are facilitators, they are now becoming – technology brands that have come into the market, new platform brands – are really the things that define this era of branding. It's all about sharing, it's all about making connections. In terms of brand equity, it's not only making connections for customers and for citizens who can actually connect with others like never before. But for the brands themselves it's really important. Because if you think about the voluntary work that individuals are putting in to platforms, to different types of connections, then the brand owning companies are themselves actually integrating all of those user networks and all of the content that those people are creating to actually incorporate into the value and the share value of their own companies. That's where we are with brand equity today. Learning outcomes By the end of this week, you should be able to: 1. Recall previous learning on the model of brand equity (CBBE) and research methods for its measurement. 2. Identify factors that have challenged traditional assumptions about methods to build brand equity. 3. Discuss different techniques used in modern brand management to develop brand opportunities and build brand equity. 4. Develop deeper understanding of how customer-based brand equity and financial value of companies are linked. 3.2 Week 3 General discussion The purpose of this weekly discussion forum is for you to share any questions you may have and to exchange ideas on the topics covered in the week, or more generally. As a class, you will benefit from a weekly forum only as much as you put in, so you are encouraged to use these forums as much as possible throughout the module. This discussion is for general questions and more informal chat around the module themes. Your contribution to this discussion will NOT be assessed. 3.3 Should a brand be a champion of a cause? Should a brand be a champion of a cause? Does this attract your attention and/or interest? What are the brand management issues to consider? Post your ideas in the forum to prompt discussion in this week’s webinar. This discussion will NOT be assessed. 3.4 Research techniques quiz See what you can recall from your past modules, note down your answers to the following questions: 1. What are the components of brand equity in Aaker’s simple, well known model? Jayne Heaford Aaker’s model gives the components of brand equity as being: awareness associations perceived quality degree of loyalty. 2. What approach and types of research would be suitable to probe what mental associations individuals link to a brand or brands? ayne Heaford Approach: Qualitative research is the best approach to probe for brand associations as you want to explore the respondent’s brand knowledge to find potential sources of brand equity. When you are probing for associations, you aim to uncover perceptions and preferences (multiple measures will be needed to cover a set of associations). Examples of potential techniques: 1. To probe for associations: o profile building - you might provide a range of stimuli and ask a respondent to select from them which they would see as most representative of their associations with the brand o ethnographic and observational approaches o free probing to uncover brand personality and relationships o probing questions asking for brand to be described as a person and the life it would live o asking subjects to find/build their own representations of how they see the brand. 2. Probing for aspects and quality of the brand relationships, questions unaided or aided with stimuli to uncover: o feeling/degree of loyalty  oself-concept – brand connection o nostalgic attachment o behavioural dependence o brand partnerships perceptions (matching suitability). 3. To gain insights into shopping or usage situations: o ethnographic or observational approaches (shopping in store, online; usage in locations). 3. How is ‘brand recall’ different to ‘brand recognition’ and which is the stronger measurement of consumers’ awareness? Jayne Heaford Brand awareness – can be measured in depth (recognition and recall) and in breadth (variety of situations that come to mind). Recognition – important for buying decision points. Recall – important when away from point of sale. Brand recall is a stronger measure as it is drawn from memory without sight of the brand. 4. Why is research using ‘conjoint analysis’ as the technique likely to be more useful to brands than a survey asking what customers value from a brand? Jayne Heaford Conjoint (CONsider JOINTly) analysis provides a more accurate view of what customers prioritise as being important as it is a multi-variant technique that forces them to trade-off preferences and choices to create a ranking. It is very useful to test propositions for customer types. 5. Do you know how traditional tests to discover the amount of ‘equity’ a specific brand might command could be conducted? Jayne Heaford Brand-based comparative methods Experiment: one customer group responds to marketing actions linked to the brand under review, a second group responds to the same actions for another/imagined brand. This isolates the value of the brand itself. Market-based comparative methods Experiment: the brand under review is held as ‘fixed’ and responses to changes explored eg for price-sensitivity testing; marketing campaigns, media channels, advertising combinations, potential extensions, etc. This tests for potential effects of changes. 3.5 Measuring CBBE – example of Royal Carribean cruises 1. The cruise holiday sector Until the 2020 covid crisis, the cruise holiday sector was a rapidly growing part of the world travel industry, with highly satisfied customers and repeat business. Due to the high costs of building and running ships, companies aim to sail with full occupancy, even discounting ‘up-front’ cabin costs heavily if needed, as their business model relies on passengers spending on board and paying set amounts of tips to staff that make up a large amount of their earnings. 2. Customer-based survey Brand owners can see their sales figures so know what people are buying, and if they have ways to link purchases to actual customers, for example through loyalty cards, but those figures don’t tell them why people buy. The following example shows how one company emails a survey to customers who have recently returned from a cruise, to gain data to measure various aspects of customer based brand equity.  1. Look at the types of information the survey would gather. 2. Then look at the extract from Kapferer’s model below for how brand equity assets translate into market metrics. 3. Consider how the types of data collected from customers would help the company build a picture of its market strength, and help its planning. Information the survey gathers The customer was asked questions on the following points. 1. Number of cruises taken. 2. Cruise lines used – from a set given + and field for ‘others’ not named. 3. Average price paid. 4. Type of accommodation. 5. Number in group. 6. Average overall spend on cruise. 7. Reason for choosing cruise holidays vs other types (multiple-choice options, including value for money). Satisfaction levels: 1. Usage of specific attractions and facilities on board a. + rating of the quality/their satisfaction.  2. Satisfaction for various service points. 3. Ranking the importance of various attractions. 4. Probability of returning again. 5. Would you recommend us…. How could the answers to the questions inform the company for its future planning? Jayne Heaford Numbers of cruises taken: this shows if the customer is a repeat purchaser, but combined with (2) (who else they have sailed with) also shows the company the ‘share of requirement’ they have gained vs competitors. The list of competitors will include those the company is aware of in its strategic set, but if ‘others’ are named it would reveal upcoming competitors – or if the customer moves into another price band, too (these indicate market position vs competitors). They will also know comparative prices vs competitors and know if this customer often chooses more or less expensive options than their company, depending on who else is on their list, and how often they have sailed with this company vs others. Average price paid: this will be the ‘up front’ cost for the cruise, ie the holiday price which will be the cabin but also perhaps some pre-paid elements such as drinks or internet packages, or pre-booked tours. Accommodation: this isolates the actual cabin cost – which combines with the question on overall spend on a cruise to reveal a lot about the customer’s profitability and spending habits. For example, someone who buys the lowest price cabin may actually spend heavily on high-profit elements on board – eg drinks, specialist restaurants, gambling – and be more profitable than someone who buys a higher-priced cabin but spends next to nothing on board. More will be revealed on profitability by the ‘use of specific attractions’ as to spending patterns. Number in group: this will again be an indicator of profitability, as information obtained pre-cruise will have ascertained who was the primary passenger or decision-maker. Knowing and targeting those who may bring groups is clearly desirable and profiles of group bookings also helps with the design of facilities. Use of attractions will also help the future design of space on board. More than one ship will be built to the same structural design but with space allocated differently internally for different markets to capture most profit. For example, Far Eastern markets make more use of casino facilities so that would be given more space than a ship for Europe. Questions on preference for cruise holidays: this again shows the potential for more business from the customer – if a land holiday could be converted to a cruise holiday that is business won against broad competition versus winning a customer from a near competitor (potential growth). The ‘will you return’ and ‘net promoter score’ final question of ‘would you recommend us…’ are highly important for this type of business, as seen by the percentage of repeat customers (degree of loyalty). Royal Caribbean states that 9 out of 10 would recommend them to a friend. These points are not exhaustive on how the data can be combined and such survey data is one information stream only, but this shows how simple questions can yield rich intelligence on customer based equity. 3.6 Building brand equity – evolving in our era 1. Brand equity In your marketing strategy module, you learned about the concept of brand equity and how the aim of brand building is to build equity from two perspectives: Customer-related benefits A brand with positive brand customer equity (assets) can potentially enjoy customer-related benefits. be perceived differently higher loyalty – more resistance to competition. higher profit margins – less price sensitivity from buyers better access to channels and trade terms more effective communications ability to license/franchise ability to extend. Aaker’s simple model  awareness associations perceived quality degree of loyalty. Keller’s brand equity pyramid With so much change in the last two decades, we should consider these conceptualisations of brand equity and ask how they may have evolved. From your understanding of consumer behaviour models, you might note that Keller’s pyramid suggests significant cognitive processing occurs following top-of- mind awareness (ie salience), but we know not all purchasing decisions go through such levels of processing. Consumer behaviour models also suggest that ‘think’, ‘feel’ and ‘do’ responses may occur in different orders, depending on the type of product. Brand pyramid: building blocks Keller (2009) The pyramid model itself indicates that only a small percentage of existing customers are loyal and studies have shown this is true for most markets, and digital era tools making comparison of many product classes almost effortless has reduced behavioural loyalty further. Building on the seminal papers from Aaker and Keller, research on brand equity has continued to explore ways to conceptualise and measure the concept of equity – some of the different viewpoints are covered in the paper provided(opens in a new tab). Aaker himself has continued to research how customers’ notions of value have changed and proposes that brands need to move beyond a focus on trying to outperform near competitors through incremental updates to product attributes, and instead grow by better developing new space and sub-categories through superior understanding of what is now relevant to modern customers’ lives. So how we build these different components of brand equity has changed due to the digital era bringing us more methods and tools – as well as more complexity and challenge. New aspects of building brand equity are explored in the next section. Reference Keller, K. (1993). Conceptualizing, Measuring, and Managing Customer-Based Brand Equity. Journal of Marketing, 57(1), 1-22. doi:10.2307/1252054 2. Innovating brand across categories New brands enter the market as lifestyles change and create new needs. Opportunities can arise from changing the boundaries of categories to create crossover products. Gymbox An example of this would be Gymbox. This brand has developed a distinctive identity and offering by realising that people these days want to keep themselves healthy, but that all activities have to compete for time allocation when lives are so hectic. If people had to choose between socialising, entertainment or going to the gym, which would win? So Gymbox created a brand concept to merge the exercise activity with an entertainment strand and created an environment that is like a hybrid of a gym and nightclub and social space. 3. Cultural branding What is cultural branding? This approach to brand development considers how brands are chosen by users in shared settings and situations. Early brand equity theory focused on psychology to understand the motivation of an individual in order to create marketing to influence attitudes and behaviour. Cultural branding draws more on sociology and social anthropology and how the choice and use of a brand can be impacted by others – especially in this era of increased connectivity and focus on social identity. From ‘I’ to ‘We and ‘Us’: the idea that modern brands are ‘co-created’ with customer communities. Norms, behaviours, and expectations show the values of a society. The level of economic development and supply of products to meet needs in a society also affects whether individuals relate to brands’ for solely individual needs or also consider wider social issues. Customers seeking to build their own sense of self by supporting causes is an evolution of consumers building identity through the brands they are seen to use (Bonnal 2008, in Kapferer 2012). Brands both draw from their surrounding culture and help to shape it. The argument for engaging brands in ever deeper cultural action is that as competition increases, even a well devised brand may not be enough to gain interest and they can do this to different degrees and using different techniques. Placement in other cultural artefacts Product placement in cultural entertainment is to associate the brand with situations or norms. Brand’s own storytelling Common forms of brand storytelling include: For older brands, their heritage and role in social history. For young brands, the entrepreneurial start and challenges overcome. The ad as a story to evoke emotions For modern online videos – ‘behind the scenes’ insider views. Creating cultural rituals or activities The ideal for brands is that their marketing activity actually embeds in society in the long term. Engaging with subcultures ‘Brands become iconic when they are woven into the more potent ideological currents in society’ (Holt, 2004). Genuine engagement with a societal community may create reciprocity so the brand becomes embedded in their environments. Subcultures of consumption Brand communities built around the common interest in a brand create social interactions and belonging to the brand ‘tribe’, which is at least as important as the brand object. Mini-car owners may join its club ‘by invitation’. It runs regular events where the owners show off their own cars as the mini brand has become known for how its fans customise the car to their highly individual tastes, creating the car’s ‘personality’ to reflect their own. Computer gaming immerses players worldwide in immersive imaginary worlds where they can act out other identities in online communities. Championing causes Brands today desire customers who go beyond just buying their products. They want followers, advocates, or fans, but gaining such extreme loyalty is hard for most companies. Kapferer maintains the most successful brands stand for something and are associated with an ideology, campaign or cause. Cultural activities are developing as a basis for competition, as ideas – like innovations – diffuse across groups to create change. A cause spurs action to inspire followers to feel part of a group creating change for good. Global companies are selling into all levels of communities worldwide where different cultural taboos can be challenged or societal tensions need addressing. Championing a cause can risk alienating those with different opinions. Strong brands may accept a loss of sales to stay true to their values. Conversely, ideals or causes may attract supporters who don’t use the brand but are vocal advocates that can create good publicity. Cultural branding is linked to helping with societal issues and tensions between interests and groups can be expected to increase in coming years, as vast and rapid changes unsettle structures in society. Procter and Gamble are a company you can research to see how brands promote social causes. 4. Online and platform brands Digital brands define this era of branding and of business generally. While the cultural branding approach builds equity by engendering emotional attachment, digital brands have created value by bringing extreme utility – allowing us to complete activities in faster and more cost-effective ways, as well as opening up new possibilities. We refer to ‘online, ‘digital’ or ‘platform’ brands collectively as they share some characteristics, but within those loose definitions are different business models. Theset range from those similar to conventional marketing methods to those disrupting many business sectors and reshaping aspects of society, such as the structure of jobs. From a brand perspective, Kapferer states the factors that are common to digital brands are: They ‘know’ their users from the data trails left on sites: so can adapt the user’s experience to preferences on future visits. They must ‘prove by experience’ as users judge them rapidly on how the interface performs and malfunctions are not tolerated. Online retailers are expected to offer lower prices than offline store Generally they can become global from the outset. (Kapferer 2012) These young brands have become more valuable than long-established conventional brands due to business models that deliver exponential growth. Their profitability arises from: network effects, especially for first movers – the more users the greater the value of the network scale effects from technology developments relatively low staff numbers vs value of business arbitrage between regulatory systems. With new forms of businesses, they can structure and operate to pay much lower percentages of income on taxes versus traditional businesses. Despite the huge salience in being top of mind brand names, and the market valuations put on these companies, their key challenges as brands include: Research has found their utility is valued, but they don’t engender a feeling of closeness, ie emotional attachment. Some reputational effects – size and power and data some effects of their operations cause concern with politicians and activists who fear disruption of business and employment patterns may widen divisions of wealth in society. Regulatory threat – the dominance of the leading companies becomes more monopolistic if they buy up businesses who could become competitors, then governments and regulators step in to place constraints. Technology outpaced the speed of regulation to govern the impact of activities.  Market valuation and growth do not equal profitability and some carry vast cumulative losses, with investors funding the businesses for long term rewards. Examples of digital businesses Let’s consider some examples of the different models of digital businesses: Data as product: In the digital era, the most valuable asset is information. Since 2006 Facebook has become the dominant aggregator of data on its users who exchange the data they input for ‘free’ use of the platform. All companies are responsible for ensuring the legality of the collection and transformation of information. By aggregating small fragments of information, Facebook knows more about citizens than anyone else and so its responsibility is greater than other companies. The difference to traditional research is the scale of data collection – it also owns other major channels WhatsApp and Instagram - and the sophistication of its processing of that data which enables it to sell advertising to specific targets. Hence the concern by regulatory bodies and the public when data has been misused. Online retailers are not dissimilar to our ideas of marketing exchanges in that like offline retailers they offer selection of goods users pay for and then own. Amazon’s success was built on the breadth of products offered and its speedy delivery. Its ‘smiling face’ logo and ads show happy people receiving parcels. Promoting the ‘human factor’ by showing it is a platform for small businesses to sell is a way to counter the concerns that it has taken business from many small offline retailers. Etsy is a dominant e-marketplace for creative activities and products.t Though a multi-billion business, it manages to project a folky, ‘small’ image as it confines selling to handcrafted, craft supplies, or vintage items, banning mass-produced products. As the site is associated with creativity and individuality, users get the psychological benefit of being in a creative community. Subscription models Although e-commerce has grown rapidly, it is still considered to be in the early stages of predicted expansion. Young companies continue to find new marketspace: Magzter Gold, originally an Indian start up but now worldwide, offers subscribers unlimited access to digital versions of thousands of the world’s top magazines. Its unique point is also allowing anyone to upload their own magazine to start selling. Netflix - digital entertainment services, and a media producer, creates content based on knowing key factors that viewers like. It offers subscribers choice from a library of media assets divided into 76,000+ different genres – and uses the user’s personal viewing data to suggest what to watch. Overall, it has a reputation for good customer engagement based on humour, light tone and personalising information – but had a backlash from using some users’ data to jokingly mock their preferred programmes and viewing habits. Also, there have been ‘cancel Netflix’ campaigns to protest about inappropriate content. ‘Sharing economy’ platforms These brands change the nature of conventional marketing exchanges, as users access goods for limited use, but don’t take ownership. Though rental models have existed before, these platforms help citizens offer their under-used items for others to use. It is this unconventional source of supply that disrupts formal businesses in the same sector. As platforms are intermediaries they don’t ‘own’ the assets or employ the people who deliver the end service. As a brand’s role is to reduce risk by taking responsibility for quality, these brands need to rely on forms of rating systems for credibility checks between the exchanging parties. As users are simply using the brand to reach the other party, the connection is based on utility. Read about the sharing economy in the paper ‘Marketing in the Sharing Economy’ by Eckhardt et al. (opens in a new tab) Both Airbnb and Uber had first-mover advantage, have raised huge sums from public offerings of shares, and run vast cumulative losses to date. Airbnb connects hosts offering accommodation with travellers and has disrupted traditional hotels’ business as it lists more rooms than the world’s top hotel groups. The brand is already adding more profitable activities by offering travel experiences as well as room booking. Airbnb has aimed to move the brand to more emotional connection by providing users with guidelines to create their own user-stories to post about their personal travel experiences. Uber is the most salient brand for ‘hail and ride’ cab service. It now has competitors but still dominates. As a brand it has suffered negative reputational effects over time, largely due to its claim that, as a mere booking service, it was not responsible for riders’ experiences or drivers’ work conditions. Some legal rulings and the need to build reputation have forced changes to take on more accountability which would normally be expected of a brand. Pioneering ‘social commerce’ Growing in a market where many global digital competitors could not operate, Chinese platform WeChat has evolved from a messaging app to a ‘one stop shop’ lifestyle management tool. Users could organise all their daily activities on it, giving rise to the new term of ‘social commerce’ defined to describe how it merges services. Read:Reference Eckhardt GM, Houston MB, Jiang B, Lamberton C, Rindfleisch A, Zervas G. Marketing in the Sharing Economy. Journal of Marketing. 2019;83(5):5-27. doi:10.1177/0022242919861929 3.7 Customer insight 1. Benefits Increasing equity for the brand arises from customer insight at many levels. ‘Insight’ is not an alternative term for ‘research’. Although the aim of customer research is to gain insight, gathering and analysing data does not guarantee that actionable insights will be gained. Businesses devote huge resources to understand customers and while there is an overabundance of data, finding insights into deep reasons why customers buy, or don’t buy, requires artful synthesis of many forms of information. However, the rewards of uncovering psychological or behavioural reasons that may restrict purchases are significant. Finding ways to increase usage of products by existing customers requires fewer resources and changes than finding new customers or markets. The following are examples of how customer insight can facilitate understanding of psychological barriers to purchase, allowing brands to alter attitudes and create more brand equity. Scenarios Before you go to the examples on the next page, see if you can anticipate the reasons behind these scenarios. Scenario 1 Why did software developers not rush to buy a software development product with superior attributes over other options? Scenario 2 The Bailey's drink has a distinctive identity from its bottle and product form of the drink itself, and was for some time associated with a specific occasion. Why might those factors have been a barrier to sales? Scenario 3 What customer insight led to the introduction of the ‘pillow menu’ that is now offered by many hotels but was first introduced by a company based on insight linked to its business-travel customers? Scenario 4 Why would a mobile telephony company call itself ‘O2’? 2. Examples of customer insight 3.8 Emotional branding A brand that captures your mind gains behaviour. A brand that captures your heart gains commitment. Al Ries, 1985, 2001 Emotions leave a ‘blueprint’ in the human brain which facilitates the recognition and anticipation of subsequent emotional cues and reactions. Kay and Loverock, 2008 Emotional branding connects people to products when they may not otherwise be stimulated to buy more material goods. Selling no longer works: to affluent people it needs an appeal to beliefs and values. An essential role of brands is to move users to a level of attachment to the brand based on emotional connection rather than just utility. Evoking emotions has various advantages – from consumer behaviour theory you know our instinctive, emotional system processes incoming information faster than our rational, cognitive (critical thinking) system. Also, the more emotionally invested we are in something, the less critical we become, due to biochemical effects. So evoking emotions is used to first attract attention, and then to draw the viewer in to the content story to engage interest. Which emotions do brands evoke? Which emotion to evoke will depend on the type of product the brand represents and a specific communication objective, but frequent examples are: Empathy The key emotion dramatists aim to evoke, as the reader or viewer then projects themselves into a character’s situation, as if experiencing their feelings. Humour Can grab attention and aid retention. It is humorous content we are very likely to share with others. Nostalgia Older brands may trigger an age-related cohort of customers back to times of their youth by using music of the era or retro images. Fear The most powerful emotion as human’s self-protective instinct leads us to act on our fears. This may stimulate response to purchase products that alleviate the fear, such as insurance policies, or those addressing social or other forms of risk. However, care is needed not to create content that is so disturbing it triggers perceptual defences to block the messages. In modern branding, even simple products are linked to emotional stories or a concept that evokes feelings, as this gives a broader territory to create brand content and communications. The concept of functional storytelling is that different forms of stories can stimulate different types of biochemical reactions and that story creation should be matched to the type of effect. For the next activity see what examples you can find of emotions used to promote brands. 3.9 Linking products to emotional benefits Look for examples of how products have been linked to emotional branding and post to the discussion forum with a short comment. Does the communication cover both functional and emotional benefits? Is it a product you would expect to be associated with intangible emotional benefits, or is it an ‘everyday’ consumer good that has been endowed with some ‘higher order’ concept to link it emotion? Discussion Your contribution to this discussion will be assessed and will count towards the 10 per cent participation mark for this module. Sharing your ideas, perspectives and experiences with others can enhance your learning, as you refine your own thoughts and receive feedback from others. Take the time to read and reply to others’ posts and check the participation marking criteria(opens in a new tab) for details on improving the quality of your discussion contribution. 3.10 Financial valuation of brands Customer based brand equity has to convert into market activity to be valuable to a company. The market outcomes create the income and profitability that in turn generate the financial value of brands. In the marketing strategy module, you viewed some ways in which some consultancies specialising in estimating values for brands use their methods and metrics. Marketing or brand managers will not be required to create financial valuations for brands, as it is a specialist area, but it is good to know what standards exist. When brands are sold, brand valuation becomes an accounting issue. However, there have always been complications in holistic measurements of financial brand value, as: There is no ‘one’ standard method for all brand valuation – it depends on the purpose for the valuation. The value attributed to a brand must be separated from other sources of value creation in the company. The value to a buyer is based on what they can do with the brand using their own advantages – ie the value is what they are prepared to pay. Valuing brands at this level is an accounting, not a marketing discipline – we just need a general understanding. It’s been a contentious issue over time, as different schools of thought/methods emerged. Just like valuing companies overall (ie all their value, not just brands) – the methods differ according to the purpose of the valuation at that time. Historical complications in valuing brands Historically, balance sheet recording, tax treatment etc differed across national markets (regulations differ). Firms creating the brands ‘ranking’ lists also use different criteria and their own methods to distinguish their consulting businesses from others. Ranking lists are also a PR tool for those companies. Meta-standards adopted to create clarity However, recently new global standards have been introduced, at least at meta- level, to govern how methods should be adopted. These distinguish between monetary valuation and non-monetary evaluation. ISO 10668.2010 is a quality standard requirement for monetary valuation established in 2010 (still current), that specifies a framework for companies to follow covering: objectives basis of valuation approach methods sources of data and assumptions reporting methods for results of valuation. A new global standard was introduced in 2019, ISO.20671:2019. This is a meta- standard for the principles and fundamentals for brand evaluation which has three parts: 1. inputs (stakeholder view) 2. outputs (brand strength), leading to brand performances, leading to financial results 3. leading to brand valuation. This is to standardise the elements used when brand value is measured. The model shows the required dimensions to consider. For any dimension there are multiple possible indicators. The process of brand evaluation, consisting of, brand development and brand strength and brand performance. Brand development, inputs: brand: quality, service, innovation, tangible, intangible, leading to brand support and brand activities. Brand strength and brand performance, outputs: legal, customer/stakeholders, market, economic political, financial, leads to brand strength, brand performance and financial results, this leads to continuous improvement, leading back to brand development and the inputs. Brand strength and brand performance, leads to brand valuation, monetary value and brand valuation: income approach, cost approach, market approach. This then leads back to brand development and the inputs. 3.11 Survey: Reflect on your learning Take a moment to reflect on your learning this week. Have you achieved the learning outcomes? This activity aims to help you reflect and action plan to give you a live picture of your progress throughout the week. It also aims to help you identify your strengths and areas for development. Reflect on the questions asked and answer them, then click Submit at the bottom of the screen to save your completed reflection. If you don't want to finish it in one sitting, you can click the Save button and return to complete it later. You can complete this self-reflection as many times as you want and you will be able to review each reflection. You are encouraged to return to this activity after the webinar to see if your knowledge and understanding has progressed.