Adventure Works: The ultimate source for outdoor equipment Chapter 31 Branding, Packaging, and Labeling

31.1Branding Elements & Strategies Objectives  Discuss the nature, scope, and importance of branding in product planning  Identify the various branding elements  List three different types of brands  Explain how branding strategies are used to meet sales and company goals

31.1Branding Elements & Strategies Key Terms  Brand  Brand Name  Trade Name  Brand Mark  Trade Character  Trademark  National Brands  Private Distributor Brands  Generic Brands  Brand Extensions  Brand Licensing  Mixed Brand  Co-Branding

31.1Branding Branding is an important component of the product planning process A brand is a name, term, design, symbol, or combination of these elements that identifies a product or service that distinguishes it from others Brands bring any number or benefits, features, or qualities

31.1Branding Example: A company may want to cultivate a brand that suggests quality and reliability. Another company may want to cultivate a brand that suggests fun and excitement. Brands are one of a company’s most important assets and are powerful tools in the marketing and selling process

31.1Elements of Branding Brands are developed to target customers’ needs and preferences Includes elements such as:  Brand names  Trade names  Brand marks  Trade Characters  Trademarks These elements are often combined to for a firm’s corporate symbol or name

31.1Elements of Branding Effective brands have tremendous value and frequently become global brands Global brands appeal to consumers beyond the cultural and political barriers Example: McDonald’s is an effective global brand because it projects an image of consistent quality in food and service but adapts the menu to meet the needs of different countries

31.1Brand Name A brand name is a word, group or words, letters, or numbers that represent a product or service An effective brand name should be easily pronounced, distinctive, and recognizable Examples:  PT Cruiser  Pepsi  Barbie  Pop-Tarts  Big Mac

31.1Trade Name A trade name, or corporate brand, identifies and promotes a company or a division of a particular corporation The trade name is the legal name that a company uses when it does business It is used to promote a positive image of the organization Examples of Trade Names:  Procter&Gamble  Dell  Disney  Nike  Yahoo  Kelloggs

31.1Brand Mark & Trade Character Many brands incorporate a unique symbol, coloring, lettering, or other design element known as a brand mark A brand mark is recognizable visually and does not need to be pronounced Example: The U.S. Postal Service’s eagle or Apple Computer’s apple

31.1Brand Mark & Trade Character A trade character is a specific type of brand mark, one with human form or characteristics Examples:  Green Giant’s Jolly Green Giant  Pillsbury Doughboy  Keebler Elves

31.1Trademark A trademark is a word, name, symbol, device, or a combination of these elements that is give legal protection by the government Example:  The imager of the golden arches is a trade mark of McDonald’s  The colorful peacock is a trademark of NBC No other companies can use these symbol The U.S. Patent and Trademark Office grants trademark rights

31.1Trademark Companies try to extend trademark branding of products or services to include sound, color, and smell Example:  Boston Duct Tours, a sightseeing tour company, received a sound trademark for the sound of a human voice making a quacking noise Trade marks are followed by a registered trademark symbol ® These trademarks cannot be used or misused by other companies

31.1Importance of Brands in Product Planning Branding establishes an image for a product or company and projects that image to its customers and marketplace The use of brands is important in product planning for several reasons:  To build product recognition and customer loyalty  To ensure quality and consistency  To capitalize on brand exposure With careful planning, companies can also adjust or reposition a brand to capitalize on changes in the market

31.1Generating Brand Names About 75% of all companies introduce a new product name every year Example: in 1999 the U.S. Patent and Trademark Office registered over 79,000 trademarks Companies use computer software programs that specialize in generating brand names These programs check to see if the name is already owned and trademarked by another company

31.1Generating Brand Names Other companies hire branding agencies, naming consultants, or public relations firms to generate and check availability of names Over 60% if all companies conduct market research to test new brand names before they are released After researching a name, the company will then conduct brand-loyalty research to gauge the brand’s effectiveness

31.1Types of Brands Wholesalers and retailers also brand their products There are three classifications of brands:  National brands (manufacturers)  Private distributor brands (wholesalers and retailers)  Generic brands

31.1National Brands National brands (producer brands) are owned and initiated by national manufacturers or by companies that provide services Examples of national brands include:  Hershey foods  Colgate-Palmolive  Whirlpool  Sunoco  Ford Service companies that generate national brands are Northwest Airlines and Hilton

31.1Importance of National Brands National brands generate the majority of sales for most consumer product categories  70% of all food products  65% of all appliances  80% of all gasoline  100% of all automobiles are all sold under national brands

31.1Importance of National Brands Electronic commerce has created a new category of national brand: the Internet brand There are internet brands for both consumer products and services Examples of internet brands are eBay and amazon.com Examples of service brands are Monster, Google, and Yahoo

31.1Private Distributor Brands Private distributor brands are developed and owned by wholesalers and retailers Private distributor brands are also called private brands and store brands The manufacturer's name does not appear on the products

31.1Private Distributor Brands Private distributor brands appeal to customers who desire the quality and performance of national brands at a lower price Many large supermarket and retail chains have private distributor brands Examples: Radio shack, Kohl’s Villager, Wal-mart’s George

31.1The Increasing Popularity of Private Brands Private distributor brands are increasing their market share in most product categorizes worldwide Private brands are popular with retailers because they usually carry higher gross margins and thus are more profitable Private brands cannot be sold at competitor’s stores so they help cultivate customer loyalty

31.1 Generic Brands Generic brands are products that do not carry a company identity The packaging for generic products usually features a description of the product such as “pancake mix” or “paper towels” Generic brands are generally sold in supermarkets and discount stores

31.1 Generic Brands Generic items are usually priced 30 to 50 percent lower than manufacturer brands Companies that manufacture and sell generic brands do not heavily advertise or promote these products More than 75% of all U.S. supermarkets carry generic items

31.1 Branding Strategies Companies develop and rely on a variety of branding strategies to meet sales and company objectives Some of these strategies include:  Brand Extension  Brand Licensing  Mixed Branding  Co-Branding Effective use of different brand strategies can increase sales of branded products and maximize company profits

31.1 Brand Extensions Brand extension is a branding strategy that uses an existing brand name to promote a new or improved product in a company’s product line Example: Ocean Spray extended its cranberry juice drink product line by adding flavors such as CranApple, CranCherry, CranGrape fruit blends Launching new products is costly and the failure rate for new products is high

31.1 Brand Extensions One risk that companies face when they employ a brand extension strategy is over extending a product line and diluting the brand Brand dilution occurs when a brand includes too many products and the product line looses recognition and appeal with customers

31.1 Brand Licensing Some companies allow other organizations to use their brand, brand mark, or trade character through brand licensing This authorization is a legal licensing agreement for which the licensing company receives a fee in return for the authorization The agreement delineates all the terms and conditions under which the brand may be used

31.1 Brand Licensing Companies license their brands to increase revenue sources, enhance company image, and sell more of their core products Example: NFL has licensing arrangements with Pepsi and Visa. Pepsi and Visa use the NFL name and logo in their promotions to try to attract customers who are loyal to the NFL

31.1 Mixed Brands Some manufacturers and retailers use a mixed-brand strategy to sell products They offer a combination of manufacturer, private distributor, and generic brands A manufacturer of a national brand will agree to make a product or sale under another company’s brand

31.1 Mixed Brands Example: Michelin manufactures its own brand of tires as well as tires for sale at Sears under the Sears brand name A mixed-brand strategy enables a business to maintain brand loyalty through its national brand and reach several different target markets through private brands, thus increasing its overall product mix It can maximize its profits by selling a private brand product without damaging the reputation and the sales of its national brand product

31.1 Co-Branding Example: Kellogg’s Pop-Tarts are made with Smucker’s fruit filling Co-Branding is a strategy that combines one or more brands in the manufacturing of a product or in the delivery of a service This strategy enables companies to capitalize on the popularity of other companies’ product and services to reach new customers and, ideally, increase sales for both companies’ brands

31.1 Co-Branding Co-branding can work with one or many partners Co-branding can also work when two or more retailers share the same location Example: Starbucks Coffee Co. has an agreement with Barnes & Noble to open coffee shops inside their bookstores

31.1 After You Read 1)What is the difference between a brand name and a trade name? 2)List the three types of brands. 3)What are the different types of branding strategies?