Marketing Management, 13th ed 9 Creating Brand Equity Marketing Management, 13th ed

Chapter Questions What is a brand and how does branding work? What is brand equity? How is brand equity built, measured, and managed? What are the important decisions in developing a branding strategy? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-2

Steps in Strategic Brand Management Identifying and establishing brand positioning Planning and implementing brand marketing Measuring and interpreting brand performance Growing and sustaining brand value Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-3

Google - 2002 Brand of the Year

Brand A name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.

Attributes of Strong Brands Excels at delivering desired benefits Stays relevant Priced to meet perceptions of value Positioned properly Communicates consistent brand messages Uses multiple marketing activities Understands consumer-brand relationship Supported by organization Monitors sources of brand equity

The Role of Brands Identify the maker Simplify product handling Organize accounting Offer legal protection

The Role of Brands Signify quality Create barriers to entry Serve as a competitive advantage Secure price premium

Services with the power of a brand. Branding Endowing products and Services with the power of a brand.

The differential effect that Brand knowledge has on Brand Equity The differential effect that Brand knowledge has on Consumer response to the marketing of that brand.

Advantages of Strong Brands Improved perceptions of product performance Greater loyalty Less vulnerability to competitive marketing actions Less vulnerability to crises Larger margins More inelastic consumer response Greater trade cooperation Increased marketing communications effectiveness Possible licensing opportunities Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-11

The marketer’s vision of what the brand must be and do for Consumers. Brand Promise The marketer’s vision of what the brand must be and do for Consumers. Click on the video icon to view a clip about Starbucks’ brand.

Brand Equity Models Brand Asset Valuator Aaker Model BRANDZ Brand Resonance Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-13

BAV Key Components Differentiation—degree to which a brand as different from others Energy—sense of momentum Relevance—breadth of a brand’s appeal Esteem—how well the brand is regarded and respected Knowledge—how familiar and intimate consumers are with the brand Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-14

Brand Knowledge Thoughts Feelings Knowledge Images Beliefs Experiences

Secondary Sources of Brand Knowledge

Aaker Model Brand identity—unique set of brand associations that represent what the brand stands for and promises to customers (e.g., Ajax—industrial service company) Core identity elements—product scope, attributes, quality/value, uses, users, country of origin, organizational attributes, brand personality, and symbols (e.g., Ajax has a spirit of excellence) Extended identity elements—add textual and guidance (e.g., Ajax is worldly but informal, confident and competent) Brand essence—communicate the brand identity in a compact and inspiring way (e.g., Ajax has a commitment to excellence) Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-17

Aaker Model – Brand Identity Brand-as-product Brand-as-organization Brand-as-person Brand-as-symbol

Aaker Model – Brand Assets Brand loyalty Brand associations Brand awareness Proprietary assets Perceived quality

The BRANDZ Model Presence—Do I know about it? Bonding nothing better Advantage—better than others Performance—can it deliver? Relevance—does something for me Presence—Do I know about it?

Brand Resonance Pyramid

Drivers of Brand Equity Brand Elements Marketing Activities Meaning Transference

Brand Elements Brand names URLs Slogans Logos Characters Symbols

Brand Elements

Brand Element Choice Criteria Memorable--recall and recognized Meaningful--credible Likeability--aesthetically appealing Transferable--introduce new product Adaptable--updatable Protectible-- legality Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-25

Slogans Like a good neighbor, State Farm is there Just do it Nothing runs like a Deere We try harder We’ll pick you up Nextel – Done Zoom Zoom This Bud’s for you

Designing Holistic Marketing Activities Personalization—brand and its marketing are as relevant as possible to as many customers as possible Integration—mixing and matching marketing activities to maximize their individual and collective effects. Internalization—activities and processes that help inform and inspire employees. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-27

Internal Branding Choose the right moment—turning points and ideal opportunities Link internal and external marketing —messages must match internal and external campaigns Bring the brand alive for employees —such be informative and energizing Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-28

Measuring Brand Equity Brand Audits—assess health of brand, uncover sources of brand equity, ways to improve Brand Tracking—baseline information about brands and marketing information Brand Valuation—estimation of total financial value of the brand

The 10 Most Valuable Brands 2006 Brand Value (Billions) Coca-Cola $67.00 Microsoft $56.93 IBM $56.20 GE $48.91 Intel $38.32 Nokia $30.13 Toyota $27.94 Disney $27.85 McDonald’s $27.50 Mercedes-Benz $22.13 Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-30

Managing Brand Equity Brand Reinforcement—meaning of the brand Brand Revitalization—retain same or create new positioning Brand Crises

Interbrand’s Steps in Calculating Brand Equity Market segmentation—divide into mutually exclusive segments Financial analysis—earnings attributed to the intangible assets of the business Role of branding—degree that the brand directly influences drivers of demand Brand strength—likelihood that the brand will realize forecast earnings Brand value calculation—net present value of the forecast brand earnings; discounted by the brand discount rate Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-32

Devising a Branding Strategy Develop new brand elements Apply existing brand elements Use a combination of old and new

Branding Terms Brand line—all products Category extension—parent brand is used to enter a different product category from the one it currently serves (Honda automobiles, motorcycles, snow- blowers) Branded variants—specific bran lines supplied to specific retailers or distribution channels (low and high end cameras) Licensed product—brand names that had been licensed to other manufacturers to make the product (franchises) Brand dilution—occurs when consumers no longer associate a brand with a specific product or highly similar products and start thinking less of the brand Brand portfolio—set of all brands and brand lines a particular firm offers for sale in a particular category or market segment Brand line—all products Brand mix—set of all brand lines made available to buyers *Brand extension—established brand used to introduce a new brand (Hershey Kisses) *Sub-brand—combine a new brand with an existing brand (American Express Blue Cards) Parent brand—existing brand that give birth to a brand extension or sub-brand Family brand—parent brand that is associated with multiple products through extensions (Kraft) Line extension—parent brand covers a new product within a product categories it currently serves (Dannon yogurt introduced new favors) * same Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-34

Brand Naming Blanket family names (e.g., Heinz, General Electric) Individual names (e.g., General Mills—Bisquick, Gold Meal Flour) Blanket family names (e.g., Heinz, General Electric) Separate family names (e.g., Sears uses Kenmore, Cratsman) Corporate name combined with individual product names (e.g., Kellogg’s Rice Krispies, Raisin Brain)

Reasons for Brand Portfolios Increasing shelf presence and retailer dependence in the store Attracting consumers seeking variety Increasing internal competition within the firm Yielding economies of scale in advertising, sales, merchandising, and distribution Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-36

Brand Roles in a Brand Portfolio Flankers Cash Cows Low-end Entry-level High-end Prestige

Brand Roles in a Brand Portfolio Flankers—fighter brand (flagship) Cash cows—capitalizing on existing brand equity Low-end, entry-level—traffic builders High-end prestige—add prestige and credibility to the entire portfolio Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-38

Study Question 1 The American Marketing Association defines a ________ as “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.” holistic product concept product concept service concept Brand brand image Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-39

Study Question 2 Consumers learn about brands through ________ and product marketing programs. the mass media past experiences with the product the sales force shopping bots independent information sources Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-40

Study Question 3 product-based brand equity service-based brand equity The premise of ________ models is that the power of a brand lies in what customers have seen, read, learned, thought, and felt about the brand over time. product-based brand equity service-based brand equity functional-based brand equity mission-driven brand equity customer-based brand equity Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-41

Study Question 4 ________ can be defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand. Mission-driven brand equity Customer-based brand equity Product-driven brand equity Service-driven brand equity Function-based brand equity Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-42

Study Question 5 When a consumer expresses thoughts, feelings, images, experiences, beliefs, and so on that become associated with the brand, the consumer is expressing brand ________. Knowledge Loyalty Behavior Preference equity Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 9-43