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CHAPTER 1:

BRANDS & BRAND MANAGEMENT

Kevin Lane Keller

Tuck School of Business

Dartmouth College

Brand History

The word “brand” is

derived from the old

norse word “brandr”

which means: “to burn”

as brand were and still

are the means by which

owner of livestock mark

their animals to

identifyy them

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Source:

http://www.texaslonghorn.net/longhorn_info/management_tips/I

mages/Branding-CU-1009-033.jpg

Brand – an Introduction

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What is a brand?

For the American Marketing Association (AMA), a brand is a “name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition.”

These different components of a brand that identify and differentiate it are brand elements.

brand with a small ‘b’

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What is a brand?

“Brand” with a capital “B”:

Many practicing managers refer to a brand as more than that— as something that has actually created a certain amount of awareness, reputation, prominence, and so on in the marketplace.

We can make a distinction between the AMA definition of a “brand” with a small b and the industry’s concept of a “Brand” with a capital b.

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Brands vs. Products

A product is anything we can offer to a market for attention, acquisition, use, or consumption that might satisfy a need or want.

A product may be a physical good, a service, a retail outlet, a person, an organization, a place, or even an idea.

http://t3.gstatic.com/images?q=tbn:ANd9GcTFXLwHBmhehZDojyOlXfoCYQt026ssb2QaQvevhqmOlIiD_7fgubpsnOeshg

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Five Levels of Meaning for a Product

(e.g. Air Conditioner) The core benefit level is the fundamental need or want that

consumers satisfy by consuming the product or service. (Cooling and comfort)

The generic product level is a basic version of the product containing only those attributes or characteristics absolutely necessary for its functioning but with no distinguishing features. This is basically a stripped-down, no-frills version of the product that adequately performs the product function. (sufficient cooling capacity/BTU/hr)

The expected product level is a set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. (based on consumer report: having 2 cooling speed, power cord 60 inches, R-22 HCFC refrigerant etc)

The augmented product level includes additional product attributes, benefits, or related services that distinguish the product from competitors. (additional feature e.g. Electric touch-pad, temperature display, etc)

The potential product level includes all the augmentations and transformations that a product might ultimately undergo in the future. (extended “infinite life” batteries, mosquito repealant, auto on of – heat detector etc)

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A brand is therefore more than a product, as it

can have dimensions that differentiate it in some

way from other products designed to satisfy the

same need.

Source: Personal Documentation

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Some brands create competitive advantages with

product performance; other brands create competitive

advantages through non-product-related means.

http://mlb.mlb.com/mlb/images/sweepstakes/y2008/gillette/gillette_ad.jpg

http://t2.gstatic.com/images?q=tbn:ANd9GcSF1q6TqD9uZA-

M81R9Cw7NoUHNauKMmNuKeLSWnbAhyzNXEqhjFw3_xzRR4Q

Performance

non

product

related

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Why do brands matter?

What functions do brands perform that make

them so valuable to marketers?

The Famous Pepsi blind test:

“New Coke” Disaster .........

Source: http://www.brandchannel.com/home/image.axd?picture=2012%2F5%2Fpepsicoke.jpg

Pepsi ad 1

1.11 Video courtessy of Youtube

Pepsi ad 2

1.12 Video courtessy of Youtube

New coke Campaign

1.13 Video courtessy of Youtube

Pepsi Reply

1.14 Video courtessy of Youtube

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Importance of Brands to Consumers (Individual/Business)

Identification of the source of the product/maker

Assignment of responsibility to product maker

Risk reducer

Search cost reducer (due to their past experiences, the simplification for their

product decision)

Promise, bond, or pact with product maker (trust and loyal to the brand as long

as they are satisfied/able to fulfil their functional utility)

Symbolic device(allowing customer to project their self image)

Given to the difficulty of assesing and intepreting product attributes and benefits

of experience and credence product, Brand become important as a signal of

quality :

Search goods (e.g. groceries: consumer able to evaluate the product attributes such as

sturdiness, size, color etc. by visual inspection)

Experience goods (e.g. automobil tires: should experience it first/actual product trial to

judge durability etc)

Credence goods (e.g. Insurance coverage: consumer might rarely learn product attributes)

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Reducing the Risks in Product Decisions

for customers

Consumers may perceive many different types of risks in buying and consuming a product:

Functional risk—The product does not perform up to expectations.

Physical risk—The product poses a threat to the physical well-being or health of the user or others.

Financial risk—The product is not worth the price paid.

Social risk—The product results in embarrassment from others.

Psychological risk—The product affects the mental well-being of the user.

Time risk—The failure of the product results in an opportunity cost of finding another satisfactory product.

Picture source: http://t3.gstatic.com/images?q=tbn:ANd9GcTdVzogoarhQdxjy4b-os9V5VjgVC3SZAWBvSwafZ5v0nZ9hx-B

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Importance of Brands to Firms

Identification to simplify handling or tracing, and operationally help to

organize inventory and accounting records

Legally protecting unique features to ensure that the firm can safely

invest in the brand and reap the benefits of a valuable asset (can be

protected through registered trademark, manufacturing through patent,

packaging through copyright and design: Apple vs. Samsung) Signal of

quality level

Endowing products with unique associations

capable of influencing consumer behavior,

Source of competitive advantage

Source of financial returns by providing the security of sustained future

revenues (a belief that strong brands result in better earnings and

profit performance that in turn will create greater value for

shareholders)

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Can everything be branded?

Ultimately a brand is something that resides in the minds of consumers.

The key to branding is that consumers perceive differences among brands in a product category.

Even commodities can be branded:

Coffee (Maxwell House), bath soap (Ivory), flour (Gold Medal), beer (Budweiser), salt (Morton), oatmeal (Quaker), pickles (Vlasic), bananas (Chiquita), chickens (Perdue), pineapples (Dole), and even water (Perrier)

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An Example of Branding a Commodity

De Beers Group added the phrase “A Diamond

Is Forever”

Source:

http://www.gemnation.com/images/debeers/3_stone

_ring_she_already_kn.jpg

Source:

http://youthvoices.net/discussion/diamo

nd-engagement-rings

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What is branded?

Physical goods

(Coca Cola, Mercedes benz, ribena, etc)

Services

(McD, Hilton, TM, AisAsia, etc)

Retailers and distributors

(Carrefour, Giant, 7 Eleven, Lotte, etc)

Online products and services

(Amazon.com, Google, etc)

People and/ organizations

(Nonprofit Organization, Donald Trump, etc)

Sports, arts, and entertainment

(Harry Potter, Broadway, MU, etc)

Geographic locations

(Las vegas, Genting, Bali, etc)

Ideas and causes

(Save Orangutan,, AIDS ribbon, etc)

Source: various resources fom Google Images

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Source of Brands Strength

“The real causes of enduring market leadership

are vision and will. Enduring market leaders have a

revolutionary and inspiring vision of the mass

market, and they exhibit an indomitable will to

realize that vision. They persist under adversity,

innovate relentlessly, commit financial resources,

and leverage assets to realize their vision.” Gerald J. Tellis and Peter N. Golder, “First to Market, First to

Fail? Real Causes of Enduring Market Leadership,” MIT Sloan

Management Review, 1 January 1996

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Importance of Brand Management

The bottom line is

that any brand - no

matter how strong

at one point in

time - is

vulnerable, and

susceptible to poor

brand

management. Source: http://celebritynewsandstyle.com/wp-content/uploads/2012/07/kristen-rupert.jpg

What are the strongest brands?

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Top Ten Global Brands

Brand 2006 ($Billion) 2005 ($ Billion)

1. Coca-Cola

2. Microsoft

3. IBM

4. GE

5. Intel

6. Nokia

7. Toyota

8. Disney

9. McDonald’s

10. Mercedes-Benz

67.00

56.93

56.20

48.91

32.32

30.13

27.94

27.85

27.50

21.80

67.53

59.94

53.38

47.00

35.59

26.45

24.84

26.44

26.01

20.00

1.25 Source: http://socialcommercetoday.com/wp-content/uploads/2011/10/BGB2011-Poster-Interbrand-1.png

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Branding Challenges and Opportunities

Savvy customers (well informed, social media, info/opinion web

etc. - e.g. Traveladvisor, FB, twitter, blogs etc)

Brand proliferation (the rise of brand and line extension, getting

crowded hard to decide)

Media fragmentation (more and more specific media)

Increased competition (Globalization, low-priced competitor,

brand extension, deregulation)

Increased costs (higher cost of developing a product or

supporting the existing one)

Greater accountability (short term profit target/benefit but long

term cost/consequences e.g. Cutting advertisining cost)

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The Brand Equity Concept

No common viewpoint on how it should be conceptualized and measured

It stresses the importance of brand role in marketing strategies.

Brand equity is defined in terms of the marketing effects uniquely attributable to the brand.

Brand equity relates to the fact that different outcomes result in the marketing of a product or service because of its brand name, as compared to if the same product or service did not have that name.

Fundamentally, branding is all about endowing products and services with the power of Brand Equity

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Strategic Brand Management

It involves the design and implementation of

marketing programs and activities to build,

measure, and manage brand equity.

The Strategic Brand Management Process is defined as

involving four main steps:

1. Identifying and establishing brand positioning and values

2. Planning and implementing brand marketing programs

3. Measuring and interpreting brand performance

4. Growing and sustaining brand equity

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Strategic Brand Management Process (to pull all various concept together)

Mental maps

Competitive frame of reference

Points-of-parity and points-of-difference

Core brand values

Brand mantra (core brand promise)

Mixing and matching of brand elements

Integrating brand marketing activities

Leveraging of secondary associations

Brand value chain

Brand audits

Brand tracking

Brand equity management system

Brand-product matrix

Brand portfolios and hierarchies

Brand expansion strategies

Brand reinforcement and revitalization

Key Concepts Steps

Grow and sustain

brand equity

Identify and establish

brand positioning and values

Plan and implement

brand marketing programs

Measure and interpret

brand performance

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http://thisisnotawebblog.files.wordpress.com/2011/11/werkgroep-01-mindmap2.png

Example: association tree/ mental map

Li Ning Company Limited is one of the leading sports brand companies in China, mainly providing sporting goods

including footwear, apparel, equipment and accessories for professional and leisure purposes primarily under the LI-

NING brand. Headquartered in Beijing, the Group has brand marketing, research and development, design,

manufacturing, distribution and retail capabilities. It has established an extensive supply chain management system

and a retail distribution network in China, predominantly through outsourced manufacturing operations and

franchised distribution (www.lining.com)