10.1: Branding

10.1.1: Defining a Brand

Learning Objective

Discuss the characteristics and connotations around branding products and services

Key Points

• The word “brand” is derived from the Old Norse brand meaning “to burn,” which refers to the practice of producers burning their mark (or brand) onto their products.
• During the Industrial Revolution, the production of many household items, such as soap, was moved from local communities to centralized factories where they were branded with a logo or insignia, extending the meaning of “brand” to that of trademark.
• All of a brand’s elements (i.e., logo, color, shape, letters, images) work as a psychological trigger or stimulus that causes an association to all other thoughts we have about a brand.
• Brands provide external cues to taste, design, performance, quality, value, and prestige if they are developed and managed properly.
• Brands convey positive or negative messages about a product. They also indicated the company or service to the consumer, which is a direct result of past advertising, promotion, and product reputation.
• A brand can convey up to six levels of meaning: Attributes, Benefits, Values, Culture, Personality and User.

Key Terms

Trademark

A trademark, trade mark, or trade-mark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify for consumers that the products or services on or with which the trademark appears originate from a unique source, designated for a specific market. It also distinguishes its products or services from those of other entities.

watermark

A translucent design impressed on the surface of paper and visible when the paper is held to the light.

brand

A name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.

Example

• Campbell Soup, Coca-Cola, Juicy Fruit gum, Aunt Jemima, and Quaker Oats were among the first products to be “branded. “

Defining a Brand

A brand consists of any name, term, design, style, words, symbols or any other feature that distinguishes the goods and services of one seller from another. A brand also distinguishes one product from another in the eyes of the customer. All of its elements (i.e., logo, color, shape, letters, images) work as a psychological trigger or stimulus that causes an association to all other thoughts we have about this brand. Tunes, celebrities, and catchphrases are also oftentimes considered brands.

History

The word “brand” is derived from the Old Norse ‘brand’ meaning “to burn,” which refers to the practice of producers burning their mark (or brand) onto their products. Italians are considered among the first to use brands in the form of watermarks on paper in the 1200s. However, in mass-marketing, this concept originated in the 19^th century with the introduction of packaged goods.

During the Industrial Revolution, the production of many household items, such as soap, was moved from local communities to centralized factories to be mass-produced and sold to the wider market. When shipping their items, factories branded their logo or insignia on the barrels used, thereby extending the meaning of “brand” to that of trademark. This enabled the packaged goods manufacturers to communicate that their products should be trusted as much as local competitors. Campbell Soup, Coca-Cola , Juicy Fruit gum, Aunt Jemima, and Quaker Oats were among the first products to be “branded. “

Connotations

A successful brand can create and sustain a strong, positive, and lasting impression in the mind of a consumer. Brands provide external cues to taste, design, performance, quality, value and prestige if they are developed and managed properly. Brands convey positive or negative messages about a product, along with indicating the company or service to the consumer, which is a direct result of past advertising, promotion, and product reputation.

A brand can convey up to six levels of meaning:

• Attributes: The Mercedes-Benz brand, for example, suggests expensive, well-built, well-engineered, durable, high-prestige automobiles.
• Benefits: attributes must be translated into functional and emotional benefits.
• Values: Mercedes stands for high performance, safety, and prestige.
• Culture: Mercedes represents German culture, organized, efficient, high quality.
• Personality: the brand projects a certain personality.
• User: the brand suggests the kind of consumer who buys and uses the product.

10.1.2: Value of Branding

Learning Objective

Explain why a strong branding strategy is essential to the success of a company

Key Points

• Branding is crucial to the success of any tangible product. In consumer markets, branding can influence whether consumers will buy the product.
• Branding can also help in the development of a new product by facilitating the extension of a product line or mix, through building on the consumer’s perceptions of the values and character represented by the brand name.
• Effective branding of a product enables the consumer to easily identify the product because the features and benefits have been communicated effectively.
• Branding helps the manufacturer create loyalty, decrease the risk of losing market share to the competition by establishing a differential advantage, and allow premium pricing that is acceptable by the consumer because of the perceived value of the brand.
• Branding enables the retailer to benefit from brand marketing support by helping to attract more customers (ideally ones who normally don’t frequent the establishment).

Key Terms

Trademark

A trademark, trade mark, or trade-mark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify for consumers that the products or services on or with which the trademark appears originate from a unique source, designated for a specific market. It also distinguishes its products or services from those of other entities.

co-branding

the combination of two or more well-known brands for marketing purposes, to strengthen one another’s preference or purchase intentions, or to reach a broader audience

Branding

This process involves researching, developing, and implementing brand names, brand marks, trade characters, and trademarks.

Example

• Starbucks is a brand known for its premium, oftentimes deemed “over-priced” coffee. Yet Starbucks has a loyal fan base due to its established global branding that communicates value.

“Branding is a way to create an emotional connection with a specific audience. ” – Troika, a network branding company.

What is the Purpose of Branding and Why Is It So Important?

Branding involves researching, developing, and implementing brand names, brand marks, trade characters, and trademarks. It undoubtedly requires a significant contribution from marketing communications and is a long term exercise, but one that reaps long-term profitability.

Branding is crucial to the success of any tangible product. In consumer markets, branding can influence whether consumers will buy the product. Branding can also help in the development of a new product by facilitating the extension of a product line or mix, through building on the consumer’s perceptions of the values and character represented by the brand name.

Benefits of Branding for the Consumer

Effective branding of a product enables the consumer to easily identify the product because the features and benefits have been communicated effectively. This will increase the probability that the product will be accessible and therefore purchased and consumed. Dunkin’ Donuts , for example, is a brand that has an established logo and imagery that is familiar to most consumers. The vivid colors and image of a DD cup are easily recognized and distinguished from competitors.

Benefits of Branding for the Manufacturer

Branding helps create loyalty, decreases the risk of losing market share to the competition by establishing a differential advantage, and allow premium pricing that is acceptable by the consumer because of the perceived value of the brand. Good branding also allows for effective targeting and positioning. For example, Starbucks is a brand known its premium coffee. Starbucks has a loyal fan base due to its established global branding that communicates value.

Benefits of Branding for the Retailer

Branding enables the retailer to benefit from brand marketing support by helping to attract more customers (ideally ones who normally don’t frequent the establishment). For example, a customer who truly values organic brands might decide to visit a Babies R Us to shop for organic household cleaners that are safe to use around babies. This customer might have learned that a company called BabyGanics, which brands itself as making “safe, effective, natural household solutions”, was only available at this particular retailer.

10.1.3: Brand Loyalty

Learning Objective

Describe the conditions that must be met to achieve brand loyalty, and the consumer behaviors associated with brand loyalty

Key Points

• Brand loyalty is not to be characterized exclusively by a consumer’s ability to repurchase a brand.
• Customers’ perceived value, brand trust, satisfaction, repeat purchase behavior, and commitment are found to be the key influencing factors of brand loyalty.
• The benefits of brand loyalty are longer tenure (or staying a customer for longer), and lower sensitivity to price.
• True brand loyalty exists when: a) customers have a high relative attitude toward the brand, which is then exhibited through repurchase behavior; and b) whether the customer is committed to the brand.
• The four patterns of behavior: a) Hardcore Loyals, who buy the brand all the time; b) Split Loyals, loyal to two or three brands; c) Shifting Loyals, moving from one brand to another; and d) Switchers, with no loyalty (possibly ‘deal-prone’ or ‘vanity prone’).
• The benefits of brand loyalty are longer tenure (or staying a customer for longer), and lower sensitivity to price. Recent research found evidence that longer-term customers were indeed less sensitive to price increases.

Key Terms

Andrew Ehrenberg

A statistician and marketing scientist. For over half a century, he made contributions to the methodology of data collection, analysis and presentation, and to understanding buyer behavior and how advertising works.

Loyalty Program

Structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially beneficial to the firm.

Philip Kotler

An American academic focused on marketing. The author of Marketing Management, among dozens of other textbooks and books, and the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University.

Example

• Some fairly well-known examples of brand loyalty promotions include: My Coke Rewards, Pepsi Stuff, and the Marriott Rewards loyalty programs.

Brand Loyalty

In marketing, brand loyalty refers to a consumer’s commitment to repurchase or otherwise continue using a particular brand by repeatedly buying a product or service.

The American Marketing Association defines brand loyalty as: 1.) “The situation in which a consumer generally buys the same manufacturer-originated product or service repeatedly over time rather than buying from multiple suppliers within the category” (sales promotion definition). 2.) “The degree to which a consumer consistently purchases the same brand within a product class” (consumer behavior definition).

Aside from a consumer’s ability to repurchase a brand, true brand loyalty exists when a.) the customer is committed to the brand, and b.) the customers have a high relative attitude toward the brand, which is then exhibited through repurchase behavior. For example, if Joe has brand loyalty to Company A, he will purchase Company A’s products even if Company B’s products are cheaper and/or of a higher quality.

Brand loyalty is viewed as a multidimensional construct, determined by several distinct psychological processes, such as the customers’ perceived value, brand trust, satisfaction, repeat purchase behavior, and commitment. Commitment and repeated purchase behavior are considered as necessary conditions for brand loyalty, followed by perceived value, satisfaction, and brand trust.

Philip Kotler defines four customer-types that exhibit similar patterns of behavior:

• a) Hardcore Loyals, who buy the brand all the time
• b) Split Loyals, loyal to two or three brands
• c) Shifting Loyals, moving from one brand to another
• d) Switchers, with no loyalty (possibly “deal-prone,” constantly looking for bargains, or “vanity prone,” looking for something different).

Benefits of Brand Loyalty

The benefits of brand loyalty are longer tenure (or staying a customer for longer), and lower sensitivity to price. Recent research found evidence that longer-term customers were indeed less sensitive to price increases.

According to Andrew Ehrenberg, consumers buy “portfolios of brands.” They switch regularly between brands, often because they simply want a change. Thus, “brand penetration” or “brand share” reflects only a statistical chance that the majority of customers will buy that brand next time as part of a portfolio of brands. It does not guarantee that they will stay loyal.

By creating promotions and loyalty programs that encourage the consumer to take some sort of action, companies are building brand loyalty by offering more than just an advertisement. Offering incentives like big prizes creates an environment in which customers see the advertiser as more than just the advertiser. Individuals are far more likely to come back to a company that uses interesting promotions or loyalty programs than a company with a static message of “buy our brand because we’re the best.”

Popular Loyalty Programs

Below are some of the most popular Loyalty Programs that are currently being used by major companies as a means of engaging their customers beyond traditional advertising.

Sweepstakes and Advergames

• Branded digital games that engage consumers with prize incentives

Contests

• Skill tests and user-generated promotions such as video and photo contests

Social

Media

Applications and Management

• Develop promotions and offers within social media channels
• Ongoing management and maintenance of brand Facebook pages and other social media

Customer Rewards Programs

• Online points programs – earn prizes for incremental purchase behavior (e.g., JetBlue’s TrueBlue and American Airlines’s AAdvantage frequet flyer programs)
• My Coke Rewards, Pepsi Stuff, and the Marriott Rewards loyalty programs

• Promotional auctions – bid for prizes with points earned from incremental purchase behavior

Email Clubs

• Manage overall subscription databases – national and/or segmented by market
• Design, develop, and publish email blasts
• Develop templates specific offers and promotions / delivery

Text

Messaging

/ Mobile Apps / Desktop Apps and

Widgets

• SMS Promotions
• iPhone apps
• Branded web apps

10.1.4: Brand Equity

Learning Objective

List the 10 attributes used to measure brand equity according to marketing professor and brand consultant David Aaker

Key Points

• Brand equity can manifest itself in consumer recognition of logos or other visual elements, brand language associations made by consumers’ perceptions of quality, and value among other relevant brand attributes.
• While many experts have developed tools or metrics to analyze brand equity, there is no universally accepted way to measure it.
• Brand equity can be measured quantitatively using numerical values such as profit margins and market share, but this approach fails to capture qualitative elements such as prestige and mental and emotional associations.
• Brand attributes used to assess a brand’s equity include: differentiation, satisfaction or loyalty, perceived quality, leadership or popularity, perceived value, brand personality, organizational associations, brand awareness, market share, and market price and distribution coverage.
• Other ways that a brand equity can be measured (these can be used individually or in combination): at the firm level, at the product level, and at the consumer level.

Key Terms

David Aaker

He is a consultant and author on the field of marketing, particularly in the area of brand strategy. He is currently the Vice Chairman of Prophet, a global brand and marketing consultancy firm, Professor Emeritus at the Haas School of Business of the University of California, Berkeley, and an advisor to Dentsu, a major Japanese advertising agency. He blogs on Aaker on brands.

Brand Equity

This phrase describes the value of having a well-known brand name, based on the idea that the owner of a well-known brand name can generate more money from products with that brand name than from products with a less well-known name.

brand awareness

The extent to which a brand is recognized by potential customers, and is correctly associated with a particular product. Expressed usually as a percentage of target market, brand awareness is the primary goal of advertising in the early months or years of a product’s introduction.

brand loyalty

where a person buys products from the same manufacturer repeatedly rather than from other suppliers

Example

• For example, Starbucks can sell its coffee at a higher price than solid market competitors because consumers associate the brand with quality and value. This is why brand equity is oftentimes directly correlated with a brand’s profitability.

Brand Equity

In marketing, brand equity refers to the value of a brand that is well-known and conjures positive mental and emotional associations. For any given product, service, or company, brand equity is considered a key asset because it helps it remain relevant and competitive. Brand equity can manifest itself in consumer recognition of logos or other visual elements, brand language associations made by consumers’ perception of quality, and value among other relevant brand attributes.

When consumers trust a brand and find it relevant, they may select the offerings associated with that brand over those of competitors even at a premium price. For example, Starbucks can sell its coffee at a higher price than solid market competitors because consumers associate the brand with quality and value. This is why brand equity is oftentimes directly correlated with a brand’s profitability.

Measuring Brand Equity

Brand equity is strategically crucial, but also very difficult to quantify. As a result, many experts have developed tools or metrics to analyze this asset, although there is no universally accepted way to measure it. For example, while it can be measured quantitatively using numerical values such as profit margins and market share, this approach fails to capture qualitative elements such as prestige and mental and emotional associations.

According to David Aaker, a marketing professor and brand consultant, there are ten attributes of a brand that can be used to assess its strength:

1. Differentiation
2. Satisfaction or loyalty
3. Perceived quality
4. Leadership or popularity
5. Perceived value
6. Brand personality
7. Organizational associations
8. Brand awareness
9. Market share
10. Market price and distribution coverage

Brand Asset Valuator

Young & Rubicam, a marketing communications agency, has developed the brand asset valuator, a tool to diagnose the power and value of a brand. The agency uses this tool to survey and measure consumers’ perspectives along four dimensions:

• Differentiation: The defining characteristics of the brand and its distinctiveness relative to competitors
• Relevance: The appropriateness and connection of the brand to a given consumer
• Esteem: Consumers’ respect for and attraction to the brand
• Knowledge: Consumers’ awareness of the brand and understanding of what it represents

Other ways that brand equity can be measured (these can be used individually or in combination):

• At the firm level – Brand equity can be studied as a financial asset by making a calculation of a brand’s worth as an intangible asset. For example, a company can estimate brand value on the basis of projected profits discounted to a present value. In turn, the present value can be used to calculate the risk profile, market leadership, stability, and global reach.
• At the product level – The price of an equivalent well-known brand can be compared to that of a no-name or private label product.
• At the consumer level – This measure seeks to map the mind of the consumer to uncover associations with the given brand. For example, projective techniques can be commonly used to identify tangible and intangible attributes, attitudes, and various perceptions about the brand. Under this approach, the brands with the highest levels of awareness and most favorable and unique associations are considered high equity brands.

10.1.5: Types of Brands

Learning Objective

Name the different categories that fall under service brands

Key Points

• The different types of brands include: individual products, product ranges, services, organizations, persons, individuals, groups, events, geographic places, private label brands, media brands, and e-brands.
• The most common type of brand is a tangible, individual product, such as a car or a drink.
• Product brands can also be associated with a range, such as the Mercedes S-class cars or all the varieties of Colgate toothpaste.
• As companies move from manufacturing products to delivering complete solutions and intangible deliverables, service brands are characterized by the need to maintain a consistently high level of service delivery.
• The service category comprises the following: classic service brands (e.g. airlines and banks), pure service providers (e.g. member associations), professional service brands (e.g. advisors of all kinds), agents (e.g. travel agents), and retail brands (e.g. supermarkets, restaurants).
• Events have brands too, whether they are rock concerts, the Olympics, a space-rocket launch, or a town-hall dance.

Key Term

tangible

Touchable; able to be touched or felt; perceptible by the sense of touch; palpable.

Example

• Mercedes and the US Senate are both defined organizations and each have qualities associated with them that constitute their brand.

Types of Brands

The different types of brands include: individual products, product ranges, services, organizations, persons, individuals, groups, events, geographic places, private label brands, media, and e-brands.

The most common type of brand is a tangible, individual product, such as a car or drink. This can be very specific, such as the Kleenex brand of tissues or can comprise a wide range of products.

Product brands can also be associated with a range, such as the Mercedes S-class cars or all varieties of Colgate toothpaste.

A service is another type of brand as companies move from manufacturing products to delivering complete solutions and intangible services. Service brands are characterized by the need to maintain a consistently high level of service delivery. This category comprises the following:

• Classic service brands (such as airlines, hotels, car rentals, and banks).
• Pure service providers (such as member associations).
• Professional service brands (such as advisors of all kinds – accountancy, management consultancy).
• Agents (such as travel agents and estate agents).
• Retail brands (such as supermarkets, fashion stores, and restaurants).

Another type of brand is an organization. This can be a company that delivers products and services. Mercedes and the US Senate are all defined organizations and each have qualities associated with them that constitute their brand. Organizations can also be linked closely with the brand of an individual. For example, the U.S. Democratic party is closely linked with President Barack Obama.

A person can also be considered a brand. It can be comprised of one, as in the case of Oprah Winfrey, or a few individuals, where the branding is associated with different personalities, such as with the American Democratic Party.

Not much higher in detail than an individual is the brand of a group. In particular, when this is a small group and the individuals are known, the group brand and the individual brand overlap. For example, the OWN brand of the Oprah Winfrey Network and the brand of its known members (Oprah and her team) are strongly connected.

Events have brands too, whether they are rock concerts, the Olympics, a space-rocket launch, or a town-hall dance. Event brands are strongly connected with the experience of the people attending. Product, service and other brands realize the power of event brands and seek to have their brands associated with the event brands. Thus, sponsorship of events is now a thriving big business as one brand tries to get leverage from the essence of the event, such as the excitement and danger of car racing.

Places or areas of the world also have essential qualities that are seen as characterizations and hence also have a brand. These areas can range from countries to states to cities to streets to buildings. Those who govern or represent these geographies will work hard to develop the brand. Cities, for example, may have de facto brands of being dangerous or safe, cultural or bland, which will be used by potential tourists in their decisions to visit and by companies in their decisions on where to set up business.

Private label brands, also called own brands, or store brands, exist among retailers that possess a particularly strong identity (such as Save-A-Lot).

Media brands include newspapers, magazines, and television channels such as CNN .

The primary activity of e-brands is to deliver physical products or services, as in the case of Amazon.com . These online brands focus on delivering a service or experience in the virtual environment.

10.1.6: Brand Ownership

Learning Objective

Describe brand ownership and the rights of brand owners.

Key Points

• To really own your Brand, you must have a clear understanding of where your brand stands today and a concrete strategy that outlines how you wish to manage and grow your brand.
• Equally important is understanding what makes your brand different and creating clear and persuasive messaging communication targeting your end consumer.
• When you truly own your brand, your money is spent wisely on marketing that is targeted, sharp and effective because you have a sophisticated understanding of the marketplace, your product/service, your consumer base and your strategy.
• A brand owner may seek to protect proprietary rights in relation to a brand by registering it to become a “Registered Trademark.”
• Also, a firm or licensor can also grant the right to use their brand name, patents or sales knowledge in exchange for some form of payment.
• Brand ownership should also be considered the responsibility of its management and employees.

Key Terms

Brand Name

A term, design, symbol, or any other feature that identifies one seller’s goods or services as distinct from those of other sellers.

Registered Trademark

Designated by ® (the circled capital letter “R”), is a symbol used to provide notice that the preceding mark is a trademark or service mark that has been registered with a national trademark office.

Example

• Steve Jobs was considered a leader in shaping the identity of Apple and a key attribute for the brand, which has helped fuel a very high stock price for the company. His clear vision and leadership attracted the best talent, which then yielded some of mobile technology’s most innovative products to date.

Brand Ownership

Brand ownership is about building, developing and sustaining a brand that reflects your principles and values and which effectively persuades consumers to believe in and purchase your product/service.

In order to really own your brand, you must have a clear understanding of where your brand stands in the marketplace today, and a concrete strategy that outlines how you wish to manage and grow your brand moving forward. Equally important is understanding what makes your brand different. You must also create clear and persuasive messaging communication targeting your end consumer. You should also develop a plan to reach your goals in a realistic and organized fashion.

When you truly own your brand, your money is spent wisely on marketing that is targeted, sharp and effective because you have a sophisticated understanding of the marketplace, your product/service, your consumer base and your strategy. This will translate into disciplined and effective brand management that will enable you to remain relevant in a rapidly-changing [and oftentimes saturated] marketplace.

Brand ownership should also be considered the responsibility of its management and employees. Steve Jobs, for example, was considered a leader in shaping the identity of Apple, which has helped fuel a very high stock price for the company. As a result, the brand image and reputation has attracted some of the world’s best talent which, in turn, has yielded an variety of innovative mobile products that will undoubtedly be marked in the history of popular consumer culture.

A brand owner may seek to protect proprietary rights in relation to a brand by registering the trademark such that it becomes a “Registered Trademark.” Also, a firm or licensor can also grant the right to use their brand name, patents or sales knowledge in exchange for some form of payment.

10.1.7: Naming Brands

Learning Objective

Discuss the purpose of a brand name, and the process of researching and selecting a brand name

Key Points

• Naming a brand is crucial to its reputation, development, and future success because the primary function of the brand (name and image) is to identify the product or service in a way that it differentiates it from those of other competitors.
• A brand name reflects the overall product image, positioning and, ideally, its benefits.
• At its best, a brand can provide a carryover effect when customers are able to associate quality products with an established brand name.
• A successful brand name can enable a product to: be meaningfully advertised and distinguished from competitors, be tracked down by consumers, and be given legal protection.
• The process of naming a brand is key because it requires a systematic effort that includes generating potential brand names, screening them (oftentimes conducting market research to test their potential among consumers), and ultimately selecting the one that holds the most potential.

Key Terms

Market Research

The systematic collection and evaluation of data regarding customers’ preferences for actual and potential products and services.

Brand Name

A term, design, symbol, or any other feature that identifies one seller’s goods or services as distinct from those of other sellers.

Example

• An example of a brand name that is unique, identifiable, and differentiating is Apple’s line of mobile products which all begin with a lower-case “i” (i.e., iPad, iPod, iPhone, iTouch).

A brand is a term, design, or symbol that identifies a commercial product or service as distinct from those of other sellers. A brand name is the part of the brand that can be vocalized. A brand name can also be a name under which a business or company operates. Naming a brand is crucial to its reputation, development, and future success because the primary function of the brand (name and image) is to identify the product or service in a way that it differentiates it from those of other competitors.

Selecting a brand name is one of the most important product decisions a seller will need to make. A brand name reflects the overall product image, positioning and, ideally, its benefits. A successful brand name can enable a product to: be meaningfully advertised and distinguished from competitors, be tracked down by consumers, and be given legal protection. At its best, a brand can provide a carryover effect when customers are able to associate quality products with an established brand name.

For example, Apple has chosen to name all of its mobile products with a lower-case i, as in the case with the iPad and iPod . Another example of a brand name is Starbucks, the coffee company which is globally recognized and chooses to name its coffee sizes in Italian .

The process of naming a brand is key because it requires a systematic effort that includes generating potential brand names, screening them (oftentimes conducting market research to test their potential among consumers), and ultimately selecting the one that holds the most potential. Brand names are mandatory if the manufacturer or distributor plans to produce mass advertising for their product.

But before this process even begins, a basic branding strategy must be employed where a company or seller must select from among the following three viable options to follow:

1. A strict manufacturer’s branding policy under which a producer can only manufacture merchandise under his own brand
2. An exclusive distributor’s brand policy where a producer does not have a brand of his own but agrees to sell his products only to a particular distributor and carry his brand name (typically employed by private brands)
3. A mixed brand policy, which allows elements of both extremes (options 1. and 2.) and leads to the production of manufacturer’s as well as distributor’s brands

10.1.8: Brands and Brand Lines

Learning Objective

Identify the various ways in which organizations can expand the brand lines to capture opportunities in the market

Key Points

• When strategically executed, a brand extension to a given product line can be an effective tool for growth.
• When an organization grows successfully in a given product line, product extensions often enable the organization to capture new markets. Pepsi and Coca-Cola accomplished this through diet sodas, for example.
• Product line extensions are a common tool for extending brand lines. An extension to a product line may differentiate to capture a niche demographic, create a low cost opportunity, or collaborate with other brands.
• It’s important to keep in mind that any new product offering attached to a given brand creates a brand risk. Any issues that arise with use of the product may damage all of the products across the brand line.

Key Term

spin off

A new product offering utilizing an existing brand.

When understanding the potential in building a brand, it’s useful to recognize the way in which brands can extend. Brand extensions are usually accomplished by expanding the existing product line offerings, or potentially creating new product lines with the same brand (often in complementary markets). 

To provide some context, let’s define a few simple examples of spinning off a brand. Coca-Cola and Pepsi are fairly classic examples of simple product line extensions to expand the brand. Diet Coke fulfills a different need than regular Coke, in that it contains fewer calories. Through extending their product line, they now had the potential to capture health conscious consumers. Car companies are another good example. There are tons of different Toyota automobiles on the market, each catering to slightly different needs, price points, and geographies. Brand lines and product extensions are a key aspect of brand management.

Brand Management

To apply concepts of product extensions by adding to the brand line, an understanding of brand management strategies is a useful starting point. Investing in an intangible asset such as a brand can be a difficult process for organizations, as the return on this investment is not realized in the shorter term. However, building a strong repertoire with the target market in a given industry, and catering the product lines to fulfill various broader or niche needs within those markets, is a powerful strategic tool.

Product Extensions

Extending brands is often accomplished through new lines of product, referred to as product extensions. When considering product extensions, it’s important to identify diverse needs that can be filled by the organization through core processes. This means that organizations must understand the needs of the market, and determine if the organization has the ability to fulfill some of these needs.

While there are countless, unique reasons to pursue a brand extension based on which industry is being discussed, there are a few common areas where extensions often occur:

Low Cost

Extending into the lower cost segment is a common move for brands as they gain power and scale in the industry. As successful companies grow in revenue and size, they often attain the ability to produce at higher scale economies. Once this is accomplished, spinning off a cheaper version of a brand is a great way to achieve higher levels of growth. Tesla is a great example of this. Tesla began by selling extremely high end vehicles, with the plan to utilize the return on those sales to begin producing higher quantities of lower cost models, all of which maintain the powerful Tesla brand.

Differentiation

A broad term, which can be applied to a variety of tactics, differentiation is all about identifying a unique need that users are willing to pay a premium for. Consider the beer and wine industry. Microbreweries have seen enormous growth (and, in turn, acquisition by big companies) in recent years. Microbreweries focus on creating a unique, specialized beer which often costs more. Due to the unique experience, local support and potential variety, customers are willing to pay a premium for a differentiated product (compared to the bigger brand names).

Co-branding 

Another interesting example is co-branding. Sometimes co-branding can help an organization spread into new markets. For example, some cars come with built in surround sound systems. These cars are often partnered with strong brands, such as Bose, which provides mutual benefit and enables Bose to enter a new market. In this situation, the Bose brand is noted by car purchasers just as the car brands are considered in the context of good sound systems.

Conclusion

While extending product lines and spinning off the brand into new product formats can be a great opportunity for revenue growth, it also exposes the brand to new market forces and new risks. Careful quality control and brand maintenance is a key consideration in any new extensions to the brand. With proper execution, a brand can be a powerful asset for new product development.

10.1.9: Branding Strategies

Learning Objective

Distinguish between different types of branding strategies

Key Points

• Attitude branding is the choice to represent a larger feeling, which is not necessarily connected with the product or consumption of the product at all.
• Iconic brands are defined as having aspects that contribute to the consumer’s self-expression and personal identity.
• In “no brand” branding, the product is made conspicuous through the absence of a brand name.
• In derived branding, some suppliers of key components may wish to guarantee its own position by promoting that component as a brand in its own right.
• Cannibalization is a particular problem of a multi-brands strategy approach, in which the new brand takes business away from an established one which the organization also owns. This may be acceptable (indeed to be expected) if there is a net gain overall.
• In crowdsourcing branding, brands are created by the people for the business, which is opposite to the traditional method where the business creates a brand.

Key Term

Cannibalization

In marketing strategy, cannibalization refers to a reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer.

Example

• Brands whose value to consumers comes primarily from having identity value are said to be “identity brands. ” Some brands have such a strong identity that they become “iconic brands” such as Apple, Nike, and Harley Davidson.

Branding Strategies

A branding strategy helps establish a product within the market and to build a brand that will grow and mature in a saturated marketplace. Making smart branding decisions up front is crucial since a company may have to live with the decision for a long time. The following are commonly used branding strategies:

Company Name

In this case a strong brand name (or company name) is made the vehicle for a range of products (for example, Mercedez Benz or Black & Decker) or a range of subsidiary brands (such as Cadbury Dairy Milk or Cadbury Fingers in the United States).

Individual Branding

Each brand has a separate name, putting it into a de facto competition against other brands from the same company (for example, Kool-Aid and Tang are both owned by Kraft Foods). Individual brand names naturally allow greater flexibility by permitting a variety of different products, of differing quality, to be sold without confusing the consumer’s perception of what business the company is in or diluting higher quality products.

Attitude Branding and Iconic Brands

This is the choice to represent a larger feeling, which is not necessarily connected with the product or consumption of the product at all. Companies that use attitude branding include: Nike, Starbucks, The Body Shop, and Apple, Inc. Iconic brands are defined as having aspects that contribute to the consumer’s self-expression and personal identity.

Brands whose value to consumers comes primarily from having identity value are said to be “identity brands. ” Some brands have such a strong identity that they become “iconic brands” such as Apple, Nike, and Harley Davidson.

“No-brand” Branding

Recently a number of companies have successfully pursued “no-brand” strategies by creating packaging that imitates generic brand simplicity. “No brand” branding may be construed as a type of branding as the product is made conspicuous through the absence of a brand name. “Tapa Amarilla” or “Yellow Cap” in Venezuela during the 1980s is a prime example of no-brand strategy. It was simply recognized by the color of the cap of this cleaning products company.

Derived Brands

Some suppliers of key components may wish to guarantee its own position by promoting that component as a brand in its own right. For example, Intel, positions itself in the PC market with the slogan (and sticker) “Intel Inside. “

Brand Extension and Brand Dilution

The existing strong brand name can be used as a vehicle for new or modified products. For example, many fashion and designer companies extended brands into fragrances, shoes and accessories, furniture, and hotels. Frequently, the product is no different than what is already on the market, except it has a brand name marking. The risk of over-extension is brand dilution, which is when the brand loses its brand associations with a market segment, product area, or quality, price, or cachet.

Multi-brands Strategy

Alternatively, in a very saturated market, a supplier can deliberately launch totally new brands in apparent competition with its own existing strong brand (and often with identical product characteristics) to soak up some of the share of the market. The rationale is that having 3 out of 12 brands in such a market will give a greater overall share than having 1 out of 10. Procter & Gamble is a leading exponent of this philosophy, running as many as ten detergent brands in the US market. In the hotel business, Marriott uses the name Fairfield Inns for its budget chain.

Cannibalization is a particular problem of a multi-brands strategy approach, in which the new brand takes business away from an established one which the organization also owns. This may be acceptable (indeed to be expected) if there is a net gain overall.

Private Labels

Also called own brands, or store brands, these have become increasingly popular. Where the retailer has a particularly strong identity this “own brand” may be able to compete against even the strongest brand leaders, and may outperform those products that are not otherwise strongly branded.

Individual and Organizational Brands

These are types of branding that treat individuals and organizations as the products to be branded. Personal branding treats persons and their careers as brands. Faith branding treats religious figures and organizations as brands.

Crowdsourcing Branding

These are brands that are created by the people for the business, which is opposite to the traditional method where the business creates a brand. This type of method minimizes the risk of brand failure, since the people that might reject the brand in the traditional method are the ones who are participating in the branding process.

Nation Branding

This is a field of theory and practice which aims to measure, build, and manage the reputation of countries (closely related to place branding).