Brand Management Notes by Bilal Mustafa Khan Brands: The important distinction is between a product and a brand.

A product is something with a functional purpose. A brand offers something in addition to its functional purpose. All brands are products (including brand as Citibank and Air India that are technically services) in that they serve a functional purpose. But not all products are brands. In fact a brand and can be defined as !A brand is a product that provides functional benefits plus added values that some consumer value enough to buy". Added values form the most important part of the definition of a brand. #e$ve all heard the story of the blind men and the elephant. %ifferent men e&amine different parts of an elephant. 'ne e&amines the trunk and concludes that (an elephant is like a vine(. Another e&amines a leg and concludes that (an elephant is like a pillar(. A third e&amines the tail and concludes (an elephant is like a rope(. A fourth runs his hand across the elephant$s side and concludes (an elephant is like a wall$. All of them are correct. All of them miss the essential truth. An elephant is much more than the sum of its anatomical parts. It is a living breathing being. Consumer taste differs so widely that no brand can be all things to all people. )oreover any manufacturer who strives to cover too vide a filed will produce a brand that is number two or number three over a wide range of attributes rather than number one over a *imited range of attributes (which might enable it to become first choice to a *imited group of consumers the normal route to success.

B r a n d

P r o d u c

Emotional Benefits Functional Benefits

Discriminators

Motivators

The strongest brands are often the most distinctive. But in their distinctiveness they are also generally well balanced between motivating benefits + those (generally functional) benefits that prompt the consumer to use any brand in the product field + and discriminating benefits , those prompting the consumer to buy one brand rather them another. All brands are different from each other in the obvious sense that the names and packaging are different. But distinctiveness over and beyond this is highly desirable although distinctiveness based so much on discriminators that it neglects motivators is a recipe for a weak brand.. -vent brands (periodic e&periences usually within the worlds of sports entertainment or fine arts) achieve their promoters$ goals by making the most of the traditional approaches to brand building. #hile it can be argued that professional golf$s )aster$s tournament (and the other three (ma.ors( as well) Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan has been a brand of sorts for many years it is only with the coming of enormous television contracts that the financial value of the brand has been reali/ed. The same can be said of do/ens of other athletic events. 0eographical brands (cities countries resorts) have become common because businesses in particular areas have also recogni/ed the value of selling their locales using some traditional and non,traditional brand building methods. Tourism directors from 'rlando to *as 1egas from Alabama to Bangkok have created brands to help sell their part of the planet. The word (brand( when used as a noun can refer to a company name a product name or a uni2ue identifier such as a logo or trademark. In a time before fences were used in ranching to keep one$s cattle separate from other people$s cattle ranch owners branded or marked their cattle so they could later identify their herd as their own. The concept of branding also developed through the practices of craftsmen who wanted to place a mark or identifier on their work without detracting from the beauty of the piece. These craftsmen used their initials a symbol or another uni2ue mark to identify their work. 3ot too long afterwards high 2uality cattle and art became identifiable in the consumer$s mind by particular symbols and marks. Consumers would actually seek out certain marks because they had associated those marks in their minds with tastier beef higher 2uality pottery or furniture sophisticated artwork and overall better products. If the producer differentiated their product as superior in the mind of the consumer then that producer$s mark or brand came to represent superiority. Today$s modern concept of branding grew out of the consumer packaged goods industry and the process of branding has come to include much much more than .ust creating a way to identify a product or company. Branding today is used to create emotional attachment to products and companies. Branding efforts create a feeling of involvement a sense of higher 2uality and an aura of intangible 2ualities that surround the brand name mark or symbol. 4o what e&actly is the definition of (brand(5 *et$s cover some definitions first before we get too far into the branding process. (If a product is something that is produced to function and e&ist in reality ( says 6hilip %urbrow of 7rankfurt Balkind an international design firm based in 4an 7rancisco (then a brand has meaning beyond functionality and e&ists in people$s minds.( 6art art part science brand is the difference between a bottle of soda and a bottle of Coke the intangible yet visceral impact of a person$s sub.ective Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan e&perience with the product 8 the personal memories and cultural associations that orbit around it. The goal of branding is to convince the public that a brand is trustworthy and thus worth paying a premium for. The buyer is assured that the branded product will perform as e&pected. But that is not the only reason why people are willing to pay a premium for some brands. Consider the differences that e&ist between a 9ole& watch and one made by Time&. Trust in their respective abilities to accurately keep track of time is not what .ustifies that one can cost :;; to <;; times more than the other. 4ure the 9ole& watch is well made and is truly waterproof whereas the Time& may only be (water,resistant ( a lower standard of water,tightness. A few 4C=BA divers may wear 9ole& watches but I am ready to bet that the ma.ority of 9ole& wearers have never seen a decompression table... 6eople are willing to pay a premium price for brands that help define their self, image and their social image. 4uccessful brand marketers can convince you that their brands are worth paying a little more for because (you are worth it ( and because there are brands that someone with your standing in society should prefer over others. This effect of branding can be felt in every category of product or service from automobiles to floor cleaners. It is more likely to be apparent where the product is worn or used for all to see but it e&ists everywhere. A brief history of branding The phenomenon of branding has roots running deep into economic history. Stone Age toolmakers undoubtedly had trademark styles that signaled potentially greater success in the hunt. Particularly accomplished Viking shipbuilders may have had valuable brands of vessels. Certainly silversmiths over the centuries, including Paul Revere, the American colonial patriot, included marks on their ares to indicate both the purity of the metal and the craftsmanship embodied in the product. The !nglish ord "brand# is derived from "burning,# a reference, in the ord$s business sense, to the embers once used to burn the mark of the o ner onto livestock, casks, timber, metal, or other goods. Indeed branding8the use of symbols to concisely convey information about a product or service8can be seen as a 2uintessential human activity. It is also a fundamental building block of commerce> #ithout information about a producer?s or a seller?s reputation trade would grind to a halt. (The seller ratings on the eBay Internet auction site represent .ust one conspicuous contemporary e&ample.) The real power of brands however dates to the time when this indicator of reputation was transferred from the individual to a larger business enterprise. The shift magnified brands? impact e&tended their geographic reach and resulted in wealth creation for numerous employees. @osiah #edgwood is often cited as the father of the modern brand. Beginning in the :AB;s #edgwood placed his name on his pottery and china to indicate their Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan source8his state,of,the art factories8and therefore their 2uality. But the #edgwood name came to stand for something more. 3early two hundred years before the advent of mass media and without using conventional advertising #edgwood used royal endorsements and other marketing devices to create an aura around the name of his company that gave the brand a value far beyond the attributes of the product itself. Cis business design of mass production and distribution enabled him to capture the value created by his calculated association of his product with a rich and famous lifestyle and his e&ploitation of customers? social aspirations. In many ways branding has stepped away from #edgwood?s precepts during the latter part of this century. #ith the development of new media particularly television and the huge post, #orld #ar II boom in consumption and birthrates a mass market was born. 9ising demand and standards of living created an era where market share was king> The player with the leading share would have the lowest cost and the highest profitability. Duite simply a brand is a promise to the customer 8 a mirror in which the customer sees a reflection of him or herself and identifies with or re.ects the promise he or she sees. *ikewise a brand is also a reflection of your organi/ation. Eour brand serves to define your organi/ation and influences every aspect of your operation right down to corporate culture. #hether measured in 4F= per second shopping margins or shareholder value the power of your brand has far,reaching impact. 'n stock valuation. 'n marketing costs. -ven on employee retention rates. 7or customers branding plays two important roles> In a world with lots of choices it tells them which choice is right. It serves as a customer?s compass out of the chaos of competing choices. Whats best for me? In a world full of change and confusion it helps them define who they are 8 it gives them a badge. Good )other Dedicated Athlete Hip Teenager.

BRANDS and Added Val es! The important distinction is between a product and a brand. A product is something with a functional purpose. A brand offers something in addition to its functional purpose. All brands are products (including brand as Citibank and Air India that are technically services) in that they serve a functional purpose. But not all products are brands. In fact a brand and can be defined as !A brand is a product that provides functional benefits plus added values that some consumer value enough to buy". Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan Added values form the most important part of the definition of a brand. Before we discuss added values two general points must be discussed briefly. 7irst the strongest brands are often the most distinctive. But in their distinctiveness they are also generally well balanced between motivating benefits + those (generally functional) benefits that prompt the consumer to use any brand in the product filled + and discriminating benefits , those prompting the consumer to buy one brand rather them another. All brands are different from each other in the obvious sense that the names and packaging are different. But distinctiveness over and beyond this is highly desirable although distinctiveness based so much on discriminators that it neglects motivators is a recipe for a weak brand. 4econd consumer taste differs so widely that no brand can be all things to all people. )oreover any manufacturer who strives to cover too vide a filed will produce a brand that is number two or number three over a wide range of attributes rather than number one over a *imited range of attributes (which might enable it to become first choice to a *imited group of consumers the normal route to success). )ost brand have a known and restricted range functions and added values are non,functional the manufactures benefits over and beyond these. The ma.or sources of added values can be listed as> 1. Added Val es that come from "#perience of the Brand !$ These include familiarity known reliability and reduction of risks. A brand becomes an old friend. This includes the important notion of brand personality the personality of the brand itself + its functional and non,functional features as they might be described in 2uasi + human terms. 2. Added Val e that come from the sort of people %ho se the brands!, 9ich and snobbish young or glamorous or masculine or feminine. There are enormous e&amples of brands which have these user association most of which are fostered by advertising. Association can be with our individual or an entity or it can be user groups also. 3. Added &al es that come from the belief that the brand is effecti&e!, This is related to the way in which some brands work on peoples belief and there is sufficient evidence to prove that branding in such product affects the mind?s influence over body processes. Belief in effectiveness also plays an important role with cosmetics with their ability to make their users feel more beautiful with generally beneficial results. 4. Added &al e %hich come from the apperance of the brand!, This is the prime role packaging two identical products with different packaging may not be e2ually attractive to consumers. There is strong evidence which points out that in many product categories the physical appearance of the brand plays a ma.or in purchase decision (e.g. white goods). If a consumer if offered a choice between two products having similar features and attributes but different styling> e.g. one is e&tremely sleek and Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan the other is .ust a basic covering than the consumer would prefer the first alternative. 5. Added &al es that come from the man fact rers name and rep tation!, This is another source of added value which results from an established and reputed manufacture 2uality of product and service 2uality. But in certain situations these may not make an impact and they are> a) #hen the consumers do not known who the manufacturer of a particular brand they use then obviously there are no role of added value which result from reputation etc. b) A familiar brand name is no longer needed as a guarantee of new products homogeneity and 2uality. Branded goods are known to be homogenous and to perform their function well. Eet there have been instance where brands spell different (e.g. 6hilips produced average 2uality as well as high 2uality goods) hence there no guarantee that a new product by 6hilips would be of average or high 2uality. The contribution of added values to consumer choice is easily demonstrated by the commonly used techni2ue of matched product tests. In these tests a sample of consumer use and .udge brands in coded but unnamed package and a second and similar sample of consumers uses and .udges those same brand in their normal containers. The invariable pattern is that the preferences among identified brands are 2uite different from preferences among those same brands in coded but unidentified containers. The sub.ect of added values is 2uite alluring by in conclusion added values in a brand arise from people?s use and familiarity from the advertising and associations and from packaging. If follows that added values are not immediately available to manufacture of new brand but are built over time and therefore initially a brand must solely survive on its superior functional performance. . 'A()*RS )HA) SHA+" A BRAND D,R-NG -)S (*N("+)-*N . B-R)H 'i&e infl ences on a ne% brand! )he follo%in/ are the fi&e ma0or forces1 %hich shape a brand! $ #. ',N()-*NA2 +"R'*R3AN("! A new brand is like a newborn child which comes naked in this world. #ithout superior competitive functional performance in at least some respect it has little chance of succeedingG it will not persuade a person who buys it on a trial basis or who receive a free sample to buy it again. 'ne of the key roles of the pack design the introductory promotions and the advertising is to communicate this functional performance clearly and forcefully. Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan The pack as an advertising medium and the advertising itself should also begin to build those added values that are vital to protect the brands often rather fragile franchise once competitors have moved towards functional parity with it. That is the new brands need the edge of added values to maintain its position when as often happens it loses within months the advantage of its initial functional lead. If when enters the market the brand is to be bought more than once the decision is essentially based on its functional properties. -vidence points out that the functional superiority of a potentially successful brand also provides under pining and support for the other factors contributing to success notably the effort of sales force. 4o if the first and most important thing its functional performance is recogni/ed synergy will lend a hand to boost its effect. But when a brand is not going to succeed efforts of the sales force alone are not enough to compensate for it functional weaknesses. Competitive functional performance is not something that is important to new brands and unimportant to mature brands because the added values that these brands have ac2uired over the years cannot provide a permanent bulwark against functionally superior newcomers. The first 2uestion for the manufacturer of a new brand to ask is !from which brands do we want to take business ! once this 2uestion has been answered the firm can direct 9H% efforts to the specific functional performance with the new brand characteristics (i.e. the new brand that is being developed should be superior functionallyIor in terms of functional performance). 'nce the competing brands are know better and superior functional productIbrand can be developed. 45 +*S-)-*N-NG! This is another ma.or variable which influence the eventual outcome (failure H success) of a brand. 6ositioning should be in tune with the brand ob.ective and target market. The positioning strategies can be classified into two brand groups. 6rice based and non,price strategy. 6rice based implies that the product is positioned in terms of high priceIpremium value priced or economically pricedIlow priced. 3on,price strategies refer to nemours positioning strategies like positioning by user by symbol competitor etc. The key to successful positioning lies in identifying a key =46 which the firm should focus on and hammer away on it trying to become no. one brand for a *td. no. of consumers (e.g. )ercedes -ngineered like no other car). 65 NA3"! )any marketing guru?s feel that choice of brand name is a less substantial matter when viewed in comparison to making sure that the brand is functionally effective and is properly positioned in the market. )any marketers feel that the added values of a brand are embodied with name that there values an be transferred to another product by using the brand as a common property this is the rational for the strategy of using and umbrella brand name for number of different products (a strategy often described as range e&tensions or line e&tensions). Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan The most obvious point is that the danger of cannibali/ation is likely to be greater where the products with the umbrella name are in competition with each other (e.g. 9in bar H 9in 6owder) than when they are not (0illette Blades and 0illette after shave). The only ma.or advantage of using umbrella naming is within the same segments ((e.g. segments using one product like %enim After 4have can easily try %enim soap) that is people who use one product under a brand name can presumably easily be persuaded to sample a second perhaps different category of product using that same brand name. =sually the advantage is in term of reduced promotional and advertising costs and efforts. In fact market research data indicates that basically the success of a brand in a new product category depends primarily on functional performance. The economic advantage of umbrella naming are substantially illusory in the short and medium term. =mbrella names are in general no worse on better than new names. As general rules the level of success of a new brand is much more dependent on support levels than on name. It is possible that umbrella names provide greater staying power by enabling greater addition to added values which is essentially a long,term process. In the long,term an umbrella naming is really a part of a manufacturers corporate policy an act of faith and one of the basic elements on which his business is based and on which the firm might be included to attribute its long, term success in the marketplace. 75 +R-("! In perhaps two,third of all cases a new brand enters an e&isting market at a premium price. The firm .ustifies this high price on the basis of innovation and functional superiority of the brand over its competitors. In reality the premium prices are charged to fund the high cost of achieving sampling. The costs are usually at a high level to compensate for the established position of e&isting brands with their stock of added values which have been ac2uired over the years and while a new brand only rarely makes a profit during its first two years or so deficit budgeting puts an automatic upward pressure on the consumer price. There is also a good deal of evidence that although new and different brands will normally command a significant price premium this premium tends to narrow during the first few years of a brands life. There are also facts to support the contention that premium prices are reasonably well accepted as .ustification for functional improvement although consumers are heartennigly skeptical about manufacturer attempts to charge a premium price for no obvious functional advantage at all. 4tephen king (developing new brands) suggests a useful investigative and pragmatic approach to the 2uestion of initial pricing. The techni2ue recommended is research into consumer attitude based on direct and indirect 2uestions which will provide guidance to the feasibility of !skimming" or !penetration pricing".

Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan 'n the other hand basing prices on derivation of production costs will tell the manufacturer whether he will cover costs at a given level of output it will give little about whether the company will in fact be able to sell that output. 85 D-S)R-B,)-*N! 'ne key factor influencing the immediate success (failure) of a new brand is the ability of the manufacturers sales force to get it into distribution. -&panded distribution is a result of success. If the brand goes well in the early stages the public demands it retail branches hear from the head office. The word gets around and more retailers want to stock it. But a functional performance is not important to the consumer alone. 9etailers themselves and even more importantly the sales force are conscious of functional superiority and its contribution to a brands success. 7unctional superiority will provide conviction to the salesman and draw commitment from the retailer.

Brand Associations , A brand association is anything mentally linked to the brand. An association can affect recall provide a point of differentiation provide a reason to buy create positive attitudes and feelings and serve as the basis for trial. 'verall 2uality ratings technological leadership newness and associations with customer benefits are the strongest. The combination of all associations supports the price which can be charged. The relative price position often is central. #hether the brand is in the lu&ury mid,price or budget being at or near the top or bottom of the selected category is often most advantageous.

This safety,pin print ad for 1olvo created in @apan positions the car so perfectly. 4o simply and 2uickly.

1olvo is !4afety." %mportance to marketers and consumers. Brand associations are the category of a brand$s assets and liabilities that include anything (linked( in memory to a brand .Brand associations can also be defined as informational nodes linked to the brand node in memory that contain the meaning of the brand for consumers. Brand associations are important to marketers and to consumers. )arketers use brand associations to differentiate position and e&tend brands to create positive attitudes and feelings toward brands and to suggest attributes or benefits of purchasing or using a specific Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan brand. Consumers use brand associations to help process organi/e and retrieve information in memory and to aid them in making purchase decisions.

Brand -ma/e 4imply put brand image is how your customers potential customers suppliers and the general public sees you. It?s how you are positioned in their minds. *arge enterprises spend a great deal of time and money on making sure that their brand pro.ects e&actly what they want about the company. #hen they?re successful in branding themselves the payoff can be huge. Take the global brands8Conda )ac%onald?s 3ike Coke8they all have very strong brand franchises. 3ow pay attention here. Their brand franchises don?t focus on product features. 6roducts can change. 7eatures can change. Brands if successful can last decades because they center on more enduring values. Think Conda and you think reliability. Eou don?t think power steering or antilock brakes. )ac%onald?s5 Eou don?t think cheeseburger or shakes. )ac%onald?s is the place to take your family. @ust do it with 3ike and you?ll be a winner. Cigh, performance plastic is the furthest thing from your mind. %o people buy Coke because it tastes sweet5 3o they buy Coke because it brings the world together. The key to having a good brand image is to have a consistent perception of your company as it relates to important customer values. 'nce you strike the right chord customers will keep coming back. Ask two,time Conda owners what car they?ll buy ne&t. Try to get a Coke drinker to switch to 6epsi. #hat?s more customers will pay for brands. @ust check out your local supermarket. *ook at the price of the no,name cereal compared to one put out by Fellog?s. Brands always cost more. They command a premium.

Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan Caving a good brand image is important to small businesses as well. Customers look for the same things from large or small companies. They want to deal with a reputable and trustworthy business. They want good value. They want 2uality. They$ll choose a company that pro.ects that over one that doesn$t any time any where. Brand 2o9alt9 *oyalty is an important concept in strategic marketing. *oyalty provides fewer reasons for consumers to engage in e&tended information search among alternatives. 9esearches also indicates that purchase decisions based on loyalty may become simplified and even habitual in nature and this may be a result of satisfaction with the current brand(s). A base of loyal customers will be advantageous for an organisation as it reduces the marketing cost of doing business. In addition loyalty can be capitalised on through strategies such as brand e&tension and market penetration. 7inally a large number of loyal customers is an asset for a brand and has been identified as ma.or determinant of brand e2uity . 9epeat 6atronage> Cigh

Sp rio s 2o9alt9

2o9alt9

9elative Attitudes> *ow 2atent 2o9alt9

Cigh

No 2o9alt9

*ow

Brand *oyalty is a crucial goal and result of successful marketing programs sales initiatives and product development efforts. At the core of every successful brand is a nucleus of loyal customers. These (true believers( understand the brand better purchase more often and recommend the brand to others. *oyal customers can be and should be the foundation for marketing strategy. Beyond the profit they generate loyal customers provide the basis for brand development Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan and improvement. The brand that loses sight of its loyal customers has lost its direction and is vulnerable to losing market share. As a brand$s percentage of loyal customers goes up market share increases and the brand becomes more profitable. 4hare rises because those customers who become repeat purchasers are no longer lost to the competition. In addition repeat customers are more profitable than new customers , attracting new customers involves investing far more marketing and promotional funds. To some e&tent brand loyalty is being developed and managed by all successful brands. But in many cases loyalty itself is considered simply the result of well e&ecuted marketing programs. The best way to achieve greater brand loyalty is by managing the brand loyalty process. This involves measuring the drivers of brand loyalty selecting high impact loyalty improvement pro.ects and 2uickly carrying them out. Brand "#tensions Traditionally the Indian market has seen e&tensions which are merely line e&tensions by using the same brand name to launch new forms flavors variants or colors of the e&isting product. 4antro and 4antro Jip %rive Close,=p 9ed and 0reen Colgate 0el and Colgate toothpaste 4urf H 4urf =ltra are not brand e&tensions in the true sense but merely line e&tensions. Barring a handful of real e&tensions like %enim soap H talcum powder %ettol antiseptic H floor cleaner Anchor switches and toothpaste most of the marketing giants like C** 6H0 and 9eckitt Coleman use multi,branding strategy. It is only recently that the Indian marketers have reali/ed the full potential of brand e&tensions. And going by number of companies adopting the brand e&tension concept it looks like the idea has taken root in the mind of brand strategists as a viable growth strategy in the Indian market. Wh9 Brand "#tensions! Introduction of a new product with an established brand name can dramatically reduce the investment re2uired and improve the likelihood of its success. It is therefore not surprising that brand e&tensions have been the strategy of growth for many firms during the past decades. Brand e&tensions provide a vehicle to e&ploit brand name recognition and brand image. A strong brand name can provide consumers with the familiarity and knowledge of a reputable brand. Additionally brand e&tensions can decrease the cost of accessing distribution channels and make promotional efforts more efficient. 'ne researcher defines brand e&tension as (using a brand in one category to introduce products in a totally different category.( Brands are basically a promise to the consumers underlying the trust familiarity risk reduction and provide emotional benefits. 4trong brands are therefore enormously attractive to senior managers whose interest is fed by any Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan number of books and articles on how to get and keep them. But anyone who thinks seriously about branding soon reali/es that there are basically two kinds of strong brands> those that are focused and those that are diversified. 7ocused like IB) concentrating on personal computers and accessories or diversified like #ipro which includes vanaspati lighting soaps healthcare computers and baby diapers. 'n one hand IB) has maintained a focused link between its brand and its core product line> personal computers. At the other end is #ipro. IB) has decided to remain focused for now while #ipro elected 8 and managed 8 to diversify. The crucial 2uestion for confronting strategists is whether to e&tend the brand or stay focused. As these e&amples show a strong company can do well in either. Benefits of Brand "#tensions At least four factors appear to be driving the brand e&tensions. 7irst leveraging a brand widely tends to lower brand management support costs. 4econd the tendency to leverage the franchise with e&isting consumers is another ma.or attraction. Third relationship benefits seem to have growing importance for customersG relationship building (through loyalty programs better service and a better understanding of customers) may now count for more than functional benefits. As relationships outstrip products in importance leveraging brands makes more and more sense. 7ourth the prospects of e&tending the brand in a new and growing market imply supernormal profits and opportunities for growth. A critical assumption underlying the use of brand e&tensions is that strong brands offer greater leverage for e&tension than weaker brands. Brand strength has been implicitly defined in terms of consumer predispositions towards the brand. -stablished brands tend to be used as 2uality cues. A recogni/able brand is often relied upon by consumers as a strategy for dealing with perceived risk. 6lacing a trusted brand name in a new category is less e&pensive and risky than creating a new brand particularly with new products failure rates e&ceeding K;LG entering a new category generates increased e&posure for the brand across the store and therefore may serve to strengthen the base brand. -&tensions across venues are less likely than traditional line e&tensions (i.e. new flavors varieties models etc.) to cannibali/e sales of the original brandG and )ost importantly e&tensions (particularly licensing) can provide an additional revenue stream with little e&tra effort or e&pense. Core brand associations are conveyed to extensions Consumer evaluation of a brand e&tension is fre2uently described by a transfer process in which core brand associations are conveyed to the e&tension. As we have seen brand associations can vary among consumers across usage situations and in different competitive environments. 6otentially the core brand may provide a group of salient positively evaluated relevant associations which are valid within or across product categories. Ideally a core brand$s associations Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan can contribute a comple& yet well,defined image to an e&tension. A well, established brand usually has a well,defined brand image. A great benefit of brand e&tension is the instant communication of a salient image. In addition to brand associations e&tension can convey 2uality associations. To avoid advertising battles based on product specifications one can compete on the basis of perceived high 2uality. Cewlett,6ackard has used this strategy by e&tending its name to numerous products and thereby has e&tended its umbrella of 2uality to them. #hen 2uality is perceived to be high it is valuable to share the benefits of a core product with an e&tension. #ithout perceived high 2uality however the task is impossible. Another benefit of e&tension is the cross fertili/ation which advertising the core brand can bring. That familiarity also provides consumers with another benefit in the form of reduced risk with a new product. Consumers confronting %iet Coke for the first time would know that it was a Coca,Cola product of assumed high 2uality. In reported tests of new products most support the fact that an established brand name enhances initial consumer reaction interest and trial. Enhancing the core product The final benefit of e&tension is enhancing the core product. *ike a successful offspring an e&tension may reinforce the core product$s brand image instead of weakening it. %iet Coke is clearly positioned as a tasty low,calorie soda and reinforces Coke$s association with cola and good taste. Brand "#tension Strate/ies! Fit and Similarity 4everal authors have suggested that an effective brand e&tension must be perceived as a (fit( with the original. 7it has been defined as the e&tent to which a consumer accepts the new product as a logical and e&pected e&tension of the brand. A poor fit between the original brand and the e&tension may diminish the appeal of the new product. 6ositive attributes may not transfer from the brand to the e&tension.. Three aspects of fit are> (:) complementarit91 defined as the e&tent to which two products can be utili/ed in common usage situations or can together satisfy some need (e.g. cricket bats and cricket balls)G (M) s bstit tabilit91 or the e&tent to which the two products can replace the other in satisfying the same need (i.e. pi//a and burger)G (N) transferabilit91 defined as the e&tent to which manufacturer$s e&pertise in one category transfers to the e&tension product. This e&pertise includes production facilities employees and the skills of the firm. Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan 3either complementarity nor substitutability had significant main effects in rating the brand e&tensions. 9ather the complementarity and substitutability measures interacted with the perceived 2uality of the original brand to predict brand e&tension evaluation. Transferability (i.e. perceived e&pertise of the manufacturer to make the e&tension product) had a direct impact on the evaluation of brand e&tensions. 7or e&ample )c%onald$s photo processing caused some sub.ects to comment that )c%onald$s should remain in the food business and had no credibility as a photo,processor. 6ositive ratings of a brand seem to transfer to brand e&tensions. 7urther there seems to be greater transfer of affect from the brand to the brand e&tension when the brand e&tension was very similar to the original brand product. Correlations between attitude toward the original brand and attitude toward e&tensions decreased as the degree of similarity decreased. The process of affect generali/ation from the brand to the brand e&tension may not take place when the e&tension is insufficiently similar to the original brand. 4uccessful brand e&tension depends on consumer perceptions of how it (fits( both in terms of similarity and consistency with the brand concept. Take two well known brand names Time& and 9ole&. Both brands are in the watch category but convey very different meanings to consumers. 9ole& is associated with the concept of lu&ury and prestige while Time& $is associated with product performance. Both product feature similarity and brand concept consistency were found to be important predictors of favorable reactions to brand e&tensions. 7urther the authors suggest that concept consistency may have a greater effect on the prestige brand than on the functional brand. "#tensions Sho ld S pport Brand +ositionin/ -&tensions are even more powerful when linked back to the customer relationship and how it has been used as a basis for brand positioning. This means ensuring that the e&tension builds off one or more of the following positioning components> O %t e&tends the target market> 0illette?s 4ensor for #omen leveraged the definition of the business 0illette?s in and its brand benefit of the clean shave " effectively e&tending its target market from only men to all adults who shave. O %t e&tends your business definition> In launching IB) Consulting IB) changed the definition of the business it was in from !technology,based" to !technology,based solutions." O %t e&tends your point of difference> By introducing the benefit of !faster relief " %ispirin grown its points of differentiation. 4o has Bluedart by establishing a new drop,off time for packages of midnight in some locations. O %t e&tends the entire positioning. This usually occurs when a business is trying to enter a new market for the first time with a Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan brand whose strengths are recogni/ed beyond its current target market and current definition of the positioning. This can be risky but done right it allows a company to diversify its range of branded products and take a true portfolio approach to managing its brand. Creating a category This may be one of the ways in which brand e&tension can be successful. A brand that is moved into an e&isting product or service category may end up as a me,too unless it is able to achieve significant differentiation from the competitors. The new variant must be able to promise something different such as simplicity or sustained added value compared with e&isting brands in the sector. 3okia?s development of a fashion element within the mobile phone sector moves the brand into a potentially lucrative area. Extending to revitalize Brand e&tensions can be one way in which the brand is kept modern and alive. 3escafP is an e&ample of a strong parent brand that has used brand e&tension to develop a series of variants that are able to target different coffee drinking occasions consumer types and price sectors. In turn these are able to strengthen the 3escafP parent brand. The addition of a service or e&periential element such as CafP 3escafP can also strengthen the brand by moving it beyond mere imagery to the provision of genuine consumer engagement. 3escafP can thus be e2ually an established and modern up,to,date brand. "#tensions Sho ld S pport Brand +ositionin/ -&tensions are even more powerful when linked back to the customer relationship and how it has been used as a basis for brand positioning. This means ensuring that the e&tension builds off one or more of the following positioning components> O %t e&tends the target market> 0illette?s 4ensor for #omen leveraged the definition of the business 0illette?s in and its brand benefit of the clean shave " effectively e&tending its target market from only men to all adults who shave. O %t e&tends your business definition> In launching IB) Consulting IB) changed the definition of the business it was in from !technology,based" to !technology,based solutions." O %t e&tends your point of difference> By introducing the benefit of !faster relief " %ispirin grown its points of differentiation. 4o has Bluedart by establishing a new drop,off time for packages of midnight in some locations. O %t e&tends the entire positioning. This usually occurs when a business is trying to enter a new market for the first time with a brand whose strengths are recogni/ed beyond its current target market and current definition of the positioning. This can be risky Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan but done right it allows a company to diversify its range of branded products and take a true portfolio approach to managing its brand. Creating a category This may be one of the ways in which brand e&tension can be successful. A brand that is moved into an e&isting product or service category may end up as a me,too unless it is able to achieve significant differentiation from the competitors. The new variant must be able to promise something different such as simplicity or sustained added value compared with e&isting brands in the sector. 3okia?s development of a fashion element within the mobile phone sector moves the brand into a potentially lucrative area. Brand ": it9 and Brand Val ation Brand e2uity has received considerable attention in the marketing literature in recent years. )uch of this attention has focused on developing alternative theoretical definitions of brand e2uityG as a result some confusion surrounds the implications of brand e2uity issues in marketing research applications. The authors discuss the role of brand names in consumer purchase decision,making processes and provide a framework within which brand e2uity issues can be e&amined by marketing researchers. In :KQQ *ance *euthesser concluded that there was no precise definition of brand e2uity nor even common agreement on what it is.( )ore recently however several definitions of brand e2uity have been published including> (Broadly stated brand e2uity refers to the residual assets resulting from the effects of past marketing activities associated with a brand.( (9angaswamy et al. :KK;) Brand e2uity is added value that (is attributable to the brand name itself which is not captured by the brand$s performance on functional attributes.( (4ikri :KKM) (Brand e2uity can be measured by the incremental cash flow from associating the brand with the product.( (7ar2uhar :KQK) (Brand e2uity is defined in terms of the marketing effects uni2uely attributable to the brands ,, for e&ample when certain outcomes result from the marketing of a product or service because of its brand name that would not occur if the same product or service did not have that name.( (Feller :KKN) (A consumer perceives a brand$s e2uity as the value added to the functional product or service by associating it with the brand name.( (Aaker :KKN)

A brand is a name or symbol used to identify the source of a product. #hen developing a new product branding is an important decision. The brand can add Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan significant value when it is well recogni/ed and has positive associations in the mind of the consumer. This concept is referred to as brand e: it9. What is Brand ": it9? Brand e2uity is an intangible asset that depends on associations made by the consumer. There are at least three perspectives from which to view brand e2uity>

'inancial , 'ne way to measure brand e2uity is to determine the price premium that a brand commands over a generic product. 7or e&ample if consumers are willing to pay R:;; more for a branded television over the same unbranded television this premium provides important information about the value of the brand. Cowever e&penses such as promotional costs must be taken into account when using this method to measure brand e2uity. Brand e#tensions , A successful brand can be used as a platform to launch related products. The benefits of brand e&tensions are the leveraging of e&isting brand awareness thus reducing advertising e&penditures and a lower risk from the perspective of the consumer. 7urthermore appropriate brand e&tensions can enhance the core brand. Cowever the value of brand e&tensions is more difficult to 2uantify than are direct financial measures of brand e2uity. (ons mer$based , A strong brand increases the consumer$s attitude strength toward the product associated with the brand. Attitude strength is built by e&perience with a product. This importance of actual e&perience by the customer implies that trial samples are more effective than advertising in the early stages of building a strong brand. The consumer$s awareness and associations lead to perceived 2uality inferred attributes and eventually brand loyalty.

4trong brand e2uity provides the following benefits>

7acilitates a more predictable income stream. -ncreases cash flo% by increasing market share reducing promotional costs and allowing premium pricing. Brand e: it9 is an asset that can be sold or leased.

Cowever brand e2uity is not always positive in value. 4ome brands ac2uire a bad reputation that results in negative brand e2uity. 3egative brand e2uity can be measured by surveys in which consumers indicate that a discount is needed to purchase the brand over a generic product. 'ifferent perspectives of brand valuation Brand valuation has been viewed from a variety of perspectives. The first perspective has used the concept of brand e2uity in the conte&t of marketing Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan decision,making. The second perspective is financially based and views brand e2uity in terms of incremental discounted future cash flows that would result from a branded product revenue in comparison with the revenue that would occur if the same product did not have the brand name (4imon H 4ullivan :KKN). 3AR;")-NG +"RS+"()-V" Aaker (:KK:) has provided the most comprehensive definition of brand e2uity to date> !A set of brand assets and liabilities linked to a brand its name and symbol that adds to or detracts from the value provided by a product or service to a firm andIor to the firm$s customers." Aaker has also synthesi/ed some contemporary thinking about marketing and depicted a comprehensive yet parsimonious set of factors that contribute to the development of brand e2uity (Aaker :KKBb). Ce has contemplated that to a greater e&tent the e2uity of a brand depends on the number of people who purchase it regularly. Cence the concept of brand loyalty is established as a vital component of brand e2uity. 4trong effects of brand recognition on choice and market share are discussed and documented e&tensively in marketing literature. That is why Aaker regards the concept of brand awareness as a second component of brand e2uity. Considering the 6I)4 findings (Bu//ell and 0ate :KQA) perceived 2uality is included as another significant component. 'ther proprietary brand assets , such as patents trademarks and established channel relationships , constitute the final component. 2o9alt9 Price Premium Aaker(:KKB) suggest that one of the most effective approaches to the valuation of a brand is the premium that it commands in the market. A basic indicator of loyalty is the amount a customer will pay for a product in comparison to other comparable products. A price premium can be determined by simply asking consumers how much more they would be willing to pay for the brand5 According to him if the price premium for a brand can be obtained then the value of the brand in a given years will be the price differential (premium) times the number of units sold. 7or -&ample if a firm?s brand commands a premium of 9s. < per unit and it has sold M <; ;;; units then the brand?s value is 9s.:M <; ;;;. A consumer may be willing to pay more for brand A than brand B. this is the price premium associated with brand loyalty. It could be high or low and positive or negative. #hile measuring price premium it is necessary to divide the market into loyalty segments. 6remium is always with respect to one or a set of competitors which must be specified. A simple 2uestion put to the customers measures price premium e.g. how much more would you pay so as to buy 4ony T1 instead of 1ideocon T15 According to Chunawalla(:KKK) a sophisticated approach would be to conduct con.oint analysis or trade,off analysis. A drawback Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan of this approach is its reference to a competitor or set of competitors. It is necessary to arrive at several sets of price premiums when there are a number of brands in the market. -ven then an emerging competitor might be missed. Customer Satisfaction( 4atisfaction or preference for a brand shows how loyal the consumer is likely to be to a brand. A direct measure of customer satisfaction can be applied to e&isting customers. The focus can be the last use e&perience or simply the use e&perience from the customer$s view. Consumers are asked about their e&perience with the brand and whether the brand met their e&pectations. 6reference is measured by asking them whether they assessed whether the usage of the brand caused some inconvenience. There can be direct 2uestions about loyalty to the brand e.g. are you loyal to this brand5 4atisfaction model is very useful in service industry like airlines and banks. 'ne drawback of this model is that it can be applied only to the users and customers. +ercei&ed < alit9 and 2eadership 3eas res Perceived )uality is one of the key dimensions of brand e2uity and has been shown to be associated with price premiums price elasticities brand usage and stock return. It can be calculated by asking consumers to directly compare similar brands. *eadership+Popularity has three dimensions. 7irst if enough consumers are buying into the brand concept it must have merit. 4econd leadership often taps innovation within a product class. Third leadership taps the dynamics of consumer acceptance. 3amely people are uneasy swimming against the tide are a likely to buy a popular product. This can be measured by asking consumers about the product$s leadership position its popularity and its innovative 2ualities. Associations= Differentiation 3eas res Perceived Value> This dimension simply involves determining whether the product provides good value for the money and whether there are reasons to buy this brand over competitive brands. #e can ask consumers how much more valuable the product in 2uestion is than another can. In other words we have to assess what percentage rise in the preferred product will make him switch to the less preferred one. Another dimension is to put priced products before the consumers. Then they are asked how much of each product they are willing to buy. 6rices can then be varied and the same e&ercise is repeated. It assesses the relative value of different products in the perception in the perception of the consumers. ,rand Personality( This element is based on the brand,as,person perspective. 7or some brands the brand personality can provide links to the brands emotional and self,e&pressive benefits. Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan -rgani.ational Associations( This dimension considers the type of organi/ation that lies behind the brand. A%areness 3eas res ,rand a areness reflects the salience of the product in the consumer$s mind and involves various levels including recognition recall brand dominance brand knowledge and brand opinion. Alternati&e 3eans to Brand ": it9 Building brand e2uity re2uires a significant effort and some companies use alternative means of achieving the benefits of a strong brand. 7or e&ample brand e2uity can be borrowed by e&tending the brand name to a line of products in the same product category or even to other categories. In some cases especially when there is a perceptual connection between the products such e&tensions are successful. In other cases the e&tensions are unsuccessful and can dilute the original brand e2uity. Brand e2uity also can be (bought( by licensing the use of a strong brand for a new product. As in line e&tensions by the same company the success of brand licensing is not guaranteed and must be analy/ed carefully for appropriateness. Brand "#perience Brand e&perience is the process of taking the values of a brand and e&trapolating them to create an environment where the consumer becomes immersed surrounded by colours shapes sounds and sensations which embody what the brand is all about. Through the creation of the (brand world( everything reflects and reinforces the brand. 3o longer do consumers .ust consume a brand> with brand e&perience they can dive into the brand world and live their favourite brand. Brand e&perience can take the product or service further into the consumer$s psyche than the more traditional uses of brand values alone and so opens up new areas of association and engagement for the consumer. The creation of the brand e&perience represents an area that companies will have to address in order to provide sustained differentiation for their brands. At a time when consumers are becoming increasingly disenfranchised from many marketing activities and many marketers are finding it difficult to differentiate their brands through (conventional( means the brand e&perience can represent the way forward.

Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan Brand -&perience is a wide concept that runs close to event marketing at one end and relationship marketing at the other e&treme. It looks beyond the brand to identify and develop values that have a greater degree of relevance for the consumer. In doing this it moves much close to the consumer in terms of immersion engagement or individual relationships.

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Brand Management Notes by Bilal Mustafa Khan

This is where brands can start to develop a competitive edge. Brand e&perience enables marketers to provide genuine and sustainable differentiation which in turn provides a strong defence against (me,toos( and other competitive threats. )eanwhile it enables products and services to be transferred into unrelated categories.

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Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

B ra n d a w a re n e s s

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Brand Management Notes by Bilal Mustafa Khan

Aaker ?s B
Brand 4oyalty
Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.

Brand Management Notes by Bilal Mustafa Khan

Bilal Mustafa Khan 2008. Department of Business Administration. Only for internal distribution and lass dis ussion. !he material may not be reprodu ed in any form "ithout prior permission either in parts or "hole.