10/7/2014

Brand Management
MK542E
Brands as Strategic Assets

Dr. Dildar Hussain

Assistant Professor
ESC Rennes School of Business
Office No. 327
dildar.hussain@esc-rennes.fr

Chapter Overview
Overview
Strategic importance of brands
Brands as value assets when buying or selling businesses
Brands in SMEs

Learning Objectives
Have an overview of literature
Understand corporate-based view of branding
Discuss role of senior management / CEO as brand custodians
Discuss brand development in SMES

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Introduction

Traditionally, brand management seen as a

function of marketing
Brands more important in FMCGs ????
Managed by marketers and advertising agencies
Brands transcending their role in marketing
Companies started to view brands as strategic
assets since 1990s
Becoming more of a strategic issue

Brands as Strategic Assets: A Review of the Literature - 1

Literature since 1990s suggests viewing brands as

strategic assets
Corporate based view of branding
Brands as key strategic instruments
Heart of a businesss competitive position
Basis of long term competitive advantage based on
long term relationship with the customers

Branding should go beyond communication

Should be regarded as integrated business process
Should be embedded with whole company not only the marketing department
Branding becomes the strategic direction of the organization
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Brands as Strategic Assets: A Review of the Literature 2

Brands express the companys core values

Thus it becomes corporate brand
Powerful resource for creating shareholder and
long term value
Companies should shift from brand strategy to
brand-based strategy
Branding develops a strong bond between the company
and customers which may lead to
Change to completely different products
For instance consumers need banking services not banks
Retailers in the financial services market

Brands as Strategic Assets: An Industry Perspective 1

Branding is no longer being a sole responsibility of

marketers
Brands are the core of our business. We would, if we so
wished sub-contract all the production, sales and service functions and,
provided we retained ownership of our brands, we would continue to be successful and
profitable. It is our brands that provide the profits for today and guarantee the profits
for the future (Sir Allen Sheppard, CEO of Grand Metropolitan)

Traditionally, brand played important role in FMCGs

Difficult to differentiate through product development and
innovation
Imitable products
Tough competition

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Brands as Strategic Assets: An Industry Perspective 2

Brand management becomes even more important
board room issue in case of when badly publicized
Single incident can damage brand significantly and
it may take time to recover
Martha Stewart insider trading
Enron falsification of financial information (90-1)
Enrons accountant s Anderson Arthur also went bankrupt
Nike - sweatshops in Asia
Coca Cola - contaminated Coke in Belgium
Chrysler Australia
https://www.youtube.com/watch?v=kbEnJZqsUK8

Reputation risk is the single biggest business hazard according to a survey in the USA
https://www.youtube.com/watch?v=XJXI2Gv5vYc
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Brands as Strategic Assets: An Industry Perspective 3

Umbrella Brands
Honda
Danone

Endorsing product brand with corporate brand

Kelloggs
Nestl

Mono brands
Unilever
Detergents containing catalyst
Omo in the Netherlands, Persil in the UK, Skip in France

Independent brands in the same country

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Brands as Strategic Assets: An Industry Perspective 4

Increased emphasis on corporate branding

More products showing company logo on packaging
Previously only product brand displayed
Targets communicating with whole spectrum of
stakeholders not only consumers

No corporation has so far been focusing whole corporate

strategy around brands
It could lead to virtual corporations and outsourcing whole range of activities
It may be necessary to maintain a certain level of control over other activities

Brands as Strategic Assets: An Industry Perspective 5

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Brands as Strategic Assets: An Industry Perspective 6

Some industries have been slow to adopt branding/brand management than others
Branding often becomes critical when competitors come in the picture
Early adopters
FMCGs
Luxury ???

Late adopters
Non-profit organizations
High-tech industry
professional services
Public services
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Brands as Strategic Assets: An Industry Perspective 7

Branding is more critical for services than goods

Intangibility
Inseparability
Perishability
Variability

Branding in financial services

Difficult to differentiate
Catering specialized needs of customers

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Brands as Strategic Assets: An Industry Perspective 7

Six steps for creating, defining, and managing brands

suggested by Pettis particularly for hi-tech products
Identify the questions that need to be answered and define the
problem(s) to be solved
Conduct qualitative and quantitative research to understand
who customers are, how they perceive your and other brands,
and the buying process
Define elements of your brand (positioning, identity, naming, etc.)
Develop a strategy and marketing communication plan
Create and execute integrated marketing communication program
Manage brand continuously and track it through research to grow, maintain and leverage
brand equity

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Brands as Strategic Assets: Small vs Large Company Perspectives

SMEs branding is a new field in branding research

Still at exploratory stage
SMEs business behavior differs from LSEs
SMEs are characterized by
Resource limitations
Strong influence of owner on decision making
SMEs often craft their marketing strategies through networks
Firm values are communicated through business and social interactions, which are part of
SMEs daily routines
In contrast to LSEs, branding and brand management is not much institutionalized

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Benefits of and Barriers to Brand Development in SMEs

Benefits
Product differentiation
Customers loyalty, better performance
Enhancing value to customers
Survive for a longer period of time

Barriers
Limited resources to conduct branding activities
Lack of vision/ strategic orientation
Informal decision process
Investments seen as costs

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SMEs Approach to Decision-Making, Marketing and Branding

Decision making
Flexibility
Speed of reaction
Eye for market opportunities

Marketing and Branding

Position in networks
Direct communication with clients, suppliers and various stakeholders to build trust and swap
favors
Creating passion for brand throughout the company is important and has to be done by the
entrepreneur him/herself

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Brand Development in SMEs - 1

Communicating a brand is not difficult for SMEs

Establishing a clear positioning is difficult
Four types of or phases in SME brand development
Beginning and underlying brands
Brands/ companies just established
Awareness of branding in management needs to grow
Companies failing to do so or lacking resources to implement plans may stay at the same
position

Emerging brands
Everyone in the organization is aware of need for branding
The firm makes resources available for creating a strong brand (although it may be difficult)
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Brand Development in SMEs - 2

Established brands
The owner and the organization are determined
to build up a strong brand
They are able to achieve this objective
A high degree of brand awareness has been attained
They can maintain and enhance their position

Historical brands
The brands that have achieved a reasonable of recognition despite of little organizational
dedication
Mostly they are exceptions owing to the events in the past
Generally middle-sized companies having paid little attention to branding but having built
enormous brand strength due to a striking product or historical background
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Brand Development in SMEs 3

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Brand Management and Country-of-Origin (COO) Effects

Given limited knowledge and know-how in branding

SMEs would benefit from COO
SMEs can use the COO effect to support their brand
building efforts
This could provide a multiplier effect especially in
foreign markets
Imports from developed countries are generally
seen as better off in terms of design, technology,
skills, and product quality
Consumer animosity???

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Internal Branding

Brands are about products and services

People behind those products and services are
an important element
Employees bring brand to life; they are its
ultimate custodians
Communicating brands values to staff in
equally important
Leadership by example is one of best forms
HR policies should reflect the brand value

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Case Study

BRANDING NOT-FOR PROFITS

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http://www.youtube.com/watch?v=JtiHOeOqVqQ

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dildar.hussain@esc-rennes.fr

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