BRANDING

Introduction to brands

Take a look at the list below that shows the world’s top 10 brands in 2006 (as measured by
value):
{Rank Brand Value ($ billions)}

1 Coca-Cola ($69.6)
2 Microsoft ($64.1)
3 IBM ($51.2)
4 GE ($41.3)
5 Intel ($30.9)
6 Nokia ($30.0)
7 Disney ($29.3)
8 McDonalds ($26.4)
9 Marlboro ($24.2)
10 Mercedes ($21.0)
Source: Interbrand; JP Morgan Chase, 2006

Why do companies such as Coca-Cola, Microsoft, IBM and Disney seem to achieve global
marketing success so easily? Why does it seem such an effort for others?

Why do we, as consumers, feel loyal to such brands that the mere sight of their logo has us
reaching into our pockets to buy their products?

The meaning of brands

Brands are a means of differentiating a company’s products and services from those of its
competitors.

There is plenty of evidence to prove that customers will pay a substantial price premium for a
good brand and remain loyal to that brand. It is important, therefore, to understand what brands
are and why they are important.

Macdonald sums this up nicely in the following quote emphasizing the importance of brands:

“…it is not factories that make profits, but relationships with customers, and it is company and
brand names which secure those relationships”

Businesses that invest in and sustain leading brands prosper whereas those that fail are left to
fight for the lower profits available in commodity markets.
What is a brand?

One definition of a brand is as follows:

“A name, term, sign, symbol or design, or a combination of these, that is intended to identify the
goods and services of one business or group of businesses and to differentiate them from those
of competitors”.

Interbrand - a leading branding consultancy - defines a brand in the following way:

“A mixture of tangible and intangible attributes symbolised in a trademark, which, if properly

managed, creates influence and generates value”.

Brand can be said to be a name, term, design, symbol or any other feature that identifies one
seller's good or service as distinct from another.

• Brand name is that part that can be spoken, including letters, words & symbols, e.g. 7UP.
Brand names simplify shopping, guarantee a certain level of quality and allow for self
expression.

• Brand mark- Elements of the brand that cannot not be spoken, for example - a symbol

• Trade Character - Trade characters are those characters that a consumer identifies with
a brand. For example - Ronald McDonald, Pillsbury Doughboy, The tiger of Britannia
Tiger

• Trade mark- Legal designation that the owner has exclusive rights to the brand or part of
a brand.

• Trade-name-The full legal name of the organization. For example - Ford, not the name
for a specific product

Three other important terms relating to brands should be defined at this stage:

Brand equity

“Brand equity” refers to the value of a brand. Brand equity is based on the extent to which the
brand has high brand loyalty, name awareness, perceived quality and strong product
associations. Brand equity also includes other “intangible” assets such as patents, trademarks
and channel relationships.
Brand image

“Brand image” refers to the set of beliefs that customers hold about a particular brand. These are
important to develop well since a negative brand image can be very difficult to shake off.

Brand extension

“Brand extension” refers to the use of a successful brand name to launch a new or modified
product in a new market. Virgin is perhaps the best example of how brand extension can be
applied into quite diverse and distinct markets.

Brands and products

Brands are rarely developed in isolation. They normally fall within a business’ product line or
product group.

A product line is a group of brands that are closely related in terms of their functions and the
benefits they provide. A good example would be the range of desktop and laptop computers
manufactured by Dell.

A product mix relates to the total set of brands marketed by a business. A product mix could,
therefore, contain several or many product lines. The width of the product mix can be measured
by the number of product lines that a business offers.

For a good example, visit the web site of Hewlett-Packard (“HP”). HP has a broad product mix
that covers many segments of the personal and business computing market. How many separate
product lines can you spot from their web site?

Managing brands is a key part of the product strategy of any business, particularly those
operating in highly competitive consumer markets.
BENEFITS OF BRANDING

To Buyer:

• Help buyers identify the product that they like/dislike.

• Identify marketer

• Helps reduce the time needed for purchase.

• Helps buyers evaluate quality of products especially if unable to judge a products

characteristics.

• Helps reduce buyers’ perceived risk of purchase.

• Buyer may derive a psychological reward from owning the brand, For example - Rolex or
Mercedes

To Seller:

• Differentiate product offering from competitors

• Helps segment market by creating tailored images. For example – Contact Lenses

• Brand identifies the companies’ products making repeat purchases easier for customers.

• Reduce price comparisons

• Brand helps firm introduce a new product that carries the name of one or more of its
existing products – preferably known as brand extension.

• Easier cooperation with intermediaries with well known brands

• Facilitates promotional efforts.

• Helps foster brand loyalty helping to stabilize market share.

• Firms may be able to charge a premium for the brand

BRAND NAMES

Introduction

How should brand names be chosen? Is the name important?

Marketing theory suggests that there are three main types of brand name:

(1) Family brand names:

A family brand name is used for all products. By building customer trust and loyalty to the family
brand name, all products that use the brand can benefit.

Good examples include brands in the food industry, including Kellogg’s, Heinz and Del Monte. Of
course, the use of a family brand can also create problems if one of the products gets bad
publicity or is a failure in a market. This can damage the reputation of a whole range of brands.

(2) Individual brand names:

An individual brand name does not identify a brand with a particular company.

For example, take the case of Heinz. Heinz is a leading global food manufacturer with a very
strong family brand. However, it also operates many well-known individual brand names.

Examples include Farleys (baby food), Complan (Health Drink for Kids) and Weight Watcher’s
Foods (diet/slimming meals and supplements).

Why does Heinz use individual brand names when it has such a strong family brand name?
There are several reasons why a brand needs a separate identity – unrelated to the family brand
name ( You can also identify with Ponds from HLL or Oil of Olay from HLL):

• The product may be competing in a new market segment where failure could harm the
main family brand name

• The family brand name may be positioned inappropriately for the target market segment.
For example the family brand name might be positioned as an up-market brand for
affluent consumers.

• The brand may have been acquired; in other words it has already established itself as a
leading brand in the market segment. The fact that it has been acquired by a company
with a strong family brand name does not mean that the acquired brand has to be
changed.

(3) Combination brand names:

A combination brand name brings together a family brand name and an individual brand name.
The idea here is to provide some association for the product with a strong family brand name but
maintaining some distinctiveness so that customers know what they are getting.

Examples of combination brand names include Microsoft XP and Microsoft Office in personal
computing software and Heinz Tomato Ketchup and Heinz Pet Foods.
Criteria for choosing a brand name

The criteria for choosing a brand name are as outlined as follows:

• Easy for customers to say, spell and recall (inclusive of foreigners)

• Indicate products major benefits

• Should be distinctive

• Compatible with all products in product line

• Used and recognized in all types of media

• Single and multiple words IBM PC (letters), or a combination Yamaha RXG

• Availability, already over 25 million viewers “Dish TV”, this makes it difficult to select a
new one.

• Use words of no meaning to avoid negative connotation. For example - Kodak

• Can be created internally by the organization, or by a consultancy

• Should adhere to various legal restrictions imposed by the Govt. & the World Council (in
case of globalizing the product)

What are the features/characteristics of a good brand name?

Brand names should be chosen carefully since the name conveys a lot of information to a
customer. The following list contains considerations that should be made before making a final
choice of brand name:

A good brand name should:

• Evoke positive associations

• Be easy to pronounce and remember

• Suggest product benefits

• Be distinctive

• Use numerals when emphasising technological features

• Not infringe existing registered brand names

BUILDING BRANDS

What factors are important in building brand value?

Many marketing specialist have identified seven main factors in building successful brands, as
illustrated in the diagram below:

Quality

Quality is a vital ingredient of a good brand. Remember the “core benefits” – the things
consumers expect. These must be delivered well, consistently. The branded washing machine
that leaks, or the training shoe that often falls apart when wet will never develop brand equity.

Research confirms that, statistically, higher quality brands achieve a higher market share and
higher profitability that their inferior competitors.

Positioning

Positioning is about the position a brand occupies in a market in the minds of consumers. Strong
brands have a clear, often unique position in the target market.

Positioning can be achieved through several means, including brand name, image, service
standards, product guarantees, packaging and the way in which it is delivered. In fact, successful
positioning usually requires a combination of these things.
Repositioning

Repositioning occurs when a brand tries to change its market position to reflect a change in
consumer’s tastes. This is often required when a brand has become tired, perhaps because its
original market has matured or has gone into decline.

The repositioning of the Dabur Glucose brand from a energy drink for children to a leading sports
drink is one example. Another would be the changing styles of entertainers with above-average
longevity such as Shah Rukh Khan.

Communications

Communications also play a key role in building a successful brand. We suggested that brand
positioning is essentially about customer perceptions – with the objective to build a clearly defined
position in the minds of the target audience.

All elements of the promotional mix need to be used to develop and sustain customer
perceptions. Initially, the challenge is to build awareness, then to develop the brand personality
and reinforce the perception.

First-mover advantage

Business strategists often talk about first-mover advantage. In terms of brand development, by
“first-mover” they mean that it is possible for the first successful brand in a market to create a
clear positioning in the minds of target customers before the competition enters the market. There
is plenty of evidence to support this.

Think of some leading consumer product brands like Gillette, Coca Cola and Cello-tape that, in
many ways, defined the markets they operate in and continue to lead. However, being first into a
market does not necessarily guarantee long-term success. Competitors – drawn to the high
growth and profit potential demonstrated by the “market-mover” – will enter the market and copy
the best elements of the leader’s brand (a good example is the way that Body Shop in UK
developed the “ethical” personal care market but were soon facing stiff competition from the
major high street cosmetics retailers.

Long-term perspective

This leads onto another important factor in brand-building: the need to invest in the brand over
the long-term. Building customer awareness, communicating the brand’s message and creating
customer loyalty takes time. This means that management must “invest” in a brand, perhaps at
the expense of short-term profitability.

Internal marketing

Finally, management should ensure that the brand is marketed “internally” as well as externally.
By this we mean that the whole business should understand the brand values and positioning.
This is particularly important in service businesses where a critical part of the brand value is the
type and quality of service that a customer receives.

Think of the brands that you value in the restaurant, hotel and retail sectors. It is likely that your
favourite brands invest heavily in staff training so that the face-to-face contact that you have with
the brand helps secure your loyalty
IMPORTANCE OF A BRAND & HOW TO DEVELOP A BRAND
We have seen the importance of a brand both to the buyer and the seller. But it remains how the
firm develops its brand. We will understand this with the help of an example below.

Example - Home Box Office (HBO)

Home Box Office in India receives competition from many other channels inclusive of Hindi movie
channels. Hindi movie channels are the most viewed channels since an average Indian quantifies
him/ her with the language.

HBO caters to English movies which has now is a part of the younger generation. The younger
generation constitutes a whooping 70% of the current population. With literacy rates having an
upward spiral in India, there has been a shift from Hindi movies to English movies because the
younger generation identifies more with the English movies although he/she seldom lets a chance
go when it comes to Hindi movies.

So, HBO has a huge task of wooing consumers in its favor and build its brand. It does not look at
capturing the whole market but rather strives to have a symbiotic relationship with the Hindi movie
channels. Its target is to generate that kind of interest an average movie goer has for Hindi
cinemas.

Let’s see what HBO does to build its brand.

Need to differentiate Product offering so consumers associate satisfying need to see good
movies to watching HBO. Consumers cannot check all brands therefore need to make choice
easier for them (In this case it could be Zee MGM, Zee Studio, Star Movies)

HBO silently works towards wooing consumers with the following thought in perspective

"We compete now with many movie channels, if consumers think of you without a Brand or
personality, you become an inventory of pictures & in a world of hundreds of channels, you'll get
lost”

How does HBO brand itself

Advertise...emphasize need to keep movies in original state

Co-promotion with United Artists Theaters sponsoring afternoon vintage movies & also sponsors
recently released flicks.

Changing Logo attracting consumers

Releasing hits on weekends and advertising them in the leading dailies.

Applies more viewing of the movie and less of ads to generate interest among the viewers

HBO – Where stars come together

BRANDING POLICIES

First question that arises is that whether to brand or not to brand. Homogenous products are
difficult to brand. The branding policies are:

• Individual Branding: Naming each product differently. For example products of P&G, HLL
facilitates market segmentation and no overlap.

• Overall Family Branding: All products are branded with the same name, or part of a
name. For example – TATA, Reliance - promotion of one item also promotes other items.
• Line Family Branding: Within one product line. For example P&G’s Men Beauty products

• Brand Extension Branding: Use one of its existing brand names as part of a brand for an
improved or new product, usually in the same product category.
75% of the new products in the market are brand extensions!!
BRAND POSITIONING
As we have argued in our other revision notes on branding, it is the “added value” or augmented
elements that determine a brand’s positioning in the market place.

Positioning can be defined as follows:

Positioning is how a product appears in relation to other products in the market

Brands can be positioned against competing brands on a perceptual map.

A perceptual map defines the market in terms of the way buyers perceive key characteristics of
competing products.

The basic perceptual map that buyers use maps products in terms of their price and quality, as
illustrated below:
BRAND EXTENSION
Marketers have long recognised that strong brand names that deliver higher sales and profits (i.e.
those that have brand equity) have the potential to work their magic on other products.

The two options for doing this are usually called “brand extension” and “brand stretching”.

Brand extension

Brand extension refers to the use of a successful brand name to launch a new or modified
product in a same broad market.

A successful brand helps a company enter new product categories more easily.

For example, Fairy (owned by Unilever) was extended from a washing up liquid brand to become
a washing powder brand too.

The Dabur Glucose brand in India has undergone a very successful brand extension from
children’s health drink to an energy and sports drink.

Brand stretching

Brand stretching refers to the use of an established brand name for products in unrelated
markets.

For example the move by Yamaha (originally a Japanese manufacturer of motorbikes) into
branded hi-fi equipment, pianos and sports equipment.

When done successfully, brand extension can have several advantages:

• Distributors may perceive there is less risk with a new product if it carries a familiar brand
name. If a new food product carries the Heinz brand, it is likely that customers will buy it
• Customers will associate the quality of the established brand name with the new product.
They will be more likely to trust the new product.
• The new product will attract quicker customer awareness and willingness to trial or
sample the product
• Promotional launch costs (particularly advertising) are likely to be substantially lower.

Food for Thought:

Think of the following:

Can TATA (i.e., the brand TATA) sell Cola, Computers, Vodka or for that reason open an Airline?

To use brand extensions the products should be either related (not the case for TATA), or the
brand name should have a value over and above the particular product category, i.e. a counter
culture image for example. If that is the case, then it might work.
TYPES OF BRAND/BRAND TYPES
There are two main types of brand – manufacturer brands and own-label brands.

Manufacturer brands

Manufacturer brands are created by producers and bear their chosen brand name. The producer
is responsible for marketing the brand. The brand is owned by the producer.

By building their brand names, manufacturers can gain widespread distribution (for example by
retailers who want to sell the brand) and build customer loyalty (think about the manufacturer
brands that you feel “loyal” to).

Own label brands

Own-label brands are created and owned by businesses that operate in the distribution channel –
often referred to as “distributors”.

Often these distributors are retailers, but not exclusively. Sometimes the retailer’s entire product
range will be own-label. However, more often, the distributor will mix own-label and
manufacturers brands. The major supermarkets (e.g. Tesco, Asda, Sainsbury’s) are excellent
examples of this.

Own-label branding – if well carried out – can often offer the consumer excellent value for money
and provide the distributor with additional bargaining power when it comes to negotiating prices
and terms with manufacturer brands.

Why should businesses try to build their brands? (Purpose of Branding)

There are many advantages to businesses that build successful brands. These include:

• Higher prices

• Higher profit margins

• Better distribution

• Customer loyalty

Businesses that operate successful brands are also much more likely to enjoy higher profits.

A brand is created by augmenting a core product with distinctive values that distinguish it
from the competition. This is the process of creating brand value.

All products have a series of “core benefits” – benefits that are delivered to all consumers. For
example:

• Watches tell the time

• CD-players play CD’s

• Toothpaste helps prevent tooth decay

• Petrol Pumps dispense petrol.

Consumers are rarely prepared to pay a premium for products or services that simply deliver core
benefits – they are the expected elements of that justify a core price.

Successful brands are those that deliver added value in addition to the core benefits.

These added values enable the brand to differentiate itself from the competition. When done well,
the customer recognises the added value in an augmented product and chooses that brand in
preference.

For example, a consumer may be looking for reassurance or a guarantee of quality in a situation
where he or she is unsure about what to buy. A brand like Mercedes, Sony or Microsoft can offer
this reassurance or guarantee.

Alternatively, the consumer may be looking for the brand to add meaning to his or her life in terms
of lifestyle or personal image. Brands such as Nike, Porsche or Timberland do this.

A brand can usefully be represented in the classic “fried-egg” format shown below, where the
brand is shown to have core features that are surrounded (or “augmented”) by less tangible
features.
PACKAGING

What is Packaging?
Easy? A box, a packet, a bag, a pot, a tube, polythene bag, a presentation box. These are all
true, but packaging is something more than just a 3D structure.

Packaging is the science, art and technology of enclosing or protecting products for distribution,
storage, sale, and use. Packaging also refers to the process of design, evaluation, and production
of packages

Packaging can be described as a coordinated system of preparing goods for transport,

warehousing, logistics, sale, and end use. Packaging contains, protects, preserves, transports,
informs, and sells. It is fully integrated into government, business, institutional, industry, and
personal use.

Package Labelling or Labeling is any written, electronic, or graphic communications on the

packaging or on a separate but associated label

Purpose of Packaging & Package Labels

• Physical protection - The objects enclosed in the package may require protection from,
among other things, shock, vibration, compression, temperature, etc.

• Barrier protection - A barrier from oxygen, water vapor, dust, etc., is often required.
Permeation is a critical factor in design. Some packages contain desiccants or Oxygen
absorbers to help extend shelf life. Modified atmospheres or controlled atmospheres are
also maintained in some food packages. Keeping the contents clean, fresh, sterile and
safe for the intended shelf life is a primary function.

• Containment or agglomeration - Small objects are typically grouped together in one

package for reasons of efficiency. For example, a single box of 1000 pencils requires less
physical handling than 1000 single pencils. Liquids, powders, and granular materials
need containment.

• Information transmission - Packages and labels communicate how to use, transport,

recycle, or dispose of the package or product. With pharmaceuticals, food, medical, and
chemical products, some types of information are required by governments.

• Marketing - The packaging and labels can be used by marketers to encourage potential
buyers to purchase the product. Package design has been an important and constantly
evolving phenomenon for several decades. Marketing communications and graphic
design are applied to the surface of the package and (in many cases) the point of sale
display.

• Security - Packaging can play an important role in reducing the security risks of
shipment. Packages can be made with improved tamper resistance to deter tampering
and also can have tamper-evident features to help indicate tampering. Packages can be
engineered to help reduce the risks of package pilferage: Some package constructions
are more resistant to pilferage and some have pilfer indicating seals. Packages may
include authentication seals and use security printing to help indicate that the package
and contents are not counterfeit. Packages also can include anti-theft devices, such as
dye-packs, RFID tags, or electronic article surveillance. tags, that can be activated or
detected by devices at exit points and require specialized tools to deactivate. Using
packaging in this way is a means of loss prevention.

• Convenience - Packages can have features which add convenience in distribution,

handling, stacking, display, sale, opening, reclosing, use, and reuse.
 • Portion control - Single serving or single dosage packaging has a precise amount of
contents to control usage. Bulk commodities (such as salt) can be divided into packages
that are a more suitable size for individual households. It is also aids the control of
inventory: selling sealed one-liter-bottles of milk, rather than having people bring their
own bottles to fill themselves.

You can look at packaging in a different way altogether. Let’s see how

Packaging is

Protection

Protecting what is inside from transit to point of sale so that reaches the consumer in perfect
condition.

Seduction

It can turn an everyday product into a luxury item. For example, how many times (especially
around big festivals) have you bought something that looks special and a little more expensive
than usual? You get home, take off all the packaging and it turns out to be no better than
something you use everyday (this is especially true with food! – Sweets rate sky rocket during
Dusshera & Diwali).

Brand differentiation

Without packaging, one toothpaste may be no different from another. Packaging holds the brand
that communicates these messages.

Advertising

50% extra free, buy one get one free, clearer skin in 30 days, good for your heart, shinier
dishes... all telling you why you should buy this particular product. Every time you open the
kitchen cupboard, you are looking at a reminder to buy more.

Another factor in the advertising power of packaging is advertising across generations. You see
Britannia biscuits in your cupboard at home when you are a child and it can reinforce the decision
to buy them and can therefore become a trusted brand when you are older.

Types of Packaging
Packaging may be looked at as several different types. For example a transport package or
distribution package is the package form used to ship, store, and handle the product or inner
packages. Some identify a consumer package as one which is directed toward a consumer or
household. (Refer the packaging slides)

Packaging may discussed in relation to the type of product being packaged:- medical
device packaging, bulk chemical packaging, over-the-counter drug packaging, retail food
packaging, military material packaging, pharmaceutical packaging, etc.

It is sometimes convenient to categorize packages by layer or function: "primary", "secondary",

etc.

• Primary packaging is the material that first envelops the product and holds it. This
usually is the smallest unit of distribution or use and is the package which is in direct
contact with the contents.

• Secondary packaging is outside the primary packaging – perhaps used to group

primary packages together.
 • Tertiary packaging is used for bulk handling, warehouse storage and transport shipping.
The most common form is a palletized unit load that packs tightly into containers.

These broad categories can be somewhat arbitrary. For example, depending on the use, a shrink
wrap can be primary packaging when applied directly to the product, secondary packaging when
combining smaller packages, and tertiary packaging on some distribution packs.

For examples, refer to the slides on packaging

What makes good packaging

Communication

Good communication in packaging enables consumers to quickly identify what is inside the
packaging, its price, its brand and its function.

Engaging consumers

Consumers can be engaged through brand stories. A good example of this is Kettle Chips who
talk about their history and love for all natural ingredients that go into handmade crisps that are
still made in small batches. It is this brand story on the packaging that reinforces the fact that they
are handmade more than if someone had just said so.

Ease of use

Good packaging is simple, easy to use and works perfectly.

No-one wants to have to fight to get into what they have bought: a good example of this being
blister packs that are used to package razors and toothbrushes.

Good aesthetics

Packaging needs to attract consumers and stand out from its competitors. Standing out from
consumers doesn’t have to mean picking the brightest color you can find. It can mean a good
balance between pack structure, color, typography and illustrations that appeals to the intended
audience.

Sustainable

There has been a massive focus on environmentally responsible packaging recently. Consumers
are becoming increasingly aware of the effect of what they buy has on the environment and
because of this, are demanding more in the way of green credentials. Sustainable packaging
means that consumers can feel good about what they buy and resources aren’t wasted - either
the energy that manufactures this packaging or the amount of material discarded at the end of its
use.

Waste Hierarchy

Packaging should take into consideration the traditional three R’s of reduce, reuse and recycle
during its development.

• Prevention – Waste prevention is a primary goal. Packaging should be used only

where needed. Proper packaging can also help prevent waste. Packaging plays an
important part in preventing loss or damage to the packaged-product (contents). Usually,
the energy content and material usage of the product being packaged are much greater
than that of the package. A vital function of the package is to protect the product for its
intended use: if the product is damaged or degraded, its entire energy and material
content may be lost.
• Minimization –(also "source reduction") The mass and volume of packaging (per unit of
contents) can be measured and used as one of the criteria to minimize during the
package design process. Usually “reduced” packaging also helps minimize costs.
Packaging engineers continue to work toward reduced packging.

• Reuse – The reuse of a package or component for other purposes is encouraged.

Returnable packaging has long been useful (and economically viable) for closed loop
logistics systems. Inspection, cleaning, repair and recouperage are often needed.

• Recycling – Recycling is the reprocessing of materials (pre- and post-consumer) into new
products. Emphasis is focused on recycling the largest primary components of a
package: steel, aluminum, papers, plastics, etc. Small components can be chosen which
are not difficult to separate and do not contaminate recycling operations.

• Energy recovery – Waste-to-energy and Refuse-derived fuel in approved facilities are

able to make use of the heat available from the packaging components.

• Disposal – Incineration, and placement in a sanitary landfill are needed for some
materials. Certain states within the US regulate packages for toxic contents, which have
the potential to contaminate emissions and ash from incineration and leachate from
landfill. Packages should not be littered.