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eGUIDE 1 Contents
Defining brands > Using this guide > Checklist
eGUIDE 2
> Introduction > Case studies
Types of brands
eGUIDE 3 > The case for brands
How brands work > Branding importance in the future
eGUIDE 4
> Evolution of brands
Brand strategy
eGUIDE 5 > The core elements: brands versus
Managing and commodities
developing brands
> Definitions
eGUIDE 6
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>Checklist
Points to a summary page.
>Resources
Links through to the online Brand Store
section where you will find further resources
on the topic being discussed.
>FAQs
Gives answers to frequently asked questions.
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The important point to make is that increased value to a brand owner may be
satisfaction is based on both expectation and significant. Often 40-75% of a company’s
performance. However, this isn’t a static assets may be attributed to brands.
process: brands have to evolve to meet the
changing needs of consumers through Successful brands not only promote loyalty
continuous innovation and improvement. and even advocacy among customers, but
they also generate price premiums and form
Consumers’ wants and needs are ever- the platform for long-term growth with the
changing and brand managers need to stay in ability to use the brand franchise to move
touch with the public’s demands. In the past into new segments or even sectors. This is
an item of clothing that looked hard-wearing becoming critical as differentiation becomes
may have been the choice of preference for a ever more difficult in the face of better,
customer; today the designer label attached faster and cheaper competition.
may have more importance. Safety may have
During an economic greater importance in a person’s choice of car, History shows that during an economic
downturn or recession, cholesterol levels in their choice of sandwich. downturn or recession, brands that invest
brands that invest As tastes change, brands that don’t evolve can ahead of the competition do better during
stagnate and lose relevance. the slowdown and recover much more
ahead of the quickly on the upturn.
competition do better Brands are importand to brand owners
during the slowdown in terms of: “As to valuing brands, fashions in business
and recover much more models may come and go – but cash flow
quickly on the upturn. >Sustainable advantage remains a trusty and constant yardstick. The
Brands are a company’s prime asset and the allegiance that a consumer feels towards a
foundation of the business. They are the favourite brand – the predisposition to
source of revenue and profitability and the purchase that is built on a better product and
key to future prosperity. They are the reason a more useful bundle of benefits – is a capital
consumers choose one company over asset. It is a reservoir, if you like, of future
another. By creating consumer preference cash flow.” [Niall FitzGerald, chief executive,
and adding value to consumers, the Unilever]
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Figure 1.2: Brands shift the demand curve: all else being equal, brand >Defendability
equity shifts the demand curve, resulting in a higher price and/or share The realisation that brands, although
intangible assets, have substantial worth has
focused their owners’ minds on protecting
them. That coincides with a worldwide trend
Price
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Own label accounts for >Loyalty Own label accounts for over 40% of grocery
over 40% of grocery Middlemen can benefit from brands – like sales in the UK. The strength of private label
sales in the UK. Harley Davidson, for example – that have in food retailing has altered the trade
gone a step beyond achieving visibility relationship between the manufacturer and
and differentiation to developing deep retailer, with the retailer now both a major
relationships with a customer group. This customer and a powerful competitor –
provides a stable sales base. [Aaker, 2000] particularly when brand manufacturers
make private labels products as well as
“The acid test on the issue (of brand loyalty) their own brands.
is whether a housewife intending to buy Heinz
Tomato Ketchup in a store, finding it to be This can give retailers a significant
out-of-stock, will walk out of the store to buy competitive advantage. Brand
it elsewhere or switch to an alternative manufacturers, however, have been rising to
product.” [Tony O’Reilly, ex-CEO of H J Heinz the challenge through continued investment
(Lury, 1998)] and innovation, competing on the basis of
quality and value.
> Image
Middlemen benefit from the image of Brands are important to the economy
successful brands. Image is what exists in in terms of:
the minds of consumers. It is the total of all
the information they have about the brand, >Economic value added
whether from experience, word of mouth, The role of manufacturers’ brands in the UK
packaging, marketing, service and so on. economy is highly significant because brand
manufacturing stimulates demand and drives
>Own brands the market forward. At home and abroad
Private label products provide retailers with many of Britain’s major companies are built
an opportunity to generate higher margins on brands. Their success contributes to the
because of the very different cost structures success of the national economy.
between private label products and brands.
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>Exports
A report by Coopers and Lybrand in 1995,
based on a limited definition of the packaged
goods sector, suggested that producers’ of
branded consumer goods (excluding private
label) accounted for exports valued at
around £6 billion a year.
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Evolution of brands > Now that most basic consumer needs in the
[de Chernatony, L., 2001] developed world have been satisfied,
people’s interests in brands have moved to a
> In Greek and Roman times, because of the higher level – one in which they turn to
high level of illiteracy, shopkeepers hung brands which add value to their lives, not
pictures above their shops to show the types only in terms of tangible factors but
of goods they sold. This was the forerunner intangible ones as well.
of the brand logo being used as a shorthand
device. > In the knowledge economy, brands are one
of the few sources of competitive advantage
> In the Middle Ages, craftsmen used branding because, if they are successful, they create a
as a form of legal protection against copying. resonance in consumers’ minds that is
harder to copy.
> The first hallmark was stamped on silver in
1300 to indicate its source. “It is people who call brands into existence –
who form attachments, detest homogeneity,
> In the American West, cattle ranchers used a value consistency and delight in conferring
red-hot iron to brand their cattle as proof of personality characteristics on animals, entities
People have been ownership. and inanimate objects. People have been
confidently confidently differentiating between objects
> The advent of the Industrial Revolution since they were first invited to make a choice
differentiating between began the move towards mass production,
objects since they were between two identical arrowheads.” [Niall
mass market distribution channels, mass FitzGerald, FitzGerald 2001]
first invited to make a media, and the separation of producers and
choice between two end consumers. This led to the increased
identical arrowheads. emphasis on branding, both to reassure
consumers of the quality of goods they were
purchasing and to help manufacturers
differentiate their offer from that of
competitors.
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>Consistent
People believe in brands because they keep
their promises. This doesn’t mean that the
product has to remain unchanged. Most
Functionally Functionally successful brands continually improve or
undifferentiated differentiated update their products to remain competitive
or meet changing market requirements.
[Feldwick, 1996]
COMMODITY SUPERIOR
PRODUCT >Guaranteed quality
The brand name offers the value of
reassurance [Feldwick, 1996]. This
Emotionally guarantee of consistent quality reduces any
undifferentiated risk in the consumer’s view that the product
will not perform the intended roles.
Source: Goodchild, J. and Callow, C. (2001) Brands, Visions and Values. John Wiley and Sons, p. 37. [de Chernatony, L., 2001]
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>Communicated Definitions
Communication enhances all the attributes
that distinguish brands from products. At Input perspective: the producer’s view
one level, BMW and Mercedes are all about [de Chernatony, L., 2001]
engineering excellence: BMW is performance
focused, Mercedes is reliability focused. Both >Brand as a logo
What gives these two manufacture excellent products. But what This was proposed by the American
brands their strength is gives these two brands their strength is the Marketing Association in 1960 and stresses
the way they have way they have leveraged their functional the importance of the brand’s logo and visual
excellence into an emotional resonance in signifiers – mainly as a source of
leveraged their differentiation – such as the unique shape of
the minds of consumers.
functional excellence the Coca-Cola bottle, the golden arch of
into an emotional For example, BMW has taken physical McDonald’s, the part-eaten apple of Apple
resonance in the minds performance and used it to communicate a Computers.
of consumers. form of emotional aggression. Mercedes, on
the other hand, has taken the concept of Such visual signifiers however tend to be
powerful reliability and used it to more signposts for consumers. The brand is
communicate a form of emotional the impact these have on individual
reassurance. consumers, combined with their experiences
over time.
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Figure 1.8: Stakeholders have conflicting needs Brand share is the result of your brand’s
customer franchise. Brand equity is the result
of your company’s stakeholder franchise.
[Duncan and Mariority, 1997]
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Valu usto Related reading
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Em nd r
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Organisation
Finance
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Fair treatment
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>Greed
Taking cost out of a product formulation
sounds efficient but as often as not it’s the
most effective way to starve a brand to
death.
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Product lifecycle vs. brand life cycle > As long as the brand is kept up-to-date with
evolving standards and values, there is no
> A Gillette razor is a product with a defined reason why it shouldn’t live forever. The
lifecycle. Gillette is a brand that endures actual contents of a can of Coca-Cola or a
through a constant focus on innovation and pack of Ariel may change, but the brand
meeting consumer needs, wants and personality, if well-managed, can remain the
aspirations. same. [Arnold, 1992]
> A brand has an existence separate from an > All purchase decisions involve an element of
The drive for something actual product or service; it has a life of its risk, and buying behaviour shows the drive
well-known and trusted own. The test lies in the collective opinion of for something well-known and trusted is
is stronger than the the target customers and consumers. If they stronger than the drive for novelty. [Arnold,
drive for novelty. can perceive that a product has a unique 1992]
identity that differentiates it from other
similar products, and they can describe it
and the unique set of benefits it offers, then
it is a brand. [Randall, 1997]
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Checklist
> Gauge the organisation’s understanding of
‘brand’.
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CASE STUDIES
1. Harley Davidson: a brand with personality
2. First Direct: brand or community?
3. Gillette: consumer-led innovation – not an option, an imperative
4. Pedigree Masterfoods: nick, nack, paddiwack, give the dog a Jumbone®
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1. Harley Davidson: a brand with In this way, Harley Davidson has been able to
personality create an almost child-like attachment of
reliance with their followers. Followers worship
The turn of the twentieth century saw the birth the Harley Davidson idol much as others would
of a name that developed its own cult a celebrity, even tattooing the Harley name
following; Harley Davidson. It’s not just a onto their bodies in a declaration of loyalty to
brand, it’s an attitude, a lifestyle, a faction of the ‘cause’. One might say Harley has become
people and a brand with a shared heritage. a ‘brand’ in the literal sense.
Harley Davidson doesn’t uphold a product, but
a maverick disregard for convention. But what causes brands to become so deeply
embedded in the psyche of their proponents?
Strong brands meet emotional needs as well The answer lies in their ability to promote a
as physical ones. They say something about lifestyle, a way of thinking, and by their
our innermost character. They invariably evoke capacity to satisfy such deep-seated
a strong emotional response and add value to psychological needs. A relationship with a
a relationship. From the earliest times people brand can be as fulfilling as one with another
have used certain products to ‘make a person.
statement’ about who they are as a person
and where they are going. “It is people who call brands into existence,
who form attachments, detest homogeneity,
In today’s world, individualism wrestles with value consistency and delight in conferring
insidious conformity. Good brands provide an personality characteristics on animals, entities
identity, along with a set of surrounding and inanimate objects. People have been
emotional values, which slowly infuse confidently differentiating between objects
themselves throughout the collective since they were first invited to make a choice
unconscious. between two identical arrowheads.” [Niall
Fitzgerald]
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This need for identity and the continuing drive First Direct: brand or community?
for novelty and uniqueness drives us to seek
affiliation seemingly to affirm our acceptance. First Direct is more than just a bank. A passion
for new technology and a zeal for customer
One of the major fortes of the Harley Davidson satisfaction set it apart from the high-street
brand is its determination to involve all its banks. What did it for First Direct? A mutual
stakeholders, from customers to employees, understanding with customers that banking
suppliers, and the community at large. They should be easy and convenient. Simplicity
have a shared heritage. itself. A black-and-white logo with black-and-
white principles.
Harley has an almost unique affinity with its
customers. Reinforcing the pride felt by riders When you become part of First Direct, you
and developing intimate relationships with vow to uphold the First Direct tradition. The
them has shaped enduring customer loyalty, First Direct brand could not have existed in its
which others have found almost impossible to current form without a genuine contribution
imitate. from all involved. It is this inclusive brand
culture that has helped dispel bureaucracy and
Harley is a brand that truly has personality. instill a sense of unity and cooperation.
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As a service operation, quality is measured by But the reasons for First Direct’s notoriously
the nature of the interaction between high satisfaction levels are multifactorial. Any
customer and staff. What the customer gets good brand stems from the combination of
out of that relationship is what creates and events that shape the total customer
preserves the value of the brand. experience. A simple-to-use, accessible
website, perceptive staff, and a commitment to
First Direct focuses on the intangible, on adding value are all contributing features. But
creating and maintaining those important brand unity and a culture of mutual benefit
personal relationships while bringing everyone between customer, brand and staff have made
together within the caring ‘pavilion’ of the First Direct a brand and a community.
brand.
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Making the brand work across all channels is
also important to First Direct. Providing
customers with choice and giving them the
freedom to access their financial information in
a manner convenient to them not only
revolutionised the banking sector but
augmented the First Direct brand.
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studies. Product innovations can often drive needs, while also giving us a return on our
manufacturing innovations, as better and investment.
cheaper ways of producing goods are
developed. The product/consumer equation
New ideas may emerge from these tests and, Let me spend a minute to outline the
if so, a new project team may need to be set particular equation between the Mach 3 design
up. There will be more feasibility studies, and consumer expectations. Whatever the
further cost estimates, more financial analysis, FMCG category in which we operate as
concept refinement and packaging professional marketing and brand managers,
development. It may be necessary to go this equation is always there and it is our duty
through this cycle several times as new ideas to live and breathe it, and to get it right.
or problems emerge before we feel we have it
right. Eventually we have a product that meets The most obvious difference in Mach 3 is that
the consumer’s needs and ours. Then we buy it has three blades. However it is more
the equipment (based on complex capacity, complicated than that. In fact the concept of
design and logistical factors which have three blades was not the solution, it was the
evolved in step with the product design), start challenge: how to deliver them to the
production, develop and test the advertising, consumer in a structure and design that would
go to the trade, and launch the product. This meet his demands and aspirations.
is a complex process, which is time consuming
and expensive. The floating blades needed to be set in a new
geometry in order to achieve a closer shave
What is critical for Gillette in the product cycle with fewer strokes, thus avoiding irritation to
is consumer testing of all aspects of the the skin. Mach 3 also has a thinner blade edge
product, including the name, the packaging that required a diamond-like carbon coating to
and the pricing. We make a huge investment make it stronger. A balance was achieved –
and cannot afford to get it wrong. The product although three blades may give more ‘drag’
has to be successful and meet consumer than two, the sharper blades reduce the drag.
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Other innovative features include the single investment. This helps the economy, but puts
docking point between the blade and the the financial risk firmly on the manufacturer’s
handle, improved manoeuvrability, and a more shoulders.
pleasant sensation of actually pulling on rather
than pushing into the face. And the open We place a high value on the name we put on
architecture of the blade cartridge allows much the product. If we don’t get the innovation
easier rinsing. right and satisfy consumers, brand loyalty can
be eroded very quickly. If consumers stop
So this product really delivered against what trying our products, our image suffers not only
we had found consumers wanted, being with consumers but also with retailers.
preferred on 61 out of 62 attributes, a unique Retailers may seek increased margins if they
proprietary innovation supported by 35 begin to doubt the marketability of our future
patents. products, or may ask us to increase our media
and promotional spend behind new launches.
In summary, it is often true that as much Maintaining our reputation is essential, and we
innovation and work go into the launch are only as good as our last launch.
process – manufacturing, advertising,
retailer presentations, etc – as into the The right environment
product itself.
For our innovation to compete, we need a level
Risk playing field. We need access to distribution.
We need a fair, competitive chance to get our
None of this is risk free. Any innovation carries products onto the retailer’s shelf. Consumers
a financial risk and a risk to our image and don’t come to Gillette. We want fair margins
brand. The financial risk lies in the fact that and equal access to the airwaves to
we invest in engineers, equipment, production, communicate the benefits of our innovation.
PR companies, printers, suppliers, TV stations. And we are in business to earn a return on our
And remember, we pay these companies investment and risk.
before the product starts to recoup any
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In summary, innovation is an imperative for established this, it was imperative for Gillette
dynamic brands. There is a famous quote that to address the gap in order to stay ahead and
you can be on the right track but if you are keep growing its business and the category.
standing still you get run over. Well, you can
be on the right track, you can have a brand, BACK
and you can have a strong reputation, but if
you are standing still, you are going to get run
over, especially in today’s marketplace. The
pace of change is enormous so it is critical to
get it right with the consumer. But it is not
easy, there are risks, and it takes time, money
and effort.
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About big dogs and big bones Qualitative research with European dog owners
improved our understanding of these areas,
Back in 1996, the marketing team at Thomas’ and helped us to develop some important
Europe decided to probe two areas of dog consumer insights. We discovered that:
ownership that appeared under-developed.
> large dog owners did tend to have a strong
The first concerned large dogs and their emotional bond with their animal;
owners. Our calculations suggested that large
dogs should (due to their high calorie > large dog owners also had the desire to give
requirements) consume around half of all the snacks, treats and chews;
manufactured snacks, treats and chews sold in
Europe. In reality, however, they were being > however, most manufactured products were
fed significantly less than this. Why? Were seen as insufficient for a large dog, and
owners of large dogs less emotionally-attached often, therefore, inappropriate or poor value
to their pets? Did the cost of feeding a large for money.
animal mean that treats were an unjustified
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And, in our bone research, we found that: Product development took around 12 months
of continuous R&D and engineering effort, and
> real bone users regarded a butcher’s bone as was achieved through the innovative use of
the ultimate dog treat, satisfying the basic extrusion and forming technology. Throughout
instincts of their dog; the development, prototype products were
regularly tested with dog owners to confirm
> however, real bones had some major that the product was meeting the brief.
drawbacks including availability, hygiene and
safety (with concern over BSE). In parallel, other elements of the marketing
mix were developed. The name was created,
By combining the learnings from these two checked and trademarked. Packaging and
pieces of market research, we developed the graphic designs were developed with external
Jumbone® concept: a large, realistic, edible design agencies. A communication strategy
bone for dogs. All the benefits of a real bone, was agreed in conjunction with the Pedigree®
without the negatives. Ideal for large dogs and advertising agency. A full pricing and
their owners. We then had to work out how to profitability model was developed.
deliver such a unique product!
In mid-1997 quantitative market research
When is a real bone not a real bone? studies were commissioned to refine the
proposition. Results were outstanding, and a
The product development brief for Jumbone® major capital investment was agreed for the
was challenging. It had to look like a real manufacture of the product.
marrowbone, it had to be completely edible
and clean to eat, it had to occupy a large dog A ‘tail’ of successful innovation?
for a considerable time, and it had to be highly
palatable and digestible. And, of course, it had Jumbone® was launched initially at Crufts in
to meet cost targets to make it affordable (for March 1998 to an outstanding response from
the dog owner) and profitable (for Thomas’). consumers. The product has subsequently
been launched into 14 European markets and
has now become the second-fastest selling
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