Chapter 3

Brands and Stakeholder Relationships Key Points:

What

does it mean to say that a brand is more than a product? Explain the three steps in building a brand. What are the key factors in creating brand relationships? What is brand equity and how is it affected by brand relationships?

Marketing evolved from Economics

During

20th century, focus on exchange through manipulating the price, promotion, distribution of ideas, goods and services to satisfy customers and organisational objectives Rational Consumer not swayed by image or intangibles Must constantly innovate, improve product quality Brands = identification to distinguish your product from competitors

But now.. 70% of tangible (physical) innovations are copied by competitors within 1year Physical attributes get you in to a market but are not sustainable competitive advantage

What brand means

A perception resulting from experiences with, and information about, a company or a line of products Exists only in peoples hearts and minds Differentiates products from competitors Makes a promise to customers

Brand value

Nike versus New Balance Coke versus Cott Laurier versus Laurentian

Brand value

You believe one brand performs better You trust the performance claims You buy benefits not products

Branding

Process of creating a brand image that engages the hearts and minds of customers

Branding

Really, at its core, branding is simply marking something and saying, This is from me.
Karl-Heinz Kalbfell, Global Head of Brand and Product Strategy, BMW Group

Intangible Attributes
Intangibles are important in brand building: Harder for competitors to copy More likely to involve consumers emotionally
Emotion

triggers brain 3000x faster than rational

thought

More consistent with how consumers choose

Brand more than a logo Not just a name (McDonalds) Not just symbol (golden arches) More than identification How you feel and what you think when you see the name/symbol No brand = commodity

New Brand definitions...

A perception of an integrated bundle of information and experiences that distinguishes a company and/or its product offerings from the competition.

The sum of a customers experiences with a product and/or company.

Tom Duncan

New Brand definitions...

The visual, emotional and cultural image that surrounds your association or organization and its products and services.

Where does a Brand come from?

Customers form perceptions from:

Cues Signals Other types of communication messages Experiences

Both products and companies are considered brands

Cues

Attributes provide cues to support

perceptions you want to create

What Does a Brand Do?

Saves consumers time Creates trust or level of expectation Provides psychological attributes

Brand Loyalty

What loyalty cards do you use? What role do they play in the MC program?

Brand Building

Building a brand is all about conveying proof points that whatever product you pitch is worth my attention and my hard-earned dollar as a consumer and as a business owner.
Steven Cody, Managing Partner, PepperCom

The Brand Promise

Essence of a brand is a promise

Brand management = managing customer expectations Dont make promises you cant deliver

The Coca-Cola Promise

The

Coca-Cola company exists to benefit and refresh everyone it touches.

The basic proposition of our business is simple, solid and timeless. When we bring refreshment, value, joy and fun to our stakeholders, then we successfully nurture and protect our brands, particularly Coca-Cola. That is the key to fulfilling our ultimate obligation to provide consistently attractive returns to the owners of our business.
http://www2.coca-cola.com/ourcompany/ourpromise.html

Employee Marketing
Employees ultimately deliver the brand promise every day If corporate culture is the brand. Then employee marketing is the branding

Brand Equity
Two basic components determine a company or a brands value: Physical net assets, e.g. plants, equipment, and land Brand equity the intangible value of a company beyond its physical net assets

Interbrands Most Valuable Brands

July 28, 2006 Rankings
1. 2. 3. 4.

5.
6. 7. 8. 9. 10.

Coca-Cola $67,000 Microsoft 56,927 IBM 56,201 GE 48,907 Intel 32,319 Nokia 30,131 Toyota 27,941 Disney 27,848 McDonalds 27,501 Mercedes 21,795

Source: www.interbrand.com/best_brands

Canadas Most Valuable Brands

Rank Brand 2006 Brand Value CAD$M 1 RBC $3,989.6 2 TD Canada Trust 3,167.9 3 Petro-Canada 3,064.0 4 Bell 2,914.9 5 Shoppers Drug Mart 2,830.6 6 Tim Hortons 1,878.2 7 BMO 1,854.6 8 Canadian Tire 1,634.2 9 Scotiabank 1,378.7 10 Telus 1,079.3 Source: www.interbrand.com/best_canadian_brands_06.asp

How are Brands Evaluated?

Calculate overall brand sales Project net earnings Deduct projected earnings from tangible assets Use market research to isolate brand from remaining intangible assets (e.g.patents, customer lists, etc.)

Testing Brand Value

Conjoint Analysis

Statistical method that captures trade-offs: service vs. price vs. features vs. brand name

Dollarmetric Scale

AMC unidentified model asked what would customers pay for it Identical TV sets examined by consumers
Vs.

Five Elements of Brand Equity

Brand-name awareness Brand associations Perceived quality Proprietary brand assets Brand loyalty

Steps in Building a Brand (V1)

1. 2.

3.
4. 5.

Select a name and symbol Create awareness and brand identity Position the brand Create a brand image Create trust/build a relationship
from Duncan first edition

Steps in Building a Brand (V2)

1. 2.

3.

Select desired brand position Develop brand identification Create a brand image
from Duncan second edition

1. Positioning
Defined

by consumers on important attributes Place in mind relative to competing products Position happens planned or not

Positioning
Product Class Product Attributes

Away from Competitors

B

G E D F G

A C

Benefits Offered

Against a Competitor

Usage Occasions

Users

Positioning Map
Luxury Automobile Market
High Price
Lotus Turbo Esprit Ferrari Porsche Cadillac Allante Audi 325i Cabriolet Car Nissan Toyota 300ZX Supra BMW 750iL
Jaguar XJS Mercedes Audi Quattro Benz 400E Nissan Infiniti Toyota Lexus

Sports

Sedan

Low Price

2. Develop Brand Identification

Choose brand name

Has to be memorable

How to do this?
Benefit description Association Distinctive Pronounceable

2. Develop Brand Identification

Choose brand symbol An effective logo:

Communicates brand image and positioning Is simple, distinctive, and relevant Often legally protected as trademarks

3. Create Brand Image

An impression created by brand messages and experiences and assimilated into a perception or impression of the brand

E.g. Marlboro Man

Brand Icons of the 20th Century

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

The Marlboro Man Ronald McDonald The Green Giant Betty Crocker The Energizer Bunny The Pillsbury Doughboy Aunt Jemima The Michelin Man Tony the Tiger Elsie the Cow
Rankings based on an Advertising Age survey

Branding Strategies

Ways of maximizing the communication impact of brands Critical elements include:

Brand Extensions Multi-tier branding Co-branding Ingredient branding

Brand Personality
Anthropomorphism

- giving human characteristics to inanimate objects If the brand were a person, what kind of person would it be? E.g. Mercedes vs Miata

Male or Female? Young or Old? How would it dress? What music would it listen to? Where would you see it?

Y&R Brand Asset Valuator

Proprietary 2-part model

part 1 - strength of the brand image part 2 - brand personality scale

Y&R Brand Asset Valuator

Differentiation

Relevance

Brand Strength

BRAND IMAGE
Esteem Knowledge

Brand Status

Brand Personality Scale

Sincerity Excitement

Sophistication
Competence Ruggedness

Brand Personality

Is it on Brand?
Would our brand say that? Would our brand do that? Is it consistent with our brand image and personality?

Communication Style Guide

Graphic Standards Manual Gives direction for the appropriate use of the brand or corporate identity symbols such as the logo, color palette, and other stylistic details

Consumers modify your brands

In the old days, the successful communication of a personality through advertising gave the brand stable meaning. Now consumers are more proactive in reshaping brands.
Michael Solomon (Auburn)

Successful Brands

are visible have clarity are relevant have longevity

Brand mantra

3 words that capture the brands essence Nike: Authentic athletic performance. Disney: Fun family entertainment.