Strategic Marketing

1. Imperatives for Market-Driven Strategy

2. Markets and Competitive Space
3. Strategic Market Segmentation
4. Strategic Customer Relationship Management
5. Capabilities for Learning about Customers and Markets
6. Market Targeting and Strategic Positioning
7. Strategic Relationships
8. Innovation and New Product Strategy
9. Strategic Brand Management
10. Value Chain Strategy
11. Pricing Strategy
12. Promotion, Advertising and Sales Promotion
Strategies
13. Sales Force, Internet, and Direct Marketing Strategies
14. Designing Market-Driven Organizations
15. Marketing Strategy Implementation And Control
 Chapter 9

Strategic Brand
Management

McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 STRATEGIC BRAND MANAGEMENT
Strategic Brand Management

Strategic Brand Analysis

Brand Equity Measurement and Management

Brand Identity Strategy

Managing Brand Strategy

Managing the Brand Portfolio

Brand Leveraging Strategy

9-3
STRATEGIC BRAND MANAGEMENT

A product is anything that is potentially

valued by a target market for the benefits
or satisfaction it provides, including
objects, services, organizations, places,
people, and ideas

9-4
 A brand is a name, term, design, symbol, or any
other feature that identifies one sellers good or
service as distinct from those of other sellers.
American Marketing Association

A compelling logic has been proposed that the

distinction between goods and services should be
replaced by a view that services are the dominant
perspective in the 21st century, consisting of both
tangible and intangible components.*

*Stephen LVargo and Robert F. Lusch, Evolving to a New Dominant Logic for Marketing, Journal of Marketing, January 2004, 1-17. 9-5
 Strategic Role of Brands
A strategic brand perspective requires managers to be clear about what role
brands play for the company in creating customer value and share-holder value.
FOR BUYERS, BRANDS CAN:
reduce customer search costs by
identifying products quickly and
accurately,
reduce the buyers perceived risk by
providing an assurance of quality and
consistency (which may then be
transferred to new products),
reduce the social and psychological
risks associated with owning and using
the wrong product by providing
psychological rewards for purchasing
brands that symbolize status and
prestige.
9-6
FOR SELLERS, BRANDS CAN FACILITATE:

repeat purchases that enhance the companys financial performance

because the brand enables the customer to identify and re-identify the
product compared to alternatives,
the introduction of new products, because the customer is familiar with the
brand from previous buying experience,
promotional effectiveness by providing a point of focus,
premium pricing by creating a basic level of differentiation compared to
competitors,
market segmentation by communicating a coherent message to the target
audience, telling them for whom the brand is intended and for whom it is
not,
brand loyalty, of particular importance in product categories where loyal
buying is an important feature of buying behavior.
Source: Marketing Science Institute Report No. 97-422, 1997
9-7
 Brand Management Challenges*
Internal and external forces create hurdles for product
brand managers in their brand building initiatives:
Intense Price and Other Competitive Pressures

Fragmentation of Markets and Media

Complex Brand Strategies and Relationships

Bias Against Innovation

Pressure to Invest Elsewhere

Short-Term Pressures

*David A. Aaker, Building Strong Brands, 1996, 26-35. 9-8

 Responsibility for Managing Products
Product/Brand Management
Planning, managing, and coordinating the
strategy for a specific product or brand
Product Group/Marketing Management
Product director, group manager, or
marketing manager
Product Portfolio Management
Chief executive at SBU
Team of top executives
9-9
 Strategic Brand Management
Brand Identity Strategy
BRAND
EQUITY
Identity Implementation
MANAGEMENT

Brand Strategy Over

Time
STRATEGIC
BRAND
ANALYSIS Managing the Brand
Portfolio

Leveraging the Brand

9-10
 GLOBAL Recharging Sonys Strategy Brand
FEATURE Management
Sir Howard Stringer, a Welsh-born American citizen, was appointed CEO of Sony, the
troubled Japanese electronics giant in 2005. Sonys past strategic brand management
initiatives had failed to close the digital gap between software/services/content/
devices. During the CEOs first year several cost reduction and portfolio initiatives
were implemented to launch the turnaround strategy: The Aibo, a beloved robotic pet,
was put to sleep. They shut down the Qualia line of boutique electronics that included
a $4,000 digital camera and a $13,000 70-inch television. They eliminated 5,700 jobs
and closed nine factories, including one in south Wales. (He took some flak back home
for that). They have sold $705 million worth of assets. You probably dont know that
Sony owned a chain of 1,221 cosmetics salons and the 18 Japanese outlets of the
Maxims de Paris restaurant chain. Theyre gone. Gone, too, is a group of salary-men
in their 60s, 70s, and 80s who, after retiring from senior management positions, were
given the title of advisor, a tradition established by Sonys founders. That was very
symbolic, says Hideki (Dick) Komivama, a Sony executive and key ally of Stringers.
The 45 advisors each had a secretary, a car and driver, and worst of all, the ability to
gum up decision-making and second-guess people doing real jobs. No more.
Source: Marc Gunther, The Welshman, the Walkman, and the Salary Men, Fortune, June 12, 2006, 72.
9-11
 STRATEGIC BRAND ANALYSIS
Analyses Product Product Line Portfolio of
Product Lines

Market and
Customer

Competition

Brand(s)

9-12
 Tracking Brand Performance
Performance
Objectives

Select Method(s) for

Evaluation

Identify Problem
Products

Decide How to
Resolve the
Problem
9-13
 Product life cycle
analysis
Financial Product
analysis performance
analysis
Analyzing Brand
Performance

Brand
Research positioning
studies Standardized analysis
information
services
9-14
 Product Life Cycle Analysis
Relevant issues in PLC analysis include:

* Determining the length and rate of change of the PLC

* Identifying the current PLC stage and selecting the
product strategy that corresponds to that stage
* Anticipating threats and finding opportunities for altering
and extending the PLC

9-15
* Product Performance Analysis
Managements performance criteria
Strengths and weaknesses relative to portfolio

* Brand Positioning Analysis

Perceptual maps for brand comparison
Buyer preferences

* Other Product Analysis Methods

Information Services
Research studies
Financial analysis

9-16
 BRAND EQUITY
Company/Customer Value
of Brand Name and
Symbol of
a Product

Determined by the
brands set of
assets (and liabilities)

9-17
 Brand Equity
Effective strategic brand management requires that we
understand brand equity and evaluate its impact when
making brand management decisions:
Brand equity is a set of brand assets
and liability linked to a brand, its name,
and symbol, that add to or subtract
from the value provided by a product or
service to a firm and/or to that firms
customers.*

* David A. Aaker, Managing Brand Equity, The Free Press, 1991, 15.
**Ibid, 102-120.

9-18
Measuring Brand Equity. Several measures are needed
to capture all relevant aspects of brand equity.**
* loyalty (price premium, satisfaction/loyalty),
* perceived quality/leadership measures (perceived
quality, leadership/popularity),
* associations/differentiation (perceived value, brand
personality, organizational associations),
* awareness (brand awareness), and
* market behavior (market share, price and
distribution indices).
These components provide the basis for developing
operational measures of brand equity.

9-19
 BRAND IDENTITY STRATEGY
Brand identity is a unique set of brand associations
that the brand strategist aspires to create or
maintain. These associations represent what the
brand stands for and imply a promise to customers
from the organization members.*

Four Brand Identity Perspectives

Product
Organization
Person
Symbol
* David A. Aaker, Building Strong Brands, 1996, 68. 9-20
 Specific
Product
Private Line
Branding of
Products
BRAND FOCUS

Combination Corporate
Branding Branding
9-21
MANAGING BRAND STRATEGY

Proactive efforts
should be devoted to
managing each brand
over time.

9-22
Strategies for Improving Product Performance

Product
Cost improvement Alter
reduction marketing
strategy
Add Product line Eliminate
new Strategy specific
product(s) product(s)

9-23
 MANAGING THE BRAND PORTFOLIO
Leverage
Commonalities to
Generate Synergy

Allocate Reduce
Resources Brand
BRAND PORTFOLIO Identity
OBJECTIVES Damage

Facilitate Change Achieve Clarity

and Adaptation of Product
Offerings

Source: David A. Aaker, Building Strong Brands, New York: The Free Press, 1996, 241-242.

9-24
 Strategies for Brand Strength
Brand-Building Strategies
* Developing the brand identification strategy
* Coordinate identity across the organization
Brand Revitalization
* Find new uses for mature brands
* Add products related to heritage
Strategic Brand Vulnerabilities
* Brand equity can be negative
* Retailer private brands compete with manufacturer brands
* Major shifts in consumer tastes
* Competitive actions
* Unexpected events

9-25
 Product Mix Modifications
Motivation for changing the product mix:
* Increase the growth rate of the business
* Offer a more complete range of products
to wholesalers and retailers
* Gain marketing strength and economies
in distribution, advertising, and personal
selling
* Leverage an existing brand position
* Avoid dependence on one product line or
category
9-26
 STRATEGY Limited Brands Shifts its Focus from
FEATURE Apparel to Accessories

Ten years ago apparel represented 70% of Limiteds sales.

By 2005 70% of sales were from skin-care
products, cosmetics, and lingerie
Clothes are increasingly out of fashionafter declines for 3 years, U.S. apparel
sales increased only 4% in 2004 to $172.8 billion.
Apparel $ sales declines are due to discount pricing and households spending
more on electronics, home improvement, and spa services.
Limited is trying to make itself over as a high-end Procter & Gamble.
Victorias Secret is adding hair and cosmetics lines to its beauty business (has 3
of the top 10 selling fragrances in the U.S.).

Sources: Limited Brands 2005 Annual Report; Value Line; and Amy Merrick, For Limited Brands Clothes Become the Accessories, The Wall
Street Journal, March 8, 2005, A1 and A14.

9-27
 One new product is Tutti Dolci (all sweets), food inspired scents-lotion
and lip gloss in fragrances like lemon meringue, angel-food cake, and
chocolate fondue.
Victorias Secret has also accelerated new product development.
From 2003 through 2005 Intimate Brands (lingerie and beauty products)
accounted for all the corporations operating income.
Limited is also partnering with other companies to sell its brands and
develop new products.
Limited has three business groups:
Beauty and Personal Care
Lingerie
Apparel
Apparel is a continuing challenge with 2004 operating margins @ 1.4%
compared to over 19% for Bath & Body Works and Victorias Secret.
Limited has about 3700 stores. 2005 sales were nearly $9.7 billion with
net profits at $51 million.

9-28
 BRAND LEVERAGING STRATEGY
LINE Minor variants of a single
EXTENSION product are marketed under
the same brand name

BRAND Extensions of the brand

EXTENSION name to other product
categories
--Similar
--Dissimilar

9-29
 LEVERAGING ALTERNATIVES

LINE EXTENSIONS BRAND

EXTENSIONS

Horizontal Vertical Another Range Co-

Extension Extension Product Brand Branding
Class
Up from Down from
Core Core
Brand Brand

9-30
BRAND LEVERAGING IN UPSCALE AND VALUE MARKETS
Vertical Brand Extensions*
New
Core Up-Market
Brand Brand

New Core
Down-Market Brand
Brand

* ONE OF THE MOST DIFFICULT

BRAND PORTFOLIO CHALLENGES
9-31
 MOVING DOWN IS EASY BUT RISKY
Affects perceptions of the brand perhaps even more
significantly than other brand management options.
We are influenced more by
unfavorable information than by favorable
information.
The brands ability to deliver self-expressive benefits
may be reduced.
Potential cannibalization problem.
Potential failure risk.
Problem when the value entry is perceived to be
inconsistent with the quality expected from the
brand.
9-32
 MOVING A BRAND UP
THE DRIVERS
Enhanced Margins at the High End
Energy & Vitality
Enhance Credibility and Prestige of
the Brand
THE RISKS OF DAMAGING THE CORE
BRAND
Lacks Credibility
Lacks Self-Expressive Benefits
Falls Short of Expectations
9-33
 BRAND EXTENSION DECISIONS
Extending into Different Product Classes
THE PROCESS
Identify product categories for which the product fits and
adds value.
Determine existing brand associations and the
brand identity.
Identify related product category opportunities
Screening should be limited
Evaluate each category
Attractive
Growing
Good margins
Competition
Assets/Capabilities
Select the most promising extension concept
Develop a viable Brand Strategy
9-34
 CO-BRANDING
Co-branding (dual branding) involves two or more established
brands making a joint offer of their product brands

The participants brand names

are identified on the good or
service.

Several different forms

Component co-branding
(Volvo and Michelin)
Same company co-branding
Alliance co-branding
(Delta and American Express)
Ingredient co-branding
9-35
BRAND LEVERAGING EVALUATION CRITERIA
Brand Relevance/Differentiation
Capabilities/Perceived Value Match
Market/Segment Opportunity
Cannibalization Risks
Potential for Core Brand Damage
Clarity of Product Offerings
Estimated Financial Performance
Brand Equity Impact
9-36
 SEVEN DEADLY SINS OF BRAND MANAGEMENT*

Failure to fully understand the meaning of the

brand.
Failure to live up to the brand promise.
Failure to adequately support the brand.
Failure to be patient with the brand.
Failure to adequately control the brand.
Failure to properly balance consistency and
change with the brand.
Failure to understand the complexity of brand
equity measurement and management.
*Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736. 9-37