CREATING CUSTOMER VALUE

BRANDS AND BRAND EQUITY MOHIT S. KELKAR PGDM-Exec 2014-15K. J. Somaiya Institute Of Management Studies & ResearchCONTENTSIntroduction

Strategic Importance and Significance of Branding

Strategies and Tactics for Building, Leveraging, and Defending Strong Brands

Challenges in Brand Management

Conclusion

INTRODUCTIONBranding Logo, Brand Name, Symbol, Character, TaglineBranding elements important for identifying & differentiating a product/service but part of overall branding strategyAmerican Marketing Association defines Brand as a name, term, sign, symbol, or design, or a combination of them, intended to identify goods & services of one seller or group of sellers and to differentiate them from those of competitorsBrand purposes : Mainly informational, cognitive Psychological, emotional & ego-expressive too

3INTRODUCTIONGlobalization, advance technology & social media contribute towards global brandChanging market forces & emergence of global brands makes branding one of the most important aspects of business strategyBrands companys most valuable assetTata Motors purchasing Jaguar & Range Rover from Ford Motor CompanyPurchase price $2.6 billion far exceeded the value of the factories, raw material due to the value of brand4STRATEGIC IMPORTANCE & SIGNIFICANCE OF BRANDINGGood branding Buyers confidence in purchase, cleaner interpretation, easier processing of info leading to higher satisfactionCorporate perspective Increases effectiveness of marketing, enhances brand loyalty, allows higher prices & margins, provides greater leverage with distribution channels, creates significant competitive advantageName, logo & design are markers of the brandWithout product history, markers are emptyMarkers such as Starbucks mermaid, bitten Apple, Nike swoosh are rife with customer experiences, ads, media reviews, word of mouth etc.STRATEGIC IMPORTANCE & SIGNIFICANCE OF BRANDINGOver time, ideas about the product accumulate and brand markers get meaning which creates a brand culture Brand Stories

(Product related activities) (Film & TV, news events) Brand Stories Brand Stories

Brand Stories

(expert writers, sales people advising retail shoppers) (Customer views)Brand CultureShared, taken-for-granted brand stories, and associations The FirmPopular CultureInfluencersCustomersSTRATEGIC IMPORTANCE & SIGNIFICANCE OF BRANDINGThese stories, images & associations become so continually reinforced & conventional and are treated as factThis creates tangible benefits in the form of brand equity & brand valueBrand equity Set of assets linked to a brands name that adds to or subtracts from the value of the product/serviceBrand equity can be positive or negativePositive brand equity causes customers to react more favourably to a product/service after brand identification.STRATEGIC IMPORTANCE & SIGNIFICANCE OF BRANDINGAssets that are component part of Brands Equity :- (Categorized by David Aaker)1) Brand awareness Familiarity2) Perceived quality Sense of quality3) Brand associations Subjective & emotional associations which form brand personality4) Brand loyalty Repeat buying, word of mouth. Strongest measure of brand equity e.g. Apple iPhone5) Other brand assets Patents, trademaksCreating positive brand equity is the goal of brand management

STRATEGIC IMPORTANCE & SIGNIFICANCE OF BRANDINGBuilding an emotional connection between consumers & products is essential to strong brand equityBrandDynamics Pyramid(BrandZ group) :- Nothing else beats it Strong Relation High Expense Whats better than others?

Can it deliver?

Does it offer something?

Do I know about it? Weak Relation Low ExpensePresenceRelevancePerformanceAdvantageBonding9STRATEGIC IMPORTANCE & SIGNIFICANCE OF BRANDINGBrand Resonance Pyramid (Kevin Lane Keller):-

Stages of Brand Development Brand Building Branding Objective at Blocks Each Stage

The New Coke Fiasco (1985) taking on the Pepsi challenge10STRATEGIC IMPORTANCE & SIGNIFICANCE OF BRANDINGBrand Value is a quantitative measurement of the financial value of a brandFirms such as Interbrand, BrandZ & Brand Finance have developed models for calculating the brand valueInterbrands Methodology :-1) Financial performance of the branded products2)Role of the brand in purchase decision process as measured by Interbrands Role Brand Index(RBI) which is derived from primary research, review of historic roles of the brand for companies in that industry or expert panel assessment3) Strength of the brand/Ability to create loyalty measured on 0 to 100 scale based on following 10 key factors :-Clarity, Commitment, Protection, Responsiveness, Authenticity,Relevance, Differentiation, Consistency, Presence & UnderstandingSTRATEGIC IMPORTANCE & SIGNIFICANCE OF BRANDINGBrandZ Methodology :-Its based on what it believes the worlds most comprehensive & reliable collection of brand equity information available, containing data from more than 1 million consumers in 30 countriesIt uses 4 step method :-1) Calculates amount of earnings for a particular brand2) Calculates financial value by predicting future earnings3) Determines brand contribution by assessing brands uniqueness & its ability to stand out, generate desire & cultivate loyalty4) Uses formula involving values from Step 1 to 3 to calculate final brand value

Strategies & Tactics for Building, Leveraging & Defending Strong BrandsCreating & Building a Strong Brand :Basics :-*A family, master or corporate brand is typically a single brand name that identifies several related productsE.g. Honda Bikes, Cars, Lawn Movers*Manufacturers also market products under individual brands uniquely identifying the productE.g. Proctor & Gamble marketing individual brands as Tide, Charmin, Duracell etc.*Some prefer both corporate as well individual brandsE.g. Toyota Branded automobiles but also Lexus, ScionStrategies & Tactics for Building, Leveraging & Defending Strong BrandsBasics :-Parent brand can create Brand Extensions leveraging the association with parent brandE.g. Mars did with M&Ms, Peanut M&M, Pretzel M&MProducts can also be co-brandedE.g. DLF IPL on YouTube, NDTV GOOD TIMESThe entirety of companys products offerings is often called its Product Mix or Product PortfolioStrategies & Tactics for Building, Leveraging & Defending Strong BrandsBrand Elements :-Brand name plays a central role in establishing brand but brand elements such as the brand mark or logo and the tagline or slogan play an equally important roleOrganizations which do it well integrate all the elements in brandingE.g. Nike, Iconic swoosh logo, Just Do It slogan and company names after Greek goddess of Victory convey characteristics as speed, strength & empowerment perfect for sporting goods companyStrategies & Tactics for Building, Leveraging & Defending Strong Brands6 criteria suggested by Kotler & Keller for choosing Brand Elements:-1)Memorable : Easy to say, remember e.g. Tide, Dove2)Meaningful : Purpose / type of product e.g. Caress soap3)Likable : Positive feeling, aesthetically pleasing4)Transferable : Does it add to brand equity across globe5)Adaptable : Will it be dated quickly?6)Protectable : How legally defensible are the brand elements? Can you trademark them? When class of products becomes widely known as original brand name of product brand name can become generic & original owner can lose trademark e.g. Nylon, Aspirin1st 3 internal facing and brand building while last 3 external facing and defensive16Strategies & Tactics for Building, Leveraging & Defending Strong BrandsUnique packaging also plays a vital role in branding. Functional as well as Promotional. e.g. Coca-Cola, Heinz can be identified without labelsBrand Personality The mix of human traits that we can attribute to a particular brandConsumers are likely to choose brands matching their personalityConsumers dont choose brands consistent with their own actual self-concept but also based on their ideal self-conceptCore brand message communicating essence of the brand & defining brand promiseStrategies & Tactics for Building, Leveraging & Defending Strong BrandsMike Moser guidelines on Brand Message :-*Is the message simple & clear enough?*Does it differentiate the brand in the marketplace?*Is it true? E.g.7-UP : The Uncola differs greatly from cola*Is it relevant? The key to memorability is relevance*Is it consistent with the companys core brand values?*Can you be the first to say it?E.g. Apples Think different is a good example of a clear, differentiating, true, relevant message

Strategies & Tactics for Building, Leveraging & Defending Strong BrandsBranding & Social Media :-Social media has completely changed how consumers engage with brands and transformed the economics of marketing70-90% of marketing funding goes to promotions hitting consumers at consider & buy stages, yet consumers are more susceptible to influence post purchase at evaluate & enjoy stagesHigh promotions but no online discussion means brand unlikely to survive the early stages of purchase decisionNeilsen reports 90% consumers trust recommendations from other consumers only 56% trust brand advertisingStrategies & Tactics for Building, Leveraging & Defending Strong BrandsBranding & Social Media :-Despite these facts marketing spending in social media is low because of following factors according to Sunil Gupta :*Cost & Time Too many creative people & too much time*Knowledge Risk Senior managers less familiar so avoid*Incentive Structure Ad firms with traditional media experts have strong incentives to maintain the current structure*Measurement Gross rating points easier to understand than page views or engagement*Loss of Control Top-down approach for brand positioning preferred so fear losing brand controlStrategies & Tactics for Building, Leveraging & Defending Strong BrandsBrand Communities :-Ardent consumers of particular brands can connect easily with like minded people via the Internet. Such online communities provide a forum to communicate with others who share same interest in productBrand communities tend to buy more, remain loyal & reduce marketing costsSuch communities are difficult to control as consumers take these communities in their handsResults are not always favourableAs brand communities inevitable a good brand strategy must at least address themStrategies & Tactics for Building, Leveraging & Defending Strong BrandsGrowing & Maintaining Strong Brands :Profit margins are generally lesser at the launch as promotional spending is very highA successfully launched product will likely demonstrate increasing profit margins throughout the growth phase and contribute significantly to the earnings growthWhen product reaches its peak growth phase, it is considered a mature brandTransferability is a key feature of a strong brand. Company tries to capitalize on strong brands through extensionsTo create brand extensions of a strong brand they should go with brands image e.g. Harley Davidson perfumeWith Strong transferable brands global markets can be penetratedStrategies & Tactics for Building, Leveraging & Defending Strong BrandsDefending Your Brand :Throughout its life cycle, a brand faces threats on a number of levels & needs to be defended :1)Economic downturn can affect brand leadership2)Counterfeiting It can tarnish the reputation of the real brand3)Direct competition is the most commonly encountered threat to a brand and certainly the most difficult to deal with. Recent studies show that length of times brands dominate their category has fallen down significantly4)With constant measurement & engineering across the entire marketing mix brand leadership can be maintainedStrategies & Tactics for Building, Leveraging & Defending Strong BrandsMeasuring Brand Success :Advertising agency Young & Rubicam (Y&R) Model of Brand Measurement called BrandAsset Valuator(BAV)Strength of a brand is measured 4 pillars :Differentiation, Relevance, Esteem & Knowledge

Strategies & Tactics for Building, Leveraging & Defending Strong BrandsMeasuring Brand Success :Kevin Keller developed a Brand Report Card. Keller recommends that companies rate their brands on 1 to 10 scale on each of the following attributes :-1)Ability to deliver benefits2)Relevance3)Value Perception Nature, premium vs household4)Positioning Similarities & differences from competitors5)Consistency No conflicting messages by marketing6)Brand Architecture All brands in portfolio work together7)Brand Equity All marketing channels communicate same message about the brand solidifying brand identity8)Brand Meaning Consumers perceptions are known9)Internal Support Building & maintaining brand awareness10)Measuring Brand Equity Formal brand equity management systemStrategies & Tactics for Building, Leveraging & Defending Strong BrandsManaging Declining or Dying Brands :Business Profits from Brands Smaller than 80/20 rule : 80-90% of profits come from fewer than 20% of the brand an organisation sellsMany brands are not performingDavid Aaker says The revitalization of a brand is usually less costly & risky than introducing a new brandIts can be true for product which is relevant & if its brand awareness & brand equity is highNirmalya Kumar suggests a more systematic method of brand & portfolio analyisStrategies & Tactics for Building, Leveraging & Defending Strong BrandsManaging Declining or Dying Brands :Nirmalya Kumars Four Step Process1)Making the case Brand audit2)Pruning the Portfolio Portfolio or segment approach3)Liquidating Brands Merging, Selling brand assets, Milking brands, Eliminating brands4) Growing core brands When non performing brands are deleted invest in growth of remaining brandsChallenges in Brand ManagementTraditional VS Contemporary Approaches Traditional approaches still apply but new market dynamics of customer centricity & social media needs to be incorporatedTheory VS Practice Consumer behaviour can be unpredictableCorporate VS Consumer Value Customers value enhanced experience but corporates value price premiumsShort Term VS Long Term Vision Due to marketing myopia long term goals are sacrificedMaintaining Consistency VS Relevancy In dynamic & constantly changing world keeping balance is difficult

CONCLUSIONBranding clearly goes far beyond a simple trademark or a logoNew technology & tools may reduce cost of developing & executing a brand strategyIrrespective of cost integrating a branding strategy into an organizations overall strategy remains crucial for ensuring brand value enduranceSuccessful brand management requires careful inclusion of all the elements while also balancing the challenges presented

THANK YOUMOHIT S. KELKARPGDM-Exec 2014-15mohit.kelkar@somaiyya.edu