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University of Nottingham

How to manage a brand to be strong: a study of Zara

Danye LUO

MSc International Business

How to manage a brand to be strong: a study of Zaraby

Danye LUO

2008

1

ContentsAcknowledgements Abstract

Chapter 1.1 1.2

Introduction

Background to brand management..8 Research question..9

Chapter 2.1 2.2

Literature Review

What is a brand?................................................................................12 How a brand is managed?.................................................................13 2.2.1 2.2.2 Brand strategy..13 Three instrument of a brand strategy.......15

2.2.2.1 Brand name16 2.2.2.2 Design of the brand..17 2.2.2.3 The effect of advertising..18 2.2.3 Planned meaning of a brand..19

2.2.3.1 Positioning choice.19 2.2.3.2 Brand value choice...22 2.2.4 2.2.5 2.2.6 Brand image..23 Brand-added value...24 Development of brand..26

2.2.6.1 Brand portfolio.26 2.2.6.2 Brand extension and endorsement strategy..27 2.3 The brand of Zara is a good study.29

Chapter 3.1

Methodology

Qualitative and Quantitative Research Methods..30

3.2 The chosen research approaches..312

3.2.1 3.2.2 3.2.3 3.3

Case study..31 Questionnaire survey31 Triangulation of these two methods...32

Questionnaire method.....32 3.3.1 3.3.2 3.3.3 Participants.32 Questionnaire design...32 Questionnaire procedure....33

3.4

Ethical issues that may need to be considered.33

Chapter 4.1 4.2 4.3 4.4 4.5 4.6 4.7

Case study of Zara

Overview of Zara35 Fashionable design with medium price..35 Product strategy of Zara...36 No traditional advertising..36 Customers feedback and Zaras image.37 Inditex Group...38 Summary of case study.....40

Chapter 5.1 5.2 5.3 5.4 5.5 5.6 5.7

The findings from questionnaire

The effect of design and price strategy42 Intrinsic aspect of positioning....43 Choosing brand value....44 Brand images, brand-added value and brand name....45 Advertising48 Zaras extension strategy...48 Summary of the findings....49

Chapter 6.1

Further discussion3

The influence of three instruments...51

6.2 6.3 6.4

Positioning and brand values choice.52 Brand images and added value.54 Brand portfolio, extension and endorsement strategy55

Chapter 7.1 7.2

Conclusion

Limitations of the study58 Recommendations for future research.59

References. . ..........60 Appendix 1 Appendix 2 Questionnaire. . .69 One sample of questionnaire.74

4

AcknowledgementI would like to give a huge thanks to my supervisor Harjit Skehon, who gave me a lot of encouragement and suggestions in my entire writing process and appreciate his hard work on the revision of it. I also would like to express my grateful appreciation to all those who kindly took part in and supported this dissertation.

5

AbstractThe meaning that a brand stands for is extremely significant for consumers, so a considerable number of researchers (Philips, 1988; Murphy, 1990; Brymer and Schiro, 1989; Temporal, 2002) are increasingly interested in brand management. The main purpose of this study is to investigate how a brand is managed to become a strong brand. The study will commence with an analysis of several key elements in the management of a brand. The three major instruments of a brand strategy are: positioning and brand values choice; brand images; and added value. If corporations exploit some brands into more than one market, the development of a brand portfolio, extension and endorsement strategy may be used (Riezebos et al., 2003; Riezebos, 1995b; Temporal, 2002).

Zara is a good case study to show how the brand has been managed to become a powerful brand in the fashion industry (Tungate, 2005). A combination of qualitative (case study) and quantitative (questionnaire survey) methods will be employed to ascertain whether Zaras success is in terms of vital elements, as mentioned above, in the brand management.

Research suggests that a brand with accurate positioning and brand values choice, positive brand image and high brand-added value, should become a powerful brand. Brand name, design and advertising have an important influence on this progression. A brand portfolio, brand extension and endorsement strategy can be used to develop brands for entry into other markets. If these strategies are managed well, a brand can also become stronger.

Key words: brand management, positioning, brand values, brand images, brand-added value, a brand portfolio, extension and6

endorsement strategy, Zara.

7

Chapter 1.1

Introduction

Background to brand management

When people see the word Nike, BMW or Coca Cola, brand is a word that springs to mind. The English word `brand originated in the Middle Ages (from 476 to 1492). It is a degenerate of the old Norse word brandr, which refers to the branding of cattle (Riezebos et al., 2003: 2; Keller, 1998; Cheverton, 2006; Olins, 2003). This was a way of making a differentiation in ownership. The Vikings may have spread the word brandr in England, where it was eventually incorporated into daily language (Riezebos et al., 2003: 2).

What is a brand? There are countless species of definitions of a brand; the benevolent see benevolence and the wise see wisdom. As stated by the American Marketing Association, a brand is a name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitions. (Keller, 1998: 2) This definition is adopted by a great number of scholars (Kolter and Keller, c2006; Keller, 1998; Kotler and Pfoertsch, 2006). All believe that brands could be the embodiment of a specific value for the organisation. According to Philips (1988), Murphy (1990), Brymer and Schiro (1989), reality confirmed the point that brands show a financial value. For example, in the process of acquisition, the buying party was often willing to pay in excess of the book value of the corporation. In addition, consumers brand experience can vary significantly from the production experience, and even one of the most powerful brands worldwide needs support from consumer acceptance (Hartley, 1995). From these two facts, brands not only stand for a financial value but also a strategic value for the corporation, and strong brands can be of great financial and strategic significance for corporations. Having said that, almost all corporations are devoted to making their brands strong in order to gain more value. So how do they do it? A great number of scholars8

(Temporal, 2002; Riezebos et al., 2003) pointed out that good brand management helps corporations make powerful brands. Put simply, brand management is a process that tries to take control over everything a brand does and says, and the way in which it is perceived (Temporal, 2002: xiii).

1.2

Research question

In this study, the crucial research question is How are brands managed in order to become strong brands?.

The first step of good brand management is formulating a brand strategy, which provides a pivot and orientation to brand management, and offers the policy that helps brand managers to obtain coherence in whole

brand-connected actions. Brand management becomes arduous and complex without a brand strategy (Temporal, 2002; Aaker, 2004). There are three key instruments of a brand strategy: brand name, design and advertising; making full use of any instrument allows corporations to manage brands well. For example, excellent design provides a positive image. In the introduction of a brand, its design must be meaningful to consumers. Positioning choice and brand value choice are made for the intended meaning of a brand by managers. If the choice is related to consumers needs and attitudes, it is the cornerstone of brand managements success. Then, through the expression of brand meaning, consumers can build a specific image of a brand and understand brand-added value (Riezebos et al., 2003). Consumers have an important influence on brand management. Therefore, in a brand strategy, positioning and brand values choice, brand image, and added value are central parts.

At the present time, there is an increasing tendency for corporations to exploit several brands into more than one market, which means they can choose the development of a brand portfolio, or brand extension and endorsement9

(Riezebos et al., 2003; Keller, 1998; Murphy, 1990). Whether building up a brand portfolio or, selecting extension strategy or endorsement strategy to exploit a brand to be powerful, these are significant components in the management of a brand which should be taken into account in a brand strategy.

In summary, a brand with accurate positioning and brand values, positive image and high brand-added value - in other words, with a good brand strategy - must become a strong brand. This transformation may benefit from three main instruments: brand name, design and advertising. Moreover, if a brand portfolio is well-managed, its brand should be very strong. A successful brand is then extended or endorsed to other brands in order to become more powerful.

Zara is a good case study to show how it has managed to become a powerful brand in the fashion industry (Tungate, 2005). Zara is only a high street brand; however, in the 2007 Best Global Brands, it was ranked at No. 64, thereby exceeding some luxury brands such as Prada, Burberry, Polo RL (Interbrand, 2007). Zara has managed to become the most valuable brand of the Spanish fashion distribution group, Inditex (a brand portfolio). Having 8 endorsed brands in the portf