Download - New Stretegic Brand Management - Chapter 3

Produced by Kevin Almeida

CHAPTER 3:

BRAND AND

BUSINESS

MODEL


Content

Are Brands for all Companies?

Differentiating a commodity by the Brand

Building a Market Leader without Advertising

Brand Building

Backing the Brand by a business model


Are brands for all companies?

The brand needs to be managed for what it is – a company instrument for company growth and profitability, a business tool.

For many industrial companies or commodity sellers, the concept of the brand applies only to mass markets, high-consumption products and the FMCG sector.

A brand is a name that influences buyers and prescribers alike.


Differentiating a commodity by the brand

Branding is the only strategy to get out of commodity markets.

‘Value Curve’- Is a specific set of utilities delivered by the brand to a chosen and well-delineated target.

Major world-wide brands are brands that first decommoditized their market.

Eg: Coca-cola, Evian WaterDecommoditizng by an experiential brand:

Eg: Yello (A regional electricity German Company)


Building MARKET leader without advertising

1. To have enough volume. – Addressing the mass market means being able to fulfill trade expectations.

2. Secure a stable quality. – The first role of my brand is to reduce perceived risk.

3. For a mass market brand , Price is Key. – It must be mainstream.

4. It is essential to be end-user driven and find the right state for the particular market.

5. One should always create barriers for entry – A Blue Ocean Strategy / Moving fast to become the reference name of the sub-category.

6. National Sales Force.


Brand building: from product to values, and vice versa

It takes time to build a really strong brand. 1. From product advantage to intangible values.2. From values to product.

Most brand owners wants to create business, based on a very specific product or service: an innovation, a good idea to start.

Product becomes a brand; well known and endowed with market power.

Simply, it did not designate a person, but little by little came to be associated with imagery, with tangible benefits, with brand personality.


Are leading brands the best products or the best value curve?

To create a brand is much more than simply marking a product or a service, the necessary first step of brand differentiation.

Those who try the product must like it enough to make repeat purchases; the product must built brand loyalty.

Branding starts from the Customer, and asks, what does he or she value? Eg: Bacardi (One of its key intangible added values is its personality)


Backing the brand by a business model

Competition between brands is often competition between business models.

The problem faced by brands is how to differentiate a product that seems generic.

Eg: Orange Juice

The raw cost of orange juice is high; It creates pressure on margins. Eg 1: Tropicana – Premium pricing strategy, Permanent product innovations, Premium Image.

Eg 2: P & G – High tech approach to differentiate. Introduced ‘Sunny Delight’ in the fruit juice market.

Eg 3: Coca-Cola – Is an opaque product. The Cola syrup itself is very cheap to produce. It has allowed high margins and as a consequence high marketing budgets to rein-force its top-of-mind position.


To grow a business through the expansion of the category the strategy rests of three facets;

AvailabilityThe distributive lever comes first. Building both business and the brand image is tied to the active presence on premises.

AccessibilityThis is the price factor. ‘In China and India, sell Coke at the price of tea.’ This is made possible by the low cost of syrup production. To push competition out of the market, Coke company exerts a high-price pressure on the whole market.

AttractivenessNon-media communication (relationship, proximity, music and sports sponsorship and on-premise communications) represents the main part of the budget. A brand’s image is not of the product but of a bond; it delivers both tangible promises and intangible ones.


The Cola War Coca-Cola main challenger world-wide, Pepsi-Cola is following the same

brand and business model. Difference is Pepsi didn’t have to create the category since it was introduced more recently than Coke. It challenges the leader in three facets;

PricePepsi is a dime cheaper than Coke, at consumer level, but this creates a higher pressure profitability.

ProductPepsi works on palatability and taste to beat Coke.

ImagePepsi is younger than Coke. Capitalizing on the only durable weakness of Coke, its advertising positioning makes Pepsi the choice of the new generation.


Cola War Cont….Richard Branson of ‘Virgin’ admitted defeat in its war

against Coca-Cola and Pepsi in the US. Branson’s whole idea was to save on advertising and thus

make a cheaper price possible by taking advantage of the Virgin umbrella brand.

Virgin’ only brand asset is its core brand, which has been extended to all types of category.

Virgin had a small sales force. Finally, ‘Virgin Cola’ wasn’t able to work in the market without a full portfolio of soft drinks to support it.

This is necessary to access the on-premise consumption sector, and is also the only way to make a true national force economically possible.


Re-cap

Are Brands for all Companies?

Differentiating a commodity by the Brand

Building a Market Leader without Advertising

Brand Building

Backing the Brand by a business model


QUESTIONS?


THANK YOU

Download - New Stretegic Brand Management - Chapter 3

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