lbm - brand equity

7/21/2019 LBM - Brand Equity

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‘Conceptualizing Luxury Brands’



Conceptualizing Luxury Brands

• Introduction.



Conceptualizing Luxury Brands

• What is a luxury brand?

• Entoology – luxurie, Luxus

• !da "ith – Categories o#Consuption$ necessary% basic%a&uence% luxury.

• Luxury is ore than aterial'better thought o# as a concept.



(iensionality$ Exploring the )alue o# Luxury Brands

• *he ‘three +orlds’ hypothesis o#,arl -opper

• We propose that luxury brandshae three coponents ordiensions$ the #unctional% the

experiential% and the sybolic.



Experiential

)alue

"ybolic

)alue

/unctional )alue

W o r l d 2 W o r l d

3

World1

What physical attributesdoes the brand possess?What does the brand do?

What does the brandean to the indiidual?

What does the brandean to others?



Levels of Market Segmentation

• Mass Marketing.• Segmenting Markets.

• Niche Marketing.

• Micro Marketing - Local Marketing,

Individual Marketing, Mass ustomisation.



Segmenting onsumer Markets

• !eogra"hic Segmentation.

• #emogra"hic Segmentation - $ge, %thnic

segmentation, Life c&cle stage, gender,

income.

• !eodemogra"hics - $'(N -

)lassification of (esidential Neigh*ourhoods.+



Market Segmentation

• s&chogra"hic Segmentation - /0’s

article1 ‘$re !race Slick and atricia Ni2on

o2 the same "erson3’• Segmentation *ased on lifest&les - $I'

anal&ses.

• 4enefit Segmentation.

• %motional Segmentation



5arget Marketing

• 5he "ur"ose of market segmentation is to

identif& target markets u"on 6hich the

marketer can focus a marketing mi2.



What is a Brand?

• What is a Brand? ! brand is a nae%ter% sign%sybol% design or

cobination o# these% +hich is used toidenti#y goods or serices o# one selleror group o# sellers and to di0erentiatethe #ro those o# copetitors.

• !ttributes% Bene1ts% )alues%-ersonality.



4rand erce"tion and 4rand

(ecall• !eorge Miller )78+ ‘5he magic num*er

seven, "lus or minus t6o.’

• ‘5o" of Mind $6areness.’

• ‘4rand $6areness.’

• ‘$ided (ecall.’

• ‘4rand (ecognition.’

• #ifferentiate9



What is a -roduct?

• *he core bene1t leel

• *he tangible product leel

• *he augented product leel



Leitt’s *hree Leels o#

-roduct

Core Bene1t

or "erice

Core Prod

Tangible Prod Augmented Product

-ac2aging

3uality"tyling

Brand

4ae

/eatures

Installation

"erice

Warranty

(elieryCredit



5he roduct Life &cle

hases of the roduct Life

&cle

Salesof

the

roduct

Introduction

!ro6th Maturit

&#ecline



Sales

of

roduct

5ime

:ad

:ashion

Ne6 roduct

#iffusion attern for a :ad, a :ashion and a Ne6 roduct



What do brands do? *o

Brand or not to Brand• Brands helps buyers

• *ell the buyer soething about the

product 5uality.

• Brands also increase the shopper’se0iciency.

• Brand naes help call consuer’sattention to ne+ products.



Branding 6elps the

"upplier• 6elps the supplier to process

orders and trac2 probles

• Branding enables the supplier toattract a loyal and pro1table set o#custoers.

• Branding helps the supplier tosegent ar2ets.



Branding adds alue to

Consuers and "ociety• *hose +ho #aour branding

suggest it leads to higher and

ore consistent product 5uality.• Branding increases innoation.

• Branding helps shoppers 7 it

proides ore in#oration aboutproducts and +here to 1nd the



Brand "ponsor

• 8anu#acturers Brands

• -riate Brands

• Licensed Brands



Brand "trategy-roduct Category

Brand4ae

Line Extension Brand Extension

8ulti7brands 4e+ Brands

Existing 4e+

Existing

4e+



Can Eerything be

Branded?• Coodities

• -hysical goods

• "erices• 9etailers and (istributors

• :nline products and serices

• -eople• "ports% entertainent

• Countries



*op Brands

*otal )alue; Billion Brand

Brand as < o#total

=E >> @A @.@<

Dahoo > F F.<

Cisco G A F.A<

eBay > .AA<(ell @H @.@H<

Intel G> > >.G<

!on @.F<

(isney F A @>.GA<

,elloggJs A A @@.@@<IB8 F F @A.A<

Co2e G> F F.G<



4rand rism

Product or

ServiceSpecifcations

Brand

Perceptions

Brands and Perception

h Ch ll #



*he Challenge o#Branding

• Cash

• Consistency

• Clutter

Price oom !oop

Business results are so#t

9educe prices

9educe sericeand 8ar2etingto pay #or

-rice reductions"hort7ter sales iproe

Copetitors respond.Custoer price expectations shi#t. Custoer experience deteriorates.



#efining *rand e;uit&

• 4rand e;uit& is the added value endo6ed to "roducts <services

• Marketers < researchers use various "ers"ectives to stud& *rand e;uit&

• ustomer-*ased *rand e;uit& can *e defined as thedifferential effect that *rand kno6ledge has on consumerres"onse to marketing of that *rand



$. ustomer-*ased *rand e;uit&

$ 4($N# IS S$I# 5' =$>% $ 'SI5I>% ?S5'M%(-4$S%# 4($N#%@?I5A B=%N 'NS?M%(S (%$5 :$>'?($4LA 5' $ ('#?5< 5=% B$A I5 IS M$(C%5%# B=%N 5=% 4($N# IS I#%N5I:I%# $S

'M$(%# 5' B=%N I5 IS N'51

D main ingredients to this definition1

. 4rand e;uit& arises from differences in consumer res"onse

E. #ifferences as a result of consumer’s kno6ledge a*out the *rand

D. (eflected in "erce"tions, "references, < *ehaviour related to all as"ects ofthe marketing of a *rand



4rand e;uit& as a *ridge

• $ll marketing s"ends each &ear on "roducts < services should

*e thought of as investments in consumer *rand kno6ledge

• It is actuall& "ossi*le to Fovers"endG on *rand *uilding

• $t the same time, the *rand kno6ledge created *& these

marketing investments dictates a""ro"riate future directions

for the *rand



4rand e;uit& models

$aker’s model



$. $aker’s model

#$>I# $$C%( >I%BS 4($N# %@?I5A $S $ S%5 ': 7$5%!'(I%S ': $SS%5S < LI$4ILI5I%S LINC%# 5'4($N# 5=$5 $## '( S?45($5 :('M 5=% >$L?%

('>I#%# 4A 5=% ('#?5 '( S%(I>I% 5' :I(M$N#H'( 5' 5=% :I(M’S ?S5'M%(S1

5hese categories of brand assets are1

. 4rand lo&alt&

E. 4rand a6arenessD. erceived ;ualit&

. 4rand association

7. 'ther "ro"rietar& assets )"atents, trademarks, channel relationshi"s+



4($N# I#%N5I5A4($N# I#%N5I5A IS $ ?NI@?% S%5 ': 4($N#

$SS'I$5I'NS 5=$5 5=% 4($N# S5($5%!IS5

$SI(%S 5' (%$5% '( M$IN5$IN.

5=%S% $SS'I$5I'NS (%(%S%N5 B=$5 5=%

4($N# S5$N#S :'( < IMLA $ ('MIS% 5'

?S5'M%(S :('M 5=% '(!$NIJ$5I'N

M%M4%(S



4($N# I#%N5I5A) contd.+4($N# I#%N5I5A S='?L# =%L %S5$4LIS=

$ (%L$5I'NS=I 4%5B%%N 5=% 4($N# <

5=% ?S5'M%( 4A !%N%($5IN! $

>$L?% (''SI5I'N IN>'L>IN!

:?N5I'N$L, %M'5I'N$L, '( S%L:-

%K(%SSI>% 4%N%:I5S



4($N# I#%N5I5A )contd.+

'NSIS5S ': 12 DIMENSIONS OF BRAND '(!$NIJ%# $('?N# 4

PERSPECTIVES:

• $s a "roduct1 "roduct sco"e, "roduct attri*utes, ;ualit&Hvalue, uses,user, countr& of origin

• $s an organiation1 organiational attri*utes, local vs. glo*al• $s a "erson1 *rand "ersonalit&, *rand-customer relationshi"s• $s a s&m*ol1 visual imager&Hmeta"hors, heritage

CORE & EXTENDED I#%N5I5A1

• Core identity1 central timeless essence of the *rand – remainsconstant as *rand travels to ne6 marketsH"roducts• Extended identity1 includes various *rand identit& elements,

organised into cohesive < meaningful grou"s



>irgin

4rand Identit&



C$:%(%( re"resents *rand identit& diagrammaticall& as a

si2-sided "rism as sho6n *elo61

Inte

rnalisation

Exte

rnalisation

Constructed"ourceK"ender

Constructed



• Physi!e according to him is the *asis of the *rand.

– %.!. the "h&si;ue of Philips is Ftechnolog& and relia*ilit&G 6hile for the

*rand Tata it is “trust”

• Person"#ity is same as $aker, it ans6ers the ;uestion F6hat ha""ens

to this *rand 6hen it *ecomes a "erson3G

• C!#t!re s&m*olies the organiation, its countr&-of-origin and the

values it stands for. – %.!. traditional *rands like balsara, dabur and zandu.



• Re#"tionshi$ is the handshake *et6een consumer and the

organisation.

– %.!. the relationshi" 6ith F safola” is safet&.

• Re%#e&tion is the consumer’s "erce"tion for 6hat the *rands stands for.

– %.!. coke’s image more attract youth.

• Self-image is what the consumer think of himself.

– %.!. benz ar o6ner think that since he has *ought the car he is treating

himself to one of the *est car in the 6orld.



Let us no+ understand the pris in ore detail +ith a case st

Adidas



ase Stud& – $didas )+5he com"an& $didas 6as founded in the earl& E0s as !e*ruder #assler Schuhfa*rik, in

=erogenaurach in !erman&. $dolf #assler designed a "air of s"ort shoes in E7 and fe6 &ears later

he and his *rother (udol"h 6ere selling s"ecial shoes for tennis "la&ers and *egan design s"ecificshoes for different s"orts. 5he famil& com"an& s"lit in . $fter the s"lit, $dolf )$di+ #assler founded

$didas and his *rother (udol"h founded uma. 5he three-stri"e logo 6as designed in *& $di

#assler and he registered it as a trademark for $didas after the s"lit.

5he strength of $didas 6as its "roduct innovation. $di #assler registered more than seven hundred

"atents. $didas *egan selling its shoes in the ?nited States after 8 and in fe6 &ears the com"an&

dominated the $merican market. 5he most im"ortant marketing *reakthrough 6as the active "romotion

of glo*al s"orting events, es"eciall& the 'l&m"ics. 5he connection of $didas to the 'l&m"ics has a rich

heritage. $t the /E 'l&m"ic game in Munich, ever& official 6ore $didas.

$ctivities1 manufacture and distri*ution of te2tiles, shoes and a""liances for s"ort and related "roducts.

$didas has 0/ su*sidiaries in E0 countries, and e2"orts to 80 countries. %2"loitation of the registered

trademark F$didasG is made 6here ever it is an o""ortunit&. $ctivities of the com"an& and its

su*sidiaries are directed from $didas-Salomon $!s head;uarters in =erogenaurach, !erman&.

roducts1 $didas - :oot6ear, a""arel, and hard6are such as *ags and *alls. Salomon - Binter s"orts

incl. skis, sno6*oards, sno6*lades, ski *oots and *indings, inline skates, hiking, a""arel. Mavic –&cle

com"onents, 4onfire – Sno6*oard a""arel. $rc5er&2 - 'utdoor a""arel, clim*ing e;ui"ment, lichO –

Skate*oard e;ui"ment, foot6ear and a""arel, 5a&lor Made-$didas !olf - !olf e;ui"ment, golf a""arel,

golf shoes and finall&, Ma2fli - !olf *alls, irons and accessories

d did ) +



ase Stud& – $didas )E+In the earl& 0s $didas has sales of P *illion, and their *rand-*uilding model *egan to lose "o6er.

In $merica, the largest s"orts market, Nike had *uilt a successful *usiness in "art of riding the

e2"losive gro6th of running and Qogging among casual users. $didas focused mainl& on athletes inteam s"orts so the& did not "artici"ate in the *oom of the 0s. Mostl& therefore $didas 6as

overtaken *& Nike at that time.

In 0, $didas 6as holding on to Qust a t6o to three "ercent share of the ?.S. market. 4et6een

and E $didas total sales dro""ed from nearl& PE *illion to P./ *illion. In the same "eriod, Nike’s

sales 6ent from P.E *illion to more than PD. *illion. :rom *eing the ?.S. market leader in the late

/0s, $didas’s market share dro""ed to D "ercent in E. 5he %uro"ean market shares dro""ed

6hile Nike’s shares gre6.

$didas also have had "ro*lems 6ith the u"stream value activities in their value chain. 5raditionall&, the

com"an& have their o6n factories and 6holl& o6ned su*sidiaries. Bhat ha""ened in the /0s and

for6ard, during the $didas recession, 6as that $didas 6as una*le to shi" "roducts 6hen it 6as

needed, and the& had a long su""l& chain - it took months to get a ne6 shoe into the market. 5histime is no6 reduced *& 70R. Methods used are e.g. reducing trans"orting times trough *&"assing

6arehouses and deliver directl& to retailers. 5oda& $didas aims to have ne6 "roducts closer to the

market.

In /$didas $! ac;uired the Salomon !rou" 6ith the *rands Salomon, 5a&lor Made, Mavic and

4onfire. 5he ne6 com"an& is named $didas-Salomon $!.

( h *l



(esearch ro*lem

• 5he strategies of $didas 6ere *ased on advertising, s"onsorshi" "rograms for team end events and su*-

*rands

• $mong the similarities *et6een the cam"aigns for $didas and Nike 6e can see their strategies to advertisein a huge scale

• 'ne difference is that $didas %ndorsement "rogram is focusing on maQor glo*al events, s"orts associations,

and teams, and Nike, in contrast, focuses on individual athletes and their success

• Bhile Nike have Nike 5o6n sho"s in the *igger cities in the 6orld, $didas have created F5he $didas

Street*all hallengeG 6hich started out in !erman& E and five &ears later it had over 700.000

"artici"ants

• In the finals in !erman& it attracted DE00 "la&ers and 0.000 s"ectators• 4oth Nike and $didas *egan their turnarounds *& develo"ing a *rand identit&

• In each case, this e2ercise led to a focusing of the *rand and initiatives that *uilt the *rand in ne6 directions

6o+ hae !didas used the instruent branding% and +hich roll did it

play in the copetition bet+een !didas and 4i2e?



4o+ let us do a Coparatie analysis through ,ap#erer’s-ris odel

Adidas



Adidas

-icture o# "ender

-icture o# 9eceier

-ersonality*raditional%

conseratie% collectie

-hysi5ue"ports and 1tness

9elationship3uality and heritage

CultureEuropean% *raditional

Intern

alization

Extern

alization

9eMection*rue sportsanship% !

good tea player%"trong +or2 ethic

"el# Iage9elates ore to

copeting than to+inning

"i#e



"i#e

-icture o# "ender

-icture o# 9eceier

-ersonalityLi2e Nordan% Woods

-hysi5ue"ports and 1tness

9elationship"ponsorship% ethics

Culture !erican% Nust do it

Internalization

Extern

alization

9eMection !ggressie%

proocation% in7 your#ace

"el# IageCool% I a an athlete

ti $ l i )+



om"arative $nal&sis )+• Nike centred their *rand e;uit& model on the "latforms, the endorsement focus strateg&, creating a

dominant media "resence, develo"ment of :lagshi" stores, Nike 5o6n and su*-*randing

•5he $didas strategies 6ere *ased on, endorsement focus strateg&, advertising, s"onsorshi" "rogramsfocusing on maQor glo*al events, s"orts associations, and teams, and su*-*rands

• 5o create *rand a6areness *oth com"anies have *een using endorsement strategies in their *rand-*uilding

"rograms

• Bhat differs is that $didas focuses on s"onsorshi" of teams and events e.g. national teams and *ig s"ort

events like the 'l&m"ic !ames and different Borld ham"ionshi" events. 5his 6ill hel" them to create

a6areness 6ith hel" from different t&"es of media

• In contrast Nike has their focus on individuals like M. ordan and 5. Boods and their success stories• $*out the second strateg&, advertisingT Nike’s advertising strateg& 6as to create dominant "resence in

media. Nike created media "resence in several trend setting ?nited States cities. 5> ads linking Nike to a

cit& 6ere used, *ut real drivers 6ere huge oversied *ill*oards and murals on *uildings that *lanketed cities

6ith messages featuring ke& Nike-s"onsored athletes, not "roducts

• $didas took u" the com"etition 6ith Nike through raising their advertising *udget to a level that made it

"ossi*le to com"ete 6ith Nike on the same conditions and the same strength as Nike did to ca"ture the

consumer interest• $didas did not Qust s"end more mone&U the& made an im"act 6ith *rilliant e2ecutions. 5he&

made 5> and other advertising cam"aigns. 5he com"an& communicate their heritage of innovation,

technolog& and *ig success stories 6ith "ersonalities like %mil Jato"ek, Mohammad $li

• $didas tried to s"read meanings like FBe kno6 then- 6e kno6 no6G and F5here is nothing *et6een &ou

and success, so e2ceed &our o6n e2"ectations and limitationsG and F %arn itG

• 5he success 6as o*vious and after hard 6ork and striving to6ard a to" "osition in the industr& $didas 6as

*ack in *usiness.

ti $ l i )E+



om"arative $nal&sis )E+• Nike’s third strateg& 6as to develo", flag shi" stores, Nike 5o6n sho"s in *igger cit&’s, first national, and

then a*road

• Nike 6as the first com"an& to esta*lish flagshi" stores and it turned out to *e a sensation

• $didas choice 6as to e2"eriment 6ith s"ort events, 6ith 6hich the& made great success. %2am"les of that is

the $didas Street*all hallenge a local three-"erson team *asket*all tournament, this event started out as a

trail in 4erlin in the *eginning of the 0s as one time occasion

• In the mid 0s it had *ecome a huge s"ort event 6ith a*out 700.000 "artici"ants all over the *igger cities

in %uro"e

• In the finals in !erman& it attracted DE00 "la&ers and 0.000 s"ectators

• $didas made here*& a *rand-*uilding success• 5he Nike customer associated the Nike *rand 6ith 6ords like s"orts, attitudes and life st&le. (easons for

that is one can relate to or identif& one self to Nike’s marketing cam"aigns like Fust do itG and the

com"anies front athletes like Michael ordan and 5iger Boods. :or $didas one image stud& of consumers

found the *rand ver& trend&, modern and cool

• 5he surve& 6as made in late 0s. $ll marketing actions that *oth com"anies are im"lementing 6ill

ho"efull& result in lo&al customers

• $didas introduced a su*-*rand in 0 to serve the high-end "roducts for all categories of shoes anda""arel. 5he F%;ui"mentG su*-*rand 6ould re"resent the *est, 6hatever the "roduct 6as

• 5he lo6-end "roducts, for the Fnormal consumerG still have a high technolog& and level of innovation

*ecause of their inheritance of the older innovations and technolog& from the %;ui"ment line

• 5his strateg& made the $didas *rand take on a different meaningU it still meant "artici"ation, emotion and

"erformance

ti $ l i )D+



om"arative $nal&sis )D+• 5his 6as a success strateg& for $didas so successful that Nike co"ied their idea and introduced their o6n

line, the $l"ha line, *ased on the same idea

• Nike advanced from P *illion dollars in 8 to P . *illion in E00E, $didas advanced from P./ *illion in

E to P. *illion in

• $ccording to sales figures for the *oth com"anies, it seems that *oth Nike and $didas com"anies have

succeeded to create a *rand lo&al customer 6ho "erceives the Nike and $didas "roducts as to" ;ualit&

l i )+



onclusion )+• 4oth $didas and Nike have used the same theoretical s&stems to create their *rand *uilding "rograms

• 5he com"anies are *enchmarking each other, using the techni;ues from each others successes, 6hen Nike

launched their su*-*rand "roduct $l"ha line 6hich 6as *enchmarked on $didas alread& launched su*-*rand

of the %;ui"ment "roduct line for the elite of s"orts men

• Be can find man& similarities like endorsements strategies and the com"anies advertising strategies *ut

6hat differs in the endorsement strategies is that $didas focuses in s"onsoring teams and glo*al events,

6hile Nike have their center of attention on stars in s"ecific s"ort like *asket*all and Michael ordan or in

golf and 5iger Boods

• $*out advertising *oth com"anies have a*out the same scale and sco"e of advertising *ut the& tr&

to communicate different messages

• 5he messages from $didas isU the onl& one &ou com"ete 6ith is &our self 6hereas Nike communicate a

"rovocative, aggressive 6inner attitude 6hich can *e related to the $merican s"orts attitude FAou don’t 6in

silver, &ou lose goldG

• $s 6e can understand the t6o com"anies are aiming at nearl& the same targeted customer grou" *ut 6ith a

slightl& differentiation of attitude

• $didas stand for a com"eting and 6inning over &our self-attitude, and Nike stands for a 6inning over

ever&one attitude• 5he differentiation is *ased on the differences in culture *et6een the t6o com"anies and *et6een %uro"e

and ?S$

• $s an overall reflection one can see that $didas had to overcome, that the *oth com"anies had the

same target grou". $didas choose a *rand-*uilding strateg& that *uilt on the same theoretical criteria’s as

Nike. 4ut the& created a differentiation in identit& of the *rand )as seen com"aring anal&sis in the Ca"ferer

rism Model a*ove+ com"ared to Nike

l i )E+



onclusion )E+• $didas had the same strateg& 6ithin creating e;uit& value to their *rand

• 5he& challenged Nike in endorsement strateg&, and in advertising, *ut 6ith a slight difference in

communicated message, *& doing it trough the same medias. 5o differentiate them self and make totall& o6n

a6areness activities, events like $didas Street*all hallenge 6as created. %vents like those communicated

the $didas *rand around the 6orld

• $ccording to the results and "ositions the *rand-*uilding "rograms have given *oth $didas and Nike in the

s"ort industr&, one can sa& that *randing have *een a totall& determining factor. 'n to" of that the& made it

so good that the& are used as models in higher education.

lbm - brand equity

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