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Chapter Nine

Strategic BrandManagement

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

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STRATEGIC BRAND MANAGEMENT

Challenges in Building Strong Brands

Strategic Brand Analysis Brand Identity Strategies Managing

Products/Brands Managing the Brand

Portfolio

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STRATEGIC BRAND MANAGEMENT

Strategic Brand Management: Creating and Sustaining Brand Equity Long Term Just like Total Quality Management (TQM)

is an integrative philosophy of management for continuously improving the quality of products and processes,

Strategic Brand Management is a long-term and integrative approach that the company adopts in creating, developing and managing its brand. 

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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

CHALLENGES IN BUILDING STRONG

BRANDS

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A brand is a name, term, sign, symbol, or design, or combination of them, intended to identify the goods or services of one seller or group of sellers, and to differentiate them from those of competitors.

American Marketing Association

Goods Versus Services Services are intangible

consumed at the time they are produced, often linked to the

people who produce the services.** Leonard Berry, “Services are Different,” Business, May-Jun 1980, 24-30.

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Strategic Role of BrandsA 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 buyer’s 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.

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FOR SELLERS, BRANDS CAN FACILITATE:• repeat purchases that enhance the company’s 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 consistent 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. 97422, 1997

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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.

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TM 5-1

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

Responsibility for Managing Products

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TM 5-1

Marketing’s Role in Product Strategy

1.Market sensing2.Identifying the

characteristics and performance features of products

3.Guiding target market and program-positioning strategies

Strategic brand management decisions are relevant to all businesses, including suppliers, producers, wholesalers, distributors, and retailers.

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Strategic Brand Management

Brand Identity

Identity Implementation

Brand Strategy Over Time

Managing the Brand Portfolio

Leveraging the Brand

Brand Equity

Strategic Brand Analysis

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Tracking Product Performance

Set Performance Objectives

Select Method(s) for Product Evaluation

Identify Problem Products

Decide How to Eliminate the Problems

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Analyzing Brand

Performance

Product life cycleanalysis

Financialanalysis

Product grid analysis

Researchstudies

Standardizedinformation

services

BrandPositioning

maps

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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

Product Life Cycle Analysis

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Product Grid Analysis Management’s 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

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Brand EquityEffective 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 orservice to a firm and/or to that firm’scustomers.*

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.

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

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BRAND IDENTITY STRATEGIES

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 PerspectivesProduct

OrganizationPersonSymbol

* David A. Aaker, Building Strong Brands, 1996, 68.

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SpecificProduct Line

ofProducts

PrivateBranding

CompanyName

Basisof

Identification

CombinationBasis

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MANAGING PRODUCTS/BRANDS

Building the Product/Brand Over

TimeProduct Line StrategiesProduct/Brand Portfolio Strategies

9-20Strategies for Improving Product

Performance

Product mix strategy

Product lineStrategy

Addnew

product(s)

Costreduction

Productimprovement

Altermarketingstrategy

Eliminatespecific

product(s)

Deleteproductline(s)

Changeproduct line

priorities

Add newproductline(s)

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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

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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

Product Mix Modifications

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BRAND EXTENSION

LINE EXTENSION

Extensions of the brand name to other product categories

--Similar--Dissimilar

Minor variants of a single product are marketed under the same brand name

Brand Leveraging Strategy

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LINE EXTENSIONS

BRAND EXTENSIONS

HorizontalExtension

VerticalExtension

AnotherProductClass

Co-Branding

Up fromCore

Brand

Down fromCore

Brand

Leveraging Alternatives

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BRAND LEVERAGING EVALUATION

CRITERIABrand Relevance/DifferentiationCapabilities/Perceived Value

MatchMarket/Segment OpportunityCannibalization RisksPotential for Core Brand DamageClarity of Product OfferingsEstimated Financial PerformanceBrand Equity Impact

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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.

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MANAGING THE BRAND PORTFOLIO

Objectives:– Leverage commonalities to

generate synergy

– Reduce damage to brand identity

– Obtain clarity of product offering

– Enable change and adaptation

– Guide resource allocations among

brands

Source: Aaker, Building Strong Brands, 1996.

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GLOBAL BRANDS International markets:

strategic branding challenges

Global brands supported by increasingly cosmopolitan consumers in many countries

Don’t build global brands but strive for global brand leadership

Challenge for MNCs: managing brand systems containing global, regional, and local brands

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Internet Brands Interactivity enhances brand

relationships and corporate reputation

Guidelines for a website used to reinforce an existing brand

Create a positive experience (ease of use, value, interactive, personalized, timely)Reflect and support the brandSynergy with other communication programsProvide home for loyalists

Differentiate with strong sub-branded content

Source: Aaker and Joachimsthaler, Brand Leadership, 2000, 242.

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HOW MANY BRANDS?

1. Is it different enough to merit a new name?

2. Will the brand identity add value?

3. Are there risks in using an existing brand name?

4. Is the new brand a viable business venture?