Instructor Manual for Strategic Brand Management Building Measuring and Managing Keller

Instructor Manual for Strategic Brand Management Building Measuring and Managing Keller

richard@qwconsultancy.com

1|Pa ge

Instructor's Manual Christy Ashley

Strategic Brand Management: Building, Measuring, and Managing Brand Equity Fifth Edition Kevin Lane Keller Vanitha Swaminathan

Chapter 1 Brands and Brand Management Learning Objectives 1. Define “brand,” state how brand differs from a product, and explain what brand equity is.

2. Summarize why brands are important.

3. Explain how branding applies to virtually everything.

4. Describe the main branding challenges and opportunities.

5. Identify the steps in the strategic brand management process.

Overview This chapter defines what a brand is and considers the functions of a brand, both from the perspective of the consumer and the firm. Because the marketplace has become increasingly complex and competitive, brand management is more important and challenging now than it ever has been. A strong brand can simplify decision making, reduce risk, and set expectations for consumers.

Brands offer tangible and intangible benefits to the companies who manufacture them, the retailers who sell them, and the consumers who buy them. Examples of strong brands given in the text include not only products and services but also people, places, sports, art, and entertainment industries. This chapter describes some of the past and present challenges faced by brands and states that the purpose of the book is to set forth principles, models, and frameworks that will help guide managers through these challenges as they plan and execute brand strategies.

This chapter details the three main factors that contribute to brand equity and several strategic imperatives for effective brand equity management. The strategic brand management process is also described. The strategic brand management process involves four main steps: identifying and establishing brand positioning and values, planning and implementing brand marketing programs, measuring and interpreting brand performance, and growing and sustaining brand equity.

Brand Focus 1.0 discusses digitally native vertical brands (DNVBs), or brands that originate on the Web and primarily interact with customers via digital channels. This book will help you develop an appreciation of and aptitude for using appropriate branding concepts.

Chapter Outline I. Preview A. The brand names associated with products and services are valuable assets.

1

B. The chapter objectives are to explore important issues in planning, implementing, and evaluating brand strategies and to provide appropriate concepts, theories, models, and other tools to make better branding conditions.

C. The information is designed to be relevant to all organizations, regardless of size, nature of the business, or profit orientation.

II. What Is a Brand? <<Use LO1. Define “brand,” state how brand differs from a product, and explain what brand equity is. Here.>> 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 to differentiate them from those of competition.”

A. Brand Elements 1. The different components of a brand that identify and differentiate it are brand elements.

2. Brand names, brand logos, and brand symbols come in different forms. <<Use Exercise 1 Here.>> B. Brands versus Products 1. A product is anything we can offer to a market for attention, acquisition, use, or consumption that might satisfy a need or want.

2. There are five levels of meaning for a product: a. The core benefit level b. The generic product level c. The expected product level d. The augmented product level e. The potential product level <<Use Figure 1-1 Here.>> 3. Steady investments in research and development have led to rapid innovations and market response. <<Use Figure 1-2 Here.>> 4. Brands carry a number of different types of associations. Marketers must account for them when making decisions.

2

5. The most valuable assets may be intangible. <<Use Branding Brief 1-1 Here.>> <<Use Discussion Question 1 Here.>> III. Why Do Brands Matter? <<Use LO2. Summarize why brands are important. Here>> A. Consumers 1. The term consumer broadly encompasses all types of customers, including organizations and individuals.

2. Brands provide a shorthand for—or simplification of—product decisions.

3. Brands help consumers identify the product’s source, assign responsibility to the product’s maker, reduce risk, reduce search costs, act as a promise or pact, are symbolic devices, and are quality signals. a. Products can be classified into: search goods, experience goods, and credence goods. b. Buyers’ risks include: functional risk, physical risk, financial risk, social risk, psychological risk, and time risk. <<Use Exercise 2 Here.>> B. Firms 1. Brands can help firms identify its products, protect unique features, signal quality, endow products with associations, serve as a source of competitive advantage, and serve as a source of financial returns.

2. Huge sums have been paid for brands in mergers and acquisitions. <<Use Figure 1-4 Here.>> IV. Can Anything Be Branded?

A brand is something that resides in the minds of consumers. Marketers must give consumers a label and a meaning that helps consumers perceive differences among brands. <<Use LO3. Explain how branding applies to virtually everything. Here>> <<Use Branding Brief 1-2 Here>> A. Physical Goods: traditionally associated with brands 3

<<Use The Science of Branding 1-1 Here.>> 1. Business-to-Business (B2B) Products a. A strong B2B brand can provide a clear competitive advantage. b. Even though purchasers are well-informed, B2B marketers recognize the importance of the brand and execution. <<Use The Science of Branding 1-2 Here.>> 2. High-Tech Products: the speed and brevity of the technology life cycle makes high-tech products a unique challenge. <<Use Branding Brief 1-3 Here.>> B. Services 1. Role of Branding with Services: services are less tangible. Branding can be a competitive weapon.

2. Professional Services a. Corporate credibility is key in terms of expertise, trustworthiness, and likability. b. Variability is a challenge because the service is hard to standardize. c. Referrals and testimonials are important when the service is highly intangible and subjective.

C. Retailers and Distributors 1. Brands serve important functions for retailers and other channel members. a. Brands help retailers establish an image and a position b. Brands can yield higher price margins c. Store brands or private label brands can increase loyalty and profit margins 2. Retailers have recently adopted a bricks and clicks model with responsive service.

D. Digital Brands: successful digital brands have been well positioned and satisfy unmet needs in unique ways. <<Use Brand Focus 1.0 Here.>> 1. Hulu, Pandora, and Wikipedia offer unique features and services.

4

2. Airbnb used storytelling to convey its message about space sharing. <<Use Exercise 3 Here.>> E. People and Organizations 1. Lady Gaga’s personal brand offers lessons for marketers.

2. Lady Gaga uses storytelling and updates her looks and performances.

3. UNICEF is an example of an organization that has initiated a number of marketing activities to satisfy its organizational goals and mission.

F. Sports, Arts, and Entertainment 1. Brand symbols and logos contribute financially to professional sports.

2. Branding is valuable in the arts and entertainment industries.

3. Harry Potter is an example of an entertainment brand that went from books to blockbuster movies.

G. Geographic Locations: Cities, states, regions, and countries are actively promoted. <<Use Branding Brief 1-4 Here.>> H. Ideas and Causes: Brands can help make ideas and causes seem more concrete. <<Use Discussion Question 3 Here.>> V. What Are the Strongest Brands?

1. Interbrand’s ranking of the most valuable brands is based on a methodology that will be discussed in Chapter 10. <<Use Figure 1-5 Here.>> 2. As much as 50% of a firm’s value can be attributed to intangible assets. <<Use The Science of Branding 1-3 Here.>> 3. Any brand is vulnerable and susceptible to poor brand management. <<Use Discussion Question 2 Here.>> VI. Branding Challenges and Opportunities <<Use LO4. Describe the main branding challenges and opportunities. Here.>> Brand management is more difficult than ever.

5

A. Unparalleled Access to Information and New Technologies: Technology provides access to vast amounts of information and can be used to design better brand experiences.

B. Downward Pressure on Prices: search costs are lower, which makes it easier for consumers to compare prices.

C. Ubiquitous Connectivity and the Consumer Backlash: as connectivity increases, it makes consumers less attentive and perhaps more protective of their time.

D. Sharing Information and Goods: new technology enables consumers to share information (social media) and goods (files and goods). <<Use Figure 1-6 Here.>> E. Unexpected Sources of Competition: new competitors can crop up online because there are fewer barriers to entry.

F. Disintermediation and Reintermediation: disintermediation intermediaries; reintermediation adds intermediaries.

takes

away

<<Use Exercise 4 Here.>> <<Use Figure 1-7 Here.>> G. Alternative Sources of Information about Product Quality: It is easier for consumers to learn about product quality with the vast amounts of information available on the Internet. Consumers can quickly learn about actual quality.

H. Winner-Takes-All Markets: Consumers are more quality sensitive and market leaders are likely to be chosen at an even greater rate. <<Use Figure 1-8 Here.>> I. Media Transformation: An important change in the marketing environment is traditional media fragmentation. LaCroix is an example of a brand that uses social media and influencers, instead of traditional media, to build brand awareness and engagement.

J. The Importance of Customer Centricity: Brands have shifted their emphasis to be more focused on customer issues and concerns. <<Use Discussion Question 5 Here.>> VII.

The Brand Equity Concept

A. Brand equity has elevated the importance of the brand in marketing strategy. <<Use Figure 1-9 Here.>> 6

B. Brand equity is the marketing effects uniquely attributable to a brand. <<Use Exercise 5 Here.>> C. Branding is all about creating differences.

1. Differences in outcomes arise from “added value” endowed to a product as a result of past marketing activity for the brand 2. Value can be created in different ways 3. Brand equity is a common denominator for interpreting marketing strategies and assessing brand value 4. There are different ways in which the brand can be manifested or exploited to benefit the firm.

VIII.

Strategic Brand Management Process

<<Use LO5. Identify the steps in the strategic brand management process. Here.>> <<Use Figure 1-10 Here.>> A. Identifying and Developing Brand Plans: brand planning uses three interlocking models.

1. The brand positioning model 2. The brand resonance model 3. The brand value chain <<Use Discussion Question 5 Here.>> B. Designing and Implementing Brand Marketing Programs: designing and implementing brand involves properly positioning the brand in the minds of customers and achieving as much brand resonance as possible. Depends on three factors: 1. Choosing Brand Elements 2. Integrating the Brand into Marketing Activities and the Supporting Marketing Program 3. Leveraging Secondary Associations <<Use Discussion Question 6 Here.>> C. Measuring and Interpreting Brand Performance: measuring and interpreting brand involves a brand equity measurement system, or a set of organizational processes 7

designed to improve the understanding and use of the brand equity concept within a firm.

D. Growing and Sustaining Brand Equity: it is about understanding how branding strategies should reflect corporate concerns and be adjusted. It involves: 1. Defining Brand Architecture 2. Managing Brand Equity over Time 3. Managing Brand Equity over Geographic Boundaries, Cultures, and Market Segments The Science of Branding

THE SCIENCE OF BRANDING 1-1 History of Branding •

Branding has been around for centuries, with trademarks on ancient pottery and bakers’ marks on bread as early examples.

•

Makers of patent medicines and tobacco manufacturers were early U.S. branding pioneers.

•

The Great Depression hurts brands, but sales of high-quality brands exploded from 1940 to 1980.

•

In the mid-1980s, brands were viewed more as intangible assets.

•

The twenty-first century brought data-driven marketing approaches and digital communications and channels for brands.

THE SCIENCE OF BRANDING 1-2 Understanding Business-to-Business Branding Six specific guidelines are defined for marketers of B2B brands: •

Ensure the entire organization understands and supports branding and brand management—Employees at all levels and in all departments must have a complete, up-to-date understanding of the vision for the brand and their role in supporting it.

A particular crucial area is the sales force, where personal selling is often the profit driver of a business-to-business organization.

•

Adopt a corporate branding strategy if possible and create a well-defined brand hierarchy—Because of the breadth and complexity of the product or service mix, companies selling business-to-business are more likely to emphasize corporate

8

brands. Ideally, they will also create straightforward sub-brands that combine the corporate brand name with descriptive product modifiers.

•

Frame value perceptions—Framing occurs when customers are given a perspective or point of view that allows the brand to “put its best foot forward.” Framing can be as simple as making sure customers realize all the benefits or cost savings offered by the brand, or becoming more active in shaping how customers view the economics of purchasing, owning, using, and disposing of the brand in a different way. Framing requires understanding how customers currently think of brands and choose among products and services, and then determining how they should ideally think and choose.

•

Link relevant nonproduct-related brand associations—Brand imagery might relate to the size or type of firm is considered relevant. Imagery may also be a function of the other organizations to which the firm sells.

•

Find relevant emotional associations for the brand—Emotional associations related to a sense of security, social or peer approval, and self-respect can also be linked to the brand and serve as key sources of brand equity.

•

Segment customers carefully both within and across companies—In a business-tobusiness setting, different customer segments may exist both within and across organizations. Within organizations, different people may assume the various roles in the purchase decision process: Initiator, user, influencer, decider, approver, buyer, and gatekeeper. Across organizations, businesses can vary according to industry and company size, technologies used and other capabilities, purchasing policies, and even risk and loyalty profiles. Brand building must take these different segmentation perspectives in mind in building tailored marketing programs.

THE SCIENCE OF BRANDING 1-3 On Brand Relevance and Brand Differentiation •

Brand relevance could make a difference on whether a firm acquires and retains customers. Differentiation is at the heart of brand success.

•

Aaker defined brand relevance as a factor that combines category choice and brand choice. Brand preference can affect brand relevance.

•

Sharp argued that acquisition was more important than retention and noted that the differentiation of brands has not resulted in distinctive consumer profiles.

•

Marketers should decide whether a mass marketing or a niche marketing strategy is most appropriate for a given category using questions like: o Is there a compelling value proposition that can appeal to a specific segment of the population?

9

o Is this target segment willing to pay a price premium over an undifferentiated product? o Is it cost-effective to engage with niche markets rather than offer an undifferentiated product to a larger audience? o What are the competitive advantages to a mass marketing strategy versus a niche strategy? Are there incumbents in the market that are using one or the other approach? Does the company’s resources and culture support a mass marketing or a niche marketing approach?

Branding Briefs

BRANDING BRIEF 1-1 Coca-Cola’s Branding Lesson One of the classic marketing mistakes occurred in April 1985 when Coca-Cola replaced its flagship cola brand with a new formula. Pepsi-Cola’s “Pepsi Challenge” promotion involved advertising and in-store sampling showcasing consumer blind taste tests between Coca-Cola and Pepsi-Cola. Invariably, Pepsi won these tests. Fearful that the promotion, if expanded nationally, could take a big bite out of Coca-Cola’s sales, Coca-Cola felt compelled to act.

Coca-Cola’s strategy was to change the formulation of Coke to more closely match the slightly sweeter taste of Pepsi. To arrive at a new formulation, Coke conducted taste tests with 190,000 consumers. The findings indicated that consumers preferred the taste of the new formulation to the old one and thus, Coca-Cola announced the formulation change.

Consumer reaction was swift but, unfortunately for Coca-Cola, negative. After several months of slumping sales, Coca-Cola announced that the old formulation would return as “Coca-Cola Classic” and join “new” Coke in the marketplace.

The new Coke debacle taught Coca-Cola a very important, albeit painful and public, lesson about its brand. Coke’s brand image certainly has emotional components, and consumers have a great deal of strong feelings for the brand. Coca-Cola’s biggest slip was losing sight of what the brand meant to consumers in its totality. The psychological response to a brand can be as important as the physiological response to the product.

BRANDING BRIEF 1-2 Branding Commodities A commodity is a product so basic that it cannot be physically differentiated from competitors in the minds of consumers. Over the years, a number of products that at one time were seen as essential commodities have become highly differentiated as strong brands have emerged in the category. These products became branded in various ways. Consumers became convinced that all the product offerings in the category were not the same and that meaningful differences existed.

10

Some notable examples are coffee (Maxwell House), bath soap (Ivory), flour (Gold Medal), beer (Budweiser), salt (Morton), oatmeal (Quaker), pickles (Vlasic), bananas (Chiquita), chickens (Perdue), pineapples (Dole), and even water (Perrier). DeBeers Group successfully branded diamonds by conveying powerful emotions and symbolic value.

BRANDING BRIEF 1-3 Adobe Adobe is a worldwide leader in multimedia and creativity software. It is well-known for Adobe Reader and Adobe Photoshop, as well as for the Adobe Creative Suite and Creative Cloud. It had a brand valuation of $9 billion in 2017, which was a 19% increase in brand value from 2016. Its innovative products are customer-friendly and its ads connect with consumers on an emotional level. It has a strong, well-executed brand strategy.

BRANDING BRIEF 1-4 Place Branding Branding is not limited to vacation destinations. Countries, states, and cities large and small are beginning to brand their respective images as they try to draw visitors or encourage relocation. Some notable early examples of place branding include “Virginia Is for Lovers” and “Shrimp on the Barbie” (Australia). Branding countries to increase appeal to tourists is also a growing phenomenon. Some recent success stories include Spain’s use of a logo designed by Spanish artist Joan Miró, the “Incredible India” campaign, and New Zealand’s marketing of itself in relation to The Lord of the Rings movie franchise. In 2017, the top five country brands were Switzerland, Canada, Japan, Sweden, and New Zealand.

Brand Focus

BRAND FOCUS 1.0 Unlocking the Secrets of Digital Native Brands Digitally native vertical brands (DNVBs) are brands that originate on the Web and interact with customers using (mostly) digital channels. Successful DNVBs include Warby Parker, Dollar Shave Club, and Bonobos. They disrupted their industries. Their growth may be less surprising given the growth of ecommerce. Direct-to-consumer retail is on pace to reach retail sales of $16 billion by 2022.

DNVBs are characterized by: 1) a relentless focus on customer acquisition, 2) direct sourcing of raw materials, 3) enhanced customer experiences, 4) building strong ties with customers, and 5) direct distribution to consumers.

Going direct allows firms to 1) gain affinity and gather feedback, 2) rely less on channel partners, 3) control the customer experience and retain agility, 4) develop an authentic, consumer-focused brand. Sometimes these digital-native brands extend into bricks-andmortar stores to strengthen customer engagement.

11

Warby Parker manufactures eyeglasses, sunglasses, and gift cards. The concept is simple: customers order glasses online and get them delivered to their homes. The average price for a pair of glasses is $95, and the firm donates a pair of glasses for every pair that is purchased.

Warby Parker took on offline giant Luxottica, which owned (or licensed) many brands and retail outlets. Warby Parker positioned itself as a lifestyle brand with unique product offerings, a low price point, and exceptional customer service. The company allows customers to try on glasses at home, and leverages social media influencers and models, as well as a well-trained, customer-centric team of employees.

Discussion Questions and Answers 1. .Pick your favorite branded product. What are the five levels of meaning for this product? Is it also a brand? Why or why not?

Answers will vary widely. Discussions could revolve around how a brand is distinguished from a product, with differentiation from other products being a key element.

Page: 32 Learning Objective 1: Define “brand,” state how brand differs from a product, and explain what brand equity is.

AACSB: Analytic Skills 2. Who do you think has the strongest brands? Why? What do you think of the Interbrand list of the 25 strongest brands in Figure 1-5? Do you agree with the rankings? Why or why not?

These two questions can be used to illustrate the similarities and differences between “favorite” brands and “strong” brands. The discussion could include evaluation of the criteria for inclusion on the Interbrand list.

Page: 49 Learning Objective 3: Explain how branding applies to virtually everything.

AACSB: Reflective Thinking 3. Think of a branded service that you use regularly, like your bank or your phone company. What are its brand elements? How does branding help address the intangibility and variability of this service?

Students will come up with different examples of services. They will consider the brand elements to understand how these try to express what customers can expect from the service company, thereby helping overcome intangibility and variability issues.

Page: 38 Learning Objective 3: Explain how branding applies to virtually everything.

AACSB: Analytic Skills 12

4.

Can you think of yourself as a brand? What do you do to “brand” yourself?

People resemble brands themselves in many ways—with their name, their mode of dress, their pattern of speech, their interests and activities, etc.—because each aspect of a person contributes to the differentiation of that person from other people.

Page: 46 Learning Objective 5: Identify the steps in the strategic brand management process.

AACSB: Reflective Thinking 5. What do you think of the new branding challenges and opportunities that were listed in the chapter? Can you think of any other issues?

Brand builders have faced forms of some of these challenges in the past, including increased competition and media fragmentation. Though the new challenges certainly make it more difficult to build a strong brand, by no means to they make it impossible.

Other issues include brand backlash, which illustrates a different type of accountability.

As the repeated targeting during anti-globalization protests of retail locations of multinational companies such as McDonald’s, Gap and Starbucks illustrates, a recognizable brand can also become a lightning rod for criticism and protest.

Page: 52 Learning Objective 4: Describe the main branding challenges and opportunities.

AACSB: Reflective Thinking Exercises and Assignments 1. Ask students to poll 10 or so consumers about their brand loyalty in various product categories (e.g., toothpaste, dishwashing soap, shampoo, deodorant, toilet tissue, soda, salsa, ice cream, cereal, potato chips, jeans, running shoes, and socks). Are there brands or categories for which consumer loyalty is relatively high? How do consumers explain their loyalty or lack thereof? How marketing strategies are affected by consumer attitude and behavior patterns (or, alternatively, how should they be affected)? (Can be related to Branding Brief 1-1: Coca-Cola’s Branding Lesson.)

Page: 35 Learning Objective 1: Define “brand,” state how brand differs from a product, and explain what brand equity is.

AACSB: Analytic Skills Question type: Individual/Group

13

Time to complete the exercise: 15 minutes This activity may be carried out at the beginning of the class where branding is introduced.

2. Ask students to imagine they have been hired as a marketing manager for a firm that sells a commodity. Instruct the student to identify the specific commodity, then to write a memo to his or her boss that suggests a brand strategy to differentiate the commodity from other products. In the memo, she/he should describe why brands matter for consumers and for the firm.

Page: 36 Learning Objective 2: Summarize why brands are important.

AACSB: Analytic Skills Question type: Individual Time to complete the exercise: 30 minutes This activity may be carried out for homework and discussed during the review of the chapter.

3. Give a prize to the student who comes up with the best list (as voted upon by other students) of “weird” brands—products that don’t seem to lend themselves to branding but yet are very successful in the marketplace. Candidates might include Blue Rhino propane gas, Banker’s Box boxes, Rent-A-Husband home handyman service, and Merry Maids housecleaning service.

Page: 38 Learning Objective 3: Explain how branding applies to virtually everything.

AACSB: Analytic Skills Question type: Individual Time to complete the exercise: 8–10 minutes This activity may be carried out before the class is introduced to the concept of the strongest brands.

4. Ask students to visit an information intermediary that has an impact on a brand’s equity.

Ask them to report back on a positive review and a negative review about one brand and the implications of each for the brand’s equity. What would they suggest the brand do in response to the reviews? Then, ask them to compare their research with at least two other students from the class. What did the positive reviews have in common? What did

14

the negative views have in common? What would they share with marketing managers based on the exercise?

Page: 55 Learning Objective 4: Describe the main branding challenges and opportunities.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 20 minutes This activity may be carried out before the class is introduced to the concept of challenges and opportunities.

5. Ask students to choose one of the notable recent auction sales listed in Figure 1-9.

Instruct them to look up the auction item and describe the “added value” that resulted in the high competition, and the resulting high sale price, for the auction item. Ask them why they believe the specific celebrity association created a difference? Then, ask them to imagine they inherited the object they chose. Ask them to describe what they would do with it and why? Discuss the results as a class.

Page: 58 Learning Objective 4: Describe the main branding challenges and opportunities.

AACSB: Analytic Skills Question type: Individual Time to complete the exercise: 10 minutes This activity may be carried out right after the class has been introduced to the concept of the strongest brands.

6. Ask students to choose one brand that leverages secondary associations (e.g., source, brands, spokespeople, sports, or events) to build brand equity. Describe the characteristics that a customer may infer the brand shares the identity it is associated with.

Page: 60 Learning Objective 5: Identify the steps in the strategic brand management process.

AACSB: Analytic Skills Question type: Individual Time to complete the exercise: 10 minutes 15

This activity may be carried out before the class is introduced to the strategic brand management process.

Key Take-Away Points 1. A brand is a “name, term, sign, symbol, or design, or a combination of these elements, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition.”

2. Brand elements come in various forms.

3. A brand is different from a product, which is “anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want.”

4. A brand adds dimensions that differentiate it from other products designed to satisfy the same need.

5. By creating rational and tangible and/or symbolic, emotional, and intangible perceived differences among products through branding, marketers create valuable, intangible assets.

6. Customers perceive differences among brands, which helps them make choices.

7. A number of branding challenges and opportunities—including changes in customer attitudes and behavior, competitive forces, marketing efficiency and effectiveness, and internal company dynamics—face today’s marketing managers.

8. Strategic brand management involves the design and implementation of marketing programs and activities to build, measure, and manage brand equity.

16

Chapter 2 Customer-Based Brand Equity and Brand Positioning Learning Objectives 1. Define customer-based brand equity.

2. Outline the sources and outcomes of customer-based brand equity.

3. Identify the four components of brand positioning.

4. Describe the guidelines in developing a good brand positioning.

5. Explain brand mantras and how they should be developed.

Overview This chapter defines the concept that is the focus of the book, customer-based brand equity.

This chapter also develops the brand positioning model.

Customer-based brand equity (CBBE) is the differential effect that brand knowledge has on consumer response to the marketing of that brand. Brand knowledge is a function of awareness, which relates to consumers’ ability to recognize or recall the brand, and image, which consists of consumers’ perceptions of, and associations for the brand. Building awareness requires repeatedly exposing consumers to the brand as well as linking the brand in consumer memory to its product category and to purchase, usage and consumption situations. Creating a positive brand image requires establishing strong, favorable, and unique associations for the brand.

This chapter outlines the important contribution of brand knowledge to brand equity. Brand knowledge is composed of brand awareness, which is itself a function of recognition and recall, and brand image, which reflects the associations consumers hold for the brand in memory.

Brand awareness is important because: 1) it is a necessary condition for inclusion in the set of brands being considered for purchase, 2) in low-involvement decision settings, it can be a sufficient condition for choice, and 3) it influences the nature and strength of associations that comprise the brand image. Awareness can be heightened by increasing consumer exposure to the brand and by linking the brand to product category, consumption, and usage situations.

A brand’s image reflects all the associations consumers have for a brand in memory. The strength, favorability, and uniqueness of the associations affect the responses consumers will have to the brand and to its supporting marketing activities. Associations can be about attributes and benefits of the brand, or attitudes toward it. Attributes, which are descriptive features of a brand, can relate to the actual physical components and ingredients of a brand (product-related), or to such things as the price, imagery, feelings, experiences, and personality associated with the brand (nonproduct-related).

17

Benefits derived from a brand may relate to the functional advantages it provides, the symbolic information it conveys, or the experiential feelings it produces. Attitudes, which represent the highest level of brand associations, reflect consumers’ overall evaluations of a brand and, consequently, often determine their behavior toward it.

The strength of associations depends upon the relevance of information consumers encounter about the brand and the consistency with which the information is presented over time. Favorability is a function of the desirability or value of the associations in attitude formation and decision-making, and of their deliverability or performance probability.

This chapter then moves onto discuss brand positioning and asserts that deciding on a positioning requires determining a frame of reference, the ideal points-of-parity (POPs) and points-of-difference (PODs) brand associations, and an overall brand mantra as a summary.

Marketers need to understand consumer behavior and the consideration sets that consumers adopt in making brand choices. PODs are associations that are unique to the brand, strongly held, and favorably evaluated by consumers—or reasons why consumers should buy a brand. POPs are those associations that are not necessarily unique to the brand but may in fact be shared with other brands. As such, they negate potential PODs for competitors and provide “no reason why not” for consumers to choose the brand.

Finally, this chapter concludes by discussing brand mantra, which is an articulation of the “heart and soul” of the brand, a three- to five-word phrase that captures the irrefutable essence or spirit of the brand positioning and brand values. It is described as a shorthand expression of the positioning.

Brand Focus 2.0 details the marketing advantages of creating a strong brand. These include greater loyalty and less vulnerability to competitive marketing actions and crises, larger margins, greater trade cooperation and support, increased marketing communication effectiveness, possible licensing opportunities, and a number of other advantages.

Chapter Outline I. Preview 1. Part II of the text explores how to develop brand strategies.

2. The first of three interconnected models, the brand positioning model, is developed.

3. The other two models, the brand resonance and the brand value chain models, are reviewed in Chapter 3.

4. The customer-based brand equity view is formally examined and will serve as an organizing framework for the rest of the book.

5. Positioning requires a definition of our desired or ideal brand knowledge structures. It also requires unique, meaningful PODs—reasons to buy—and eliminates reasons not to buy by establishing POPs. 18

6. This chapter discusses brand mantras, a shorthand expression of the brand’s positioning, before it concludes with a Brand Focus 2.0 that examines the benefits of a strong brand.

II. Customer-Based Brand Equity A. Defining Customer-Based Brand Equity (CBBE): 1. CBBE approaches brand equity from the perspective of the consumer.

2. Two fundamental questions: a. What do different brands mean to consumers? b. How does the brand knowledge of consumers affect their response to marketing activity?

3. CBBE defined as the differential effect that brand knowledge has on customer response to the marketing of that brand: a. Brand has positive CBBE when customers react more favorably to a product and the way it is marketed when the brand is identified than when it is not. b. If a brand has a negative CBBE, customers react less favorably to marketing activity for the brand. <<Use Learning Objective 1 Here>> <<Use Figure 2-1 here>> <<Use Brand Focus 2.0 here>> B. Brand Equity as a Bridge: 1. Customer knowledge drives the differences that manifest themselves in terms of brand equity.

2. Brands as a Reflection of the Past a. Dollars spent on manufacturing and marketing are investments in what consumers sensed, learned, and experienced about the brand. b. Quality of investment is more important than the quantity beyond some minimal threshold. c. Netflix has formed strong relationships with its customers and uses technology in novel ways to promote its shows and engage with the audience. <<Use NETFLIX Example Here>> 19

3. Brands as a Direction for the Future a. Future prospects of a brand come from consumers and their brand knowledge. b. Brand equity can help marketers design future marketing programs. c. Discovery Channel returned to its mission of producing work that was beneficial for people and the sustainability of the environment. <<Use DISCOVERY CHANNEL Example Here>> III. Making a Brand Strong: Brand Knowledge: A. Brand knowledge creates the differential effect that drives brand equity.

B. Marketers use the associative network memory model to understand how knowledge exists in consumer memory: 1. Memory is viewed as a network of nodes connected by links.

2. Nodes are stored information.

3. Links represent strength of association between the nodes.

C. Brand awareness is based on the strength of the brand node and is measured by the consumer’s ability to identify the brand under different conditions.

D. Brand image is consumers’ perceptions about a brand and is measured by asking about brand meaning or associations. <<Use Learning Objective 2 Here> IV. Sources of Brand Equity A. Brand Awareness. CBBE occurs when a consumer has high awareness and familiarity with the brand and holds strong, favorable, and unique brand associations in memory. Brand awareness consists of brand recognition and brand recall performance: 1. Brand recognition is the consumer’s ability to confirm prior exposure to a brand when cued with the brand.

2. Brand recall is the consumer’s ability to retrieve the brand from memory when prompted with the category or usage situation.

3. Brand recognition is helpful at the point of sale, but brand recall is important when the consumer has to actively seek the brand, like services and online brands.

20

4. There are three advantages of high brand awareness: a. Learning Advantages: brand awareness helps form and strengthen associations that make up the brand image. b. Consideration Advantages: raising awareness increases the likelihood the brand will be considered for purchase, or part of the consideration set. c. Choice Advantages: awareness can affect choice without other associations if consumers use decision rules to buy familiar brands or in some low involvement decision settings.

5. The elaboration-likelihood model suggests consumers may make choices based on awareness when they have low involvement due to lack of consumer purchase motivation, consumer purchase ability, or consumer purchase opportunity.

6. Brand awareness can be established via repeated exposure, which is better for brand recognition than for recall. Linkages that build a positive brand image are better for recall.

B. Brand Image. Once a sufficient level of brand awareness is created (for brand recognition) and strong associations with relevant information are established (for brand recall), marketers can create a positive brand image: 1. Brand attributes are descriptive features that characterize the product or service.

2. Brand benefits are personal value and meanings that consumers attach to the product or service. <<Use ANNIE’S HOMEGROWN Here>> <<Use E*TRADE Here>> 3. The more deeply a consumer thinks about a product and relates those thoughts to existing brand knowledge, the stronger the resulting brand associations will be.

4. Marketers create positive brand associations, or favorable brand associations, which may be situation- or context-dependent.

5. The uniqueness of brand associations or its unique selling proposition or compelling reason to buy is the essence of brand positioning.

V. Identifying and Establishing Brand Positioning <Use Learning Objective 3 Here> A. Basic Concepts:

21

a. Brand positioning, the “act of designing the company’s offer and image so it occupies a distinct and valued place in the target customers’ minds,” is at the heart of marketing strategy. b. It requires marketers to know who the target consumer is, who the main competitors are, how the brand is similar to the competitors, and how the brand is different from competitors.

B. Target Market: a. Different consumers may have different brand knowledge structures, perceptions, and preferences for the brand. b. A market is the set of all actual and potential buyers who have sufficient interest in, income for, and access to the product. c. Market segmentation divides the market into homogeneous groups who have similar needs and consumer behavior and require different marketing mixes. d. Segmentation bases can be classified as descriptive or customer-oriented (related to what kind of person or organization the customer is) or as behavioral or product-oriented (related to how the customer thinks of or uses the brand or product). e. Behavioral segmentation bases have clear strategic implications, so they are often valuable for understanding branding issues. <<Use Figure 2-3, Consumer Segmentation Bases, Here>> <<Use Figure 2-4, Business-to-Business Segmentation Bases, Here>> f. Other segmentation approaches build on brand loyalty, which can include a classic funnel model that traces consumer behavior from awareness to brandmost-often-used. <<Use Figure 2-5, Hypothetical Examples of Funnel Stages and Transitions, Here>> g. Broad demographic descriptors can mask important underlying differences related to behavior and needs. h. Criteria to guide segmentation and target market decisions include the following: 1. Identifiability 2. Size 3. Accessibility

22

4. Responsiveness i.

The overall consideration in defining market segments is profitability, which can be related behavioral considerations.

j.

Personas can help marketers understand the needs of different segments

C. Nature of Competition: 1. The decision to target a certain type of consumers defines the nature of competition (e.g., other firms that target the segment or plan to do so, other brands consumers consider).

2. Competitive analysis includes the resources, capabilities, and intentions of other firms, which can affect marketers’ abilities to profitably serve a segment.

3. Indirect competitors include solutions that may provide the same benefit, even it if it is not in the same category. Firms that narrowly define competition may fail to realize threats and opportunities.

4. It is not uncommon for a brand to identify multiple frames of reference and may have different POPs and PODs that depend on the competitor and/or category.

D. Points-of-Parity and Points-of-Difference 1. PODs are formally defined as attributes or benefits that consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand: a. Consumers’ brand choices often depend on the perceived uniqueness of brand associations. b. PODs may rely on performance attributes, performance benefits, imagery associations, or both performance and imagery. <<Use Branding Brief 2-1, Subaru Finds Its Groove, Here>> c. PODs are generally defined in terms of consumer benefits and have important underlying proof points, or reasons to believe (RTBs) in one of many forms: 1. Functional design concerns 2. Key attributes 3. Key ingredients 4. Key endorsements 23

2. POPs are not unique to the brand. They may be shared with other brands and come in three types: category, competitive, and correlational: a. Category points-of-parity—necessary, but not necessarily sufficient conditions for brand choice b. Competitive points-of-parity—associations competitors’ PODs

designed

to

negate

c. Correlational points-of-parity—potentially negative associations that arise from the existent of other, more positive associations for the brand. POPs and PODs can be inversely related (such that if your brand is good at one thing, it can’t be perceived as good on something else) 3. POPs are important because they can undermine PODs: unless certain POPs can be achieved to overcome potential weaknesses, PODs may not even matter: a. Brand performance on POPs must be sufficient, not necessarily equal. b. POPs are easier to achieve than PODs, where a brand must be perceived as superior. << Use Figure 2-6, Examples of Negatively Correlated Attributes and Benefits, Here>> VI. Positioning Guidelines <Use Learning Objective 4 Here> A. Defining and Communicating the Competitive Frame of Reference: 1. Category membership is a starting point for defining a competitive frame of reference: a. It tells consumers about the goals they might achieve by using a product or service. b. Consumers must be convinced a brand belongs with other category members. c. Brands may be affiliated with categories with which they do not hold membership. d. Consumers should be convinced of category membership before they are informed of PODs. 2. Category membership can be conveyed by communicating category benefits, comparing to exemplars, and relying on a product descriptor:

24

a. Communicating category benefits—reassures consumers a brand will deliver on the fundamental reason for using a category. b. Exemplars—or well-known, noteworthy brands in a category, can be used to specify a brand’s category membership. c. Product Descriptors—that follow the brand name are a compact means of conveying category membership.

B. Choosing Points-of-Difference: 1. PODs must offer a compelling, credible reason for choosing it over other options: a. Desirability criteria are determined from the consumer’s point of view: i. POD must be personally relevant and important. ii. The attribute that matters must have enduring value or be sustainable as a POD. b. Deliverability criteria are based on a company’s inherent capabilities: i. Feasibility—product and marketing must be designed to support the desired association. ii. Communicability—it is easier to create associations that are consistent with consumers’ existing brand associations. c. Differentiation criteria are determined relative to competitors: i. Target consumers must find the POD distinctive and superior. ii. Sustainability depends on internal commitment, use of resources, and external market forces.

2. PODs should be important and consumers should feel confident the firm can deliver them in a way that is superior to other brands.

C. Establishing Points-of-Parity and Points-of-Difference: 1. A key to branding success is to establish both POPs and PODs. <<Use Branding Brief 2-2 Here>> 2. The following ways to address the problem of negatively correlated POPs and PODs are listed in increasing order of effectiveness—and increasing order of difficulty:

25

a. Separate the Attributes—launch different marketing campaigns that are each devoted to different attributes or benefits. b. Leverage Equity of Another Entity—link brand to entity that possess the right kind of equity. c. Redefine the Relationship—convince consumers that the relationship is positive by providing a different perspective or new facts. <<Use MILLER LITE Here>> D. Straddle Positions: 1. Used when companies want to straddle two frames of reference.

2. Attractive as a means to reconcile conflicting consumer goals—best-of-both worlds solution—but carries an extra burden. <<Use APPLE example here>> <<Use BMW Here>> E. Updating Positioning over Time: 1. It is important to update positioning of established brands.

2. Positioning should be fundamentally changed infrequently, and only when circumstances reduce the effectiveness of existing POPs and PODs. 3. Laddering deepens the meaning of the brand to permit further expansion: a. Maslow’s hierarchy maintains consumers have different priorities and levels of needs. b. From lowest to highest, they are physiological needs, safety and security needs, social needs, ego needs, and self-actualization needs. c. Means-end chains have been devised as a way of understanding higher-level brand meanings. d. As a brand moves up the product hierarchy, its meaning becomes more abstract. <<Use The Science of Branding 2-1, Brand Values Pyramid, Here>> 4. Reacting responds to competitive actions that threaten existing positioning.

Three main options for the target brand, from no reaction to moderate to significant reactions: a. Do nothing—stay the course.

26

b. Go on the defensive if the competitive actions are disruptive. c. Go on the offensive if competitive actions are damaging—reposition the brand to address the threat. <<Use DISCOVER Here>> F. Developing a Good Positioning: 1. Good positioning has a foot in the present and a foot in the future: it has to be aspirational so the brand as room to grow and improve.

2. Good positioning carefully identifies relevant POPs and does not overlook crucial areas where a brand is potentially disadvantaged.

3. Good positioning reflects the benefits that consumers will derive from the brand from the consumer’s point of view.

VII. Defining a Brand Mantra <Use Learning Objective 5 Here> A. Brand Mantras: 1. A brand mantra is a short, three- to five-word phrase that captures the irrefutable essence or spirit of the brand positioning.

2. Similar to brand essence or a core brand promise—ensures external marketing partners understand what the brand most fundamentally represents to consumers.

3. Brand mantras help the brand present a consistent image.

B. Designing and Implementing a Brand Mantra: 1. Brand mantras may be described using an emotional modifier, a descriptive modifier, and a brand function: <<Use Branding Brief 2-3, Nike Brand Mantra, Here>> <<Use Branding Brief 2-4, Disney Brand Mantra, Here>> a. Brand functions describe the nature of the product or service and the experience or benefits the brand provides. b. Descriptive modifiers clarify the nature of the brand functions. c. Emotional modifiers provide qualifiers of how the benefit is provided.

2. Brand mantras derive their power and usefulness from their collective meaning.

27

3. Brand mantras are typically designed to capture what is unique about the brand.

4. Brands that are facing rapid growth may get crucial guidance from the brand functions term that helps govern categories that are inappropriate or appropriate for extensions.

5. Brand mantras should be developed at the same time as brand positioning. <<Use The Science of Branding 2-2 Here>> 6. In the final brand mantra, the following considerations should come into play: a. Communicate b. Simplify c. Inspire The Science of Branding

THE SCIENCE OF BRANDING 2-1 Brand Values Pyramid A recent study by Almquist, Senior, and Bloch proposed a set of brand values that was organized into a pyramid. The functional values were at the bottom and social impact was at the top. The authors identified 30 elements of brand positioning. Their data suggested that companies that perform well on more than four elements of value have more loyal customers, higher net promoter scores, and four times higher revenue growth. Brands such as Amazon, with extraordinary growth rates, have strengths in eight different elements of value.

The building blocks of value are regrouped as functional, emotional benefits, life-changing values, and social impact.

Functional: time and money savings, providing basic benefits, generates efficiencies, and convenience in daily life Emotional: self-enhancement, hedonic benefits Life-changing values: motivation, investment for the future, affiliation/belonging, provides hope, and self-actualization Social impact: includes self-transcendence Quality is important to influencing consumer advocacy across the board, sensory appeal is important to success in food and beverages, access is important in financial services.

Companies may add benefits to their existing products. The framework is useful for thinking about value in a broad range of categories.

28

THE SCIENCE OF BRANDING 2-2 Branding Inside the Organization Brand mantras point out the importance of internal branding—making sure that members of the organization are properly aligned with the brand and what it represents. For service companies especially, it’s critical that all employees have an up-to-date and deep understanding of the brand.

Companies need to engage in continual open dialogue with their employees. Branding should be perceived as participatory. Some firms have pushed B2E (business-to-employee) programs through corporate intranets and other means. In short, for both motivating employees and attracting external customers, internal branding is a critical management priority.

Branding Briefs

BRANDING BRIEF 2-1 Subaru Finds Its Groove Subaru’s market share suffered from a me-too positioning—it was advertised as “Inexpensive and Built to Stay That Way”—until it shifted to sell only all-wheel-drive passenger cars, upgraded its luxury image, and increased its price. It went from selling 104,000 cars annually in the United States in 1993 to selling more than 187,000 cars annually in the United States by 2004. Its “Share the Love” ad campaign focused on fun, adventure, and experiences. Its “Share the Love Event” appealed to relatively upscale buyers who value freedom and frugality. As a result, it experienced record sales in the 2008–2010 recession when other car brands were not selling.

In response to recent relatively flat sales, Subaru targeted four segments that accounted for more than 50 percent of sales: teachers and educators, healthcare professionals, IT professionals, and outdoorsy types. A fifth segment liked the Subaru because it was good for outdoor trips and hauling without being as large as a truck or SUV. Subaru developed marketing programs to target lesbian customers, which earned its market share and customer loyalty.

BRANDING BRIEF 2-2 Positioning Politicians The importance of marketing has not been lost on politicians. One way to interpret campaign strategies is from a branding perspective. For example, high name ID is a high level of brand awareness. Consultants who emphasize positives and negatives, where they are looking for a 3 to 1 or 4 to 1 ratio of voters who think positively to voters who think negatively about a candidate, are measuring something that corresponds to brand attitude.

The last three decades revealed the importance of properly positioning a politician. George H.W. Bush positioned himself as a safe choice in the center of the political spectrum in 29

1988. In 1992, the new Democratic candidate, Bill Clinton, was a fierce campaigner who ran a focused effort to create a key point-of-difference on one main issue—the economy. Rather than attempting to achieve a POP on this issue, Bush, who was running for reelection, campaigned on other issues such as family values, which was not compelling to voters.

Candidates who did not provide a strong position were not successful in presidential elections.

The 2008 presidential election was another textbook application of branding as Barack Obama ran a very sophisticated and modern marketing campaign. Republican candidate John McCain attempted to create a POD on experience and traditional Republican values; Obama sought to create a POD on new ideas and hope. The Obama campaign team effectively hammered home his message. Multimedia tactics combined off-line and online media as well as free and paid media. Even Obama’s slogans and campaign posters became iconic symbols, and Obama breezed to victory.

The 2016 presidential campaign resulted in a surprise win of President Donald J. Trump over Hillary Clinton. President Trump positioned himself as an outsider who would end the status quo in Washington DC and used messaging, a slogan, and a style of delivery that was effective among his target audience and won the larger number of votes in the electoral college.

BRANDING BRIEF 2-3 Nike Brand Mantra Nike has a rich set of associations with consumers, revolving around such considerations as its innovative product designs, its sponsorships of top athletes, its award-winning advertising, its competitive drive, and its irreverent attitude. In Nike’s eyes, its entire marketing program—its products and how they are sold—must reflect the key brand values conveyed by the brand mantra.

In the words of ex-Nike marketing gurus Scott Bedbury and Jerome Conlon, Nike’s brand mantra provided the “intellectual guard rails” to keep the brand moving in the right direction and to make sure it did not get off track somehow. Nike’s brand mantra has even affected product development. Each step of the way it has been guided by its “authentic athletic performance” brand mantra. At the same time, the company has been careful to avoid using the Nike name to brand products that did not fit with the brand mantra, such as casual “brown” shoes.

When Nike has experienced problems with its marketing program, they have often been a result of its failure to figure out how to translate its brand mantra to the marketing challenge at hand.

BRANDING BRIEF 2-4 Disney Brand Mantra Disney developed its brand mantra in response to its incredible growth through licensing and product development during the mid-1980s. In the late 1980s, Disney became 30

concerned that some of its characters, such as Mickey Mouse and Donald Duck, were being used inappropriately and becoming overexposed. To investigate the severity of the problem, Disney undertook an extensive brand audit. Disney also launched a major consumer research study to investigate how consumers felt about the Disney brand.

The results of the brand inventory revealed some potentially serious problems: the Disney characters were on so many products and marketed in so many ways that in some cases it was difficult to discern the rationale behind the deal, to start with. The consumer study only heightened Disney’s concerns. Because of the broad exposure of the characters in the marketplace, many consumers had begun to feel that Disney was exploiting its name. In some cases, consumers felt that the characters added little value to products and, worse yet, involved children in purchase decisions that they would typically ignore.

Disney learned in the consumer study, however, that consumers did not differentiate between all the product endorsements. “Disney was Disney” to consumers, whether they saw the characters in films, records, theme parks, or consumer products. Consequently, all products and services that used the Disney name or characters had an impact on Disney’s brand equity. Consumers reported that they resented some of these endorsements because they felt that they had a special, personal relationship with the characters and with Disney that should not be handled so carelessly.

As a result of the brand audit, Disney moved quickly to establish a brand equity team to better manage the brand franchise and more carefully evaluate licensing and other thirdparty promotional opportunities. One of the mandates of this team was to ensure that a consistent image for Disney—reinforcing its key brand associations—was conveyed by all third-party products and services. To facilitate this supervision, Disney adopted an internal brand mantra of “fun family entertainment” to serve as a screening device for proposed ventures. Opportunities that were not consistent with the brand mantra were rejected.

Brand Focus

BRAND FOCUS 2.0 The Marketing Advantages of Strong Brands Customer-based brand equity occurs when consumer response to marketing activity differs, when consumers know the brand, and when they do not. A number of benefits can result from a strong brand, both in terms of greater revenue and lower costs. Some of the benefits to the firm of having brands with a high level of awareness and a positive brand image: •

Greater Loyalty and Less Vulnerability to Competitive Marketing Actions and Crises—Research shows that different types of favorable brand associations can affect consumer product evaluations, perceptions of quality, and purchase rates.

Moreover, familiarity with a brand has been shown to increase consumer confidence, attitude toward the brand, and purchase intention, and to mitigate the negative impact of a poor trial experience. One characteristic of brands with a great deal of equity is that consumers feel great loyalty to them. A brand with a positive brand image also is more likely to successfully weather a brand crisis or downturn in the 31

brand’s fortunes. Effective handling of a marketing crisis requires swift and sincere action, an immediate admission that something has gone wrong, and assurance that an effective remedy will be put in place. Even absent a crisis, a strong brand offers protection in a marketing downturn or when the brand’s fortunes fall.

•

Larger Margins—Brands with positive customer-based brand equity can command a price premium. Consumers should also have a fairly inelastic response to price increases and elastic responses to price decreases or discounts for the brand over time. Research has shown that consumers loyal to a brand are less likely to switch in the face of price increases and more likely to increase the quantity of the brand purchased in the face of price decreases.

•

Greater Trade Cooperation and Support—Wholesalers, retailers, and other middlemen in the distribution channel play an important role in the selling of many products. Their activities can thus facilitate or inhibit the success of the brand. If a brand has a positive image, retailers and other middlemen are more likely to respond to the wishes of consumers and actively promote and sell the brand. Channel members are also less likely to require any marketing push from the manufacturer and will be more receptive to manufacturers’ suggestions to stock, reorder, and display the brand, as well as to pass through trade promotions, demand smaller slotting allowances, give more favorable shelf space or position, and so on. Given that many consumer decisions are made in the store, the possibility of additional marketing push by retailers is important.

•

Increased Marketing Communication Effectiveness—A host of advertising and communication benefits may result from creating awareness of and a positive image for a brand. One well-established view of consumer response to marketing communications is the hierarchy of effects models. A brand with a great deal of equity already has created some knowledge structures in consumers’ minds, increasing the likelihood that consumers will pass through various stages of the hierarchy. Familiar, well-liked brands are less susceptible to “interference” and confusion from competitive ads are more responsive to creative strategies such as humor appeals, and are less vulnerable to negative reactions due to concentrated repetition schedules. Because strong brand associations exist, lower levels of repetition may be necessary. Similarly, because of existing brand knowledge structures, consumers may be more likely to notice sales promotions, direct mail offerings, or other sales-oriented marketing communications and respond favorably.

•

Possible Licensing and Brand Extension Opportunities—A strong brand often has associations that may be desirable in other product categories. To capitalize on this value, a firm may choose to license its name, logo, or other trademark item to another company for use on its products and merchandise. Academic research has shown that well-known and well-regarded brands can extend more successfully and into more diverse categories than other brands. In addition, the amount of brand equity has been shown to be correlated with the highest or lowest-quality member in the product line for vertical product extensions. Research has also shown that positive symbolic associations may be the basis of these evaluations, even if overall 32

brand attitude itself is not necessarily high. Brands with varied product category associations through past extensions have been shown to be especially extendable.

•

Other Benefits—Brands with positive customer-based brand equity may provide other advantages to the firm not directly related to the products themselves, such as helping the firm to attract or motivate better employees, generate greater interest from investors, and garner more support from shareholders.

Discussion Questions and Answers 1.

Apply the categorization model to a product category other than beverages. How do consumers make decisions whether or not to buy the product, and how do they arrive at their final brand decision? What are the implications for brand equity management for the brands in the category? How does it affect positioning, for example?

Answers will vary. Have students pick brands of their choice and have them assess if they perceive the brand as only representative of the product or service category. This will help them realize whether they respond to the brand as if the offering were unbranded. The students may then be asked to assess the implications their perceptions have on the positioning of the brands.

Page: 77 Learning Objective 1: Define customer-based brand equity.

AACSB: Reflective Thinking

2.

Pick a brand of breakfast cereals. Who are its target markets? Identify the possible market segmentation bases.

Answers will vary widely. Students may be divided into groups to compare the market segments of brands.

Page: 82 Learning Objective 3: Identify the four components of brand positioning.

AACSB: Analytic Skills

3.

Consider some educational institutions that are relevant to you. What are their main points-of-parity and points-of-difference?

Answers will vary widely. Students may discuss different attributes as PODs and POPs. Page: 81 Learning Objective 3: Identify the four components of brand positioning.

AACSB: Analytic Skills 33

4.

Can you think of any negatively correlated attributes and benefits other than those listed in Figure 2-6?

Can you think of any other strategies to deal with negatively correlated attributes and benefits?

Answers will vary. Students may be divided into groups to come up with examples of correlated attributes and benefits. Following this, a class activity may be conducted to discuss the strategies to deal with these negative correlations.

Page: 83 Learning Objective 4: Describe the guidelines in developing a good brand positioning.

AACSB: Analytic Skills

5.

What do you think of the brand elements pyramid suggested by Bain & Company consultants? How would you apply the framework to a particular brand? Do you think this set of elements yields any unique insights relative to the traditional Maslow’s hierarchy of needs?

Student responses to the framework and their selections for its application to a particular brand may vary, but should acknowledge the organization of the values, where the functional values are at the bottom of the pyramid and social impact values are at the top, and its wide applications in both consumer and business-to-business markets. For the next part of the question, they should differentiate between the elements they selected, as presented in Almquist et al.’s framework, and the traditional hierarchy of needs, which is mentioned on page 90. Their opinions should be grounded in the differences, and they should provide a rationale for why they believe the elements in Almquist et al.’s model does/does not provide additional insights.

Page: 91 Learning Objective 4: Describe the guidelines in developing a good brand positioning.

AACSB: Analytic Skills; Reflective Thinking

Exercises and Assignments 1. Have students conduct a taste test of two different types of chocolate bars with similar calories, one of which is marketed for its health benefits. Have half the class do a blind taste test and half the class do a “sighted” taste test and compare the results. Ask the students to discuss the results and the reasons behind consumer preferences in class.

Page: 71 Learning Objective 1: Define customer-based brand equity.

AACSB: Analytic Skills Question type: Group

34

Time to complete the exercise: 20–30 minutes This activity may be carried out before the class is introduced to the concept of customer-based brand equity and discussed during the class were the concept of CBBE is introduced.

2. Ask students to pick two brands in each of three or four different product categories, and then compare the sources of brand equity for each pair. This exercise is a good way to demonstrate the stronger positioning strategies and franchises that some brands enjoy relative to their competition. Focal brands might include: Charles Schwab versus E*Trade Frederick’s of Hollywood versus Victoria’s Secret Maytag versus Kenmore washing machines FedEx versus USPS Express Mail Page: 75 Learning Objective 2: Outline the sources and outcomes of customer-based brand equity.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 15–20 minutes This activity may be carried out at the end of the class where CBBE is explored.

3. Bring in or have students bring in examples of consumer sales promotions. Analyze each in terms of its ability to build or bash brand equity. Suggest alternative promotion ideas.

Pick the best and worst of the lot and explain what makes them good or bad.

Page: 71 Learning Objective 2: Outline the sources and outcomes of customer-based brand equity.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 10 minutes This activity may be carried out at the beginning of the class.

4. Have students develop a brand of their own for a given product category such as beverages, automobiles, and art supplies. The students may then be asked to arrive at the optimal competitive brand positioning. This will help the students to define and 35

communicate the competitive frame of reference and choose and establish POPs and PODs. Page: 82 Learning Objective 4: Describe the guidelines in developing a good brand positioning.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 20 minutes This activity may be carried out after the class has been introduced to the guidelines of brand positioning.

5. Have students develop a positioning for a presidential candidate in the next U.S. presidential election. What can they learn from the positioning successes and failures described in Branding Brief 2-2? What do they want to know about the target audience, the external market, and the competitor in order to create the ideal positioning for their politician?

Page: 87 Learning Objective 4: Describe the guidelines in developing a good brand positioning.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 20 minutes This activity may be carried out in class has been introduced to the guidelines of brand positioning.

6. Ask students come up with examples for how the brand mantra from Nike might function as intellectual guard rails for Nike as it considers extensions in the following product categories: athletic foot spray, energy drink, vitamins, fabric softener, and cell phones. Ask them to explain how existing associations and the brand mantra would affect the viability of each extension’s success. For the extensions they feel would be viable, ask them to survey at least five people outside of the class to provide opinions about it. To successfully complete the exercise, students should be familiar with brand mantras and the challenges associated with extending a brand in a way that is not consistent with the brand’s associations.

Page: 87 Learning Objective 5: Explain brand mantras and how they should be developed.

36

AACSB: Analytic Skills Question type: Group Time to complete the exercise: 50 minutes This activity may be carried out outside of class after students have been introduced to the brand mantras.

7. Have students create mental maps for several well-known brands. Have them use these mental maps to develop brand mantras that capture the core values and attributes of the brands. Then have the students compare the mantras they generated with the actual brand mantras. Are they similar? Why or why not? Possible companies include Nike (Authentic Athletic Performance) and Disney (Fun Family Entertainment).

Page: 87 Learning Objective 5: Explain brand mantras and how they should be developed.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 20–25 minutes This activity may be carried out immediately after the students are introduced to the concept of brand mantras.

Key Take-Away Points 1. The power of the brand and its ultimate value to the firm resides with customers.

2. Customer-based brand equity is the differential effect of brand knowledge on consumer response to the marketing of a brand.

3. Positive brand equity results when consumers are familiar with the brand and have strong, favorable, and unique associations for it.

4. A brand has negative customer-based brand equity if consumers react less favorably to marketing activity for the brand compared with an unnamed or fictitiously named version of the product.

5. The quality of the investment in brand building is the most critical factor, not the quantity beyond some minimal threshold amount.

6. Brand awareness is the consumers’ ability to identify the brand under different conditions and brand image is consumers’ perceptions about a brand.

7. Brand recognition is consumers’ ability to confirm prior exposure to the brand when given the brand as a cue and brand recall is consumers’ ability to retrieve the brand from 37

memory when given the product category, the needs fulfilled by the category, or a purchase or usage situation as a cue.

8. Brand attributes are those descriptive features that characterize a product or service, and brand benefits are the personal value and meaning that consumers attach to the product or service attributes.

9. Brand positioning is the act of designing the company’s offer and image, so that it occupies a distinct and valued place in the target customers’ minds.

10. The key to branding success is to establish both POPs and PODs. 11. PODs are attributes or benefits that consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand.

12. POPs are not necessarily unique to the brand but may in fact be shared with other brands.

13. A brand mantra is a short, three- to five-word phrase that captures the irrefutable essence or spirit of the brand positioning.

38

Chapter 3 Brand Resonance and the Brand Value Chain Learning Objectives 1. Define brand resonance.

2. Describe the steps in building brand resonance.

3. Define the brand value chain.

4. Identify the stages in the brand value chain.

5. Contrast brand equity and customer equity.

Overview This chapter deals in greater detail with two interlinking models, which, along with the brand positioning model, make up the brand planning system.

This chapter first discusses the brand resonance model, which describes how to create intense, active loyalty relationships with customers. The model considers how brand positioning affects what consumers think, feel, and do and the degree to which they resonate or connect with a brand.

This chapter begins by presenting the four steps to building a strong brand. This will help students consider brand salience, performance, imagery, judgments, feelings, and resonance as brand building blocks. This chapter talks in detail about each of these characteristics including the attributes and benefits that underlie brand performance. This chapter also highlights the types of brand judgments, namely, judgments about quality, credibility, consideration, and superiority. Resonance is characterized in terms of intensity, or the depth of the psychological bond that customers have with the brand, as well as the level of activity engendered by this loyalty.

Next, this chapter presents some of the main implications of the brand resonance model and moves on to confer how brand resonance and these loyalty relationships, in turn, create brand equity or value.

The brand value chain model is discussed next. It is a means by which marketers can trace the value creation process for their brands to better understand the financial impact of their marketing expenditures and investments. Based in part on the customer-based brand equity (CBBE) concept, it offers a holistic, integrated approach to understanding how brands create value.

This chapter points out that brand value is created at a stage when customers have (1) deep, broad brand awareness; (2) appropriately strong, favorable, and unique points-of-parity and points-of-difference; (3) positive brand judgments and feelings; (4) intense brand attachment and loyalty; and (5) a high degree of brand activity.

39

This chapter then moves on to discuss the implications of the brand value chain model and concludes by reviewing both the models and then throwing light on customer equity by calling it the sum of lifetime values of all customers. Several different concepts and approaches relevant to the topic of customer equity have been discussed.

Brand Focus 3.0 at the end of this chapter provides a detailed overview of the topic of customer equity. It provides information that will help students make the distinction between brand equity and customer equity, in line with the fifth chapter objective.

Chapter Outline I. Preview a. Two interlinking models, the brand resonance model and the brand value chain model, join the brand positioning model from chapter two to make up the brand planning system. b. The brand resonance model describes how to create intense, active loyalty relationships with customers. c. Brand positioning affects what consumers think, feel, and do and the degree to which they resonate or connect with a brand. d. Brand resonance affects loyalty, brand equity, and brand value. e. The brand value chain model helps marketers trace the value creation process for their brands so marketers can understand the financial impact of their marketing expenditures and investments. f. Brand Focus 3.0 provides information about customer equity.

II. Building a Strong Brand: The Four Steps of Brand Building <Use Learning Objectives 1 and 2 Here> a. Four steps in the brand resonance model 1. Ensure identification of the brand with customers and associations with a product class, benefit, or customer need 2. Establish totality of brand meaning via tangible and intangible brand associations 3. Elicit proper customer responses to the brand 4. Convert brand responses to create brand resonance and active loyalty customer-brand relationships b. Four questions that correspond with the steps 40

1. Who are you? (brand identity) 2. What are you? (brand meaning) 3. What about you? What do I think or feel about you? (brand responses) 4. What about you and me? (brand relationships) c. The branding ladder progresses from identity to meaning to responses to relationships d. Six brand building blocks are assembled in a pyramid, with significant brand equity resulting if brands reach the top of the pyramid A. Brand Salience 1. Brand salience measures aspects of brand awareness and how easily and often the brand is evoked.

2. The breadth of brand awareness measures the range of purchase and usage situations in which the brand comes to mind while the depth of brand awareness measures the ease with which and how likely it is for a brand element to come to mind. <<Use TROPICANA Here>> 3. The product category structure, or how products are organized in memory, groups products in a hierarchical fashion and influences awareness, consideration, and choice a. Product class information is at the highest level b. Product category information is at the second highest level c. Brand information is at the lowest level 4. The strategic implications are that depth and breadth of awareness matter: the brand must be top-of-mind and have sufficient mind share at the right times and places a. Key not whether consumers can recall the brand but rather where, when, how easily, and how often they think of it b. Sometimes it is more important to increase brand salience and the breadth of brand awareness than it is to improve attitudes <<Use CAMPBELL’S SOUP Example Here>> B. Brand Performance 41

1. Brand performance describes how well the product or service meets customers’ more functional needs. <<Use SUBWAY Example Here>> 2. Five important types of attributes and benefits often underlie brand performance 1. Primary ingredients and supplementary features 2. Product reliability, durability, and serviceability 3. Service effectiveness, efficiency, and empathy 4. Style and design 5. Price C. Brand Imagery 1. Brand imagery depends on the extrinsic properties of the product or service, including the ways the brand attempts to meet customers’ psychological or social needs 2. Four main types of intangibles that can be linked to a brand i. User profiles ii. Purchase and usage situations iii. Personality and values iv. History, heritage, and user experiences 3. User imagery can result in customers’ mental image of actual or idealized users, and may be characterized by demographic or psychographic factors i. Gender ii. Age iii. Race iv. Income 4. Purchase and usage imagery comes from associations that tell consumers under what conditions or situations they can or should buy and use the brand 5. Brands may take on personality traits or human values

42

i. Five dimensions of brand personality are sincerity, excitement, competence, sophistication, and ruggedness ii. Once brands develop a personality, it can be difficult for consumers to accept information they see as inconsistent with that personality <<Use Hyatt Example Here>> 6. Brand history, heritage, and experiences can form associations that, in some cases, help create strong points-of-difference 7. Creating strong, favorable, and unique associations is a challenge to marketers but is essential to customer-based brand equity <<Use The Science of Branding 3-1, How Customer Experiences Define a Brand, Here>> D. Brand Judgments 1. The most important consumer attitudes toward a brand relate to its perceived brand quality and to customer value and satisfaction.

2. Brand credibility describes the extent to which customers see the brand as credible in terms of three dimensions: perceived expertise, trustworthiness, and likability <<Use FEDEX Example Here>> 3. Brand consideration depends on how personally relevant customers find the brand 4. Brand superiority is the extent to which customers view the brand as unique and better than other brands E. Brand Feelings 1. Brand feelings are customers’ emotional responses and reactions to the brand 2. Kevin Roberts argues it is not enough for a brand to just be respected; it must be loved 3. Transformational advertising is designed to change consumers’ perceptions of the usage experience with the product 4. Six important types of brand-building feelings a. Warmth b. Fun c. Excitement 43

d. Security e. Social approval f. Self-respect 5. The first three types are experiential and immediate, and increase in level of intensity 6. The second three types (d–f) are private and enduring, increasing in level of gravity F. Brand Resonance 1. Brand resonance describes the nature of the relationship and level of identification that the customer has with the brand.

2. Resonance is characterized in terms of intensity, or the depth of the psychological bond customers have with the brand and the activity engendered by the loyalty.

3. Four categories: i. Behavioral loyalty ii. Attitudinal attachment iii. Sense of community iv. Active engagement 4. Behavioral loyalty is gauged in terms of repeat purchases and the amount or share of category volume attributed to the brand 5. Attitudinal attachment is when customers go beyond having a positive attitude to viewing the brand as something special in the broader context 6. Sense of community is when customers feel a kinship or affiliation with other people associated with the brand << Use Branding Brief 3-1 Here>> 7. Active engagement is the strongest affirmation of brand loyalty—customers are engaged when they are willing to invest time, energy, money, or other resources in the brand beyond those expended during purchase or consumption of the brand << Use BMW Example Here>> G. Brand-Building Implications 44

<<Use Figure 3-4 Here>> 1. Customers Own the Brands—the true measure of the strength of the brand is the way consumers think, feel, and act with respect to that brand 2. Don’t Take Shortcuts with Brands—there are no shortcuts to building a brand; strategy must be explicit and deliberate 3. Brands Should Have a Duality—strong brands appeal to the head and the heart <<Use MASTERCARD Example Here>> 4. Brands Should Have Richness—brand imagery should lead to broader associations 5. Brand Resonance Provides Important Focus—ask “to what extent is marketing activity affecting the key dimensions of brand resonance—consumer loyalty, attachment, community, or engagement with the brand.”

6. Customer Networks Strengthen Brand Resonance—networks of customer relationships can generate positive outcomes for brands <<Use Branding Brief 3-2 Here>> III. The Brand Value Chain <Use Objectives 3 and 4 Here> 1. The brand value chain is a structured approach to assessing the sources and outcomes of brand equity and the manner by which marketing activities create brand value 2. The brand value chain provides insights to support brand managers, chief marketing officers, managing directors, and chief executive officers who need different types of information 3. It assumes the value of the brand resides with customers 4. It assumed the value creation process begins when the firm invests in a marketing program targeting actual or potential customers 5. The associated marketing activity then affects the customer mind-set—what customers know and feel about the brand—as reflected by the brand resonance model 6. The mind-set, across a broad group of customers, produced the brand’s performance in the marketplace—how much and when customers purchase, the price they pay, and so forth

45

7. Finally, the investment community considers the market performance to arrive at an assessment of shareholder value in general and a value of the brand in particular 8. Value created at one stage transfers or multiplies to the next stage <<Use Figure 3-5 Here>> A. Value Stages 1. Any marketing program investment that can contribute to brand value development falls into the first value stage 2. The program quality multiplier depends on the marketing program’s quality. Key considerations are included in the acronym DRIVE: Distinctiveness, Relevance, Integrated, Value, and Excellence.

3. The customer mind-set includes everything that exists in the minds of customers with respect to a brand, including the following: a. Brand Awareness b. Brand Associations c. Brand Attitudes d. Brand Attachment e. Brand Activity 4. Brand value is created when customers have deep, broad brand awareness; appropriately strong, favorable, and unique points-of-parity and points-ofdifference.

5. The marketplace conditions multiplier depends on factors beyond the individual customers, like competitive superiority, channel and other intermediary support, and customer size and profile.

6. Market performance is affected by customer mind-set in six main ways a. Price premiums b. Price elasticities c. Market share d. Brand expansion e. Cost structure 46

f. Brand profitability 6. The investor sentiment multiplier is affected by market dynamics, growth potential, risk profile, and brand contribution 7. Shareholder value is based on all available current and forecasted information about a brand and other considerations B. Implications 1. Marketers create value first by making shrewd investments in their marketing program and maximizing the multipliers 2. Brand and category marketing managers are likely to be interested in the customer mind-set and the impact of the marketing program on customers.

The Science of Branding

THE SCIENCE OF BRANDING 3-1 How Customer Experiences Define a Brand Amazon is known for its ability to deliver exceptional customer experiences throughout the customer journey. Cheap tablets and smart speakers help Amazon learn about customer needs and behaviors. It uses machine learning and artificial intelligence and memberships to its Prime service to improve customer experiences. Other digital-only brands are also focused on learning about customers and making the customer experience seamless via technology and empathy, including Zappos and Southwest Airlines. User experience is a key component of brand image.

Branding Briefs

BRANDING BRIEF 3-1 Building Brand Communities Harley-Davidson Harley-Davidson sponsors the Harley Owners Group (H.O.G.), which has 1.2 million members. HOG benefits include a magazine subscription, roadside assistance, safe rider programs, and a Fly & Ride program enabling members to rent Harleys while on vacation.

The company also maintains an extensive Web site devoted to H.O.G., which includes information about club chapters and events and features a special members-only section.

Sephora Sephora sponsors and online brand community with embedded features that allow the company to learn about customers’ shopping habits and media consumption behaviors.

Sephora’s brand community (BeautyTalk), digital community platform “Beauty Insiders”, the 47

Beauty Insider Community, and the “Beauty Board” encourage engagement with the retailer and among customers. The community and purchase tracking are also accessible via the Sephora App. Jeep Jeep owners can convene with their vehicles in wilderness areas across the United States as part of the company’s official Jeep Jamborees. Jeep Jamborees bring Jeep owners and their families together for two-day off-road adventures in more than 34 different locations throughout the United States from spring through autumn each year. Jeep owners can participate in the “My Jeep Story” digital and social campaign, which tells its customers to share their stories because the customers make Jeep. Drawing customers into the brand conversation strengthened the bond between the customer and the brand. Story Sessions and other initiatives encouraged engagement by loyalty users.

The three cases highlight companies engaging with their loyal customers to get them to act as brand ambassadors and brand evangelists. They score high on the “Participation Brand Index” (PBI), a metric that measures how much a brand community harnesses its members to get involved.

BRANDING BRIEF 3-2 How Digital Platform-Based Brands Create Customer Engagement Grubhub Grubhub is a digital food delivery service which is available in more than 1,000 U.S. cities and has 44,000 restaurants in its network. Grubhub uses data to generate a deep understanding of customer eating habits and tries to create quality experiences and moments.

TripAdvisor TripAdvisor is the world’s largest travel site and has more than $1.2 billion in revenue. It goes beyond data to develop an empathetic view of customer needs and wants to identify motivations and pain points. It uses features the MyTrips and an app to personalize service for individual customers.

Brand Focus

BRAND FOCUS 3.0 Creating Customer Value <Use Objective 5 Here> Many firms are now more carefully defining the financial value of prospective and actual customers and devising marketing programs to optimize that value. Customer–brand relationships are the foundation of brand resonance and building a strong brand.

48

Marketers have long recognized the importance of adopting a strong consumer and customer orientation. The customer-based brand equity concept makes it clear that the power of a brand resides in the minds of consumers and customers. However, too many firms still find themselves paying the price for lacking a customer focus.

Customer equity is different from brand equity. It is defined as the sum of lifetime values across all of the customers. Blattberg and Deighton measure each customer’s expected contribution toward offsetting the company’s fixed costs over the expected life of that customer, discounted to the net present value at the company’s target rate of return for marketing. Then they add the discounted expected contributions and current contributions.They recommend a focus on high value customers, add-on sales and crossselling, and a reduction of acquisition costs. Rust, Zeithaml, and Lemon define customer equity as the discounted lifetime values of a firm’s customer base and suggest it is made up of three components: value equity, brand equity, and relationship equity. Kumar and his colleagues show how individual customers vary in their value to a firm and suggest lifetime value computations should depend on the application. Customer equity has been linked to the firm’s value on the stock market.

Customer equity and brand equity are related, but they are not the same thing. The customer equity perspective tends to be less prescriptive about specific marketing activities beyond general recommendations toward customer acquisition, retention, and cross-selling. The brand equity approach could benefit from sharper segmentation schemes. A customer-based brand equity concept is an attempt to improve the marketing success of a firm.

Discussion Questions and Answers 1. Pick a brand. Attempt to identify its sources of brand equity. Assess its level of brand awareness and the strength, favorability, and uniqueness of its associations.

Answers will vary. Students may be asked to pick brands on different levels ranging from luxury to economy brands. To assess the level of brand awareness, the students may be divided into groups. Each group may take turns to come up with some unique characteristic of a brand, while the other groups have to recognize the brand. This can also be played vice versa where a group may suggest a brand and the others have to come up with the characteristics.

Page: 107 Learning Objective 1: Define brand resonance.

AACSB: Analytical Skills 2. Pick a celebrity. Based on the four categories of brand resonance, how does this celebrity resonate with their fans?

Answers will vary widely. Students should portray the celebrity’s brand resonance with the help of the four categories in the book. E.g., students might include the various forms of fan engagement on social media.

49

Page: 120 Learning Objective 1: Define brand resonance.

AACSB: Analytical Skills 3. Pick your favorite footwear brand and identify the different types of brand-building feelings that you associate with it.

Answers will vary widely. Students should be encouraged to paint a broad picture of their feelings.

Page: 120 Learning Objective 2: Describe the steps in building brand resonance.

AACSB: Reflective thinking 4. Pick a brand. Assess the extent to which the brand is achieving the various benefits of brand equity.

Answers will vary. To assess better, students may be asked to choose a brand that they are extremely familiar with. It must be a brand that they have/had experience with.

Pages: 92-93 Learning Objective 5: Contrast brand equity and customer equity.

AACSB: Analytical Skills 5. Which companies do you think do a good job managing their customers? Why? Answers will vary. Students may be given examples of companies and discuss the extent to which each company has achieved customer equity. Students may consider the various approaches discussed in the chapter to assess the customer equity.

Page: 134 Learning Objective 5: Contrast brand equity and customer equity.

AACSB: Analytical Skills 6. Can you think of digital platforms (such as TripAdvisor, Airbnb) that have built a strong brand presence? Can you identify key factors contributing to their success?

Student responses will vary, but should include some reference to understanding customers and designing the customer experience with the customers’ benefits sought in mind—and how touchpoints with customers contribute to the brand’s value. Digital platforms often emphasize community, engagement, and data analysis to gain, and 50

provide personalized content or offerings to respond to, unique insights about their customers.

Page: 127 Learning Objective 4: Identify the stages in the brand value chain.

AACSB: Reflective Thinking Exercises and Assignments 1. Have students pick a brand of their choice. Then have them answer how they would go about establishing the six brand building blocks with customers if the brand was their own. The students may then compare the steps taken by them with the steps taken by the company to establish loyalty relationships with customers.

This activity will help the students in understanding brand building and the subdimensions contained within.

Page: 108 Learning Objective 1: Define brand resonance.

AACSB: Analytical Skills Question type: Individual/Group Time to complete the exercise: 10 minutes This activity may be carried out after the class has been introduced to the concept of brand building.

2. Tell students to imagine they are sitting in a room with two doors. When a knock sounds at each, the butler (!) announces that a particular brand is at one entrance to the room (e.g., Target), while another brand is at the other (e.g., Wal-Mart). Ask students to describe each brand in terms of what it would look like, what it would be wearing, what it would say when you went to the door, and what its reason for visiting was.

(Alternatively, you can have students conduct this assignment outside of class by talking to consumers.)

This projective technique, when used in the context of pairs of brands, helps uncover different beliefs, knowledge, images, and opinions that consumers hold. Other possible examples are: Nike versus Reebok California versus Nebraska Your university versus another Mountain Dew versus Sprite E*Trade versus Charles Schwab 51

Page: 113 Learning Objective 1: Define brand resonance.

AACSB: Analytical Skills Question type: Individual/Group Time to complete the exercise: 5–8 minutes This activity may be carried out at the beginning of the class.

3. Ask students to provide a visual map of the stages in the brand value chain for a particular brand. At each stage, ask them to think about potential pain points and customer needs that must be addressed prior to moving to the next stage.

Page: 128 Learning Objective 4: Identify the stages in the brand value chain.

AACSB: Analytical Skills Question type: Individual Time to complete the exercise: 5–8 minutes This activity may be carried out at the beginning of the class.

4. Provide the students with examples of brands (e.g., Drink Simple, Sephora, Minute Maid, and 7UP) and discuss why their marketing programs were a success or failure.

Have the students be in the shoes of a marketer and have them design a well-integrated marketing program for any of these brands. The students must consider factors such as distinctiveness, relevance, integration, value, and excellence of the program. This activity will help the students better understand the concept of program quality multiplier.

Page: 129 Learning Objective 4: Identify the stages in the brand value chain.

AACSB: Analytical Skills Question type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out at the end of the class hour after the students have been taught about brand value stages.

52

Key Take-Away Points 1. Brand planning is aided by three interlocking models that can both qualitatively guide and interpret possible marketing actions as well as quantitatively measure marketing effects.

2. Building a strong brand involves establishing brand salience, performance, imagery, judgments, feelings, and resonance with customers.

3. Building brand awareness helps customers understand the product or service category in which the brand competes and what products or services are sold under the brand name.

4. A highly salient brand is one that has both depth and breadth of brand awareness.

5. Brand performance describes how well the product or service meets customers’ more functional needs.

6. Brand imagery refers to more intangible aspects of the brand, and consumers can form imagery associations directly from their own experience or indirectly through advertising.

7. Brand meaning is what helps produce brand responses, or what customers think or feel about the brand.

8. Warmth, fun, excitement, security, social approval, and self-respect are the important types of brand feelings.

9. The power of the brand and its ultimate value to the firm reside with customers.

10. Brand value creation begins with marketing activity by the firm.

11. Modifications to the brand value chain can expand its relevance and applicability.

12. Customer equity focuses on the bottom-line financial value created by customers while ignoring the advantages of creating a strong brand (back end).

13. Brand equity could benefit from sharper segmentation schemes, as it tends to be more customer-focused (front end).

14. The two concepts, customer equity and brand equity, are related; both perspectives can improve the marketing success of a firm.

53

Chapter 4 Choosing Elements to Build Brand Equity Learning Objectives 1. Identify the different types of brand elements.

2. List the general criteria for choosing brand elements.

3. Describe key tactics in choosing different brand elements.

4. Explain the rationale for “mixing and matching” brand elements.

5. Highlight some of the legal issues surrounding brand elements.

Overview Chapter 4 examines brand elements that marketers can use to identify and differentiate a brand. Names, logos, symbols, characters, slogans, URLs, jingles, and packages all influence a company’s ability to build awareness and image for a brand and, consequently, have a direct impact on the degree of positive brand equity that can be established. Brand elements can be judged on the merits of their brand-building ability by isolating the element in a consumer survey and measuring consumers’ response to the brand based solely on the isolated element. If the consumers infer or assume a certain valued association or response, the element is said to contribute positively to brand equity.

Six general criteria should govern a firm’s choice of brand elements. First, an element should be memorable, or easy to recognize and recall. Second, an element should be meaningful, or descriptive, persuasive, inherently fun and interesting, and rich in visual and verbal imagery.

Third, an element should be likable to consumers, in an aesthetic sense and in an emotional sense. Fourth, an element should be transferable within and across product categories, and across geographical and cultural boundaries. Fifth, an element should be adaptable, or flexible, and capable of being updated over time. Sixth, an element should be protectable, both legally and competitively.

Next, this chapter discusses the benefits and drawbacks inherent in the choice of each type of brand element. For example, selecting a familiar-sounding name for a brand would likely lead to high recallability, but recognition often requires brand names to be different, distinct, or unusual. Fictitious or coined names are often used to satisfy these criteria. Brand characters are beneficial because they typically aid awareness, reinforce key brand strengths, add elements of fun, excitement, humor, etc., and can be transferred across product categories. Consumer associations with a brand character can be so strong, however, that they actually dampen awareness by dominating other brand elements. Also, brand characters must be updated over time.

This chapter ends by discussing how brand elements can be “mixed and matched” for maximum equity building. For instance, brand elements must be mixed to achieve different positioning objectives. It is also important to match brand elements by ensuring that they 54 Copyright © 2020 Pearson Education, Inc.

harbor similarities that reinforce some shared meaning. Taken together, the entire set of brand elements makes up the brand identity, which reflects the contribution of all the elements to awareness and image.

Brand Focus 4.0 discusses legal branding considerations. These include trademark protection from counterfeit and imitator brands, historical and legal precedence, trademark issues with generic names, and trademark issues with packaging.

Chapter Outline I. Preview 1. Brand elements, sometimes called brand identities, are trademarkable devices that serve to identify and differentiate the brand, including brand names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages, and signage.

2. The customer-based brand equity model suggests marketers should choose brand elements to enhance brand awareness; facilitate strong, favorable, and unique brand associations; or elicit positive brand judgments and feelings.

3. The test of the brand-building ability of a brand element is what consumers would think or feel if they only know that particular brand element and not anything else.

4. This chapter includes general criteria for choosing brand elements, considers specific tactical issues for different types of brand elements, and discusses choice of brand elements.

5. This chapter ends with Brand Focus 4.0, which highlights legal considerations for branding.

II. Criteria for Choosing Brand Elements <<Use Figure 4-1 Here>> A. Memorability (offensive strategy, builds brand equity): 1. A high level of brand awareness is necessary to build brand equity.

2. Brand elements that are memorable and attention-getting, and facilitate recall or recognition in purchase or consumption settings.

B. Meaningfulness (offensive strategy, builds brand equity): 1. Brand elements take on meaning with descriptive or persuasive content.

2. Two particularly important criteria:

55 Copyright © 2020 Pearson Education, Inc.

a. General information about the function of the product or service (important determinant of awareness and salience) b. Specific information about particular attributes and benefits of the brand (important determinant of brand image and positioning) C. Likability (offensive strategy, builds brand equity): 1. Do customers find the brand element aesthetically appealing and likable?

2. Brand elements can be rich in imagery and inherently fun and interesting even if they are not always directly related to the product.

3. A memorable, meaningful, and likable set of brand elements can help reduce the burden on marketing communications to build awareness and link brand associations and equity.

4. The less concrete the possible benefits are, the more important the creative potential of the brand name and other brand elements are.

D. Transferability (defensive strategy, maintains brand equity): 1. Transferability measures the extent to which the brand element adds to the brand equity for new products or in new markets for the brand.

2. Several aspects to this criterion: a. How useful is the brand element for line or category extensions? b. To what extent does the brand element add to brand equity across geographic boundaries and market segments? <<Use Figure 4-2 Here>> E. Adaptability (defensive strategy, maintains brand equity): 1. Brand elements must be adaptable so they can be updated over time.

2. The more flexible the brand element, the easier it is to update it.

F. Protectability (defensive strategy, maintains brand equity): 1. Marketers should choose brand elements that can be legally protected internationally.

2. Marketers should formally register brand elements with the appropriate legal bodies.

3. Marketers should vigorously defend trademarks from unauthorized competitive infringement.

56 Copyright © 2020 Pearson Education, Inc.

<<Use The Science of Branding 4-1, Counterfeit Business is Booming, Here>> III. Options and Tactics for Brand Elements: 1. A well-chosen brand name can make an appreciable contribution to the creation of brand equity.

2. Brand names may be the most central of all brand elements.

3. A brand name should be: a. Easily remembered b. Highly suggestive of the product class and the benefits served as a basis of positioning c. Inherently fun or interesting d. Rich with creative potential e. Transferable to a wide variety of product and geographic settings f. Enduring and relevant over time g. Strongly protectable both legally and competitively.

A. Brand Names: 1. The brand name is fundamentally important because it often captures the central theme or key associations of a product in a compact, economical fashion.

2. It can be activated in a few seconds, but it is difficult to change.

3. Although there are 140,000 words in the English vocabulary, the average U.S. adult recognizes only 20,000 and NameLab, a consulting company, sticks to 7,000.

4. Selecting a brand name is an art and a science. <<Use Figure 4-3 Here>> 5. Naming Guidelines: a. Brand Awareness—brand names that are simple and easy to pronounce or spell, familiar and meaningful, and different, distinctive, and unusual can improve brand awareness. b. Simplicity and Ease of Pronunciation and Spelling—simplicity reduces the effort consumers have to make to comprehend and process the brand name, and easy to pronounce brand names help encourage word-of-mouth.

57 Copyright © 2020 Pearson Education, Inc.

c. Familiarity and Meaningfulness—a brand name that is familiar and meaningful can tap into existing knowledge structures. d. Differentiated, Distinctive, and Unique—brand names should be different, distinctive, and unusual. e. Brand Associations—the explicit and implicit meanings consumers extract from the brand name are important: i. A morpheme is the smallest linguistic unit that has meaning. ii. The sounds of letters can take on meaning; plosives such as b, c, d, g, k, p, and t escape the mouth more quickly than sibilants such as s and soft c. iii. Fonts can also change consumer impressions. <<Use Figure 4-4 Here>> <<Use Colgate Wisp Example Here>> f. Naming Procedures: <<Use Figure 4-6 Here>> i. Define objectives in terms of six criteria ii. Generate names iii. Screen initial candidates, eliminating: 1. Names with unintentional double meaning 2. Names that are unpronounceable, already in use, or too close to an existing name 3. Names that have legal complications 4. Names that contradict the positioning iv. Study candidate names v. Research the final candidates vi. Select the final name <<Use JETBLUE Example Here>> B. URLs: 58 Copyright © 2020 Pearson Education, Inc.

1. URLs are commonly referred to as domain names.

2. Companies need to protect their brands from unauthorized use in other domain names.

3. Cybersquatting is when people register a domain name with bad-faith intent to profit from the goodwill of a trademark belonging to someone else: a. In 2010, Academy Awards filed a lawsuit against GoDaddy suggested the third-party was not required to police a brand’s trademark. b.

A related deceptive practice is spoofing, where scam artists set up fraudulent sites which use variants of a brand’s name to set up a series of URLs to attract unsuspecting actors and encourage them to spend money.

c. In 2016, there was a 16 percent increase in cybersquatting disputes. <<Use Louis Vuitton versus Louis Vuitton Dak Example Here>> C. Logos and Symbols: 1. Logos have a long history as a means to indicate origin, ownership, or association.

2. Logos range from corporate names or trademarks written in distinctive form to abstract designs that may be completely unrelated to the word mark, corporate name, or corporate activities.

3. Nonword mark logos are often called symbols.

4. Like names, abstract logos can be distinctive and recognizable.

5. Benefits of logos include: a. Logos and symbols are often easily recognized and can be a valuable way to identify products. b. Logos are versatile; because they are often nonverbal, they transfer well across cultures and product categories. c. Logos can be easily adapted to achieve a more contemporary look.

6. More than half of all logos featured a horizontal aspect ratio.

7. Branding seconds are the percentage of people who saw the logotype multiplied by the average time spent on it.

8. Changing a logo can be expensive and time consuming.

D. Characters: 59 Copyright © 2020 Pearson Education, Inc.

1. Characters take on human or real-life characteristics. <<Use Branding Brief 4-1, StarKist’s Charlie, Here>> 2. Because they are often colorful and rich in imagery, brand characters can be attention getting and useful for creating brand awareness: a. The human element of brand characters can enhance likability. b. Brand characters may be transferred relative easily across product categories.

3. Brand characters can be so attention getting and well liked that they dominate other brand elements and dampen brand awareness. <<Use EVEREADY Example Here>> <<Use Branding Brief 4-2, Updating Betty Crocker, Here>> 4. There are some drawbacks to using brand characters: a. Brand characters can be so attention getting and well liked that they dominate other brand elements and dampen brand awareness. b. Characters must be updated to remain relevant; the more realistic the brand character, the more important it is to keep it up-to-date. c. Some characters are so culturally specific that they do not travel well to other countries.

E. Slogans: 1. Slogans are short phrases that communicate descriptive or persuasive information about the brand.

2. Slogans are an efficient, shorthand means to build brand equity; they can function as useful hooks or handles to help consumers grasp brand meaning.

3. Slogans can help build awareness by: a. Playing off the brand name b. Building explicit brand awareness by making strong links with the product category c. Reinforcing brand positioning <<Use HBO Example Here>> 4. Slogans can serve as tag lines to summarize the descriptive or persuasive information conveyed in ads.

60 Copyright © 2020 Pearson Education, Inc.

5. Slogans can be more expansive and enduring than ad tag lines.

6. Slogans contribute to brand equity in multiple ways: a. They can play off the brand name to build both awareness and image. b. They can contain product-related messages and other meanings.

7. Slogans can become so strongly linked to the brand that it is difficult to introduce a new one, which can box in the brand.

8. Once a slogan achieves a high level of recognition and acceptance, it can contribute to brand equity, but it probably works as more of a reminder of the brand.

9. Slogans are among the easiest brand elements to change over time: a. Recognize how the slogan is contributing to brand equity through enhanced awareness or image b. Decide how much of the equity enhancement is still needed c. Retain the needed or desired equities still residing in the slogan <<Use Figure 4-7, Famous Slogans Quiz, Here>> F. Jingles: 1. Jingles are musical messages written around the brand.

2. Jingles are extended musical slogans, so they are brand elements.

3. Jingles are not as transferable as other brand elements.

4. Jingles communicate brand benefits but convey meaning in a nondirect and abstract fashion.

5. Jingles are most valuable in enhancing brand awareness.

G. Packaging: 1. Packaging must achieve a number of objectives: a. Identify the brand b. Convey descriptive and persuasive information c. Facilitate product transportation and protection d. Assist in at-home storage 61 Copyright © 2020 Pearson Education, Inc.

e. Aid product consumption 2. Functionally, structural design is crucial.

3. Often the strongest associations consumers have with a brand are inspired by the look of its packaging.

4. Structural packaging innovations can create a point-of-difference that permits a higher margin.

5. One packaging trend is to make bigger and smaller packaged versions of products to appeal to new market segments.

IV. Packaging the Right Content A. Kashi: 1. Kashi’s new look featured stories from behind the brand to foster a more personal connection and to highlight Kashi’s commitment to healthy food that makes a positive impact on the world.

2. Kashi included stories about how food was made and where it came from.

B. Chipotle: 1. Chipotle has incorporated content into its packaging that is part of a “Cultivating Thought” series.

2. Chipotle showcases high ethical standards for sourcing ingredients and how it is delivered from farm to table.

C. Snickers: 1. Snickers linked its campaign taglines to its brand and printed customized bar packages with symptoms of hunger.

2. It helped make the brand appear cool and edgy.

Packaging Touchpoints: a. Packaging at the point of purchase is important because the right packaging can create appeal on the store shelf or help products stand out from the clutter. b. Packaging is a cost-effective way to build brand equity. c. Packaging innovations can lower costs and/or improve demand: i. A supply-side goal is to redesign packages to lower use of paper and plastic.

62 Copyright © 2020 Pearson Education, Inc.

ii. Consumer-packaged goods are being marketed in flexible packaging. iii. Package innovations can provide a short-term sales boost. d. Package design is sophisticated: i. Specialized package designers bring artistic techniques and scientific skills to package design. ii. Designers decide on the optimal look, content, dominant features, and shared elements. iii. Designers often refer to the shelf impact of a package—the visual effect of the package at the point of purchase. e. Packaging is subject to some legal requirements. f. Packaging changes can be expensive, but they can be cost-effective compared with other marketing communication costs. <<Use Branding Brief 4-3 Here>> The Science of Branding

THE SCIENCE OF BRANDING 4-1 Counterfeit Business Is Booming The current size of the counterfeit market is estimated to be $600 billion, representing costs of $460 billion annually to U.S. businesses. The fakes are soaking up profits faster than multinationals can squash counterfeiting operations, and they’re getting tougher and tougher to distinguish from the real thing. The difference can be as subtle as lesser-quality leather in a purse or fake batteries inside a cell phone. And counterfeiters can produce fakes cheaply by cutting corners on safety and quality, as well as by avoiding paying for marketing, R&D, or advertising.

The World Health Organization has raised concerns about instances of lifesaving drugs such as antimalarial drugs, antibiotics, and birth control. Counterfeiting has become increasingly sophisticated and pervasive. To avoid being detected, counterfeiters are knocking off smaller brands that don’t have the resources to fight back, focusing on fewer high-end brands given the recent economic downturn, and increasing prices on fake goods sold over the web to counter consumer suspicions.

These days, 63 percent of counterfeit goods in the United States come from China. Other sources are Turkey, Singapore, Thailand, and India, and several countries in Southeast Asia and Latin America. The operations are financed by such varied sources as Middle East businessmen who invest in facilities in Asian countries for export, local Chinese entrepreneurs, and criminal networks. The replication process has also speeded up as counterfeiters have honed their engineering skills and increased their speed.

63 Copyright © 2020 Pearson Education, Inc.

Producing counterfeit goods is as profitable as trading in illegal drugs but does not carry the same risk. Some companies have decided to target the end users of knockoff products, hoping manufacturers will eventually be forced to get a license and pay royalties. And some patent holders are beginning to get creative and target anyone on the supply chain who knowingly ignores counterfeit businesses.

Some provocative academic research shows that fake products are not uniformly bad for companies. While some who cannot afford to buy genuine luxury items may always buy fakes, other consumers will find that buying a counterfeit motivates them to later buy the real thing.

Branding Briefs

BRANDING BRIEF 4-1 StarKist’s Charlie StarKist, the largest tuna brand in the United States, features Charlie the Tuna, an iconic mascot/brand character that has been with the brand since 1961, on its packaging. He was used in ads to communicate that StarKist was looking for tuna that tastes good. StarKist’s current dominance has to do with its introduction of flavored pouches in a variety of flavors.

Charlie’s role now is to communicate as a brand ambassador that StarKist offers innovative mealtime solutions.

BRANDING BRIEF 4-2 Updating Betty Crocker In 1921, Washburn Crosby Company, makers of Gold Medal flour, launched a picture puzzle contest. The contest was a huge success—the company received 30,000 entries—and several hundred contestants sent along requests for recipes and advice about baking. To handle those requests, the company decided to create a spokesperson. Managers chose the name Betty Crocker because “Betty” was a popular, friendly sounding name and “Crocker” was a reference to William G. Crocker, a well-liked, recently retired executive.

The company merged with General Mills and introduced the Betty Crocker Cooking School of the Air as a national radio program. During this time, Betty was given a voice and her signature began to appear on nearly every product the company produced. Prim and proper, Betty was shown with pursed lips, a hard stare, and graying hair. Her appearance has been updated a number of times over the years and has become more friendly, although she has never lost her reserved look.

Prior to a makeover in 1986, Betty Crocker was seen as honest and dependable, friendly and concerned about customers, and a specialist in baked goods, but also out-of-date, old and traditional, a manufacturer of “old standby products,” and not particularly contemporary or innovative. The challenge was to give Betty a look that would attract younger consumers, but not alienate older ones who remembered her as the stern homemaker of the past. Finally, Betty Crocker’s look was also designed to appeal to men. A few years later, Betty Crocker received another update as an ultramodern model—the current one. Betty Crocker now 64 Copyright © 2020 Pearson Education, Inc.

appears on cookbooks, advertising, and online, where she has over 5 million Facebook followers and an impressive YouTube presence with over 23 million views for her instructional videos.

BRANDING BRIEF 4-3 Do-Overs with Brand Makeovers Logos, symbols, packaging, and even brand names are being updated to create greater meaning, relevance, and differentiation. Some high-profile examples and the challenges and difficulties their brand makeovers encountered: •

Tropicana In February 2009, Pepsi introduced a dramatic overhaul to its category-leading orange juice. Gone was the visual image of an orange with a straw protruding from it; in its place was a close-up image of a glass of orange juice and the phrase “100 percent Orange.” Consumer reaction was swift and largely negative. Customers complained about being unable to differentiate between the company’s pulp-free, traditional, and other juice varieties. Even worse, customers also felt the look was too generic.

•

The Gap After unexpectedly unveiling a new logo, the company asked consumers on its Facebook page for comments and further logo ideas. Feedback was far from kind, and after enduring a long week of criticism, Gap management reverted to its iconic white text logo and unique brand font.

•

Gatorade and Pepsi Pepsi completely overhauled its Gatorade brand as well as its classic Pepsi product lineup. The new brand goal was to reach athletes in a wide range of sports and experience levels while positioning itself as the one-stop source for hydration and other needs before, during, and after their workouts. Pepsi’s makeover included a new logo—a white band in the middle of the Pepsi circle that appeared to loosely form a smile. Both brand makeovers received some negative feedback and the products experienced sluggish sales afterward.

•

Lessons When changing a well-received or even iconic brand element—a character, logo, or packaging—two issues are key. One, the new brand element must be inherently highly regarded. Two, regardless of the inherent appeal of a new brand element, changes are hard for consumers and should be handled carefully and patiently.

65 Copyright © 2020 Pearson Education, Inc.

Brand Focus

BRAND FOCUS 4.0 Legal Branding Considerations According to Dorothy Cohen, under common law, “a ‘technical’ trademark is defined as any fanciful arbitrary, distinctive, and nondescriptive mark, word, letter, number, design, or picture that denominates and is affixed to goods; it is an inherently distinctive trade symbol that identifies a product.” Trademark strategy involves proper trademark planning, implementation, and control. A few key legal branding considerations: •

Counterfeit and Imitator Brands Some products attempt to gain market share by imitating successful brands. These copycat brands may mimic any one of the possible brand elements, such as brand names or packaging. Many copycat brands are put forth by retailers as store brands, putting national brands in the dilemma of protecting their trade dress by cracking down on some of their best customers. Many national brand manufacturers are responding through legal action. For national brands, the key is proving that brand clones are misleading consumers, who may think that they are buying national brands. The burden of proof is to establish that an appreciable number of reasonably acting consumers are confused and mistaken in their purchases.

•

Historical and Legal Precedence Legally, a brand name is a “conditional-type property”—protected only after it has been used in commerce to identify products (goods or services) and only in relation to those products or to closely related offerings. To preserve a brand name’s role in identifying products, and the authors’ note, federal law protects brands from actions of others that may tend to cause confusion concerning proper source identification.

Trademark appropriation is identified as a developing area of state law that can severely curtail even those brand strategies that do not “confuse” consumers.

Appropriation resembles theft of an intangible property right. Trademark dilution is the protection from dilution—a weakening or reduction in the ability of a mark to clearly and unmistakably distinguish the source. Dilution can occur in three ways: blurring, tarnishment, and cybersquatting.

•

Trademark Issues Concerning Names Without adequate trademark protection, brand names can become legally declared generic, as was the case with vaseline, victrola, cellophane, escalator, and thermos. Legally, the courts have created a hierarchy for determining eligibility for registration. In descending order of protection, these categories are fanciful, arbitrary, suggestive, descriptive, and generic. Secondary meaning refers to a mark gaining a meaning other than the older (primary) meaning. The secondary meaning must be the meaning the public usually attaches to the mark and that indicates the association between the mark and goods from a single source.

66 Copyright © 2020 Pearson Education, Inc.

•

Trademark Issues Concerning Packaging In general, names and graphic designs are more legally defensible than shapes and colors. The issue of legal protection of the color of packaging for a brand is a complicated one.

Discussion Questions and Answers 1. Pick two of your favorite brands. Which brand elements do you immediately associate with them? In your opinion, how do these fulfill the criteria for good brand elements as mentioned in this chapter?

Answers will vary. The class may come up with different brand elements and how well they fulfill the criteria for choosing good brand elements (memorable, meaningful, likeable, transferable, adaptable, and protectable).

Page: 147 Learning Objective 1: Identify the different types of brand elements.

AACSB: Reflective thinking 2. What are your favorite brand jingles? Why? Do you think they contribute to brand equity in any way?

How? Relate their effects to the customer-based brand equity model.

Answers will vary. Brand jingles relate to the customer-based brand equity model because they can contribute to the differential effect in a consumer’s response to marketing. Jingles can create positive associations and feelings toward the brands they represent, improve awareness, develop additional brand knowledge, and lead to consumer resonance with the brand.

Page: 156 Learning Objective 3: Describe key tactics in choosing different brand elements.

AACSB: Analytic Skills 3. What are some other examples of slogans not listed in the chapter that make strong contributions to brand equity? Why? Can you think of any “bad” slogans? Why do you consider them to be so?

Slogans could be considered “bad” for a variety of reasons. For example, a slogan might be “bad” if it seems outdated to consumers, if it focuses on an inappropriate or irrelevant aspect of the brand, if it strives for humor but falls short, if it is confusing, if it is overly complicated, and so forth.

Page: Learning Objective 3: Describe key tactics in choosing different brand elements.

AACSB: Reflective Thinking 67 Copyright © 2020 Pearson Education, Inc.

4. Choose a package of any supermarket product. Assess its contribution to brand equity. Justify your decisions.

Answers will vary. The students may be asked to assess if the package achieves its objectives, viz. identify the brand, convey descriptive and persuasive information, facilitate product transportation and protection, assist in at-home storage, and aid product consumption.

Page: 163 Learning Objective 3: Describe key tactics in choosing different brand elements.

AACSB: Analytic Skills 5. Can you think of some general guidelines to help marketers mix and match brand elements? Can you ever have “too many” brand elements? Which brand do you think does the best job of mixing and matching brand elements? How do online channels and offline channels differ in their use of brand elements?

Guidelines for mixing and matching brand elements might touch on presenting a cohesive and consistent image for the brand, ensuring that brand elements are not too disparate and reinforcing the brand’s positioning.

Page: 168 Learning Objective 4: Explain the rationale for “mixing and matching” brand elements.

AACSB: Reflective Thinking Exercises and Assignments 1. Have students make a list of brand slogans, analyze what each communicates, and explain why the parent firm would select it.

Page: 159 Learning Objective 3: Describe key tactics in choosing different brand elements.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 12–15 minutes This activity may be carried out after the class has been introduced to the concept of slogans and their benefits.

2. Ask students to develop a character for a new product. Discuss how the elements would change if the target market changed. Candidates might include a men’s fragrance, a laundry detergent, a battery-free windup flashlight, and a sparkling fruit drink.

68 Copyright © 2020 Pearson Education, Inc.

Page: 156 Learning Objective 3: Describe key tactics in choosing different brand elements.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out after the class has been introduced to options and tactics for brand elements.

3. Tell students to pick two brands from the same product category and compare their brand elements in terms of their memorability, likability, protectability, adaptability, meaningfulness, and transferability. Häagen-Dazs versus Ben & Jerry’s ice cream, Aquafina versus Dasani water, Michelin versus Goodyear tires, Holiday Inn versus Comfort Inn motels, Heineken versus Michelob beer, and Budweiser versus Miller beer could be used.

Page: 143 Learning Objective 4: Explain the rationale for “mixing and matching” brand elements.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 10 minutes This activity may be carried out after the class has been introduced to the criteria for choosing brand elements.

4. Bring in or have students bring in competing brands so that their packages can be compared. Discuss the reasons for the similarities and differences between them, as well as the pros and cons of each.

Page: 168 Learning Objective 4: Explain the rationale for “mixing and matching” brand elements.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 8–10 minutes This activity may be carried out before the class is introduced to the concept of packaging.

69 Copyright © 2020 Pearson Education, Inc.

5. Find an example on social media where an unofficial social media account includes a variation of the name of a brand. How do you think the account affects the brand it is copying? Do you think the brand has trademark protection that it could use to ask the social media account to stop using its name? Why or why not?

Page: 170 Learning Objective 5: Highlight some of the legal issues surrounding brand elements.

AACSB: Reflective Thinking Question type: Individual Time to complete the exercise: 10–15 minutes This activity may be carried out after the class is introduced to legal branding considerations.

Key Take-Away Points 1. Criteria for choosing brand elements include memorability, meaningfulness, likability, transferability, adaptability, and protectability.

2. All the brand elements for a particular brand create the brand identity, which conveys the contribution of these elements to image and awareness.

3. A brand’s identity is created through the choice of a name, URL, logo, symbol, slogan, package, jingle, and character.

4. The brand-building potential of brand elements can be gauged by asking consumers what they would think about the product if they knew only its name, logo, and other identity characteristics.

5. There are legal considerations associated with protecting brand assets.

70 Copyright © 2020 Pearson Education, Inc.

Chapter 5 Designing Marketing Programs to Build Brand Equity Learning Objectives 1. Identify some of the new perspectives and developments in marketing.

2. Describe how marketers enhance product experience.

3. Explain the rationale for value pricing.

4. List some of the direct and indirect channel options.

5. Summarize the reasons for the growth in private labels.

Overview This chapter explores the contribution of three of the four marketing “Ps”—product, price, and place—to customer-based brand equity. The creation of equity effectively begins with the design of a product or service that satisfies consumer wants and needs. Perceived quality, which influences attitude and behavior, reflects consumer assessments of the relative superiority of a brand on dimensions related to performance, design, durability, and other factors. Perceived value reflects consumer judgments about a brand’s price-quality relationship.

The chapter also discusses some of the new developments in personalized marketing.

Experiential marketing, where the marketer focuses on connecting the consumer to the brand through a unique experience, is one emerging personalized marketing technique.

Others include one-to-one marketing, where the marketer uses technologies such as the Internet to target individual consumers with individualized marketing messages; and permission marketing, where the marketer seeks permission in advance from consumers to send them appropriate and relevant marketing materials.

Pricing strategy can affect consumers’ perceptions of a brand’s position in its product category, and of its overall quality. Many firms now employ value pricing, in which a brand’s price is based on considerations of product quality, product costs, and product prices that satisfy consumer needs as well as the profit goals of the firm. Another popular strategy is everyday low pricing, which entails reducing or eliminating discounts and sales promotions in favor of an everyday fair price.

A brand’s distribution strategy also has an important influence on the creation of customerbased equity. Channels are of two broad types: direct, which involves selling to customers by mail, phone, Internet, or personal visit, and indirect, which involves selling through intermediaries. The image a retailer has in the minds of consumers and the actions it takes with respect to stocking and selling products can affect the equity of the brands it sells.

Therefore, it is in a firm’s interest to treat channel members as customers and assist in their selling efforts.

71 Copyright © 2020 Pearson Education, Inc.

This chapter concludes with a discussion of private labels in Brand Focus 5.0, noting that they primarily threaten brands that are overpriced, undersupported, or undifferentiated. It is important not to confuse private labels with generic brands because private labels identify the source of the product. The source is usually the chain in which the private label is sold, which is why private labels are also called “store brands.” Major brands employ a number of strategies to fight private labels, from value pricing to continued product innovation.

Chapter Outline I. Preview 1. Marketing activities build brand equity.

2. The chapter considers how the brand can be effectively integrated into the marketing program to create brand equity.

3. Key developments affect the design of marketing programs, including product, pricing, and channel strategies.

4. Private label brands are covered in Brand Focus 5.0.

II. New Perspectives on Marketing: 1. Some of the changes that have forced marketers to embrace new approaches and philosophies include: a. Rapid technological developments b. Greater customer empowerment c. Fragmentation of traditional media d. Growth of digital and mobile marketing options e. Channel transformation and disintermediation f. Increased competition and industry convergence g. Globalization and growth of developing markets h. Heightened sustainability concerns, with increased emphasis on corporate social responsibility i.

Greater empowerment of consumers because of their ability to influence opinions through social media.

2. Other changes such as privatization and regulation, along with the ones listed above, have combined to give customers and companies new capabilities with important implications for brand management.

72 Copyright © 2020 Pearson Education, Inc.

<< Use Figure 5-1 Here>> <<Use CLIF BAR Example Here>> III. Integrating Marketing: 1. Today’s marketplace affords many different means by which products and services and their corresponding marketing programs can build brand equity.

2. Channel strategies, communication strategies, pricing strategies, and other marketing activities can enhance or detract from brand equity.

3. Brand equity can be built in many different ways. <<Use Branding Brief 5-1 Here>> A. Personalizing Marketing: 1. The rapid expansion of the Internet and continued fragmentation of mass media have brought the need for personalized marketing into sharp focus.

2. Experiential marketing promotes a product by communicating a product’s features and benefits and by connecting it with unique and interesting consumer experiences: a. Pine and Gilmore defined experience businesses as follows: 1) If you charge for stuff, you are in the commodity business.

2) If you charge for tangible things, you are in the goods business.

3) If you charge for the activities you perform, you are in the service business.

4) If you charge for the time customers spend with you, you are in the experience business. b. Bernd Schmitt defined experiential marketing as a customer-focused marketing activity that creates a sensory-emotional connection to customers. << Use Figure 5-2 Here>> c. Meyer and Schwager describe customer experience management as a process that involves monitoring past patterns, present patterns, and potential patterns. d. Brands are investing in unique experiences that allow consumers to enjoy themselves without feeling like they are being targeted with marketing. e. Advantages of experiences: 73 Copyright © 2020 Pearson Education, Inc.

1. They help expand brand awareness among new segments of consumers.

2. They encourage participants to share their experiences on social media, helping to increase social media engagement.

3. Experiences can help reshape consumers perceptions of the brand.

3. Relationship marketing strategies can transcend the product or service and form stronger bonds with consumers and maximize brand resonance: a. Relationship marketing puts customers’ needs front and center of everything that is done in marketing. b. Relationship marketing is based on the premise that current customers are the key to long-term brand success. c. Basic benefits of relationship marketing: 1. Holistic, personalized brand experiences 2. Breadth and depth of brand-building marketing programs 3. Improved retention and cost savings 4. Mass customization is increased with digital-age technology: a. Customers can communicate preferences directly with the manufacturer. b. Manufacturers can use advanced production methods to assemble the product for a price that is comparable to a non-customized item. c. Mass customization happens in services, too. d. Companies must evolve offerings to tap real value or emotional drivers that influence customer purchases. e. Location-based marketing is another way to tailor or customize offerings. <<Use NikeID Example Here>> <<Use TESCO Example Here>> 5. Permission marketing is the practice of marketing to consumers only after gaining their permission: a. Marketers should avoid interruption marketing in favor of a cooperative communication strategy. b. E-mail is one of the main tools permission marketers employ; social media is also used.

74 Copyright © 2020 Pearson Education, Inc.

c. Five steps to permission marketing: 1) Situational permission 2) Brand trust 3) Personal relationship 4) Incentive-based permission 5) Intravenous permission <<Use Discussion Question 1 Here>> B. Reconciling the Different Marketing Approaches: 1. Different approaches to personalization help reinforce important marketing concepts and techniques.

2. According to the customer-based brand equity model, these approaches emphasize different aspects of brand equity.

3. An implication of these approaches is that the notion of “4Ps” of marketing may not fully describe marketing programs and activities.

IV. Product Strategy: 1. The product is the primary determinant of what consumers experience with a brand, what they hear about the brand from others, and what the firm can tell customers about the brand.

2. Designing and delivering a product or service that fully satisfies consumer needs and wants is a prerequisite for successful marketing.

A. Perceived Quality: 1. Perceived quality is the customers’ perceptions of the overall quality or superiority of a product or service compared with alternatives and with respect to its intended purpose.

2. Consistent with the resonance model, research has identified the following general dimensions: a. Primary ingredients and supplementary features b. Product reliability, durability, and serviceability c. Style and design

75 Copyright © 2020 Pearson Education, Inc.

3. Product quality depends on functional product performance and broader performance considerations such as speed, accuracy, and care of product delivery and installation; promptness, courtesy, and helpfulness of customer service and training; and the quality of repair service.

4. Brand attitudes may depend on more abstract product imagery, such as the symbolism or personality reflected in the brand, which are augmented aspects of products.

B. Managing Customers Post-Purchase: 1. To achieve the desired brand image, product strategies should focus on both purchase and consumption.

2. Product experiences are the second moment of truth, where the first moment of truth is purchase.

3. Aftermarketing is the name for marketing activities that occur after customer purchase.

4. Innovative design, thorough testing, quality production, and effective communication are important considerations in enhancing product consumption experiences that build brand equity.

5. User manuals for many products should be easy-to-use and as user friendly as possible: a. User manuals may need to appear online and in multimedia formats to demonstrate product functions and benefits. b. Researchers may spend time with first-time buyers.

6. Customer service programs can help retain customers and build relationships that extend customers’ lifetimes: a. Customer service representative benefits firms because they can gain valuable feedback and connect with consumers. b. Customer service can influence product choice and willingness to pay. c. Companies are turning to brand communities to help enhance support and reduce customer support costs. d. Companies gain from up-selling and cross-selling following good customer service. e. Aftermarket services can add to earnings.

76 Copyright © 2020 Pearson Education, Inc.

7. Loyalty or frequency programs can create stronger ties to customers by identifying the right customers, maintaining relationships with them, and increasing their expenditures with the firm: a. Loyalty programs often include extensive co-branding relationships. b. Loyalty programs reduce defection rates and increase retention. c. Suggestions and consideration.

complaints

from

top

customers

deserve

special

V. Pricing Strategy: 1. Price is the one source of revenue that comes from the traditional marketing mix.

2. Price premiums are among the most important benefits of building a strong brand. <<Use The Science of Branding 5-1 Here>> A. Consumer Price Perceptions Setting Prices to Build Brand Equity: 1. Choosing a pricing strategy to build brand equity means determining a method for setting current prices and a policy for choosing the depth and duration of promotions and discounts: a. The costs of making and selling products and the relative prices of competitive products are important determinants in pricing strategy. <<Use Figure 5-3 Here>> b. Acceptable prices are called price bands. <<Use Figure 5-4 Here>> c. Value-based pricing strategies attempt to sell the right product at the right price. d. Consumers price perceptions can be shaped by other ways the pricing is implemented. e. The razor-and-blades pricing model has begun to lose its appeal. f. Freemium models—with a free service and a premium tier—remain popular. g. Pay-as-you-wish pricing can dictate the price of the brand and how flexible the firm thinks the price is based on how it is discounted.

2. Value pricing aims to uncover the right product quality, costs, and prices so needs and wants of consumers are satisfied and the firm is profitable.

77 Copyright © 2020 Pearson Education, Inc.

3. Value pricing balances three key components: a. Product design and delivery—well conceived and well-executed marketing programs b. Product costs—lower costs c. Product prices—understand how much value consumers perceive in the brand and the extent to which they will pay a premium over product costs <<Use Hyundai Example Here>> 4. Communicating value can help consumers recognize the value associated with a product.

5. Price segmentation sets and adjusts prices for appropriate market segments: a. Yield management principles or dynamic pricing is being employed because of the wide adoption of the Internet. b. Companies and brands can alter pricing on a minute-to-minute basis with social media.

6. Everyday low pricing (EDLP) sets prices consistently based on the value-pricing considerations.

7. The P&G Experience reduced half its brands and eliminated temporary discounts.

8. Reasons for price stability include forward buying and diverting.

VI. Channel Strategy A. Channel Design: 1. Direct channels mean selling through personal contacts from the company to prospective customers.

2. Indirect channels mean selling through third-party intermediaries.

3. Increasingly, winning channel strategies will be those that combine multiple channels. << Use Nike Example Here>> <<Use Omnichannel Integration Here>> <<Use The Science of Branding 5-2, Research on Omnichannel, Here) B. Indirect Channels: 78 Copyright © 2020 Pearson Education, Inc.

1. Indirect channels have different intermediaries, but the chapter is focused on retailers, who have the most visible and direct contact with customers.

2. Retailers have a profound influence on the equity of brands they sell: a. Push and pull strategies can affect the equity of brands sold by retailers. b. Online retailers can use product reviews to influence equity. c. Shopper marketing emphasizes collaboration between retailers and manufacturers to do in-store marketing. d. There is competition for shelf space among retailers and increasingly undifferentiated brands. e. Retailers often have more power than manufacturers.

3. Channel support can enhance the value to the consumers of purchasing and consuming a brand name product. << Use Figure 5-4 Here>> <<The Branding Brief 5-2 Here>> 4. Retail segmentation divides retailers into segments so they can provide the necessary brand support: a. Different retailers may need different product mixes, special delivery systems, customized promotions, or even their own branded version of the products. b. Branded variants are branded items in a diverse set of durable and semidurable goods categories that are not directly comparable to other items carrying the same brand name. c. Branded variants are a means to reduce retail price competition because they make direct price comparisons difficult.

5. Cooperative advertising is when a manufacturer pays for a portion of the advertising that a retailer runs to promote the manufacturer’s product.

C. Direct Channels: 1. Company-owned stores allow manufacturers to gain control over the selling process, build stronger relationships with customers, and let them sell direct to customers: a. Digital native stores are increasingly embracing brick-and-mortar outlets to build high-touch relationships with customers.

79 Copyright © 2020 Pearson Education, Inc.

b. Company stores showcase brands and allow manufacturers to learn about customer shopping habits. c. Some companies lack the skills, resources, or contacts to operate effectively as a retailer.

2. Store-within-a-store is when marketers create shops within major department stores: a. It appeases retailers and may help the retailer’s brand image. b. The marketer retains control over the design and implementation of the product presentation at the point of purchase.

3. Another channel option is to sell directly to consumers by phone, mail, or electronic means.

D. Online Strategies: 1. The advantages of having a physical brick-and-mortar channel and a virtual online retail channel are becoming clear to many firms: a. Consumers value the convenience of shopping online or over the phone but want to pick up the product at the local store. b. Consumers want to be able to return merchandise to a store.

2. Consumers like using online accounts at kiosks inside the store to research purchase decisions and access additional inventory.

3. Multichannel retailers can acquire customers at half the cost of Internet-only retailers. <<Use Figure 5-5 Here>> The Science of Branding

THE SCIENCE OF BRANDING 5-1 Understanding Consumer Price Perceptions Consumers and customers often actively process price information, interpreting prices in terms of their knowledge from prior purchasing experience, formal communications such as advertising, informal communications from friends or family members, and point-ofpurchase or online information. Consumer purchase decisions are based on consumers’ perceived prices.

When examining or considering an observed price, consumers often compare it with internal frames of reference or external frames of reference. When consumers evoke one or more of 80 Copyright © 2020 Pearson Education, Inc.

these frames of reference, their perceived price can vary from the stated price. Most research on reference prices has found that “unpleasant surprises,” such as a stated price higher than the perceived price, have a greater impact on purchase likelihood than pleasant surprises.

Consumer perceptions of prices are also affected by alternative pricing strategies. Even the competitive environment has been shown to affect consumer price judgments: deep discounts can lead to lower perceived prices over time than frequent, shallow discounts, even if the average prices are the same in both cases. Clearly, consumer perceptions of price are complex and depend on the pricing context involved.

THE SCIENCE OF BRANDING 5-2 Research on Omnichannel An omnichannel is different from a multichannel because the boundaries between channels are increasingly blurred. Omnichannel environments can affect brands. Brick-and-mortar stores add online channels or branded apps to increase customer touchpoints. Digital-native brands have embraced offline channels. The highest cost-to-serve customers in online channels were the first to migrate to offline channels, and the cost of product returns also reduced.

It is important to have distribution breadth and depth and to understand the role of the supplier or brand on retailers, and vice versa.

Branding Briefs

BRANDING BRIEF 5-1 Yeti Is the “Cooler” Brand Yeti manufactures high-quality, expensive coolers that are status symbols for its core target audience, which includes hunters and fisherman. It is an aspirational cooler brand. It has a high sticker price associated with a mundane product, but it is successful because it keeps ice cold for days. It uses endorsements for credibility and social media and apparel to create excitement. It uses data analytics to personalize the content its audiences receive.

Since it grew from $5 million to $450 million in 2016, it is facing increased competition and has to work hard to maintain its appeal and authenticity. It uses effective storytelling.

BRANDING BRIEF 5-2 Chew on This: How Milk-Bone Brushing Chews Connected with Customers Research indicated that many pet owners did not know how to brush their dog’s teeth. Big Heart Pet Brands wanted to introduce Milk-Bone Brushing Chews and increase the dental category by 10 percent. It used shopper marketing—free-standing inserts, veterinary outreach, displays inside clinics, signage and endcap displays, and retailer-specific programs.

It exceeded its sales goals and won an Effie award for effectiveness in 2015.

81 Copyright © 2020 Pearson Education, Inc.

Brand Focus

BRAND FOCUS 5.0 Private-Label Strategies and Responses Private Labels

Private labels can be defined as products marketed by retailers and other members of the distribution chain. Private labels can be called store brands when they actually adopt the

name of the store itself in some way. They are not generics, whose simple black-and-white packaging typically provides no information about who made the product. The appeal to consumers of buying private labels and store brands often is the cost savings involved; the appeal to retailers of selling private labels and store brands is that their gross margin (25–30 percent) is nearly twice that of national brands.

The recession of the 1970s saw the successful introduction of low-cost, basic-quality, and minimally packaged generic products that appealed to bargain-seeking consumers. Today, private-label makers have begun improving quality and expanding the variety of their private-label offerings to include premium products. In recognition of the power of bold graphics, supermarket retailers have been careful to design attractive, upscale packages for their own premium branded products.

Private-Label Status The recession that began in 2008 heightened interest in private labels. In the United States, private-label goods have accounted for 16 to 17 percent of total supermarket dollar volume.

In supermarkets, private-label sales have always been strong in product categories such as dairy goods, vegetables, and beverages. More recently, private labels have been successful in previously “untouchable” categories such as cigarettes, disposable diapers, and cold remedies. Nevertheless, private labels have been relatively unsuccessful in categories such as candy, cereal, pet foods, baby food, health and beauty, and beer. One implication is that consumers are being more selective in what they buy, no longer choosing to buy only national brands. Categories that are particularly vulnerable to private-label advances are those in which there are little perceived quality differences among brands in the eyes of a sizable group of consumers.

Private-Label Branding Strategy Private-label growth could be seen in some ways as a consequence of cleverly designed branding strategies. In terms of building brand equity, the key point of difference for private labels in consumers’ eyes has always been “good value.” As a result, private labels can be extremely broad, and their name can be applied across many diverse products. Implementing a value-pricing strategy for private labels requires determining the right price and product offering. The challenge for private labels has been to determine the appropriate product offering.

Specifically, to achieve the necessary points of parity, or even to create their own points of difference, private labels have been improving quality, and as a result are now aggressively 82 Copyright © 2020 Pearson Education, Inc.

positioning against even national brands. Sellers of private labels are also adopting more extensive marketing communication programs to spread the word about their brands.

Loblaws Loblaws is Canada’s largest food distributor. In 1983, it carried more than 500 generic products that accounted for 10 percent of store sales. In 1984, it launched its private-label brand, Presidents Choice, which offered unique value through exceptional quality and moderate prices.

Major Brand Response to Private Labels Marketers of major brands have attempted to decrease costs and reduce prices to negate the primary point of difference of private labels and achieve a critical point of parity. In instances in which major brands and private labels are on a more equal footing with regard to price, major brands often compete well because of other favorable brand perceptions that consumers might have. One problem faced by marketers of major brands is that it can be difficult to actually lower prices even if they so desire. Marketers of major brands may not want to alienate retailers by attacking their store brands too forcefully, especially in zero-sum categories in which their brands could be easily replaced.

Marketers of major brands have increased R&D expenditures to improve products and identify new product innovations. They have also increased advertising and promotion budgets and tracked store-brand growth more closely than in the past and are competing on a market-by-market basis.

Kleenex Kleenex dominates the facial tissue category with 46 percent market share. Kimberly-Clark, maker of Kleenex, responded to private-label brands with innovation. Major brands have been more aggressive about legally protecting their brands. They have introduced discount “fighter” brands that are specially designed and promoted to compete with private labels.

Marketers of major brands have also been more aggressive about legally protecting their brands. One controversial move by some marketers of major brands is to actually supply private-label makers.

Future Developments Many marketers feel that the brands most endangered by the rise of private labels are second-tier brands that have not been as successful at establishing a clear identity as market leaders have. Highly priced, poorly differentiated, and undersupported brands are especially vulnerable to private-label competition. Retailers need the quality and image that go along with well-researched, efficiently manufactured, and professionally marketed major brands because of consumer demand. Jet.com and Amazon have private label brands. Amazon’s private label business is expected to generate added revenues of $25 billion by 2022.

83 Copyright © 2020 Pearson Education, Inc.

Discussion Questions and Answers 1. Have you ever voiced a complaint about a broken product or a bad service to a manufacturer or service provider? How was your complaint handled? What did you like or not like about their response?

Answers will vary. Help students think of incidents by mentioning everyday situations where services could go wrong (e.g., mixed up order in a coffeehouse). Good as well as bad handling of complaints may be portrayed by students. Some dos and don’ts about complaint handling could be summarized.

Page: 181 Learning Objective 2: Describe how marketers enhance product experience.

AACSB: Reflective Thinking 2. Are you part of a loyalty program, such as at a supermarket chain or a coffeehouse? If you are, why did you opt for it? Are there other loyalty programs that you were offered but declined to be a part of? What were the reasons for your decision?

Students may list different loyalty programs and cite valid reasons for consumers being part of them (e.g., for free products). Encourage students to think about what the company is getting in exchange for offering the loyalty program (e.g., customer data).

Students may have declined being part of loyalty programs because the associated benefits were not as meaningful to them or they already have too many loyalty cards or other reasons.

Page: 187 Learning Objective 2: Describe how marketers enhance product experience.

AACSB: Reflective Thinking 3. Choose a product category. Profile all the brands in the category in terms of pricing strategies and perceived value. If possible, review the brands' pricing histories. Have these brands set and adjusted prices properly? What would you do differently?

The cigarette industry is interesting for exploring pricing and its history. Major brands have altered pricing strategies over the years. They also established flanker or “fighter” brands to protect their premium price. The premium national brands, such as Marlboro, Camel, and Winston, currently keep their prices constant relative to one another. The cereal category is another interesting category to investigate.

Page: 186 Learning Objective 3: Explain the rationale for value pricing.

AACSB: Analytic Skills

84 Copyright © 2020 Pearson Education, Inc.

4. Visit a department store and evaluate the in-store marketing effort. Which categories or brands seem to be receiving the biggest in-store push? What unique in-store merchandising efforts do you see?

Answers will vary. Students may be divided into groups to discuss the question.

Page: 199 Learning Objective 4: List some of the direct and indirect channel options.

AACSB: Analytic Skills 5. Take a trip to a supermarket and observe the extent of private-label brands. In which categories do you believe private labels might be successful? Why? Supermarkets use private labels extensively for “commodity products” such as milk, cheese, and condiments; for “me-too” products such as cereals, snack foods, and soups; and a variety of other products. Private labels are more likely to be successful in lowinvolvement categories where they can compete primarily on price.

Page: 206 Learning Objective 5: Summarize the reasons for the growth in private labels.

AACSB: Analytic Skills Exercises and Assignments 1. For each of the four Ps, have students identify an exemplary brand whose strategy is different from and superior to that of its competitors. Discuss the role the particular strategy plays in the brand’s success. For example, Microsoft has an outstanding record of new product hits; Walmart’s pricing strategy is a major factor behind the retailer’s market domination; BP’s policy of not locating gas stations on corner properties gives it a distribution cost advantage over rivals; Snapple’s unique advertising quickly built national awareness and preference for what initially was a tiny, unknown brand.

Page: 178 Learning Objective 1: Identify some of the new perspectives and developments in marketing.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out at the end of the class.

85 Copyright © 2020 Pearson Education, Inc.

2. Ask students to survey consumers to identify product categories in which they engage in brand switching and determine what influences their behavior. Discuss the implications for marketing strategy of those influencing factors.

Page: 197 Learning Objective 2: Describe how marketers enhance product experience.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 8–10 minutes This activity may be carried out at the beginning of the class.

3. NASCAR teams—and the collateral merchandise and sponsorships that go along with them—have been growing in popularity in recent years. Have students pick a NASCAR team and analyze the factors (team name, drivers, sponsors, licensing, promotions, etc.) that contribute to its brand equity.

Page: 183 Learning Objective 1: Identify some of the new perspectives and developments in marketing.

AACSB: Analytic Skills Question type: Group Time to complete the exercise: 12 minutes This activity may be carried out at the end of the class.

4. Ask students to find a brand whose sole or primary distribution channel is the Internet.

Discuss the likely reasons for the brand’s highly focused strategy and the positive and negative consequences of it.

Page: 204 Learning Objective 4: List some of the direct and indirect channel options.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out after the class has been introduced to the concept of online retail strategy.

86 Copyright © 2020 Pearson Education, Inc.

5. Ask students to identify brands that have created pop-up stores in the last six months.

Students should research the examples outside of class and bring them to class, along with their analyses of how the brands used the pop-up stores, which blend retail and event marketing, to develop brand associations. Ask them to consider the locations, target audience, approach/brand experience, and desired brand associations, as well as how the pop-up store may have impacted relationships with channel partners. Students can share their examples with each other in small groups (4–5 students) to compare and contrast their individual findings before summarizing their key takeaways for brands to the rest of the class.

Page: 202 Learning Objective 4: List some of the direct and indirect channel options.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 20–25 minutes This activity may be carried out after the class has been introduced to the concept of direct channels and continued at the beginning of the next class session as a review.

6. Ask students to go to a retailer that sells private label brands. Ask them to choose a product category where private label brands are likely to be successful (avoiding things such as cigarettes, disposable diapers, and cold remedies). Once they make their selection, ask them to compare the retailer’s strategy for the private label brands and the manufacturers’ brands in the same category. Comparisons should include shelf space (amount of shelf space and placement on the shelf), price, sales promotions, and packaging (including quantity and colors that may leverage associations with the channel and or the store), with special attention paid to information that communicates private label quality (e.g., money back guarantees, comparison of active ingredients or products with manufacturer’s brands, etc.). Ask them to consider how they would respond if they were the brand manager for one of the manufacturer’s brands in the category.

Page: 206 Learning Objective 5: Summarize the reasons for the growth in private labels.

AACSB: Analytic Skills Question type: Individual Time to complete the exercise: 20–30 minutes This activity may be carried out after the class has been introduced to the concept of private label brands.

87 Copyright © 2020 Pearson Education, Inc.

Key Take-Away Points 1. Successful brands create strong, favorable, and unique brand associations, with both functional and symbolic benefits, using brand-building marketing activities and programs that include product, pricing, channel, and communication strategies.

2. Perceived quality is often at the heart of brand equity, but consumers may have a wide range of associations with the brand.

3. Consumer interactions are personalized through experiential and relationship marketing.

4. Marketers should fully understand consumer perceptions of value and consider a valuebased pricing strategy that balances product design and delivery, product costs, and product prices, when they set prices.

5. In terms of channel strategies, marketers need to match brand and store images to leverage secondary associations, integrate push strategies and shopper marketing activities for retailers with pull strategies, and consider a range of direct and indirect distribution options.

88 Copyright © 2020 Pearson Education, Inc.

Chapter 6 Integrating Marketing Communications to Build Brand Equity Learning Objectives 1. Describe some of the changes in the new media environment.

2. Outline the major marketing communication options.

3. Describe some of the key tactical issues in evaluating different communication options.

4. Identify the choice criteria in developing an integrated marketing communication program.

5. Explain the rationale for mixing and matching communication options.

Overview This chapter describes the role of marketing communications, perhaps the most flexible element of marketing programs, in building brand equity. Marketing communications are the means by which firms attempt to inform, persuade, and remind consumers—directly or indirectly—about the brands they sell. Advertising is one of many means by which firms stay in touch with consumers and form relationships with them. They can help build customerbased brand equity if the right mix of communication options is applied in a coordinated and integrated fashion.

Brand Focus 6.0 considers some of what we have learned about advertising.

Chapter Outline I. Preview 1. Marketing communications are the means by which firms attempt to inform, persuade, and remind consumers—directly or indirectly—about the brands they sell.

2. Marketing communications represent the voice of the brand and are a means for a brand to establish a dialogue and form relationships with consumers.

3. Advertising is not the only element of a marketing communications program. <Use Figure 6-1 Here> II. The New Media Environment <Use Objective 1 Here> 1. Advertising and other marketing communications contribute to brand equity by:

89 Copyright © 2020 Pearson Education, Inc.

a. Creating awareness of the brand b. Linking points-of-parity and points-of-difference associations to the brand in consumers’ memory c. Eliciting positive brand judgments or feelings d. Facilitating stronger consumer–brand connection and brand resonance 2. Marketing communication programs can provide incentives eliciting the differential response that makes up customer-based brand equity.

3. Once the optimal brand positioning has been defined—in terms of the desired target market—and product, pricing, and distribution decisions have been made, we can consider how to develop marketing communication options that build brand equity.

4. The media environment has changed dramatically in recent years.

A. Challenges in Designing Brand-Building Communications <Use Objective 2 Here> 1. The simplest and most useful way to judge a communication option is by its ability to contribute to brand equity. <Use Figure 6-2 Here> 2. The information processing model of communications is one model to explain the steps in the persuasion process: a. Exposure b. Attention c. Comprehension d. Yielding e. Intentions f. Behavior 3. If there is a breakdown or failure in any step, the communication is not successful.

4. To increase the odds for a successful marketing communications campaign, marketers must attempt to increase the likelihood that each step occurs.

B. Role of Multiple Communications 90 Copyright © 2020 Pearson Education, Inc.

1. Economic theory suggests placing dollars into a marketing communication budget and across communication options according to marginal revenue and cost.

2. Other models emphasize more observable factors (stage of brand life cycle, objectives and budget of the firm, product characteristics, size of budget, and media strategy of competitors), which are contrasted with characteristics of the media.

3. Communication options may target different segments.

III. Four Major Marketing Communication Options <Use Objectives 3 and 4 Here> A. Advertising 1. Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor: a. Powerful means to create strong, favorable, and unique brand associations and eliciting positive judgments and feelings b. Specific effects difficult to quantify 2. It is difficult to provide a comprehensive set of detailed managerial guidelines. <Use Brand Focus 6.0 Here> 3. Television is a powerful advertising medium because it allows for sight, sound, and motion and reaches a broad spectrum of consumers. a. It is an effective means of vividly demonstrating product attributes and benefits. b. It is a compelling means for portraying user and usage imagery, brand personality, emotions, and other brand intangibles. c. Because of the fleeting nature of the message and potentially distracting creative elements, consumers can overlook product-related messages and the brand. d. The large number of ads and nonprogramming material creates clutter that makes it easy for consumers to ignore or forget ads. e. The large number of channels creates fragmentation. f. Consumers can use digital video recorders to skip commercials. g. The cost of production and placement is high and reach has declined.

91 Copyright © 2020 Pearson Education, Inc.

<Use TIDE Example Here> h. Television networks have been making a case that marketers have been allocating too much of their budgets to digital marketing. i.

An increased focus on creating single-source data, or data that combines consumer purchase histories with data on multiple media, will allow marketers to understand and evaluate the effectiveness of different media and channels.

4. In designing and evaluating an ad campaign, marketers should distinguish the message strategy (or positioning of the ad—what it attempts to convey about the brand) from the creative strategy (or the way the ad expresses brand claims).

5. Designing effective campaigns is an art and a science.

6. Two main concerns are: a. Defining the proper positioning to maximize brand equity b. Identifying the best creative strategy to communicate or convey the desired positioning <Use Figure 6-3 Here> 7. Creative strategies tend to be largely informational, elaborating on a specific product-related attribute or benefit, or largely transformational, portraying a specific nonproduct-related benefit or image.

8. Borrowed interest devices can attract consumers’ attention and raise their involvement (e.g., cute babies, frisky puppies, popular music, celebrities, amusing situations, sex appeals, and fear-inducing threats).

9. Attention-getting tactics can be too effective and distracting from the brand or its product claims.

10. What makes an effective TV ad? a. Demonstrable contribution to brand equity b. Copy testing can evaluate the effectiveness of message and creative strategies 11. Television events are a main focus in television advertising.

12. Radio is pervasive and geographically targeted and is relative inexpensive to produce and place. a. Radio is effective in the morning and can complement or reinforce TV ads. <Use MOTEL 6 Example Here> 92 Copyright © 2020 Pearson Education, Inc.

b. Radio is low involvement and has limited sensory options. c. Four factors critical to success: i. Identify your brand early in the commercial ii. Identify it often iii. Promise the listener a benefit early in the commercial iv. Repeat it often d. Radio can be creative.

13. Print media has taken a huge hit as consumers collect more information and seek entertainment online: a. Publishers are doing innovation in the form of iPad apps and a stronger Web presence. b. Stark contrast to broadcast media: self-paced (detailed product information); static (less dynamic, no demonstrations); and passive c. Effective at building user and usage imagery d. Consumers may view magazine ads as less intrusive, more truthful, and more relevant than ads in other media; less multitask while reading. e. Newspapers are timely and pervasive, but have poor reproduction quality and a short shelf life. f. Can communicate user and user imagery, like the ads for Absolut vodka <Use ABSOLUT Example Here> g. Effective print ads: i. Many readers only glance at the most visible elements of a print ad, so it is critical that the ad communicate clearly, directly, and consistently in the ad illustration and headline. ii. Consumers can overlook the brand name if it is not readily apparent. iii. Clarity, consistency, and branding are the three criteria.

14. Direct response uses mail, telephone, Internet, and other contact tools to solicit a response from specific customers and prospects: a. Direct mail remains popular.

93 Copyright © 2020 Pearson Education, Inc.

b. Direct response TV is now known as infomercials. c. Steady growth in direct marketing dues to ease of setting up toll-free numbers and Web sites; increased demand for convenience; and needs of marketers—desire to avoid waste. d. Direct marketers employ precision marketing—combining data analytics with strategic messages and compelling colors and designs in their communications. e. Direct marketers measure effects, but there are challenges with intrusiveness and clutter. f. Effect direct marketing programs i. Should have up-to-date and informative lists of current and potential future customers ii. Should put forth the right offer in the right manner iii. Should track effectiveness <Use The Science of Branding 6-1 Here> 15. Nontraditional or support advertising complements more traditional advertising: a. Place advertising or out-of-home advertising captures advertising outside traditional media. b. Ads and commercials show up in unusual spots and/or as parts of experiential marketing. c. As traditional media becomes less effective, marketers try to reach people in other environments. d. Billboards and posters are available in a number of different environments, including airport luggage carousels, parking meters, elevators, and gas pumps. <Use Figure 6-4 Here> e. Advertisers are placing traditional TV and print ads in movies, on airlines, and in lounges. f. Advertisers are also using product placement in movies, videos, during sporting events, etc. g. Marketers communicate with consumers at the point of purchase on shopping carts in aisles, and on shelves as well as through demonstrations, sampling, and coupons.

94 Copyright © 2020 Pearson Education, Inc.

16. Out-of-home ads must be simple and direct; it is often called the “15-second sell” a. It is challenging to demonstrate reach and effectiveness through credible, independent research. b. Consumers may react negatively to overcommercialization and the pervasiveness of ads.

B. Promotion 1. Sales promotions are short-term incentives to encourage trial or usage of a product or service.

2. Sales promotions provide consumers with an incentive to buy: a. Change the behavior of the trade so they carry and actively support the brand b. Change the behavior of the consumers so they buy the brand for the first time, buy more of the brand or buy the brand earlier or more often 3. Economic forces worked against advertising effectiveness as a rates rose and the media environment became more cluttered: a. Consumers began making more in-store decisions, were less brand loyal, and were more immune to advertising. b. Mature brands were less easily differentiated. c. Retailers gained power.

4. Marketers have turned to consumer and trade promotions as a more effective means than advertising to influence sales of a brand. a. Consumer sales promotions permit manufacturers to price discriminate. b. They convey a sense of urgency. c. They can build brand equity through information or positive experiences. d. They can decrease brand loyalty and increase brand switching. e. They can lead to lower quality perceptions and increased price sensitivity. f. Funds diverted to promotions cannot be spent on franchise-building advertising or research and development. g. Promotions elevate the importance of price, which breaks down traditional loyalty patterns.

95 Copyright © 2020 Pearson Education, Inc.

h. Promotions subsidize buyers who would have bought the brand anyway. i.

Consumers may attribute purchase behavior to the promotion and not the merits of the brand.

j.

Retailers now expect trade discounts.

5. Consumer promotions aim to change the choices, quantity, or timing of consumers’ product purchases: a. Franchise-building promotions include samples, demonstrations, and educational material. b. Noncustomer franchise-building promotions include price-off packs, premiums, sweepstakes, and refund offers. c. Marketers increasingly judge sales promotions by their ability to contribute to brand equity and to generate sales. d. Creativity is important, as is a strategy that reflects the attitudes and behavior of consumers. e. In-store coupons and digital coupons have grown. <Use GROUPON Here> 6. Trade promotions are often financial incentives or discounts given to channel partners, distributors, and retailers to stock, display, and facilitate sales: a. They are typically designed either to secure shelf space and distribution or to achieve more prominence on the shelf and in the store. b. Many firms are failing to see the brand-building value in trade promotions.

C. Online Marketing Communications 1.

Marketers are trying to find the right places to be in cyberspace.

2. The main advantages are the low cost and the level of detail and degree of customization it offers.

D. Events and Experiences 1. Real world events and experiences play an important role.

2. Global sponsorship spending was approximately $62.7 billion globally in 2017.

3. Events allow brands to: a. Identify with a target market or lifestyle 96 Copyright © 2020 Pearson Education, Inc.

b. Increase awareness of the company or product name c. Create or reinforce consumers’ perceptions of the key brand image associations d. Enhance corporate image dimensions e. Create experiences and evoke feelings f. Express commitment to the community or on social issues g. Entertain key clients or reward key employees h. Permit merchandising or promotional opportunities 4. Disadvantages include: a. Events can be unpredictable and out of the sponsor’s control. b. There is often clutter in sponsorship. c. Consumers will credit sponsors for financial assistance but do not like the commercialization of events.

5. Marketers need to choose the right opportunities and approach: a. The event must meet marketing objectives and the communication strategy defined for the brand. b. The event must have sufficient awareness, possess the desired image, and be capable of creating the desired effects with the target market. c. An ideal event should have an audience that matches the ideal target market, generates favorable attention that is not encumbered with many sponsors, and lends itself to ancillary marketing activities, and reflects or enhances the brand. d. Some marketers believe a marketing program funded by at least two to three times the sponsorship expenditure should accompany a sponsorship program. <Use Branding Brief 6-1 Here> <Use Figure 6-5 Here> 6. Two basic approaches to measuring the effects of sponsorship activities include the supply-side method and the demand-side method: a. The supply-side method provides quantifiable measures.

97 Copyright © 2020 Pearson Education, Inc.

b. The demand-side method attempts to identify the effects that sponsorship has on consumers’ brand knowledge structures.

IV. Brand Amplifiers 1. Efforts to engage consumers and the public via word-of-mouth and public relations and publicity can amplify other marketing activities.

A. Public Relations and Publicity 1. Relate to a variety of programs 2. Can help during a crisis B. Word-of-Mouth 1. Getting people to talk to each other can help brands.

2. Influencer marketing is a specific type of word-of-mouth that has grown in influence on consumer decision-making.

V. Developing Integrated Marketing Communication Programs <Use Objectives 4 and 5 Here> 1. Integrated marketing communications (IMC) is regarded as a process of strategically managing stakeholders, content, channels, and results of brand communication programs.

2. Marketers should mix and match communication options to build brand equity.

3. IMC is shown to drive a brand’s financial performance through influencing the effectiveness of communication campaigns and the brand’s market-based performance.

4. IMC can lead to miscommunication, compartmentalization of duties, and loss of trust.

A. Criteria for IMC Programs 1. Six relevant criteria, the 6 Cs: a. Coverage b. Contribution c. Commonality d. Complementarity 98 Copyright © 2020 Pearson Education, Inc.

e. Conformability f. Cost 2. Coverage is the proportion of the audience reached by each communication option: <Use Figure 6-6 Here> a. Communication effects from consumer exposure to one communication option can be enhanced when consumers have prior exposure to a different communication program. b. A communication option can reinforce associations and strengthen linkages that are the focus of other communication options or it can address other associations and linkages as suggested by commonality and complementarity.

3.

Contribution is the inherent ability of a marketing communication to create the desired response and communication effects in the absence of exposure to any other communication option.

4. Commonality is the consistency and cohesiveness of the brand image; shared content and meaning: a. The more coordinated executional information is, the more likely it is to serve as a retrieval cue. b. If a symbol is established in one communication option, marketers can use it in other communications to help cue memories from previous communication.

5. Complementarity is the extent to which different associations and linkages are emphasized across communication options. <Use The Science of Branding 6-2 Here> 6. Conformability, which can be communication or consumer, is the extent that a marketing communication option is robust and effective for different groups of consumers: a. Multiple information provision strategy can be used to appeal to different consumers. b. Broad information provision strategy can provide rich or ambiguous information so it is enough to work.

7. Cost is important because programs must be effective and efficient.

B. Using IMC Choice Criteria 99 Copyright © 2020 Pearson Education, Inc.

1. Evaluating communication options must be done to provide evaluation material and to establish priorities and trade-offs.

2. Commonality and complementarity will often be inversely related.

3. Conformability and complementarity will also be inversely related.

4. Commonality and conformability do not share an obvious relationship.

The Science of Branding

THE SCIENCE OF BRANDING 6-1 The Importance of Database Marketing Database marketing manages a relational database that includes data on customers, inquiries, prospects, and suspects in order to improve relationships and profitability. Regardless of the particular means of direct marketing, database marketing can help create targeted communication and marketing programs tailored to the needs and wants of specific consumers. Database marketing is generally more effective at helping firms retain existing customers than in attracting new ones. Many marketers believe it makes more sense the higher the price of the product and the more often consumers buy it.

Database marketing pioneers include a number of financial services firms and airlines. Even packaged-goods companies are exploring the possible benefits of database marketing.

Database management tools will become a priority to marketers as they attempt to track the lifetime value (LTV) of customers.

THE SCIENCE OF BRANDING 6-2 Coordinating Media to Build Brand Equity For brand equity to be built, it is critical that communication effects created by advertising be linked to the brand. There are a number of reasons why TV ads in particular do not “brand” well: •

Competing ads in the product category can create interference and consumer confusion.

•

“Borrowed interest” creative strategies and techniques may grab consumers’ attention, but result in the brand being overlooked in the process.

•

Delaying brand identification or providing few brand mentions direct attention away from the brand.

•

Limited brand exposure time in the ad allows little opportunity for elaboration of existing brand knowledge.

100 Copyright © 2020 Pearson Education, Inc.

•

Consumers may not have any inherent interest in the product or service category or may lack knowledge of the specific brand.

•

A change in advertising strategy may make it difficult for consumers to easily relate new information to existing brand knowledge.

Strategies to Strengthen Communication Effects One common tactic marketers employ is to make the brand name and package information prominent in the advertisement. Although consumers are better able to recall the advertised brand, there is less other information about the brand to actually recall. Three potentially more effective strategies are brand signatures, ad retrieval cues, and media interactions.

Brand Signatures The brand signature is the manner by which the brand is identified in a TV or radio ad or displayed within a print ad. An effective brand signature often dynamically and stylistically provides a seamless connection to the ad as a whole.

Ad Retrieval Cues These cues are visual or verbal information uniquely identified with an ad that is evident when consumers are making a product or service decision. The purpose is to maximize the probability that consumers who have seen or heard the cued ad will retrieve the communication effects stored in long-term memory. Ad retrieval cues may consist of a key visual, a catchy slogan, or any unique advertising element that serves as an effective reminder to consumers.

Media Interactions Cueing a TV ad with an explicitly linked radio or print ad can create similar or even enhanced processing outcomes that can substitute for additional TV ad exposures.

Moreover, a potentially useful, although rarely employed, media strategy is to run explicitly linked print or radio ads prior to the accompanying TV ad. The print and radio ads in this case function as teasers and increase consumer motivation to process the more complete TV ad consisting of both audio and video components.

Branding Briefs

BRANDING BRIEF 6-1 Brand Building via the X Games Although the action sports industry contains a variety of high-energy and sometimes potentially high-risk sports, it is largely defined by various forms of skateboarding, snowboarding, surfing, and BMX biking. Action sports are increasingly mainstream and profitable.

101 Copyright © 2020 Pearson Education, Inc.

ESPN’s X Games began as a biannual event in 1995 quickly grew into a franchise that has millions of fans and has successfully launched a variety of brand extensions in consumer products and home entertainment and touches all seven continents. Partners for X Games 17 were chosen based on their ability to meet the various needs of the sponsors, the X Games franchise, and ESPN as a whole. It is popular, but warmer winters and higher participation costs have made some of the actions sports less accessible. However, there is great potential for overseas growth.

Brand Focus

BRAND FOCUS 6.0 Empirical Generalizations in Advertising Empirical generalizations emerge from careful, thoughtful research. Empirical generalizations are not formal laws themselves and there may be important exceptions and boundary conditions as to when they operate. Nevertheless, they suggest three possible benefits to having some empirical generalizations: 1) as a starting point in the development of an advertising strategy; 2) as an initial set of tentative rules that management can follow; and 3) as a benchmark, giving management some sense of how much change to expect when advertising is launched or something changes in the advertising environment. The empirical generalizations can be grouped into four broad topics: ROI; 360-degree media planning; value of TV; and creative quality.

Discussion Questions and Answers 1. Pick a brand and gather all its marketing communication materials. How effectively has the brand mixed and matched marketing communications? Has it capitalized on the strengths of different media and compensated for their weaknesses at the same time? How explicitly has it integrated its communication program?

Answers will vary. Students may assess the four vital ingredients to the best brandbuilding communication programs (advertising and promotion, interactive marketing, events and experiences, and mobile marketing).

Page: 218 Learning Objective 2: Outline the major marketing communication options.

AACSB: Analytic Skills 2. What possibilities does the Internet grant brands looking to build relationships with their customers?

Students’ answers may vary. Today the Internet is a ubiquitous communication channel which provides companies with innovative new tools to create richer stories and build more elaborate worlds for consumers (e.g., gamification).

Page: 230 102 Copyright © 2020 Pearson Education, Inc.

Learning Objective 2: Outline the major marketing communication options.

AACSB: Analytic Skills 3. Pick up a current issue of a popular magazine. Which print ad do you feel is the best, and which ad do you feel is the worst based on the criteria described in this chapter?

Answers will vary. Magazines may be distributed to groups of students, and they may choose the best and worst ads and assess the same on the visible elements contained in the ad and the directness of the message communicated through the ad.

Page: 222 Learning Objective 3: Describe some of the key tactical issues in evaluating different communication options.

AACSB: Analytic Skills 4. Look at the coupon supplements in a Sunday newspaper. How are they building brand equity, if at all?

Try to find a good example and a poor example of brand-building promotions.

For coupons to build brand equity, it is important for them to offer the consumer more than just a price break. Other incentives and promotions such as cash back, prizes, merchandise tie-ins, and free services are more effective means of building brand equity through coupons than simple percentage-off discounts.

Page: 229 Learning Objective 3: Describe some of the key tactical issues in evaluating different communication options.

AACSB: Analytic Skills 5. Some experts believe that product placements on television will rise in the future. What are some of the pros and cons of product placements on television?

As viewing habits change (e.g., the possibility for consumers to skip ad breaks), advertisers have to find other routes to their customer base. Students might come up with the following pros of product placements on television: cannot be avoided like ad breaks, gets undivided attention of the viewer, can benefit from consumers’ positive association with their favorite TV series or character, is less aggressive than TV commercials, etc. Cons might include: the high costs of product placements depending on the amount and nature of the brand exposure.

Sources: https://www.theguardian.com/tv-and-radio/2014/jun/24/breaking-bad-tv-productplacement

103 Copyright © 2020 Pearson Education, Inc.

https://www.sciencedirect.com/science/article/pii/S1877042812036671 Page: 230 Learning Objective 3: Describe some of the key tactical issues in evaluating different communication options.

AACSB: Analytical Skills Exercises and Assignments 1. Have students divide into groups and ask each group to develop a marketing communications strategy for the same brand. Once they have finished, discuss the various plans and the groups’ rationales for them. Compare and contrast the plans on their reliance on mass versus direct media and on advertising versus consumer promotions.

Page: 224 Learning Objective 2: Outline the major marketing communication options.

AACSB: Analytic Skills Question Type: Group Time to complete the exercise: 15 minutes This activity may be carried out at the end of the class.

2. Assign students the task of identifying brands that have appeared in movies or television shows. Discuss why the particular movies or shows were chosen and what the likely effect of the placement was on consumers.

Page: 227 Learning Objective 3: Describe some of the key tactical issues in evaluating different communication options.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 6–8 minutes This activity may be carried out before the class has been introduced to the concept of product placement.

3. Assign students the task of finding communications in unconventional places. Ask them to photograph or video the communications and to share them with the class. Discuss 104 Copyright © 2020 Pearson Education, Inc.

why the unconventional formats were selected, and what the marketers did to adjust for the unconventional placements, as well as whether the communications were effective.

Page: 227 Learning Objective 2: Outline the major marketing communication options.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 10–15 minutes This activity may be carried out after the class where the marketing communication options are introduced. It can be done outside of class as homework and shared in class on the day they are reviewed.

4. Compare the communication strategies for two competing brands on the factors delineated in #1. What are the reasons for the differences? And for the similarities?

Which brand’s strategy do you think is more effective? Why? Page: 224 Learning Objective 3: Describe some of the key tactical issues in evaluating different communication options.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out at the end of the class.

5. Ask students to identify an IMC campaign where the marketer made a trade-off with the IMC choice criteria. Ask students to reflect on the trade-off and why they believe the marketer was willing to make the trade-off, given the communication objectives.

Page: 241 Learning Objective 4: Identify the choice criteria in developing an integrated marketing communication program.

AACSB: Analytic Skills Question Type: Individual Time to complete the exercise: 10–12 minutes This activity may be carried out at the end of the class.

105 Copyright © 2020 Pearson Education, Inc.

6. Identify brands that have received publicity, favorable or unfavorable, as the result of action taken by the brand’s management. Analyze the press coverage, its positive and negative effects, and the company’s efforts to capitalize on or downplay the attention.

Recent examples include Philip Morris changing its name to Altria, the television advertisement for Nuveen that featured digitally enhanced images of Christopher Reeves rising from his wheelchair and walking, and ads for Cingular and Alcatel featuring famous speeches by Martin Luther King, Jr. Page: 235 Learning Objective 5: Explain the rationale for mixing and matching communication options.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out before the class is introduced to the concept of public relations and publicity.

Key Take-Away Points 1. It is through marketing communications that brands build relationships with consumers.

2. According to the customer-based brand equity model, marketing communications can contribute to brand equity by creating awareness of the brand; linking points-of-parity and points-of-difference associations to the brand in consumers’ memory; eliciting positive brand judgments or feelings; and facilitating a stronger consumer–brand connection and brand resonance.

3. Four vital ingredients to the best brand-building communication programs: 1) advertising and promotion, 2) interactive marketing, 3) events and experiences, and 4) mobile marketing.

4. Development of an integrated marketing communications campaign entails “mixing and matching” options based on their ability to produce a whole that is greater than the sum of its parts.

5. Creating a dialogue with consumers requires thinking beyond traditional advertising and promotion strategies.

6. Consistency is the key to creating brand awareness and strong brand associations.

106 Copyright © 2020 Pearson Education, Inc.

Chapter 7 Branding in the Digital Era Learning Objectives 1. Describe changes in marketing and consumer behavior in a digital era.

2. Define brand engagement and understand the brand engagement pyramid and key drivers of brand engagement.

3. Understand digital communications and the various options available.

4. Define the role of e-mail marketing and Web site optimization as important components of digital marketing strategy.

5. Appreciate the pros and cons of various social media channels (e.g., Facebook and Twitter) as digital marketing tools.

6. Understand the developments within mobile marketing.

7. Develop a broad understanding of influencer marketing approaches and how word-ofmouth and social influence occurs and can be managed.

8. Describe content marketing and its role in creating brand awareness and engagement.

9. Describe changes in brand management organizational structure.

Overview The growth of online and digital marketing as a means of communicating with and selling to consumers has caused a shift in branding and brand management. Consumers are playing a bigger and more explicit role in the success or failure of brands. Marketers know more about consumers than ever and can employ different marketing tactics to reach and influence them.

Consumer behavior and marketing have evolved. The chapter outlines some of the changes that are taking place in the digital area, introduces brand engagement, profiles digital communications that exist for marketers, and considers issues around social influence and brand management structure. It concludes with Brand Focus 7.0, which reviews research findings related to online word-of-mouth.

Chapter Outline I. Key Issues for Branding in the Digital Era <Use Objective 1 Here>

107 Copyright © 2020 Pearson Education, Inc.

1. Consumers who turn to Google or other search engines when they buy a product: 97% 2. Consumers who search for product information from their mobile device: 96% 3. Millennials that expect brands to have a Facebook presence: 95% 4. Consumers who do online research prior to purchasing in the store: 89% <Use Table 7-1 Here> A. Changes in Consumer Decision Journey 1. Traditional consumer journey implied a series of systematic stages: a. Awareness b. Consideration c. Purchase intention d. Purchase 2. Due to dramatic developments in digital marketing and social media, the consumer decision journey has changed.

3. Key digital era trends with implications for branding and brand management: a. Changes in consumer decision journey b. Sharp increase in buying via online retail channels c. Shift in advertising and promotion expenditures toward digital channels d. The rise of many-to-many communications e. Dramatic increase in consumer touchpoints f. Tremendous increase in data availability g. The use of digital personalization h. A loss of control over brand message and co-creation of brand meaning i.

The role of user experiences

j.

The growth of brands as cultural symbols

4. Brand managers should equip themselves with information about how the decision journey varies across different segments of consumers.

108 Copyright © 2020 Pearson Education, Inc.

<Use Figure 7-1 Here> 5. Post-purchase advocacy is important, so consumers should be encouraged to engage with the brand following a purchase.

B. Growth of Online Retailing 1. Statistics related to the growth of online retailing: a. Value of ecommerce sales will reach $414 billion in 2018. b. Sixty percent of adult Americans are happy to not shop in a crowded mall or store. c. Seventy-one percent of shoppers believe they will get a better deal online than in stores. d. Forty percent of men and 33% of women aged 18–34 say they would ideally buy everything online.

2. Brand managers should find ways to increase their online appeal and presence and optimize brand experiences online.

3. Consumers sometimes visit stores to touch and feel products, called showrooming, particularly if they then place an order online.

4. Amazon continues to disrupt retail through innovations. <Use Branding Brief 7-1 Here> C. Advertising and Promotions Using Digital Channels 1. There is a change in how advertising dollars are allocated across online and offline channels: a. As of 2017, digital media expenditures ($82.9 billion) in the United States exceeded traditional TV advertising expenditures ($72.09 billion). b. By 2020, online channels are expected to be almost 50% larger than TV advertising. c. Worldwide, mobile advertising accounts for $100 billion in advertising expenditures. <Use Branding Brief 7-2 Here> D. One-to-Many to Many-to-Many Channels 1. One-to-Many 109 Copyright © 2020 Pearson Education, Inc.

a. Traditional marketing involved mass media channels: TV, print, and radio b. Communication was from manufacturer to consumer, with limited feedback. c. Audiences were passive recipients. <Use Figure 7-3 Here> 2. Many-to-Many a. Interactive or one-to-one communications between the brand and the customer became more common over time. <Use Figure 7-4 Here> b. One-to-one direct marketing is being supplemented or replaced by many-tomany channels, like Facebook and Twitter. c. Consumers have become broadcasters in conversation with each other and engaged in two-way dialogue with brand marketers.

E. Increase in Consumer Touchpoints 1. Brand managers have more consumer touchpoints at their disposal to engage with and communicate with their consumers.

2. The increase in media options has made media planning more complex; brand managers need to create an integrated strategy across channels as appropriate given the consumer decision journey.

3. Attribution modeling, or understanding which channels produce the greatest return on advertising dollar expenditures, can be complex and challenging.

F. Increase in Data Availability 1. Data comes from clickstream data, advertising metrics, and Web sites.

2. The quantity of information can become overwhelming if brands don’t invest in tools for transforming the information into usable bits of knowledge.

3. Insights into membership and online behaviors of consumers can improve a brand marketer’s ability to fine-tune segmentation and targeting and strengthen customer engagement and sales.

4. Social media conversations also increase data availability. <Use Table 7-2 Here> 5. Social media mentions provide information for brand marketers about consumers’ perceptions of brands.

110 Copyright © 2020 Pearson Education, Inc.

6. Social media control rooms offer brand marketers the ability to listen to customer conversations and understand trends.

7. Consumer privacy must be preserved to protect consumer trust in brands.

G. Digital Personalization 1. Dynamic pricing is when the same product becomes available at different prices based on expressed customer interest.

2. Marketers can offer highly tailored messages that are relevant to target audiences.

3. Digital personalization is the “tailoring of messages and offerings to individuals based on their actual behavior.”

4. Brand managers can micro-target consumers at different touchpoints and stages in the decision journey: a. Consumers may react negatively to personalization of offers because of privacy concerns. b. Retargeting is when consumers get ads for products they previously browsed but did not buy.

5. Brand marketers must understand key triggers that work well with consumers with different profiles and in varying stages of the consumer decision journey.

6. To be successful in engaging in digital personalization, organizations must: a. Invest in a customer data warehouse that provides continuous monitoring and feedback b. Deploy cross-functional teams to understand the customers’ decision journey c. Employ an iterative process of testing and learning to identify what works H. Loss of Control over Brand Message and Co-Creation of Brand Meaning 1. The shift to digital has decreased the extent of control that a brand manager has on brand meaning. <Use Figure 7-3 Here> 2. Managers need to coordinate brand meaning generation on a large scale.

3. Consumers are co-creators of brand meaning; managers must manage consumer conversations without being the storyteller.

4. Summary of conditions by which brand meaning is coproduced: 111 Copyright © 2020 Pearson Education, Inc.

a. Firm-generated brand meaning b. Consumer-generated brand meaning c. Media and cultural influences <Use Figure 7-5 Here> 5. Social media megaphone amplifies positive and negative stories about brands.

6. The challenge for brand management is to assess how to coordinate multiple sources of brand meaning in a cohesive manner.

7. Brands are willing to invite consumers to co-create brand meaning in an explicit manner. <Use The Science of Branding 7-1 Here> I. User Experience Is the Key to Digital Brand Success 1. Seamless user experience is critical to digital brand success: a. Effortless navigation b. Seamless switching from one device to another 2. Design online and offline interfaces to ensure that Web sites, apps, and offline environments are easy to navigate.

J. Brands as Cultural Symbols 1. Brands can help consumers feel they are part of something and allow consumers to signal and connect with others.

2. Brands must maintain cultural relevance and authenticity as they allow consumers to “friend” them and participate in brand communities.

3. Brands must achieve cultural resonance by presenting an authentic voice and genuine point-of-view. <Use PEPSI’S AD MISFIRE Here> II. Brand Engagement 1. There is a greater emphasis on consumer-brand engagement in the digital marketing and social media context.

2. When consumers are engaged, they are willing to invest time, energy, money, or other resources in the brand.

112 Copyright © 2020 Pearson Education, Inc.

3. Consumers’ engagement with firms by donating time, money, or other resources that help strengthen bonds with brands.

4. Three levels of consumer engagement: a. Low brand engagement b. Moderate brand engagement c. High brand engagement 5. Some consumers have negative brand engagement.

A. Brand Engagement Pyramid <Use Objective 2 Here> 1. Customers vary in their propensity to engage with firms, so marketers must develop different approaches to strengthen positive brand engagement.

2. Consumers can be segmented on their propensity to engage with a firm. <Use Figure 7-6 Here> 3. Brand marketers need to answer the following questions about their customers’ level of brand engagement: a. What is the shape of the brand engagement pyramid? What is the size of the highly positive engaged group? What is the size of the not engaged versus highly engaged group? How many negatively engaged customers exist and at what levels? b. Are there any trickle-down effects—such as those who are highly engaged exert influence on those who are less engaged? Are there any influences of the disengaged group on the engaged group or vice versa? Does this reverse influence of less engaged on highly engaged consumers harm the brand, and how can marketers stem this direction of influence if it is negative in nature? c. What are the flows of information (as well as influence) for a given level of engagement? What does this imply for brand loyalty and purchase behavior? d. Among those who are highly engaged, what are the most efficient means of marketing communications? Similarly, among those who are least engaged, how can we leverage marketing communications to strengthen engagement? <Use Branding Brief 7-3 Here> 4. Understanding the different levels of brand engagement and how marketing communications can strengthen brand engagement is critically important.

113 Copyright © 2020 Pearson Education, Inc.

<Use Objective 3 Here> <Use The Science of Branding 7-2 Here> B. Negative Brand Engagement 1. Sometimes brand communities are negatively disposed to brands.

2. Negative communities can present opportunities for brands to redress customer grievances.

3. Both brand love and brand hate can become more exaggerated in online communities.

4. Negative communities can also become the basis for social movements and brand boycotts.

5. Brands are also increasingly parodied or ridiculed.

6. Social media gives consumers an unprecedented power to share.

III. Digital Communications 1. A paid channel is one in which a marketer runs paid advertising.

2. An owned channel is controlled by the company, like its Web site, YouTube channel, or mobile apps.

3. An earned channel is not controlled by the company and does not cost the company anything, so it includes publicity, reviews, and social media mentions. <Use Figure 7-7 Here> 4. All three can contribute to brand presence and brand engagement. <Use Ford Fiesta Example Here> 5. Shared media has been added by some commentators. <Use Brand Focus 7.0 Here> 6. The company Web site is an example of an owned channel: a. It represents a key brand asset and primary marketing tool. b. Consumers use the Web site as the first place they go to learn about a brand. c. Companies have to invest to ensure the Web site experience reflects the brand experience and to show up in searches.

114 Copyright © 2020 Pearson Education, Inc.

7. E-mail marketing is one of the most effective forms of communication: <Use Objective 4 Here> a. Segmenting, targeting, and positioning are critical. b. The differences in content, structure, and subject line can affect response rates. c. The timing of e-mail campaigns can affect response rates. d. Entertaining and engaging content helps improve responses. <Use Figure 7-8 Here> e. Testing different versions of the e-mail campaigns to identify the ones that work and to optimize the e-mail marketing campaign is important.

8. Search advertising is where most digital ad spending is focused, with an expected $130 billion in ad spending worldwide anticipated in 2019: <Use Branding Brief 7-4 Here> <Use Figure 7-9 Here> a. Search advertising allows the advertisers to pay based on actual clicks so there is no waste. b. Conversion rate is a metric to gauge the success of a search ad; the higher the conversion rate, the higher the success of the ad.

9. Display advertising or banner ads place ads on related Web sites: a. Display advertising is monetized on a cost-per-thousand (CPM) basis (impressions generated). b. Search ads and display ads are effective when used together.

IV. Overview of Social Media Paid Channels <Use Objective 5 Here> 1. Social media channels (Facebook and Twitter) offer unparalleled access to communities and users with similar demographic, geographic, and psychographic characteristics.

2. Social media roles include: a. Establishing a public voice and online presence 115 Copyright © 2020 Pearson Education, Inc.

b. Amplifying marketing message c. Helping monitor and obtain feedback from consumers d. Promoting customer engagement 3. Social media offers a unique way for marketers to promote dialogue with their audiences.

A. Facebook would be the largest country in the world: 1. It has 1.6 billion active users.

2. In the United States, 79% of adults have a Facebook account.

3. Facebook is influential among young adults, with 88% of Americans aged 18–29 with a Facebook account.

4. Females are more present, with 83% of females in the United States versus 75% of males.

5. Users are educated and live in urban and suburban areas.

6. Advertising revenue comprises the largest source of revenue for Facebook, with $34 billion estimated in 2017.

7. Metrics that are relevant to assessing the impact of Facebook advertising campaigns include: a. Reach, which includes organic, paid, and viral reach b. Followers, which captures reach and popularity of a given message c. Likes and shares, which are indicative of customer engagement with a particular message 8. Pros of Facebook include a large marketplace to connect with consumers, ability to generate brand awareness among its users, its targeting capability, direct purchasing feature, and instant play videos. <Use TOUGH MUDDER Here> 9. Cons of Facebook include a Facebook post will likely not reach every user, precision targeting can produce suboptimal results, there is a risk of a firestorm in a scandal. <Use Table 7-3 Here> B. Twitter is the second largest social medium: 116 Copyright © 2020 Pearson Education, Inc.

1. The Twitter message goes directly to followers, and they are easy to create; it provides communication between customer service and customers and shows a brand’s personality.

2. Cons of Facebook include a Facebook post will likely not reach every user, precision targeting can produce suboptimal results, there is a risk of a firestorm in a scandal. <Use #LIKEAGIRL Here> C. Instagram has 400 million users and targets a younger audience: 1. It has higher brand engagement levels than found with comparable platforms.

2. It engages audiences visually through images and videos and allows for more nontraditional marketing approaches.

3. Instagram’s cynical audience sees traditional ads negatively.

D. Pinterest is a medium that allows for sharing and posting of pictures featuring different brands and has “Buy It” pins.

E. Video has become important when brands want to engage in deeper themes and story-telling using their brand. <Use Branding Brief 7-5 Here> V. Mobile Marketing <Use Objective 6 Here> 1. Smartphones are viewed as lifelines or butlers by some consumers.

2. Mobile advertising and promotions are expected to grow for the $50 billion in expenditures in the United States: $26 billion in display advertising and $22 billion in search advertising.

3. Consumers spend more time on their mobile devices than on their desktop computers.

4. Social media apps reinforce the notion that mobile is primarily a means of entertainment and communication versus commerce.

5. Mobile advertising is helpful to send timely, location-based messages to customers at the right time and place: a. Marketers can communicate in real time with customers. b. Mobile ad copy has to be simple and direct to attract attention from its target audience.

117 Copyright © 2020 Pearson Education, Inc.

c. Mobile marketing helps engage customers while they are shopping. d. Messages can be targeted by location and behavior.

6. Short messaging service (SMS) and multimedia messaging service (MMS) offer customers unique offers based on time and location.

7. In-app advertising in Snapchat and in games can drive consumer engagement for brands: a. Mobile apps can facilitate companies’ learning about their customers’ motives. b. Mobile apps can be used to reward customers at appropriate times, increasing its effectiveness. c. Mobile apps can help companies strengthen their bond with customers. <Use A PERFECT BLEND Here> 8. Proximity systems marketing, or geo-fencing, involves particular advertising messages to be delivered to mobile users within a defined geographic area: a. Serving up targeted, relevant ads can benefit companies and customers alike. <Use Branding Brief 7-6 Here> b. The ability to reach consumers at a time and place that is more relevant to their purchasing of a brand with mobile marketing provides marketers with the ability target their offerings and engage customers. c. Push notifications allow a company to notify users about new messages or events when they are not actively using the app. d. Key findings from academic research include: i. Environments may impact the effectiveness of mobile advertising and promotions. ii. Mobile targeting based on time and location is more effective the closer the promotion is to actual purchase. iii. Targeting consumers who are closer in physical location to competitors’ locations produces better results than targeting mobile promotions to consumers who are closer to the company’s own locations. iv. Targeting consumers with mobile promotional coupons can boost overall spending, particularly unplanned spending.

VI. Influencer Marketing and Social Media Celebrities 118 Copyright © 2020 Pearson Education, Inc.

<Use Objective 7 Here> 1. Influencer marketing involves utilizing key influencers such as bloggers, celebrities, topic experts, and opinion leaders to provide information and opinions about products and brands.

2. It is expected to account for $5 billion dollars of global marketing expenditures within the next five years.

3. Instagram influencer marketing is a $1 billion industry and is forecasted to reach $2 billion by 2019.

4. Marketers have been utilizing influencers for their brands to a greater extent in recent years because of the results they have seen.

5. Sponsored bloggers and celebrities can hold greater sway over some consumers than advertisers can.

6. Organic word-of-mouth is different from sponsored word-of-mouth.

7. Influencer marketing relies a great deal on the authentic tone that is struck by influencers.

VII.

Content Marketing <Use Objective 8 Here> 1. “Content marketing is a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience—and, ultimately, to drive profitable customer action.”

2. It involves the creation and sharing of online material (such as videos, blogs, and social media posts).

A. Guidelines for Good Content Marketing 1. A key difference between content marketing and traditional marketing is consumers typically want to consume the posts that form part of the content marketing campaign.

2. The goal of content marketing is to engage audiences in topics of interest to them.

3. Selling products and services cannot be the primary goal of content marketing.

4. Understanding buyer needs must always be a starting point for generating good content.

5. Content distribution is an extremely important component of content marketing.

119 Copyright © 2020 Pearson Education, Inc.

B. Integrating Content with Public Relations & Marketing 1. A good content strategy has to be integrated with a broader public relations and marketing strategy.

2. The reach and engagement goals of the overall marketing strategy should be aligned with the content marketing strategy; it can help reach the audience, build a brand, increase brand awareness, generate leads, and ensure sales.

C. Case Studies 1. John Deere launched “The Furrow” magazine in 1895 to address farmers’ needs for information regarding soil health, soil conservation, and other topics: a. It has a circulation of 2 million globally in 40 countries and in 12 different languages. b. John Deere makes its sponsorship of the magazine prominent as the brand appears in the magazine, and it is distributed to John Deere dealers. c. It is user focused, tells stories that people enjoy reading and can use in their own operations. d. It has evolved from an agriculture journal to one that tells farmers how to run their businesses.

2. Movoto used content marketing to stimulate comic book fans’ interest in regional real estate: a. An infographic was created, which featured the background stories of Marvel characters and showing their birthplaces around the world. b. The campaign featured 365 stories about Marvel characters that were placed in various outlets such as Yahoo, Mashable, MTV, etc. and resulted in 9,000 social media shares.

D. Legal and Ethical Considerations 1. Content marketing may violate the Federal Trade Commission’s rules for sponsorship identification of broadcast content, which mandate compensated authors must disclose their compensation.

2. Content marketing efforts must balance the fine line between sponsorship of content and ensuring that such sponsorship efforts are adequately disclosed to ensure compliance with the law.

VIII.

Summary of Pros and Cons, Integrating Across Paid Channels 1. Integrating across channels can provide significant benefits to storytelling.

120 Copyright © 2020 Pearson Education, Inc.

2. Table 7-3 summarizes the Pros & Cons of primary paid channels. <Use Table 7-3 Here> IX. Brand Management Structure <Use Objective 9 Here> 1. Brand marketers have to evolve to a strategy to address the shifts in advertising spending across digital channels and implement an organizational structure and processes that support the strategy.

2. Success factors for strategy-making: a. Senior management should understand how products and brands are being researched and viewed via digital channels. b. Cross-functional coordination is important. c. Data-driven decision making will become the standard operating procedure. d. Marketing strategy should be viewed as part of an overall strategy exercise. e. High-quality data about customers can help marketers understand and personalize offers for customers. f. Companies can offer personalized offerings to their customers. g. Understanding how online and offline communications interact and coordinating with online digital channels are important.

The Science of Branding

THE SCIENCE OF BRANDING 7-1 Is Co-Creation of Brands and Products Always Good?

Co-creation can increase loyalty by promoting feelings of psychological ownership and making consumers feel empowered and via enjoyment of participation. However, not all consumers want to participate or perceive benefits of co-creation. Co-creation benefits brands more when viewers’ ability to scrutinize messages is low, identities of ad creator and viewers are similar, or when viewers are highly loyalty to the brand. Co-creation is less successful with luxury brands, in product categories where quality is important, and when consumers believe in power distance or uncertainty avoidance.

THE SCIENCE OF BRANDING 7-2 Drivers of Brand Engagement 121 Copyright © 2020 Pearson Education, Inc.

Brand characteristics, message characteristics, medium characteristics, and consumer characteristics can all drive brand engagement.

Brand characteristics with more symbolic or nonfunctional positioning and those with unique or differentiating attributes or associations tend to elicit greater brand engagement.

Publicly consumed goods also elicit higher consumer engagement than privately consumed goods.

Relevancy of a message from a brand to a consumer can increase brand engagement, as can message factors. Emotional arousal can also affect engagement, particularly if brands use awe and surprise.

The size of the audience and the strength of ties between consumer and audience can affect engagement. Brands may be better off selecting unique or less crowded social media venues or channels.

Consumers desire to express themselves and manage others’ impressions of them, loyalty and identity goals can affect their engagement. Co-creation can increase engagement in certain categories.

Branding Briefs

BRANDING BRIEF 7-1 The Phenomenal Rise of Amazon Since it began as an online bookseller in 1995, Amazon has grown to be a successful multinational conglomerate. In a series of moves that include an IPO in 1997; quarterly profits, cloud computing, jewelry, and shoe sales between 2001 and 2004; the introduction of Amazon Prime in the United States in 2005; the addition of a fresh food delivery service in 2006, Amazon Fresh; the Kindle e-reader and the acquisition of Audible; the development of Amazon studio and the Kindle Fire tablet; and the introduction of drone delivery, Amazon changed how people thought about what online shopping and shipping would look like in the future. Following the introduction of Alexa (voice-controlled personal assistant) and Amazon Fire, Amazon reached a market value of $250 billion. It is the market leader in cloud computing and acquired Whole Foods for $14 billion in 2017. Amazon’s founder attributes success to quick, bold decisions. Figure 7-2 provides a timeline of key events of Amazon’s development over time.

BRANDING BRIEF 7-2 Igniting a Digital Firestorm Black Friday, the day after Thanksgiving in the United States, is a day when retailers offer special deals and some shoppers experience a surge of adrenaline. While the deals are popular, there have been protests against Black Friday because it makes retail employees work during a time when they would prefer to spend time with their families. REI chose to close its 143 stores as part of an Alternative Black Friday Movement, #OptOutside. REI got high engagement on social media, and 170 other organizations decided to close down for 122 Copyright © 2020 Pearson Education, Inc.

Black Friday. Hundreds of parks opened without charging fees, and 1.4 million spent the day outdoors. REI received 1 million new memberships, in-store sales increased 7 percent and digital sales grew almost 23 percent. The campaign was linked to the products and showed the customers. REI cared about its employees and customers more.

BRANDING BRIEF 7-3 Shaving the Price of Razors Dollar Shave Club is positioned as a convenient and cost-effective alternative to delivering razors and personal grooming products via mail. It uses humor to highlight its value proposition in its campaign, which has resulted in a high level of engagement on its online videos. The messages about the convenience and cost savings associated with the service resonated with consumers, resulting in high levels of loyalty and brand engagement.

BRANDING BRIEF 7-4 Campaigning Using Clicks with Google Adwords Google AdWords search advertising platform is among the largest digital advertising platforms available. Google search advertising accounts for 80% of the $45 billion industry in the United States. AdWords connects ad buyers and sellers within Google’s network of search sites. Sponsored search ads appear on the top of the Google home page. Behind the scenes, the auction makes keywords available for a price that is based on the demand for the keyword and other factors (like the relevance of the landing page and prior clicks on the ads). Payment is based on a cost-per-click (CPC) basis. An ad can get impressions without paying for them, but effective ads—ads that are relevant to the keyword and that have been successful in the past—can earn top placement in search results at a lower CPC than less effective ads due to Google’s quality score.

Companies may use branded or generic keywords, depending on brand recognition. Higher placements are more likely to be seen by consumers. Google offers ways to target consumers including geo-targeting. Highly targeted ads are likely to get higher click-through rates.

BRANDING BRIEF 7-5 On Being Social in China WeChat is a dominant social media platform in China. It has over 1 billion active monthly users. Consumers use its 10 million apps for daily activities, which gives brands many moments to push messages out to followers.

Weibo is a micro-blogging platform with 303 million active monthly users, most popular in cities.

QQ is a messaging app with an installed base of 869 million users.

Youku is the video-sharing analog of YouTube in China. It has 580 million active users.

123 Copyright © 2020 Pearson Education, Inc.

Baidu Tieba is part of the Chinese search engine company Baidu. It offers businesses and brands to create their own forums.

BRANDING BRIEF 7-6 Turning Flight Delays into Marketing Opportunities Red Roof Inn leverages flight cancellation information to increase reservations by targeting customers with mobile marketing in real time. It uses its limited budget for mobile search advertising aimed at consumers who have a high likelihood of converting—targeting travelers whose travel plans were disrupted. It uses real-time data, geographical information, and search queries. The ads are shown when the volume hits a threshold. Specific opportunities were matched to the calls to action. Precision targeting of 400,000 stranded travelers allowed Red Roof Inn to gain first position within the segment of last-minute questions.

Brand Focus Brand Focus 7.0 Understanding How Online Word-Of-Mouth Influences Brands and Brand Management Consumers spend considerable time posting reviews and accessing word-of-mouth information posted by others across multiple digital channels. A large percentage (83%) said the most credible form of advertising was recommendations from people they knew.

Online word-of-mouth, also known as electronic word-of-mouth or eWOM, has received prominent attention in academic research. Five aspects of online word-of-mouth influence overall sentiment and engagement toward a brand and drive sales: word-of-mouth volume; word-of-mouth valence; word-of-mouth venue; word-of-mouth source; and word-of-mouth virality and content.

•

High volume of negative word-of-mouth information exerts greater impact than positive ratings or reviews.

•

The location of where information is shared has an impact. Measures of brand sentiment should incorporate the wide variations that exist across venues or platforms.

•

Content that arouses emotions like awe or surprise spreads faster than low-arousal content.

•

Positive content is more likely to spread virally on social media than negative content.

•

Word-of-mouth information exerts the greatest impact just prior to the launch of a new product.

124 Copyright © 2020 Pearson Education, Inc.

Only some of the social media connections are actually influencers, and traditional earned media and earned media on social media channels can impact each other. Personalized responses on social media can be coupled with traditional media.

Discussion Questions and Answers 1. When you purchase a new electronic device, what role does the Internet play in your decision-making process? Which digital channels, if any, influence your decision the most? Why? Students’ answers may vary and might include everything from company homepages to social media and websites that offer product test results. Different opinions may be voiced about the reliability of internet sources (e.g., sponsored content vs. objective assessment). Some students may argue in favor of disregarding the Internet and sticking to personal advice received in shops or from their relatives and friends. The class may be divided into groups and asked to compare their group results.

Page: 257 Learning Objective 1: Describe changes in marketing and consumer behavior in a digital era.

AACSB: Reflective Thinking 2. This question tests your familiarity with three key concepts that we discussed in the context of search as well as display advertising—that is, click-through rates (CTR), cost-per-click (CPC), and cost-perthousand (CPM).

•

Assume a company launched a search advertising campaign, which generated 10,000 impressions and 100 clicks. What is the click-through rate of the ad? o 100/10000 = .01 or can be expressed in percentage terms as .01*100 or 1%

•

What is the cost per click if an ad campaign costing $250 generates 50 clicks? o 250/50 = $5 is the cost-per-click (CPC)

•

What is your cost-per-thousand (CPM) if you have 20,000 impressions, and your total cost is $100? o CPM is $5 (100/20)

In the first pass version of the chapter, the answers are provided. Therefore, it is not clear what the expectations are from the students in response to this question. If the question stays in the current format, consider providing different metrics so students can do calculations on their own. For example, change the click-through rate of the ad calculation by noting it had 5,000 impressions or 25 clicks.

Page: 269 125 Copyright © 2020 Pearson Education, Inc.

Learning Objective 3: Understand digital communications and the various options available.

AACSB: Analytical Thinking 3. Highlight some of the issues associated with brand marketers losing control over brand meaning. Do you think there are any benefits to firms intervening to control the conversations taking place in social media?

Why or why not?

The loss of control over the brand message is outlined on page 259, where the many-tomany communications model is discussed and the sources of brand meaning are laid out in a visual. Encourage students to go beyond what is in the text to talk about why it matters and analyze when it would (and would not) benefit firms to intervene. Consider using a current example from the market where the social media communications are not consistent with the desired brand meaning. Ask the students to put on the brand manager hat and weigh the pros and cons of intervention in that specific case.

Page: 259 Learning Objective 5: Appreciate the pros and cons of various social media channels (e.g., Facebook and Twitter) as digital marketing tools AACSB: Reflective Thinking 4. How can brands develop systems to ensure that dynamic information coming in from social media is acted upon quickly? What would this imply for the brand management function?

Student responses may vary, but should consider the organizational structure in the response, as the question asks specifically about the brand management function.

Students may also reference social media dashboards and social media control rooms and why they are useful when a firm wants to respond in a timely manner. If you want to expand upon the question, consider adding a discussion about firms that utilize “automatic” responses that indicate the firm will respond within 24 hours. How do/would they feel, as consumers, if they received an automated response? How would it shape their interactions with the brand? How would it shape their interactions with other consumers? What alternatives exist for the brand managers?

Page: 262 Learning Objective 9: Describe changes in brand management organizational structure AACSB: Reflective Thinking 5. Provide a summary of pros and cons associated with the following: (1) mobile advertising and (2) content marketing. What are some brands that appear to utilize these channels in an effective manner?

Mobile advertising and content marketing are covered in different sections. Specifically, responses related to mobile advertising should highlight the popularity and usage of mobile devices and mobile apps; the value associated with sending timely, location-based 126 Copyright © 2020 Pearson Education, Inc.

messages—so the message reaches customers at the right time and place; the increased relevancy of the message based on responses; and real-time communications. The tradeoffs are mobile ad copy must be simple and attract attention since there is limited screen space for creativity; and as usage increases, and there may be competitive interference.

Content marketing is designed to stimulate interest in the brand or topics related to the brand, so the brand messages are presented in an entertaining way that often blends in with editorial content. The ability to blend in is both a strength and a weakness; if consumers feel the brand tried to trick them, it could lead to negative feelings and brand avoidance. The positive side is it gives consumers the ability to select the content based on their interest, which should increase their engagement with the message. It can be a challenge to distribute the content so it reaches the right audience.

Student responses to the part of the question about brands that use both tactics effectively will vary based on their selections. Consider asking them to take screenshots of the ads or content marketing initiative and ask them to submit them in advance of class or to post them on discussion boards where they can view each other’s examples and provide feedback on what makes them more or less effective than other possibilities.

Pages: 277, 281 Learning Objective 6: Understand the developments within mobile marketing and Learning Objective 8: Describe content marketing and its role in creating brand awareness and engagement AACSB: Analytical Thinking Exercises and Assignments 1. Ask students to elect one of the winners of the Shorty Awards (https://shortyawards.com/), which honors the “best of social media” and respond to the following: Describe the winner and why it was recognized. Include the social media channels in the description. Analyze whether the initiative would have worked as well if it had been done on a different social media channel or on traditional media. Explain why you feel it would or would not work in a way that reflects your understanding of the pros and cons of social media channels as digital marketing tools.

Student responses will vary, but it will both give them an opportunity to review additional, current examples of digital marketing tools in action, and it will give them a chance to review the pros and cons of the different social media channels. Perhaps they would consider how the channel attributes interact with the brand attributes, integrating the content from the previous chapters about brand resonance and brand image.

Page: 271 Learning Objective 5: Appreciate the pros and cons of various social media channels (e.g., Facebook and Twitter) as digital marketing tools AACSB: Analytic Skills 127 Copyright © 2020 Pearson Education, Inc.

Question Type: Individual or group Time to complete the exercise: 20–30 minutes Students can participate for homework and bring their examples into class to discuss in small groups. Alternatively, students may post their responses on a discussion board and interact around each other’s selections.

2. Content marketing is a strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience—and, ultimately, to drive profitable customer action. Ask students to create an outline a specific content marketing strategy for the brand of their choice, where they create the content marketing approach versus reporting back on what someone is doing.

Ask them to consider the branding objectives, and how they will measure success.

Student responses will vary based on the type of content marketing selected, but they should consider the target audience and the branding objective as part of their approach.

Further, they need to identify how they will know if they succeeded/the measurement plan.

Page: 281 Learning Objective 8: Describe content marketing and its role in creating brand awareness and engagement AACSB: Analytic Skills Question Type: Individual or Group Time to complete the exercise: 20–30 minutes Students should review the chapter information about content marketing, then complete the assignment outside of class for homework, either individually or in small groups.

3. Ask students to use their personal Instagram accounts to identify influencers who are currently paid to promote products. Ask them to respond to the following: What are the characteristics of the influencer? How many followers does she/he have? How often does she/he post? What does she/he post about? How does the influencer’s association transfer over to the brand she/he is promoting? If you were Rolex, would you approach the influencer to post about your watches? Why or why not?

Student responses will vary depending on their selection of an Influencer, but they should identify the influencer’s characteristics, including engagement around posts and the influencer’s brand image.

Page: 279 Learning Objective 7: Develop a broad understanding of influencer marketing approaches and how word-of-mouth and social influence occurs and can be managed 128 Copyright © 2020 Pearson Education, Inc.

AACSB: Analytic Skills Question Type: Individual Time to complete the exercise: 15–20 minutes The assignment can be done in class if students have access to their mobile phones. It should be presented when the influencer marketing content is introduced.

4. Ask students to imagine they were creating a marketing for a musician who is performing live in a specific market. How would they utilize location-based mobile marketing, if at all? How would they utilize other social media channels to complement or address gaps in mobile marketing?

Student responses should vary, but should reflect recognition of the benefits and constraints of mobile marketing, and should consider complementary social media channels.

Page: 277 Learning Objective 6: Understand the developments within mobile marketing AACSB: Analytic Skills Question Type: Individual Time to complete the exercise: 5–10 minutes This question can be used as a discussion question in class when mobile marketing and its pros and cons are discussed.

Key Take-Away Points 1. The growth of digital marketing and social media has ushered in a new era with many distinct trends that require changes to the way marketers organize their efforts and deliver value to their customers.

2. The communication options and availability of data to target customers with offerings at the right time and place suggest marketers are in a powerful position to engage with customers.

3. Brands may occupy a different role in consumers’ lives and have a greater role as cultural symbols.

129 Copyright © 2020 Pearson Education, Inc.

Chapter 8 Leveraging Secondary Brand Associations to Build Brand Equity Learning Objectives 1. Outline the eight main ways to leverage secondary associations.

2. Explain the process by which a brand can leverage secondary associations.

3. Describe some of the key tactical issues in leveraging secondary associations from different entities.

Overview This chapter addresses the way in which secondary associations can be leveraged to build brand equity. Secondary associations are links to other entities that have their own knowledge structures in the minds of consumers. The ability to “borrow” brand knowledge and potentially brand equity creates leverage for marketers. Secondary brand associations can help create strong, favorable, and unique associations or positive responses in new ways.

Eight different ways to leverage secondary associations to build brand equity are linking the brand to: (1) companies (through branding strategies); (2) countries or other geographic areas (through identification of product origin); (3) channels of distribution (through channel strategy); (4) other brands (through co-branding); (5) characters (through licensing); (6) spokespersons (through endorsements); (7) events (through sponsorship); and (8) other third-party sources (through awards or reviews).

The chapter notes that attempts to leverage secondary associations require the company to relinquish some control over the branding process. In particular, managing the transfer process so that only the relevant secondary associations become linked to the brand may be difficult.

Brand Focus 8.0 discusses one of the biggest events for corporate sponsorship, the Olympic Games. Companies spend up to $50 to be lead sponsors for the Games, and then spend as much as $100 million on related marketing activities; however, not everyone thinks the Games provide good value since the increasing commercialization of the competition makes it harder to break through the clutter.

By making a connection between the brand and another entity, consumers may form a mental association from the brand to this other entity and to any or all associations, judgements, feelings, and the like linked to that entity. Secondary brand associations are most likely to affect evaluations of a new product when consumers lack the motivation or ability to judge product-related concerns.

Chapter Outline I. Preview

130 Copyright © 2020 Pearson Education, Inc.

1. Brands can build brand equity by leveraging related or secondary brand associations.

2. Brands may be linked to other entities that have their own knowledge structures in the minds of consumers: a. Consumers infer that some of the associations or responses that characterize the other entities are also true for the brand. b. The brand “borrows” brand knowledge and maybe brand equity.

3. The indirect approach to building brand equity is leveraging secondary brand associations for the brand.

4. Secondary brand associations can create strong, favorable, and unique associations or positive responses if existing brand associations or responses are deficient—and it can be an effective way to reinforce existing associations and responses.

5. Secondary brand associations can be leveraged by linking the brand to: <Use Objective 1 Here> a. Companies (through branding strategies) b. Countries or other geographic areas (through identification of product origin) c. Channels of distribution (through channel strategy) d. Other brands (through co-branding) e. Characters (through licensing) f. Spokespersons (through endorsements) g. Events (through sponsorship) h. Other third-party sources (through awards or reviews) 6. The first three entities reflect source factors: who makes the product, where the product is made, and where it is purchased; the remaining entities deal with related people, places, or things. <Use Figure 8-1 Here> 7. The secondary brand associations are most likely to affect evaluations of a new product when consumers lack either the motivation or the ability to judge product-related concerns.

A. Effects on Existing Brand Knowledge 131 Copyright © 2020 Pearson Education, Inc.

<Use Objective 2 Here> 1. Linking the brand to some other entity can create new brand associations to the entity and affect existing brand associations: a. Consumers have some knowledge of an entity. b. When a brand is identified as linked to that entity, consumers may infer that some of the associations, judgments, or feelings that characterize the entity may also characterize the brand, perhaps due to cognitive consistency.

2. Three important factors predict the extent of leverage from linking the brand to another entity: a. Awareness and knowledge of the entity (What doe consumers know about the other entity?) b. Meaningfulness of the knowledge of the entity c. Transferability of the knowledge of the entity (Does any of this knowledge affect what they think about the brand when they think about the brand when it becomes linked or associated in some fashion with this other identity?)

3. Consumers can infer any aspect of knowledge from other entities to the brand; some of the entities are more likely to create or affect brand knowledge than others. <Use Figure 8-2 Here> 4. Any one entity may be associated with multiple dimensions of knowledge, each of which may affect brand knowledge directly or indirectly.

5. Judgments or feelings may transfer more readily than more specific associations, which are likely to seem irrelevant or be too strongly linked to the original entity to transfer.

B. Guidelines 1. Leveraging secondary brand associations may allow marketers to create or reinforce an important point-of-difference or a necessary or competitive pointof-parity versus competitors.

2. Marketers should take into account consumers’ awareness of the linked entity and its associations, judgments, or feelings, which might become linked to the brand or affect existing brand associations.

3. A commonality leveraging strategy makes sense when consumers have associations to another entity that are congruent with desired brand associations.

132 Copyright © 2020 Pearson Education, Inc.

4. A complementarity branding strategy can be used when there are few if any common or similar associations, but it has to overcome confusion or skepticism.

5. Even if consumers buy into the association one way or another, leveraging secondary brand associations may be risky because the marketer gives up control of the brand image: a. The source factors or related person, place, or thing will undoubtedly have a host of other associations, of which only some smaller set will be of interest to the marketer. b. Managing the transfer process so only the relevant secondary knowledge becomes linked to the brand can be difficulty. c. The knowledge may change and new associations may or may not be advantageous for the brand.

II. Company <Use Objective 3 Here> 1. Branding strategies are an important determinant of the strength of association from the brand to the company and other existing brands.

2. Three branding options exist for a new product: a. Create a new brand b. Adopt or modify an existing brand c. Combine an existing brand and a new brand 3. A corporate or family brand can be a source of brand equity. <Use Branding Brief 8-1 Here> 4. Sometime a corporate or family brand is hidden. <Use BLUE MOON Example Here> 5. Brands and companies are often unavoidably linked to the category and industry in which they compete, sometimes with adverse consequences.

III. Country of Origin and Other Geographic Areas 1. The country or geographic location from which it originates may also become linked to the brand and generate secondary associations.

2. The world is becoming a cultural bazaar where consumers can pick and choose brands originating in different countries.

133 Copyright © 2020 Pearson Education, Inc.

3. Choosing brands with strong national ties may reflect a deliberate decision to maximize product utility and communicate self-image, based on what consumers believe about products from those countries.

4. Marketers can establish a geographic or country-of-origin association by embedding the location in the brand name, making the location the dominant theme in brand advertising, other countries have developed and advertised labels or seals for their products.

5. It is typically a legal necessity for the country of origin to appear somewhere on the product or package, so it is a question of relative emphasis on the package and through the marketing program. <Use BRAND AMERICA Example Here> 6. Marketers should consider the favorability of a country-of-origin association from both a domestic and foreign perspective.

7. Patriotic appeals have been the basis of marketing strategies all over the world. <Use Branding Brief 8-2 Here> 8. A challenge with country-of-origin is how consumers define it and under what circumstances they care.

9. Country-of-origin can become confusing in the increasingly globally connected world, resulting in stipulations about labeling from some countries.

IV. Channels of Distribution 1. Retail stores can indirectly affect brand equity through an image transfer process because of consumers’ associations linked to the retail stores.

2. Because of associations to product assortment, pricing and credit policy, quality of service, and so on, retailers have their own brand images in consumers’ minds. <The Science of Branding 8-1> 3. Retailers create associations through the products and brands they stock and the means by which they sell them.

4. Consumers may perceive the same brand differently depending on where it is sold.

5. The transfer of store image associations can be either positive or negative for a brand.

V. Co-branding

134 Copyright © 2020 Pearson Education, Inc.

1. Also known as brand bundling or brand alliances, when two or more existing brands are combined, the associations transfer between the brands.

2. Co-branding has a long history, but it has advantages and disadvantages: <Use Figure 8-4 Here> a. Co-branding can create more compelling points-of-difference or points-ofparity for the brand—or both—than otherwise might have been feasible. b. Co-branding can reduce the cost of the product introduction because it combines two well-known images, accelerating potential adoption. c. Co-branding may be a valuable means to learn about consumers and how other companies approach them. d. Co-branding can help create a distinctive product in poorly differentiated categories. e. Disadvantages include the lack of control that arises from becoming aligned with another brand in the minds of consumers. f. Expectations are high; unsatisfactory performance thus could have negative repercussions for both or all brands. g. If the brands are distinct, consumers may be less sure about what each brand represents.

A. Guidelines 1. To create a strong co-brand, both brands should have: a. Adequate brand awareness b. Sufficiently strong, favorable, and unique associations c. Positive consumer judgments and feelings d. Two brands separately should have some potential brand equity. e. There must be a logical fit so the combined brand or marketing activity maximizes advantages of the individual brands while minimizing disadvantages.

2. Marketers sue ensure the right fit in values, capabilities, and goals as well as the appropriate balance of brand equity.

3. The aim is the licensor and the licensee should benefit from the agreement.

4. Marketers should ask themselves a number of questions: 135 Copyright © 2020 Pearson Education, Inc.

a. What capabilities do we not have? b. What resource constraints doe we face (people, time, and money)? c. What growth goals or revenue needs do we have?

5. To assess joint branding opportunities, marketers ask: a. Is it a profitable business venture? b. How does it help to maintain or strengthen brand equity? c. Is there any possible risk of dilution of brand equity? d. Does it offer any extrinsic advantages such as learning opportunities?

6. One downside—when a partner ceases to be a source of positive brand associations—is illustrated by the Disney/McDonald’s example.

B. Ingredient Branding 1. Ingredient branding creates brand equity for materials, components, or parts that are necessarily contained within other branded products.

2. Ingredient brands attempt to create enough awareness and preference for their product that consumers will not buy a host product that does not contain the ingredient.

3. Branded ingredients are often a signal of quality.

4. The uniformity and predictability of ingredient brands can reduce risk and reassure consumers.

5. Ingredient brands can become industry standards/a category point-of-parity.

6. Ingredient branding has become more prevalent as mature brands seek costeffective means to differentiate themselves and a means to expand their sales opportunities.

7. Some companies create their own ingredient brands. <Use SINGAPORE AIRLINES Example Here> 8. Ingredient brands are not restricted to products and services.

9. Advantages and Disadvantages: a. Similar to co-branding

136 Copyright © 2020 Pearson Education, Inc.

b. If an ingredient pulls consumers, the firm can generate higher sales at a higher margin. c. There may be more stable and broader customer demand and better longterm supplier–buyer relationships. d. There may be two streams of revenue—direct revenue and royalties associated with displaying the ingredient brand. e. Host product brands may achieve access to new product categories, market segments, and distribution channels. f. Host products can share the product and development costs with the ingredient supplier. g. Host products many become supplier dependent or may believe the branded ingredient does not add value. h. Consumers may get confused about the real brand if the branded ingredient gains too much equity. i.

The sustainability of competitive advantage is uncertain. <Use The Science of Branding 8-2 Here>

10. Guidelines are consistent with conventional branding program guidelines. <Use Branding Brief 8-3 Here> 11. Ingredient branding must accomplish four tasks: a. Consumers must perceive the ingredient as valuable to the performance and success of the end product. b. Consumers must be convinced the ingredient brand is different and superior. c. A distinctive symbol or logo must be designed to clearly signal to consumers that the host product contains the ingredient. d. A coordinated push and pull program must be put into place so consumers understand the importance and advantages of the branded ingredient.

VI. Licensing 1. Licensing creates contractual arrangements by which firms can use names, logos, characters of brand to market their own brands for some fixed fee.

2. Licensing can be a shortcut means to building brand equity. <Use DISNEY CONSUMER PRODUCTS Example Here> 137 Copyright © 2020 Pearson Education, Inc.

3. Licensing can provide legal protection for trademarks.

4. A trademark can become overexposed if marketers adopt a saturation policy.

5. Consumers do not know the motivation or marketing arrangements so they can get confused or angry if the relationship is not clear.

6. If the product fails to live up to consumer expectations, the brand name could become tarnished.

A. Guidelines 1. Manufacturers can get caught up in licensing a brand that might produce shortlived sales.

2. Due to multiple licensing arrangements, licensed entities can become overexposed and wear out quickly.

3. Firms are obtaining licensing rights to a broad range of licensed entities to diversify risk.

4. Licensees are developing new products and sales and marketing approaches so sales are not merely a function of the popularity of other brands.

5. Some firms conduct marketing research to ensure the proper match of product and licensed entity or to provide more precise sales forecasts for effective inventory management.

6. Corporate trademark licensing of company names, logos, or brands can also be used (e.g., Harley-Davidson).

7. Firms can generate extra revenues and profits while protecting the trademarks and enhancing the brand image.

8. Inappropriate licensing can dilute brand meaning.

VII.

Celebrity Endorsement 1. Using well-known and admired people to promote products is a widespread phenomenon with a long marketing history.

2. Millward Brown estimates that celebrities show up in 15 percent of U.S. ads; that number jumps to 24 percent for India and 45 percent for Taiwan.

3. A famous person can draw attention to the brand and shape perceptions of the brand.

4. Celebrities’ fans will also become fans of their products or services.

5. Celebrity endorser qualities: 138 Copyright © 2020 Pearson Education, Inc.

a. High level of visibility b. Rich set of potentially useful associations, judgments, and feelings c. Credible in terms of expertise, trustworthiness, likability or attractiveness, and should have specific associations that carry potential product relevance <Use OPRAH WINFREY Here> A. Potential Problems 1. Celebrity endorsers can endorse a certain number products before it lacks product meaning or the celebrities are seen as opportunistic or insincere: a. Celebrities run the risk of overexposure. <Use Branding Brief 8-4 Here> b. There must be a reasonable match between the celebrity and the product. c. Celebrity endorsers can get in trouble or lose popularity, which diminishes their marketing value. <Use Figure 8-5 Here> 2. Some marketers use several different celebrities or celebrities who are deceased.

3. Consumers may infer that celebrities are only motivated by money and that they do not believe in or use the brand.

4. Celebrities can be difficult to work with and may not follow the marketing direction of the brand.

5. Celebrities may distract attention from the brand in the ads.

6. Featuring celebrities can become a subject of controversy.

7. Brands can become too reliant on a celebrity.

B. Guidelines 1. Marketers should strategically evaluate, select, and use celebrity spokespeople: a. Choose a well-known and well-defined celebrity whose associations are relevant to the brand and likely to be transferable. b. There must be a logical fit between the brand and the person.

139 Copyright © 2020 Pearson Education, Inc.

c. The advertising and communication program should use the celebrity in a creative fashion that highlights the relevant associations and encourages their transfer. <Use Q Scores Here> d. Marketing research must help identify potential endorser candidates, facilitate the development of the proper marketing program, and track its effectiveness.

2. Celebrities must manage their own brands to ensure they provide value. <Use Branding Brief 8-5 Here> C. Social Influencers as the New Celebrities 1. The area of rapid growth has been in the use of social media celebrities for advertising brands.

2. In addition to macro-influencers who may command large followings on social media, there are noncelebrity or micro-influencers who hold considerable sway on social media: a. Micro-influencers may have 10 times the impact on in-store purchases than celebrity influencers. b. More than half of respondents suggested they turned to YouTube reviewers to learn about markets.

VIII.

Sporting, Cultural, or Other Events 1. Events have their own set of associations that may become linked to a sponsoring brand under certain conditions.

2. Sponsored events can contribute to brand equity by becoming associated to the brand and improving brand awareness, adding new associations, or improving the strength, favorability, and uniqueness of existing associations.

3. The main means by which an event can transfer associations is credibility—the brand is more likable, trustworthy, or expert by association. <Use Brand Focus 8.0 Here> <Use SPORTS SPONSORSHIPS Here>

IX. Third-Party Sources

140 Copyright © 2020 Pearson Education, Inc.

1. Marketers can create secondary associations in a number of different ways by linking the brand to third-party sources (e.g., Good Housekeeping, expert critics).

2. Third-party sources can be especially credible sources; endorsements can be used in advertising campaigns. <Use GREY GOOSE Example Here> The Science of Branding

THE SCIENCE OF BRANDING 8-1 Understanding Retailers’ Brand Images Academics have identified the following five dimensions of a retailer’s brand image: •

Access—The location of a store and the distance that consumers must travel to shop are basic criteria in their store choice decisions.

•

Store Atmosphere—Different elements of a retailer’s in-store environment, like color, music, and crowding, can influence consumers’ perceptions of its atmosphere, whether or not they visit a store, how much time they spend in it, and how much money they spend there.

•

Price and Promotion—Consumers are more likely to develop a favorable price image when retailers offer frequent discounts on a large number of products than when they offer less frequent, but steeper discounts.

•

Cross-Category Assortment—Consumers’ perception of the breadth of different products and services offered by a retailer under one roof significantly influences store image.

•

Within-Category Assortment—As the perceived assortment of brands, flavors, and sizes increases, variety-seeking consumers will perceive greater utility, consumers with uncertain future preferences will believe they have more flexibility in their choices, and, in general, consumers are more likely to find the item they desire.

There is also a question related to the growth of ecommerce and online retailing: how do retailers manage their image in online and offline settings? One study examined how incongruity between online and offline retailer brand image impacts consumer attitudes toward a Web site. Incongruity is disruptive to navigation.

THE SCIENCE OF BRANDING 8-2 Understanding Brand Alliances Academic research has explored the effects of co-branding and ingredient branding strategies: 141 Copyright © 2020 Pearson Education, Inc.

•

Co-Branding—Park, Jun, and Shocker compare co-brands to the notion of “conceptual combinations” in psychology. The findings show how carefully selected brands can be combined to overcome the potential problems of negatively correlated attributes (here, rich taste and low calories).

Simonin and Ruth found that consumers’ attitudes toward a brand alliance could influence subsequent impressions of each partner’s brands. Brands less familiar than their partners contributed less to an alliance but experienced stronger spillover effects than their more familiar partners. Voss and Tansuhaj found that consumer evaluations of an unknown brand from another country were more positive when it was allied with a well-known domestic brand.

Levin and Levin explored the effects of dual branding, which they defined as a marketing strategy in which two brands, usually restaurants, share the same facilities while providing consumers with the opportunity to use either one or both brands.

Kumar found that introducing a co-branded extension into a new product category made it less likely that a brand from the new category could turn around and introduce a counter-extension into the original product category. LeBar and colleagues found that joint branding helped to increase a brand’s perceived differentiation, but also sometimes decreased consumers’ perceived esteem for the brand and knowledge about the brand.

Swaminathan and colleagues examined co-branded partnerships with two brands and found complementary attribute levels or dissimilar attributes would be preferred by consumers. Different consumers may evaluate complementary partnerships in different ways. Newmeyer and colleagues propose an overarching framework for evaluating co-branded partnerships.

•

Ingredient Branding—Desai and Keller conducted a laboratory experiment to consider how ingredient branding affected consumer acceptance of an initial line extension, as well as the ability of the brand to introduce future category extensions.

The results indicated that with slot filler expansions, although a co-branded ingredient eased initial acceptance of the expansion, a self-branded ingredient led to more favorable later extension evaluations. With more dissimilar new attribute expansions, however, a co-branded ingredient led to more favorable evaluations of both the initial expansion and the subsequent extension.

Branding Briefs

BRANDING BRIEF 8-1 IBM Promotes a Smarter Planet IBM decided it needed to radically transform itself from a product-focused company to a value-added, services-oriented company. IBM Chairman and CEO Sam Palmisano spun off the company’s famous PC division and began to invest heavily in software and business consulting. Another critical aspect of the transformation was aligning the public perception

142 Copyright © 2020 Pearson Education, Inc.

of IBM with this new vision. “Smarter Planet” became the slogan for the corporate campaign, which had its roots in some of IBM’s recent accomplishments.

The initial goal of the “Smarter Planet” campaign was to position IBM as a leader in solving the world’s most pressing problems. One of the first campaign activities was an op-ad series, “Building a Smarter Planet,” targeting forward-thinking leaders.

The campaign also included TV ads and targeted ads to three groups: business and government leaders in large organizations, IT professionals, and the mid-market. It included a strong digital component, with an expanded IBM Web site and a Smarter Planet blog.

Videos were created and distributed across eight of the largest video-sharing sites. IBM also launched a “Smarter Cities” global tour to bring key policy and decision makers together to discuss the topical issues they faced, such as transportation, energy, health care, education, and public safety. IBM’s stock price increased by 64 percent during the campaign. Figure 8-3 has a longstanding IBM executive talking about the Smarter Planet campaign.

BRANDING BRIEF 8-2 Selling Brands the New Zealand Way In 2013, New Zealand was ranked as the fifth-strongest country brand in the world, a credit to the country’s remarkable qualities, but also to its concerted marketing program through the years.

In 1991, New Zealand began a branding initiative called “The New Zealand Way.” The key objectives of the New Zealand Way brand campaign were to reposition New Zealand to reflect its contemporary positioning and undertake a sustained campaign that could be a powerful force to benefit trade and tourism in the global marketplace. The New Zealand Way brand campaign promoted the country, its tourism and trade products and services, and its famous people, known as “Brand Ambassadors.”

Buoyed also by publicity from the highly popular Lord of the Rings film trilogy, which was filmed there, plus the profile from the America’s Cup, which Tourism New Zealand cleverly used for promotion, the number of visitors to the country increased by 50% during this time. NZTE chose to focus its branding efforts on international business development reflecting emerging and relevant values for enterprise such as innovation, creativity, and integrity.

In 2011, the tag line for the tourism campaign was changed to “100% Pure You” with the subline, “It’s About Time.” The intent was to build on the prior campaign to target people who were actively considering New Zealand for a holiday vacation and to encourage them to travel soon. The country’s wine producers have marketed their products’ origin as the “clean, green land.”

New Zealand had a record number of visitors by 2014, representing a 5 percent growth over the previous year. It uses digital media channels and search engine marketing. Its Web site, NewZealand.com, attracts 20 million visits per year. Facebook and Sina Weibo were used to spread awareness across the globe. The campaign uses a mobile app to connect with people 143 Copyright © 2020 Pearson Education, Inc.

who visit New Zealand and to build strong relationships with customers. New Zealand has partnered with airlines, airports, and travel sellers.

BRANDING BRIEF 8-3 Ingredient Branding the DuPont Way DuPont introduced a number of innovative products for use in markets ranging from apparel to aerospace. Many of the company’s innovations became household names as ingredient brands in consumer products manufactured by many other companies.

DuPont learned an important branding lesson the hard way. Because the company did not protect the name of its first organic chemical fiber, nylon, it was not trademarkable and became generic. A key question that DuPont constantly confronts is whether to brand a product as an ingredient brand. To address this question, the firm has traditionally applied several criteria: •

On the quantitative side, DuPont has a model that estimates the return on investment of promoting a product as an ingredient brand. The goal of the model is to determine whether branding an ingredient can be financially justified, especially in industrial markets.

•

On the qualitative side, DuPont assesses how an ingredient brand can help a product’s positioning. If competitive and consumer analyses reveal that conveying certain associations would boost sales, DuPont is more likely to brand the ingredient.

DuPont maintains that an appropriate, effective ingredient branding strategy leads to a number of competitive advantages, such as higher price premiums, enhanced brand loyalty, and increased bargaining power with other members of the value chain. DuPont employs both push and pull strategies to create its ingredient brands.

BRANDING BRIEF 8-4 Rachael Ray’s Nutrish Rachael Ray’s Nutrish is a brand of pet food aimed at the super-premium segment of the market that competes with Purina and IAMS. To convince pet owners of the nutritional benefits of the super-premium cat food, they used a celebrity endorsement strategy featuring Rachael Ray. She had celebrity status and was linked to philanthropies, like no-kill pet shelters, that supported pets. It made pet owners feel like the food was created by a celebrity chef. The campaign to support it targeted busy moms and included social media and content on BuzzFeed.

BRANDING BRIEF 8-5 Managing a Person Brand Guidelines for managing a person brand: 144 Copyright © 2020 Pearson Education, Inc.

•

A person brand must manage brand elements.

•

A person brand is built by the words and actions of that person.

•

A person brand can borrow brand equity through secondary associations and employ strategic partnerships with other people to enhance brand equity.

•

Credibility is key for a person brand.

•

Person brands can use multiple media channels.

•

A person brand must stay fresh and relevant and properly innovate and invest in key person traits.

•

A person brand should consider optimal positioning in terms of brand potential and associated points-of-parity and points-of-difference.

•

Brand architecture is simpler for a person brand but brand extensions can occur, for instance when a person adds to his or her perceived capabilities.

•

A person brand must live up to the brand promise at all times.

•

A person brand must be a self-advocate and help to shape impressions.

Brand Focus

BRAND FOCUS 8.0 Going for Corporate Gold at the Olympics Corporate sponsorship is a significant part of the business side of the Olympics and countries themselves vie for the rights to host the Games.

Corporate Sponsorship Corporate sponsorship of the Olympics exploded with the commercial success of the 1984 Summer Games in Los Angeles. At that time, many international sponsors, like Fuji, achieved positive image building and increased market share. Besides direct expenditures, firms spent hundreds of millions more on related marketing efforts.

Sponsorship ROI Although several firms have long-term relationships and commitments with the Olympics, in recent years other long-time sponsors have cut their ties. Although many factors affect the decision to engage in or renew an Olympic sponsorship, its marketing impact is certainly widely debated.

Ambush Marketing 145 Copyright © 2020 Pearson Education, Inc.

In some cases, sponsorship confusion may be due to ambush marketing, in which advertisers attempt to give consumers the false impression they are Olympic sponsors without paying for the right to do so. Nonsponsoring companies attempt to attach themselves to the Games by, for instance, running Olympic-themed ads that publicize other forms of sponsorship like sponsoring a national team, by identifying the brand as an official supplier, or by using current or former Olympians as endorsers. Containing ambush marketing requires much diligence.

London 2012 Summer Games Recognizing the important financial contribution of sponsorship, the London Games were supported by the British government’s introduction of extensive anti-ambush legislation.

Banned were activities such as sky-writing, flyers, posters, billboards, and projected advertising within 200 meters of any Olympic venue. Organizers of the London Games also embarked on a multimillion-dollar advertising campaign, “The Greatest Tickets on Earth,” in hope of raising £500 million from ticket sales. Outside the country, the government also embarked on a “Visit Britain” and “Visit London” promotional campaign to attract tourists.

City and Country Effects A number of benefits may be evident for a host country that can be hard to quantify. One important psychological benefit is civic pride and patriotism for serving as host to such an iconic global sporting event. Another often-overlooked benefit is the investment in improving infrastructure that often leads up to hosting the Games.

Summary Many corporate sponsors continue to believe that their Olympic sponsorship yields many significant benefits, creating an image of goodwill for their brand, serving as a platform to enhance awareness and communicate messages, and affording numerous opportunities to reward employees and entertain clients. Others view the Games as overly commercialized, despite the measures undertaken by the IOC and USOC to portray the Olympics as wholesome. In any case, the success of Olympic sponsorship depends in large part on how well it is executed and incorporated into the entire marketing plan.

Discussion Questions and Answers 1.

The Boeing Company makes a number of different types of aircraft for the commercial airline industry, for example, the 727, 747, 757, 767, 777, and now, the 787 jet models. Is there any way for Boeing to adopt an ingredient branding strategy with its jets? How? What would be the pros and cons?

Boeing could develop an ingredient branding strategy by leveraging its corporate name more for use on the interior and exterior of planes, on literature issued inside the plane, on ticketing information, and in airline advertising. Boeing could also develop an advertising campaign featuring its different jet models. Pros: more business, more recognition, and greater equity. Cons: greater accountability (particularly in the event of a crash) and competitors can adopt similar strategy.

Page: 305 146 Copyright © 2020 Pearson Education, Inc.

Learning Objective 1: Outline the eight main ways to leverage secondary associations.

AACSB: Analytic Skills 2. Think of a brand endorsed by a celebrity sportsperson. How credible is this endorsement to you? Why? What factors might compromise the success of this endorsement in the future?

Students’ answers may vary. Encourage students to analyze whether the values the celebrity stands for match the values the brand stands for. Students may suggest various factors that may compromise the success of this endorsement in the future such as, legal issues or lacking athletic success.

Page: 313 Learning Objective 2: Explain the process by which a brand can leverage secondary associations.

AACSB: Analytic Skills 3. Take a trip to a supermarket near you. Look for products that try to generate secondary associations with clues regarding their country of origin on their packaging. What do these associations convey? Do they appeal to you as a consumer? Why? Answers will vary. Students should assess the secondary associations regarding impact and credibility.

Page: 300 Learning Objective 2: Explain the process by which a brand can leverage secondary associations.

AACSB: Analytic Skills 4. Which retailers have the strongest image and equity in your mind? Think about the brands they sell. Do they contribute to the equity of the retailer? Conversely, how does that retailer’s image help the image of the brands it sells? What is the impact of online versus offline retail storefronts in creating your image of this retailer?

Answers will vary. Because of associations to product assortment, pricing and credit policy, quality of service, and so on, retailers have their own brand images in consumers’ minds. Retailers create these associations through the products and brands they stock and the means by which they sell them. To more directly shape their images, many retailers aggressively advertise and promote directly to customers.

Page: 302 Learning Objective 3: Describe some of the key tactical issues in leveraging secondary associations from different entities.

147 Copyright © 2020 Pearson Education, Inc.

AACSB: Analytic Skills 5. Pick a brand. Evaluate how it leverages secondary associations. Can you think of any ways that the brand could more effectively leverage secondary brand associations?

Answers will vary. Students may be divided into groups of four and may be asked to choose a brand and assess its secondary associations.

Page: 292 Learning Objective 2: Explain the process by which a brand can leverage secondary associations.

AACSB: Analytic Skills Exercises and Assignments 1. Ask students to poll consumers regarding their associations for different countries. What products or services fit with and could benefit from being linked to the countries? Are the associations consistent with the way in which products and services from those countries are being marketed?

Page: 295 Learning Objective 2: Explain the process by which a brand can leverage secondary associations.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out after the class is introduced to the concept of how the country or geographic location from which the product originates may also become linked to the brand and generate secondary associations.

2. Tell students to suggest celebrity endorsers for brands currently without one, and to explain their recommendations. For example, does Dennis Rodman’s fiery personality make him a good spokesperson for Tabasco? Does Sean “P. Diddy” Combs’ everpresent cell phone make him a perfect candidate to endorse Nokia phones? Would Rosie O’Donnell be a made-in-heaven match with Nickelodeon because of her love for and knowledge of classic TV shows?

Page: 313 Learning Objective 2: Explain the process by which a brand can leverage secondary associations.

148 Copyright © 2020 Pearson Education, Inc.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 6–8 minutes This activity may be carried out before the class is introduced to the concept of celebrity endorsements.

3. Assign students the task of finding co-branding opportunities in various product categories. For example: Facial tissue

Puffs and Vaseline Intensive Care lotion?

Spaghetti sauce

Ragu and Gallo wine?

Hotel

Red Roof Inn and Serta mattresses?

Page: 303 Learning Objective 2: Explain the process by which a brand can leverage secondary associations.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 10 minutes This activity may be carried out after the class is introduced to the concept of cobranding.

4. Have students identify a brand with an active licensing strategy and evaluate the fit of the licensed products with the brand’s image. What changes should be made in the brand’s licensing policy? Examples of brands with products in numerous categories outside the original include Jell-O, Looney Tunes, Ralph Lauren, and Star Wars.

Page: 310 Learning Objective 3: Describe some of the key tactical issues in leveraging secondary associations from different entities.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out after the class is introduced to the concept of licensing.

149 Copyright © 2020 Pearson Education, Inc.

Key Take-Away Points 1. Linking the brand to some other entity—some source factor or related person, place, or thing—may create a new set of associations from the brand to the entity, as well as affecting existing brand associations.

2. Brands can “borrow” equity from their association with people, places, programs, and other nonproduct-based sources.

3. Creating secondary association may be important if the corresponding brand associations are deficient in some way.

4. Secondary associations may be especially valuable as a means to link favorable brand associations that can serve as points-of-parity or to create unique brand associations that can serve as points-of-difference in positioning a brand.

5. Eight different ways to leverage secondary associations to build brand equity are linking the brand to 1) the company making the product; 2) the country or some other geographic location in which the product originates; 3) retailers or other channel members that sell the product; 4) other brands, including ingredient brands; 5) licensed characters; 6) famous spokespeople or endorsers; 7) events; and 8) third-party sources.

6. The extent to which entities can be leveraged by the brand depends on how easily appropriate associations or responses to the entity transfer to the brand.

7. Overall credibility or attitudinal dimensions may be more likely to transfer than specific attribute and benefit associations, even though they can be transferred, too.

8. Marketers give up some control and take on the challenge of managing secondary associations when the brand is linked to other entities.

150 Copyright © 2020 Pearson Education, Inc.

Chapter 9 Developing a Brand Equity Measurement and Management System Learning Objectives 1. Describe the new accountability in terms of ROMI (Return on Marketing Investment).

2. Create an understanding of analytics dashboards as a tool for monitoring performance and the implications of brand investments.

3. Outline the two main steps in conducting a brand audit and how to execute a digital marketing review.

4. Describe how to design, conduct, and interpret a tracking study.

5. Identify the steps in implementing a brand equity management system.

Overview The concept of a brand equity measurement system is introduced. Customer-based brand equity is the differential effect that knowledge about the brand has on customer response to marketing about that brand. Two basic approaches to measuring brand equity include the indirect approach (identifying and tracking brand knowledge) and the direct approach (impact of brand knowledge on consumer response).

Implementing a brand equity measurement system involves three steps: conducting brand audits, designing brand tracking studies, and establishing a brand equity management system.

A brand audit is a consumer-focused exercise to assess the health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity. The brand audit consists of two steps: the brand inventory and the brand exploratory.

Tracking studies measure consumer attitudes toward the brand on a consistent basis over time and provide a contemporary picture of the state of the brand. Five key measures can be used to capture the consumer mindset: brand awareness, brand associations, brand attitudes, brand attachment, and brand activity or experience.

Brand Focus 9.0 illustrates a sample brand audit using the Rolex brand as an example.

Chapter Outline I. Preview 1. The customer-based brand equity (CBBE) concept provides guidance about how we can measure brand equity: a. CBBE is the differential effect that knowledge about the brand has on customer response to marketing of that brand.

151 Copyright © 2020 Pearson Education, Inc.

b. An indirect approach can assess potential sources of CBBE by identifying and tracking consumers’ brand knowledge. c. A direct approach can assess the actual impact of brand knowledge on consumer response to different aspects of the marketing program. d. Marketers can and should use both approaches.

2. A brand equity measurement system is a set of research procedures designed to provide marketers with timely, accurate, and actionable information about brands so they can make the best possible tactical decisions in the short run and strategic decisions in the long run: a. The goal is to achieve a full understanding of the sources and outcomes of brand equity and be able to relate the two as much as possible. b. The ideal brand equity measurement system would provide complete, up-todate, and relevant information about the brand and its competitors to the right decision makers at the right time within the organization. c. Three steps are involved in implementing brand equity measurement system: conducting brand audits, designing brand tracking studies, and establishing a brand equity management system.

II. The New Accountability <Use Objective 1 Here> 1. Virtually every marketing dollar spent today must be justified as both effective and efficient in terms of return on marketing investment (ROMI).

2. It is often hard to link activities that improve brand equity to short-term, incremental profits; it is critical to measure long-term value and impact on consumers.

3. The digital economy has an emphasis on strong, long-term relationships and networks rather than immediate profitability.

4. Marketers need new tools and procedures that clarify and justify the value of their expenditures beyond ROMI. III. Conducting Brand Audits 1. A brand audit is a comprehensive examination of a brand to discover its sources of brand equity.

2. It is designed to learn how consumers think, feel, and act toward brands and products so the company can make informed strategic positioning decisions.

152 Copyright © 2020 Pearson Education, Inc.

3. A marketing audit is a comprehensive, independent, systematic examination that takes place at specific time intervals to learn about the marketing environment, objectives, strategies, and activities with a view of determining problem areas and opportunities: a. First step is agreement on objectives, scope, and approach. b. Second step is data collection. c. Third step is report preparation and presentation.

4. In contrast, a brand audit is a more externally, consumer-focused exercise to assess the health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity.

5. The brand audit can set strategic direction for the brand; management should conduct one whenever important shifts in strategic direction are likely.

6. Brand audits are particularly useful background when managers set up marketing plans. <Use DOMINO’S PIZZA Example Here> <Use Brand Focus 9.0 Here> A. Brand Inventory 1. The brand inventory provides a current, comprehensive profile of how all the products and services sold by a company are marketed and branded.

2. Profiling each product or service requires marketers to catalogue the following in visual and written form for each product or service sold: a. Names b. Logos c. Symbols d. Characters e. Packaging f. Slogans g. Other trademarks used h. Inherent product attributes or characteristics of the brand i.

Pricing, communications, and distribution policies 153 Copyright © 2020 Pearson Education, Inc.

j.

Other relevant marketing activity related to the brand <Use Figure 9-1 Here>

3. Conducting an audit of digital brand assets (images, audio, video, blog posts, sponsored content, and consumer guides) is an important part of the brand inventory.

4. Brand marketers should pay attention to maintaining the consistency of look and feel of a brand across digital and social media channels.

5. A digital inventory of brand assets may provide four types of useful insights: a. Outdated brand accounts that have fallen into disuse b. Overlapping brand assets, which can be merged or deleted c. Existing brand accounts with information that is inaccurate or not up-to-date d. Particular digital and social media channels where the brand does not have a presence 6. The rationale for using the brand inventory as a first step is as follows: a. It helps suggest the basis of consumers’ current perceptions. b. It provides useful information for interpreting follow-up research like the brand exploratory. c. The brand inventory is primarily a descriptive exercise, but it can supply some useful analysis and initial insights into how brand equity may be better managed. d. As firms expand their products geographically and extend them into other categories, deviations may emerge in brand appearance and marketing; a thorough brand inventory can reveal the extent of brand consistency. e. A brand inventory can reveal lack of perceived differences among products that share the brand name like line extensions or other sub-brands that are redundant, which is not desirable because it can confuse consumers or lead to retailer resistance.

B. Brand Exploratory 1. Consumer perceptions may not reflect what the marketer intended.

2. The second step of the brand audit is to provide detailed information about what consumers actually think of the brand by means of the brand exploratory.

3. Several preliminary activities are useful for the brand exploratory: 154 Copyright © 2020 Pearson Education, Inc.

a. Prior research studies may exist and be relevant; dig through the company archives. b. Interview internal personnel to gain an understanding of their beliefs about consumer perceptions for the brand and competitive brands. c. Additional research, which typically begins with qualitative research, is usually required. <Use Figure 9-2 Here> 4. Marketers must carefully consider which qualitative research techniques to employ: a. Three criteria: direction, depth, and diversity b. The more specific the question, the narrower the range of information given by the respondent c. The more abstract and symbolic the research technique, the more important it is to follow up with probes and other questions to understand motivations and reasons for responses d. Qualitative research conducted as part of the brand exploratory should vary in direction, depth, and technique <Use The Science of Branding 9-1 Here> 5. One useful outcome of qualitative research is a mental map, which portrays the salient brand associations and responses for a particular target market.

6. It is sometimes useful to group brand associations into related categories with descriptive labels. a. Core brand associations are abstract associations (attributes and benefits) that characterize the most important aspects or dimensions of a brand. b. Core brand associations can serve as the basis of brand positioning in terms of how they create points-of-parity and points-of-difference. <Use Figure 9-3 Here> c. Brand concept maps elicit brand association networks from consumers and aggregate individual maps into a consensus map: i. The brand elicitation stage identifies brand associations by providing survey respondents with a set of brand associations used in the mapping stage.

155 Copyright © 2020 Pearson Education, Inc.

ii. The mapping stage is structured and has respondents use the provided set of brand associations to build an individual brand map that shows linkages and linkage strength. iii. The aggregation stage is structured and analyzes individual brand maps step by step. <Use Figure 9-4 Here> <Use Branding Brief 9-3 Here> <Use Objective 3 Here> 7. A formal digital marketing review can provide input to a brand audit, which could generate useful insights regarding a brand’s online presence, which offers the following benefits: a. It can highlight whether a brand’s digital efforts are received in online channels, relative to competitors. b. It can help unlock customer-level insights and industry trends. c. It can provide useful input to brand strategy development and inform brand positioning. d. It can act as a health check of the brand’s digital marketing and social media strategy.

8. Ongoing social media conversations can be successfully mined and summarized using the 5 Cs related to brand conversations: a. Conversation channel b. Conversation source c. Conversation content d. Channel-specific engagement e. Context <Use Table 9-1 Here> 9. The advantages to brand positioning maps that are constructed from natural language processing or machine learning techniques, relative to survey-based approaches, include lower costs, timely information and voluntary posts from consumers overcome typical biases associated with survey responses.

10. The disadvantages are social media data may only represent a segment of consumers who tend to engage with a brand online, so it is more suitable only 156 Copyright © 2020 Pearson Education, Inc.

for those categories where offline consumption is limited and social media posting behavior may be driven by impression or image management.

C. Brand Positioning and the Supporting Marketing Program 1. Moving from the current brand image, as uncovered via the brand exploratory, to a desired brand image typically means adding new associations, strengthening existing ones, or weakening or eliminating undesirable ones in the minds of consumers.

2. The ideal positioning for a brand achieves congruence among four key considerations: a. What customers currently believe about the brand and find credible b. What customers will value in the brand c. What the firm is saying about the brand d. Where the firm would like to take the brand <Use Figure 9-5 Here> 3. A number of different internal management personnel can be part of the planning and positioning process, including brand marketing research, and production managers, as well as outside marketing partners (marketing research suppliers and the ad agency) IV. Designing Brand Tracking Studies <Use Objective 4 Here> 1. To gather information for short-term tactical decisions, marketers will typically college less detailed brand-related information through ongoing brand tracking studies: a. Brand tracking studies collect information from consumers on a routine basis over time, usually through quantitative measures of brand performance on a number of key dimensions that marketers can identify in the brand audit or other means. b. As more marketing activity surrounds the brand—as the firm introduces brand extensions or incorporates an increasing variety of communication options in support of the brand—it becomes difficult and expensive to research each one. c. Tracking studies play an important role by providing a consistent baseline to facilitate day-to-day decision-making.

157 Copyright © 2020 Pearson Education, Inc.

A. What to Track 1. It is usually necessary to customize tracking surveys 2. Some common measurements include: a. Product-brand tracking that image/association questions:

captures

recall,

recognition,

and

i. Benefit associations often represent key points-of-parity or points-ofdifference. ii. Marketers may want to measure attribute beliefs that underlie the benefit beliefs to better understand any changes in benefit beliefs for a brand. iii. Marketers should assess key brand associations that make up potential sources of brand equity on the basis of strength, favorability, and uniqueness in that order. iv. Marketers will also track more general, higher-level judgments, feelings, and other outcome-related measures. <Use Branding Brief 9-1 Here> b. Marketers may want to track the corporate or family brand separately or concurrently with individual products: i. When a brand is associated with multiple products, it is important to know which products the brand reminds consumers of and which products are most influential in affect consumer perceptions of the brand. ii. To identify influential products, ask consumer which products they associate with the brand on an unaided basis. c. If tracking covers diverse geographic markets, you need a broader set of background measures to put the brand development in those markets in the right perspective.

V. Big Data and Marketing Analytic Dashboards <Use Objective 2 Here> 1. With the growth of mobile payments and the rise of networks of data-gathering sensors, there are troves of data, which can enable continuous tracking.

2. Social media data has been a source of data that facilitates the trend toward continuous tracking.

158 Copyright © 2020 Pearson Education, Inc.

A. Marketing Analytic Dashboards 1. Marketing analytic dashboards communicate important metrics and make them available throughout the organization.

2. More than a billion dollars were invested in data analytics from 2015 to 2017.

3. Analytic dashboards are a valuable tool to help in decision-making.

4. Companies aim to align their brand health with financial returns, leading to improved metrics.

5. While the financial return can be high, marketing analytics within organizations sometimes do not reach the right people with the right insights. <Use Branding Brief 9-2> VI. Establishing a Brand Equity Management System <Use Objective 5 Here> 1. Firms need proper internal structures and procedures to capitalize on the brand equity concept and the information they collect about it.

2. One of the biggest threats to brand equity can come from within the organization, since assignments are short term and perspectives can be short term.

3. A brand equity management system is a set of organizational processes designed to improve the understanding and use of the brand concept within a firm.

4. Three major steps include the following: a. Creating brand charters or bibles b. Assembling brand equity reports c. Defining brand equity responsibilities <Use Branding Brief 9-3 Here> A. Brand Charter or Bible 1. The brand charter or brand bible is a formal document that provides relevant guidelines to marketing managers within the company as well as to key marketing partners outside the company.

2. The document should crisply and concisely do the following:

159 Copyright © 2020 Pearson Education, Inc.

a. Define the firm’s view of branding and brand equity and explain why it is important. b. Describe the scope of key brands in terms of associated products and the manner by which they have been branded and marketed. c. Specify what the actual and desired equity is for brands at all relevant levels of the brand hierarchy. d. The charter should define and clarify points-of-parity, points-of-difference, and the brand mantra.

B. Brand Equity Report 1. A brand equity report or scorecard of performance measures for the brand should be distributed to management on a regular basis.

2. Brand equity reports can be derived from analytic dashboards and are designed to help decision-making.

3. The brand equity report should describe what is happening with the brand and why it is happening: a. It should include all relevant internal measures of operational efficiency and effectiveness. b. It should include external measures of brand performance and sources and outcomes of brand equity. c. One section of the report should summarize consumers’ perceptions of key attribute or benefit associations, preferences, and reported behavior as revealed by the tracking study. d. Another section should include more descriptive market-level information.

C. Brand Equity Responsibilities 1. Managers must clearly define organizational responsibilities and processes with respect to the brand.

2. Weak brands often suffer from a lack of discipline, commitment, and investment in brand building. <Use The Science of Branding 9-2 Here> 3. To provide central coordination, the firm should establish a position responsible for overseeing the implementation of the brand charter and brand equity reports, to ensure that product and marketing actions across divisions and geographic

160 Copyright © 2020 Pearson Education, Inc.

boundaries reflect their spirit as closely as possible and maximize the long-term equity of the brand.

4. Some people advocate for top-down brand leadership (a chief brand officer who reports to the CEO and champions, architects, and protects brands).

5. The firm should organize its marketing function to optimize brand equity.

6. Many companies have organized their marketing departments to become more agile and data driven.

7. Brand performance depends on actions taken by outside suppliers and marketing partners; the brand bible can be shared with them so they can provide brandconsistent support.

The Science of Branding

THE SCIENCE OF BRANDING 9-1 The Role of Brand Personas Personas are detailed profiles of one, or perhaps a few, target market consumers. They are often defined in terms of demographic, psychographic, geographic, or other descriptive attitudinal or behavioral information. The rationale behind personas is to provide exemplars or archetypes of how the target customer looks, acts, and feels that are as true-to-life as possible, to ensure marketers within the organization fully understand and appreciate their target market and therefore incorporate a nuanced target customer point of view in all their marketing decision-making. Personas are fundamentally designed to bring the target consumer to life.

A good brand persona can guide all marketing activities. Although personas can provide a very detailed and accessible perspective on the target market, it can come at a cost. The more heterogeneity in the target market, the more problematic the use of personas can be. To overcome the potential problem of overgeneralization, some firms are creating multiple personas to provide a richer tapestry of the target market.

There can also be varying levels of personas, such as primary (target consumer), secondary (target consumer with differing needs, targets, goals), and negative (false stereotypes of users).

THE SCIENCE OF BRANDING 9-2 Maximizing Internal Branding Internal branding creates a positive and more productive work environment. It can also be a platform for change and help foster an organization’s identity. According to branding expert Scott Davis, for employees to become passionate brand advocates, they must understand what a brand is, how it is built, what their organization’s brand stands for, and what their

161 Copyright © 2020 Pearson Education, Inc.

role is in delivering on the brand promise. Formally, he sees the process of helping an organization’s employees assimilate the brand as three stages: •

Hear It: How do we best get it into their hands?

•

Believe It: How do we best get it into their heads?

•

Live It: How do we best get it into their hearts?

Davis also argues that six key principles should guide the brand assimilation process within an organization: •

Make the brand relevant—Each employee must understand and embrace the brand meaning.

•

Make the brand accessible—Employees must know where they can get brand knowledge and answers to their brand-related questions.

•

Reinforce the brand continuously—Management must reinforce the brand meaning with employees beyond the initial rollout of an internal branding program.

•

Make brand education an ongoing program—Provide new employees with inspiring and informative training.

•

Reward on-brand behaviors—An incentive system to reward employees for exceptional support of the brand strategy should coincide with the rollout of an internal branding program.

•

Align hiring practices—HR and marketing must work together to develop criteria and screening procedures to ensure that new hires are good fits for the company’s brand culture.

Davis also emphasizes the role of senior management in driving internal branding, noting that the CEO ultimately sets the tone and compliance with a brand-based culture and determines whether proper resources and procedures are put into place.

Branding Briefs

BRANDING BRIEF 9-1 Sample Brand Tracking Survey Introduction: We’re conducting a short online survey to gather consumer opinions about quick-service or coffeehouse chains.

Brand Awareness and Usage a. What brands of coffeehouse chains are you aware of?

162 Copyright © 2020 Pearson Education, Inc.

b. At which coffeehouse chains would you consider visiting? c. Have you visited a coffeehouse chain in the last week? Which ones? d. If you were to visit a coffeehouse tomorrow, which one would you go to? e. What are your favorite coffeehouse chains?

We want to ask you some general questions about a particular coffeehouse chain, Starbucks.

Have you heard of this brand? [Establish familiarity.]

Have you ever visited a Starbucks coffeehouse? [Establish trial.]

When I say Starbucks, what are the first associations that come to your mind? Anything else?

[List all.]

Brand Judgments We’re interested in your overall opinion of Starbucks. a

How favorable is your attitude toward Starbucks?

b. How well does Starbucks satisfy your needs? c. How likely would you be to recommend Starbucks to others? d. How good a value is Starbucks? e. Is Starbucks worth a premium price? f. What do you like best about Starbucks? Least? g. What is most unique about Starbucks? h. To what extent does Starbucks offer advantages that other similar types of coffeehouses cannot? i.

To what extent is Starbucks superior to other brands in the coffeehouse category?

j. Compared to other brands in the coffeehouse category, how well does Starbucks satisfy your basic needs?

We now want to ask you some questions about Starbucks as a company. Please indicate your agreement with the following statements.

Starbucks is . . . a. Innovative 163 Copyright © 2020 Pearson Education, Inc.

b. Knowledgeable c. Trustworthy d. Likable e. Concerned about their customers f. Concerned about society as a whole g. Likable h. Admirable Brand Performance We now would like to ask some specific questions about Starbucks. Please indicate your agreement with the following statements.

Starbucks . . . a. Is convenient to visit for coffee b. Provides quick, efficient service c. Has clean facilities d. Is ideal for the whole family e. Has delicious coffee f. Has tasty snacks g. Has a varied menu h. Has friendly, courteous staff i.

Offers fun promotions

j.

Has a stylish and attractive look and design

k. Has high-quality food l.

Has baristas who prepare excellent coffee

Brand Imagery a. To what extent do people you admire and respect visit a Starbucks? b. How much do you like people who frequently visit Starbucks?

164 Copyright © 2020 Pearson Education, Inc.

c. How well do each of the following words describe Starbucks?

Down-to-earth, honest, daring, up-to-date, reliable, successful, upper class, charming, and outdoorsy d. Is Starbucks a coffeehouse chain that you can visit at a variety of different times of the day? e. To what extent does thinking of Starbucks bring back pleasant memories? f. To what extent do you feel that you grew up with Starbucks?

Brand Feelings Does Starbucks give you a feeling of . . . a. Warmth? b. Fun? c. Excitement? d. Security or confidence? e. Social approval? f. Self-respect?

Brand Resonance a. I consider myself loyal to Starbucks. b. I buy Starbucks whenever I can. c. I would go out of my way to visit a Starbucks. d. I really love Starbucks. e. I would really miss Starbucks if it went away. f. Starbucks is special to me. g. Starbucks is more than a product to me. h. I really identify with people who go to Starbucks. i.

I feel a deep connection with Starbucks as a company.

j.

I really like to talk about Starbucks to others.

165 Copyright © 2020 Pearson Education, Inc.

k. I am always interested in learning more about Starbucks. l.

I would be interested in merchandise with the Starbucks name on it.

m. I am proud to have others know that I eat at Starbucks. n. I like to visit the Starbucks Web site. o. Compared to other people, I follow news about Starbucks closely.

BRANDING BRIEF 9-2 How Taco Bell Uses Data-Driven Social Media Marketing to Engage Its Customers Taco Bell uses analytics to drive social media strategy. It is frequently listed as a top social media strategist based on its performance.

It launched its mobile app in 2015 and generated 75% of its orders via app within a few months. It also integrates mobile in its TV spots. By using data analytics, Taco Bell has been able to identify which brands resonated well with their target audiences. It has also leveraged data analytics to improve location-based mobile targeting. It uses social media to encourage people to purchase tacos for a cause. It also partnered with Lyft to offer Taco mode, which increased weekend visits 8%.

BRANDING BRIEF 9-3 Understanding and Managing the Mayo Clinic Brand Mayo Clinic grew to be a worldwide leader in patient care, research, and education and became renowned for its world-class specialty care and medical research. In 1996, Mayo undertook its first brand equity study and since then has conducted regular, national qualitative and quantitative studies. Mayo’s research identifies seven key brand attributes or values, including (1) integration, (2) integrity, (3) longevity, (4) exclusivity, (5) leadership, (6) wisdom, and (7) dedication.

In terms of integration, respondents described Mayo as bringing together a wealth of resources to provide the best possible care. For integrity, respondents placed great value on the fact that Mayo is noncommercial and committed to health and healing over profit.

In a more recent quantitative study, overall awareness of Mayo Clinic in the United States was 90.2 percent, and a remarkable one-third knew at least one Mayo patient. From its research, Mayo Clinic understands that its brand “is precious and powerful.” Mayo realized that while it had an overwhelmingly positive image, it was vital to develop guidelines to protect the brand. In 1999, the clinic created a brand management infrastructure to be the “institutional clearinghouse for ongoing knowledge about external perceptions of Mayo Clinic and its related activities.” Mayo Clinic also established guidelines for applying the brand to products and services. Its brand management measures work to ensure that the clinic preserves its brand equity.

166 Copyright © 2020 Pearson Education, Inc.

Brand Focus

BRAND FOCUS 9.0 Brand Audit <Use Objective 3 Here> Rolex has remained one of the most recognized and sought-after luxury brands in the world.

In 2017, it was in the BrandZ Top 100 Most Valuable Global Brands. A thorough audit can help pinpoint opportunities and challenges for Rolex, whose brand equity has been historically strong, as much is at stake.

Background History—Rolex was founded in 1905 by a German named Hans Wilsdorf and his brotherin-law, William Davis, as a watch-making company, Wilsdorf & Davis, with headquarters in London, England. In 1912, Rolex moved its headquarters to Geneva, Switzerland, and started working on improving the reliability of its watches. Twelve years later, Wilsdorf developed and patented the now famous Oyster waterproof case and screw crown. Over the years, Rolex has pushed innovation in watches to new levels. For decades, Swiss-made watches owned the middle and high-end markets, remaining virtually unrivaled until the invention of the quartz watch in 1969. In order to survive, Rolex was forced to move into the high-end market exclusively—leaving the middle to the quartz people—and create a strategy to defend and build its position there.

Private Ownership—Rolex is a privately owned company and has been controlled by only three people in its 100-year history. By staying an independent entity, Rolex has remained focused on its core business.

Brand Portfolio—Rolex includes three family brands of wristwatches, called “collections”; the Oyster Perpetual Collection, the Professional Collection, and the Cellini Collection.

Rolex owns a separate “fighter” brand called Tudor, developed in 1946 to stave off competition from mid-range watches such as TAG Heuer, Citizen, and Rado.

Brand Inventory Rolex not only produces extremely high-quality timepieces but also tightly controls how its watches are sold, ensuring high demand and premium prices. Its sophisticated marketing strategy has created an exclusive and premium brand that many aspire to own.

Brand Elements—Rolex’s most distinguishable brand element is its Crown logo. Many Rolex watches also have a distinct look, including a big round face and wide wrist band.

Product—Throughout the years, Rolex timepieces have maintained the high quality, durability, and prestige on which the company built its name. The company does not license its brand or produce any other product besides watches. Its product portfolio is clear, concise, and focused.

167 Copyright © 2020 Pearson Education, Inc.

Pricing—By limiting production to approximately 2,000 watches a day, Rolex keeps consumer demand high and prices at a premium. Scarcity also helps positively influence the resale value of Rolex watches.

Distribution—Rolex carefully monitors how its timepieces are sold, distributing them only through its approximately 60,000 “Official Rolex Dealers” worldwide. In addition, a large secondary market exists for Rolex, both through online auction sites and at live auctions.

Communications—Rolex associates itself with “ambassadors”—established artists, top athletes, rugged adventurers, and daring explorers—to help create its imagery. Rolex also sponsors various sports and cultural events as well as philanthropy programs to help align with targeted demographics as well as create positive associations in consumers’ minds.

Advertising—One of the company’s largest expenditures is for magazine advertising. Rolex’s print ads are often simple and austere, usually featuring one of its many brand ambassadors or a close-up photo of one of its watches with the tagline “Rolex—A Crown for Every Achievement.” Rolex does not advertise extensively on television, but does sponsor some events that are televised.

Ambassadors—Rolex’s celebrity endorsers are continuously added and dropped depending on their performance. These ambassadors fall into four categories: athletes, artists, explorers, and yachtsmen.

Sports and Culture—Rolex sponsors a variety of elite athletic and cultural events to reinforce the same messages, values, and associations as it does through its ambassador endorsements.

These include a quest for excellence, pursuit of perfection, teamwork, and ruggedness.

Philanthropy—Rolex gives back through three established philanthropic programs, viz. the Awards for Enterprise program, the Young Laureates Programme, and the Rolex Mentor and Protégé Arts Initiative.

Brand Exploratory Consumer Knowledge—Rolex has successfully leveraged its history and tradition of excellence along with innovation to become the most powerful and recognized watchmaker in the world. Some positive consumer brand associations for Rolex might be “sophisticated,” “prestigious,” “exclusive,” “powerful,” “elegant,” “high quality.” Some negative brand associations that some consumers may link to the brand, however, could include “flashy” or “snobby.” While the brand and product line seem to resonate well with older, wealthy individuals, Rolex struggles somewhat to connect with younger consumers.

Brand Resonance Pyramid—The functional and emotional benefits Rolex strives to deliver are in harmony with consumers’ imagery and feelings about the brand. Rolex also enjoys the highest brand awareness of any luxury brand as well as high repeat purchase rates and high customer loyalty. Rolex has successfully focused on both the superior product attributes and the imagery associated with owning and wearing a Rolex.

Competitive Analysis—Through its pricing and distribution strategies, Rolex has positioned itself as a high-end luxury watch brand. On the lower end of the spectrum, it competes with 168 Copyright © 2020 Pearson Education, Inc.

companies such as TAG Heuer and OMEGA, and on the higher end with brands such as Patek Philippe, maker of the world’s most expensive wristwatch.

TAG Heuer—A leader in the luxury watch industry, the Swiss firm TAG Heuer distinguishes itself by focusing on extreme chronograph precision in its watches, and on sports and auto-racing sponsorship in its advertising. TAG ’s image and positioning is inextricably connected to chronograph precision. TAG Heuer uses officially licensed retailers to sell its watches both in stores and online. The watchmaker generates brand awareness through brand ambassadors and sponsoring sporting events and advertises extensively in magazines.

OMEGA—OMEGA has long prided itself on the precision of its watches and timing devices. OMEGA was the time equipment selected for the 1936 Winter Olympics, which saw the first use of synchronized chronographs. OMEGA employs ambassadors to generate brand awareness, including athletes Michael Phelps, Alexander Popov, Ernie Els, and race car driver Michael Schumacher as well as Hollywood stars Nicole Kidman and Cindy Crawford. OMEGA watches are offered in both women’s and men’s styles in four different collections: Constellation, Seamaster, Speedmaster, and De Ville. Prices vary greatly even within individual collections.

Patek Philippe— The innovator of many technologies found in today’s high-end watch, Patek Philippe represents the absolute pinnacle of luxury timepieces. In particular, the firm prides itself on creating many of the world’s most complicated watches through innovations with split-second chronograph and perpetual date technology. Patek Philippe does not rely on event sponsorship or brand ambassadors to generate name recognition. Patek Philippe evaluates every authorized dealer’s storefront to ensure that it meets the watchmaker’s quality standards. It also separates itself from other watchmakers on price, with its least expensive noncustomized watch retailing.

Strategic Recommendations Positioning Points-of-Parity—Rolex is similar to other watchmakers in the high-end luxury watch market on several levels. All pride themselves on their attention to detail and ongoing innovation in the watch industry.

Points-of-Difference—Rolex separates itself from the competition in several ways. Through careful selection of event sponsorships and brand ambassadors, Rolex has cut through the clutter, resonated with consumers around the world, and maintained an air of prestige.

Brand Mantra—Rolex has been extremely successful in building a global name through clever marketing and communications, without compromising the integrity of the brand.

Tactical Recommendations The Rolex brand audit proved that Rolex is a very strong brand with significant brand equity. It also identified a few opportunities and challenges: 169 Copyright © 2020 Pearson Education, Inc.

Leverage the Company’s Independent, Continuous Heritage and Focus •

Rolex is the largest and most successful watch company in the world. As a result, many consumers don’t realize it is privately owned and competes against major conglomerates. While being privately owned is a good thing for many reasons, it also brings up several challenges.

•

Rolex may want to leverage and promote the fact that in some ways it has to work harder to succeed.

Leverage the Company’s Elite Craftsmanship and Innovation •

Research from the Luxury Institute group suggested that consumers do not consider Rolex the top brand in quality and exclusivity.

Connect with the Female Consumer •

Women are more and more interested in purchasing unisex mechanical watches rather than feminine-styled watches. This is a great opportunity for Rolex, whose watches are primarily masculine in design.

•

Rolex may want to tweak its female ambassador list to coincide with a more unisex product line.

Attack the Online Counterfeit Industry •

To maintain its limited distribution, Rolex does not authorize any of its watches to be sold on the Internet. In order to combat the online sale of counterfeits; however, Rolex might consider building an exclusive online store, or an exclusive distribution site to which all official e-retailers must link. In fact, Rolex dedicates extensive resources to fight the illegal use of the brand, including sponsoring the International Anti-Counterfeiting Coalition and suing companies that allow the sale of counterfeit Rolexes.

Use Marketing to Reach Younger Consumers •

Research has shown that younger consumers do not value watches the same way older generations did.

Communicate Long-Term Value •

Rolex competes for a share of the luxury buyer’s wallet with a host of other types of goods, such as clothes, shoes, and handbags. Many are less durable over time than a Rolex watch and are susceptible to falling out of fashion.

•

Swiss luxury watch competitor Patek Philippe used print advertising to communicate the heirloom quality of its watches. Rolex could pursue a similar approach.

170 Copyright © 2020 Pearson Education, Inc.

Discussion Questions and Answers 1. What do you see as the biggest challenges in qualitative brand research? What do you think are some of the critical success factors for this type of research?

Answers will vary. Brand exploratory research is the comprehensive examination of a brand to understand what consumers think and feel about the brand. It requires understanding the brand from the perspective of its consumers. Conducting this kind of research and the interpretation of results can be time-consuming and expensive. The interviewers must be properly trained so they don’t influence the answers (and the results) with their behavior.

Page: 329 Learning Objective 3: Outline the two main steps in conducting a brand audit and how to execute a digital marketing review.

AACSB: Analytic Skills 2. Pick a brand. See if you can assemble a digital brand asset inventory for it, by consulting various social media channels (e.g., Facebook, Twitter). What does your exercise reveal about the consistency of the brand’s presence across its multiple touchpoints?

Answers will vary depending on current brand performance. The purpose of the brand inventory is to provide a current, comprehensive profile of how all the products and services sold by a company are marketed and branded.

Page: 330 Learning Objective 3: Outline the two main steps in conducting a brand audit and how to execute a digital marketing review.

AACSB: Analytic Skills 3. Consider the Starbucks tracking survey presented in Branding Brief 9-1. What might you do differently?

What questions would you change or drop? What questions might you add? How might this tracking survey differ from those used for other products?

Answers will vary. Students may be divided into groups of 3–4 to weigh and assess the tracking survey provided in the branding brief. They may then be asked to opine on the survey and differentiate it from a survey for another product such as Wal-Mart.

Page: 338 Learning Objective 4: Describe how to design, conduct, and interpret a tracking study.

AACSB: Analytic Skills

171 Copyright © 2020 Pearson Education, Inc.

4. Can you develop a tracking survey for the Mayo Clinic? How might it differ from the Starbucks tracking survey?

A tracking study for the Mayo Clinic would probably need to be designed for two different groups of consumers, those who had received care at the Mayo Clinic and those who had not. Those who had received care at the Mayo Clinic would be much more informed about the type and quality of care available and would be able to give more detailed responses to specific questions. The sample set that had not received care from the Mayo Clinic would be equally valuable because it would provide insight into public perception of the brand. The questions on the Mayo Clinic tracking survey would differ dramatically from the McDonald’s survey, but would still cover the six elements of the customer-based brand equity pyramid.

Page: 338 Learning Objective 4: Describe how to design, conduct, and interpret a tracking study.

AACSB: Analytic Skills 5. Critique the Rolex brand audit in Brand Focus 9.0. How do you think it could be improved?

Answers will vary. A brand audit is a comprehensive examination of a brand to discover its sources of brand equity. Students may be asked to assess whether the Rolex brand audit was consumer focused. They may be asked to discuss whether the sources of brand equity from the perspective of both the firm and the consumer was clearly understood and taken into consideration. Students may be asked to suggest ways to improve the audit and leverage the brand equity.

Page: 352 Learning Objective 3: Outline the two main steps in conducting a brand audit and how to execute a digital marketing review.

AACSB: Analytic Skills Exercises and Assignments 1. Have students discuss how they would go about conducting a brand audit, including a digital asset inventory, for a brand of their choice. This activity will help them understand better the concepts of brand inventory and brand exploratory.

Page: 330 Learning Objective 3: Outline the two main steps in conducting a brand audit and how to execute a digital marketing review.

AACSB: Analytic Skills Question Type: Individual/Group 172 Copyright © 2020 Pearson Education, Inc.

Time to complete the exercise: 15 minutes This activity may be carried out after the class is introduced to the concept of brand audits.

2. Have groups of students design a brand tracking survey for the same brand. The groups may then assess the similarities and differences between the surveys.

Page: 338 Learning Objective 4: Describe how to design, conduct, and interpret a tracking study.

AACSB: Analytic Skills Question Type: Group Time to complete the exercise: 12–15 minutes This activity may be carried out after the class is introduced to the concept of brand tracking studies.

3. Identify current branding issues facing a brand of your choice and describe how you would organize the management team to respond to these issues.

Page: 348 Learning Objective 5: Identify the steps in implementing a brand equity management system.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out after the class is introduced to the concept of brand charter.

Key Take-Away Points 1. The purpose of a brand equity measurement system is to provide timely, accurate, and actionable information that marketers can use in their tactical and strategic decision-making.

2. Marketers should conduct a brand audit, design brand tracking studies, and establish a brand equity management system.

3. With the advent of the digital revolution, a brand’s digital assets must be considered in creating and assessing the brand inventory.

173 Copyright © 2020 Pearson Education, Inc.

4. The brand audit, which includes a brand inventory and a brand exploratory, assesses the health of the brand, uncovers its sources of brand equity, and suggests ways to improve and leverages its equity.

5. The purpose of the brand inventory is to provide a comprehensive, up-to-date profile of how all the products and services sold by a company are marketed and branded.

6. The brand exploratory is research directed to understanding what consumers think and feel about the brand and act toward it in order to better understand sources of brand equity as well as any possible barriers.

7. Brand audits can be used to set the strategic direction for the brand.

8. Tracking studies employ quantitative measures and provide marketers with current information about brand performance.

9. Brand tracking studies collect information from consumers on a routine basis over time, with a focus on short-term effectiveness of marketing programs and activities.

10. Brand equity management systems involve the creation of a brand charter that formalizes branding standards and a brand equity report—what happened and why— plus senior management to oversee the implementation of these tools.

174 Copyright © 2020 Pearson Education, Inc.

Chapter 10 Measuring Sources of Brand Equity: Capturing Customer Mind-Set Learning Objectives 1. Describe effective qualitative research techniques for tapping into consumer brand knowledge.

2. Identify effective quantitative research techniques for measuring brand awareness, image, responses, and relationships.

3. Outline how big data can help with understanding brand perceptions and brand positioning.

4. Explain the role of social media monitoring “control rooms” as a marketing research tool.

5. Profile and contrast some popular brand equity models.

Overview To effectively build and manage brand equity, marketers would ideally like to construct detailed mental maps of what is in consumers’ minds—thoughts, feelings, perceptions, images, beliefs, and attitudes toward different brands, and how they compare to each other.

Without these brand knowledge structures to provide strategic guidance, effective brand managers use primary and secondary research to learn as much as they can about consumer knowledge structures.

Qualitative methods allow marketers to probe consumers either through direct questions or through tasks that indirectly reveal perceptions and attitudes. Such methods, which permit a relatively unlimited range of verbal consumer responses, include free association tasks, projective techniques, and descriptions of a brand’s personality and values, among others.

Data gathered through qualitative research generally must be coded and aggregated before it is useful.

Quantitative methods, which typically use numerical rating scales or rankings, include measures of recognition, aided and unaided recall, beliefs, attitudes, intentions, and behaviors toward the brand. Image measures, brand response measures such as purchase intentions, brand relationship measures such as behavioral loyalty, and brand sustainability can also be employed to measure consumer attitudes. Data gathered through quantitative research can be entered directly into files and analyzed using a variety of statistical techniques.

Brand Focus 10.0 discusses Young & Rubicam’s Brand Asset Valuator (BAV). The BAV is the world’s largest database of consumer-derived information on brands. The BAV evaluates brands on four key measures, called the “Four Pillars”: differentiation, relevance, esteem, and knowledge. Also employed are a number of measures across a broad array of perceptual dimensions. The BAV provides a brand landscape by which marketers can see where their brands are located relative to other prominent brands or with respect to different markets.

175 Copyright © 2020 Pearson Education, Inc.

Chapter Outline I. Preview 1. Understanding the current and desired brand knowledge structures of consumers is vital to effectively building and managing brand equity, but it is not possible to build mental maps to understand exactly what exists in consumers’ minds.

2. Effective brand management requires us to thoroughly understand the consumer—how consumers think of or use products and the particular brands in a category.

3. Detailed, sophisticated research techniques, and methods exist to help marketers understand consumer knowledge structures: a. Primary and secondary sources exist online. b. Industry and company studies can be accessed. c. Surveys can be distributed and collected.

4. Sources of brand equity arise from the customer mind-set: a. Measuring sources of brand equity requires that the brand manager fully understand how customers shop for and use products and services—and more important what they know, think, and feel about, and how they act toward various brands. <Use Figure 10-1 Here> <Use Branding Brief 10-1 Here> b. Measuring sources of customer-based brand equity requires measurement of brand awareness and brand image. c. The chapter describes qualitative and quantitative approaches to identifying potential sources of brand equity/capturing the customer mind-set.

II. Qualitative Research Techniques <Use Objective 1 Here> 1. Qualitative research techniques often identify possible brand associations and sources of brand equity.

2. Unstructured measurement approaches that permit a range of questions and answers.

3. Some of the results of Ernest Dichter’s influential qualitative research and subsequent recommendations were questioned.

176 Copyright © 2020 Pearson Education, Inc.

A. Free Association 1. The simplest and often the most powerful way to profile brand associations is free association tasks, in which subjects are asked what comes to mind when they think of the brand. <Use Figure 10-2 Here> 2. Marketers use free association tasks to identify the range of possible brand associations in consumers’ minds.

3. Free association may provide a rough indication of the relative strength, favorability, and uniqueness of brand associations.

4. Answers to free-association questions help marketers assemble a brand profile.

5. To elicit more structure and guidance, interviewers ask “who, what, when, where, why, and how” questions.

6. The main issues to consider are what types of probes to give to subjects and how to code and interpret the resulting data: a. It is best to move from general considerations to more specific considerations. b. Responses to open-ended probes can be oral or written; oral responses tend to be less deliberate and more spontaneous. Protocols from each consumer can be divided and then phrases can be aggregated across consumers. <Use The Science of Branding 10-1> B. Projective Techniques 1. Consumers may fall back on stereotypical, pat answers because they feel that it would not be socially acceptable or desirable to express their true feelings.

2. Projective techniques are diagnostic tools that can be used to uncover true opinions and feelings when consumers are unwilling or unable to express themselves.

3. Marketers present consumers with incomplete stimuli and ask consumers to complete them or present ambiguous stimuli and ask consumers to make sense of them. <Use Branding Brief 10-2 Here> 4. Projective techniques can provide useful insights that help marketers assemble a more complete picture of consumers and their relationships with brands.

177 Copyright © 2020 Pearson Education, Inc.

5. Completion and interpretation tasks include bubble exercises where consumers fill in the bubble based on what they believe is happening or being said in the scene.

6. Comparison tasks ask consumers to convey their impressions by comparing brands to people, countries, animals, activities, fabrics, occupations, cars, magazines, vegetables, nationalities, or other brands.

C. Zaltman Metaphor Elicitation Technique (ZMET) 1. Uncovers unconscious motives for purchasing behavior.

2. Metaphors can be useful because they represent one thing with another thing to help express something about consumers’ lives.

3. ZMET focuses on surface, thematic, and deep metaphors, where deep metaphors include transformation, container, journey, connection, sacred, and profane.

4. Participants research a topic and bring in images that represent their thoughts and feelings about the research topic to a one-on-one, two-hour interview with a trained ZMET interviewer: a. The interviewer explores images to reveal deep ideas, archetypes, themes, and emotions through “guided conversation.” b. The interview consists of a series of steps: i. Storytelling—individual visual metaphors ii. Expand the frame—metaphoric meaning of images iii. Vignette—short story about the research topic iv. Digital image—integrating the images to create a visual summary of the research topic c. Researchers identify key themes or constructs from the interviews, code the data, and assemble a consensus map of the most important constructs. <Use Figure 10-3 Here> d. Quantitative analyses of the data can provide information for advertising, promotions, and other marketing decisions (e.g., Cisco’s “The Human Network”) D. Neural Research Methods

178 Copyright © 2020 Pearson Education, Inc.

1. Neuromarketing is the study of how the brain responds to marketing stimuli, including brands: a. Electroencephalogram (EEG) monitors brain activity to gauge consumer responses to marketing. b. Functional magnetic resonance imaging (fMRI) tracks the brain’s blood flow to understand how participants are responding to stimuli.

2. Neurological research has been applied many ways: a. Neuromarketing has been used to measure the type of emotional response consumer exhibit when presented with marketing stimuli. b. Many purchase decisions entail an unconscious, habitual process that is distinct from the rational, conscious, information-processing model of economists, and traditional marketing textbooks.

E. Brand Personality and Values 1. Brand personality is the human characteristics or traits that consumers attribute to a brand.

2. It can be measured using open-ended responses to a probe.

3. Consumers’ points of view may also be captured using picture sorting studies to clarify typical users.

4. User imagery can inform positioning.

5. Five factors of brand personality revealed in Jennifer Aaker’s research project included: a. Sincerity (down-to-earth, honest, wholesome, and cheerful) b. Excitement (daring, spirited, imaginative, and up-to-date) c. Competence (reliable, intelligent, and successful) d. Sophistication (upper class and charming) e. Ruggedness (outdoorsy and tough) <Use Figure 10-4 Here> 6. Sincerity and competence dimensions of brand personality are linked to brand attitudes and commitment; excitement and ruggedness had the weakest impact.

7. Brand personality exerted the greatest impact on brands in the maturing stage of their life cycle.

179 Copyright © 2020 Pearson Education, Inc.

F. Ethnographic and Experiential Methods 1. Researchers are working to improve the effectiveness of their qualitative approaches and to go beyond traditional qualitative techniques to research consumers in their natural environments.

2. Ethnographic research uses thick description based on participant observation. <Use Branding Brief 10-3 Here> 3. In marketing, the goal of ethnographic research is to extract and interpret the deep cultural meaning of events and activities through research techniques such as consumer immersion, site visits, shop-alongs, embedded research, and so on. <Use Branding Brief 10-4 Here> <Use Figure 10-5 Here> 4. Companies may care more about certain users: ones that are more engaged in online communities or who are more willing to participate in cocreation.

5. Ethnographic research is time-consuming and expensive, and it is based on subjective interpretation, so multiple points of view may prevail. <Use Branding Brief 10-5 Here> G. Summary 1. Qualitative research techniques are a creative means of ascertaining consumer perceptions that may otherwise be difficult to uncover.

2. Qualitative research has drawbacks, including small samples and questions about interpretation.

III. Quantitative Research Techniques <Use Objective 2 Here> 1. Some say qualitative research strives to uncover and discover, while qualitative research aims to prove or disprove.

2. Quantitative research typically employs scales from which researchers can draw numerical representations and summaries.

3. Quantitative measures of brand knowledge can help definitively assess the depth and breadth of brand awareness; the strength, favorability, and uniqueness of brand associations; the positivity of brand judgements and feelings; and the extent and nature of brand relationships.

A. Brand Awareness 180 Copyright © 2020 Pearson Education, Inc.

1. Brand awareness is related to the strength of the brand in memory, as reflected by consumers’ abilities to identify brand elements.

2. Brand awareness describes the likelihood that a brand will come to mind in different situations, and the ease with which it does so given different types of cues.

3. Marketers use several measures of awareness of brand elements: a. Brand recognition requires consumers to identify the brand under a variety of circumstances and can rest of the identification of any of the brand elements. b. Brand recognition can use yes or no responses with decoys or test perceptually degraded versions of the brand. <Use Figure 10-6 Here> c. Brand recognition is important for packaging. d. Research methods using tachistoscopes (T-scopes) and eye tracking techniques test alternative package designs by specific criteria: i. Degree of shelf impact ii. Impact and recall of specific design elements iii. Perceived package size iv. Copy visibility and legibility v. Distance at which the package can first be identified vi. Angle at which the package can first be identified vii. Speed at which the package can be identified e. One advantage of brand recognition measures over recall measures is the chance to use visual recognition. f. Brand recognition measures only provide an approximation of recallability.

4. Recall is when consumers retrieve the brand element from memory when given a related probe or cue, so it is more demanding than brand recognition: a. Unaided recall is on the basis of all brands. b. Aided recall uses cues to help recall (product class, product category, product type, attributes, and usage goals).

181 Copyright © 2020 Pearson Education, Inc.

c. The stronger the brand associations to nonproduct considerations, the more likely it is that consumers will recall them when given situational cues. d. Measures of recall based on product attribute or category cues or situational and usage cues give an indication of breadth and depth of recall. e. Recall can further be distinguished based on order and latency/speed of recall.

5. Any research measure must consider the issues of consumers making up responses or guessing, which may be evident in aided awareness or recognition measures: a. Spurious awareness occurs when consumers erroneously claim they recall something they really don’t. b. It may send misleading signals about the proper strategic direction for a brand.

6. The advantage of aided recall measures is that they yield insight into how brand knowledge is organized in memory, and what kind of cues or reminders may be necessary for consumers to be able to retrieve the brand from memory (e.g., consideration sets).

B. Brand Image <Use Objective 3 Here> 1. Image is reflected by the associations consumers hold for a brand: a. Marketers can distinguish between lower-level considerations that are related to consumer perceptions of specific performance, imagery attributes, and benefits and higher-level considerations related to judgments, feelings, and relationships. b. Beliefs are descriptive thoughts a person holds about something. c. Belief associations may be based on one or more of three key dimensions: strength, favorability, and uniqueness, which make up sources of brand equity. <Use Figure 10-7 Here> 2. Multidimensional scaling (MDS) can determine the perceived relative images of a set of objects, such as products or brands.

3. Respondents may base their similarity between brands on tangible or intangible bases.

182 Copyright © 2020 Pearson Education, Inc.

<Use Figure 10-8 Here> IV. Social Media Listening and Monitoring <Use Objective 4 Here> 1. Social media monitoring is a fast-growing and increasingly specialized area of marketing research.

2. Firms track brand and product mentions across social media sources, including volume (frequency of mentions) and valence (sentiment of mentions).

3. A summary of key statistics associated with a brand is referred to as a dashboard: a. Number of engagement b. Sentiment of messages c. Topics related to the brand d. Lists of keywords associated with a brand 4. Information is contextualized by examining trends over time or by contrasting statistics with a brand’s key competitors. <Use Figure 10-9 Here> 5. Companies offer social media monitoring services and social media analytics to brand marketers to enable them to keep track of social media conversations surrounding brands. <Use Branding Brief 10-6 Here> 6. Brand marketers are concerned about return-on-investment (ROI) of each communication channel. <Use Branding Brief 10-7 Here> A. Brand Responses 1. The purpose of measuring more general, higher-level considerations is to find out how consumers combine more specific, lower-level considerations about the brand in their minds to form different types of responses and evaluations.

2. Purchase intentions are focused on the likelihood of buying the brand or of switching to another brand.

3. Likelihood to recommend results from all aspects of a customer’s experience, and can include a Net Promoter Score (NPS), which is used to capture brand health.

183 Copyright © 2020 Pearson Education, Inc.

4. No conclusive study exists to prove the superiority of NPS over other available metrics for tracking customers’ experiences and satisfaction.

B. Brand Relationships 1. Brand relationships are characterized in terms of brand resonance.

2. Brand relationships are measured on each of four key dimensions: a. Behavioral loyalty b. Attitudinal attachment c. Sense of community d. Active engagement <Use Figure 10-10 Here> 3. Behavioral loyalty is captured based on purchase behavior.

4. Attitudinal attachment may be characterized as brand love or as two dimensions: brand-self connection and brand prominence.

5. Sense of community and active engagement call for more varied measures due to their diverse issues: a. Social currency is the extent to which people share the brand or information about the brand. <Use Figure 10-11 Here> b. Active engagement is the extent to which consumers are willing to invest their own personal resources on the brand beyond the resources expended during the purchase or consumption. <Use The Science of Branding 10-2 Here> 6. Fournier’s brand relationship research provides a typology of 15 different relationship types that characterize consumers’ engagement with brands. <Use Figure 10-12 Here> 7. Brand relationship quality defines a brand’s strength in terms of strength, depth, and durability of the consumer-brand relational bond: a. Interdependence b. Self-concept connection 184 Copyright © 2020 Pearson Education, Inc.

c. Commitment d. Love/passion e. Intimacy f. Brand partner quality V. Comprehensive Models of Consumer-Based Brand Equity <Use Objective 5 Here> 1. The customer-based brand equity models put forth by others share some of the principles and philosophy of the CBBE model.

2. Young and Rubicam’s Brand Asset Valuator is an influential industry branding model. <Use Brand Focus 10.0 Here> The Science of Branding

THE SCIENCE OF BRANDING 10-1 Using Text Mining to Uncover Brand Associations and Positioning The increased availability of large quantities of user-generated data from digital and online channels has spurred considerable interest in applying text mining methods to generate insights that are relevant to marketing. Text-mining algorithms and natural language processing can help construct a brand positioning map. Another approach uses tags or keywords.

Differential Language Analysis can be used to identify clusters of words or topics linked to brands. There are also efforts to analyze images to generate deeper insights into brand associations and brand positioning.

THE SCIENCE OF BRANDING 10-2 Understanding Brand Engagement There are several different ways to think of brand engagement: •

Actual brand engagement is the activities with which the consumer currently is engaged with the brand and is typically what is measured with the brand resonance model.

•

Ideal brand engagement is the activities the brand consumer wishes they could do with the brand.

185 Copyright © 2020 Pearson Education, Inc.

•

Market brand engagement is the activities the consumer believes other consumers are doing with the brand.

Market brand engagement will be closely related to measures of brand momentum—how much progress the brand appears to be making with consumers in the marketplace. Both sets of measures deal with consumer perceptions of how other consumers are connecting to a brand. Measures of actual brand engagement can take two forms—more general, macro measures or more specific, micro measures. Micro sets of measures focus on specific categories of brand-related activities. These activities fall into three categories depending on whether they relate to: 1) collecting brand information, 2) participating in brand marketing activities, or 3) interacting with other people and having a sense of community.

Branding Briefs

BRANDING BRIEF 10-1 Digging Beneath the Surface to Understand Consumer Behavior Useful marketing insights sometimes emerge from unobtrusively observing consumers rather than talking to them. DuPont commissioned marketing studies to uncover personal pillow behavior for its Dacron polyester unit, which supplies filling to pillow makers and sells its own Comforel brand (now part of INVISTA). The researchers found that people fell into distinct groups in terms of pillow behavior: stackers (23 percent), plumpers (20 percent), rollers or folders (16 percent), cuddlers (16 percent), and smashers, who pound their pillows into a more comfy shape (10 percent). The prevalence of stackers led the company to sell more pillows packaged as pairs, as well as to market different levels of softness or firmness.

Much of this type of research has its roots in ethnography, the anthropological term for the study of cultures in their natural surroundings. The intent behind these in-depth, observational studies is for consumers to drop their guard and provide a more realistic portrayal of who they are rather than who they would like to be.

BRANDING BRIEF 10-2 Once Upon a Time . . .You Were What You Cooked One of the most famous applications of psychographic techniques was made by Mason Haire in the 1940s. The purpose of the experiment was to uncover consumers’ true beliefs and feelings toward Nescafé instant coffee. On the basis of consumer taste tests, however, Nescafé’s management knew consumers found the taste of instant coffee acceptable when they didn’t know what type of coffee they were drinking. Suspecting that consumers were not expressing their true feelings, Haire designed a clever experiment to discover what was really going on.

Haire set up two shopping lists containing the same six items. Shopping List 1 specified Maxwell House drip ground coffee, whereas Shopping List 2 specified Nescafé instant coffee. Two groups of matched subjects were each given one of the lists and asked to “Read the shopping list. . . Try to project yourself into the situation as far as possible until you can

186 Copyright © 2020 Pearson Education, Inc.

more or less characterize the woman who bought the groceries.” Subjects then wrote a brief description of the personality and character of that person.

After coding the responses into frequently mentioned categories, Haire found that two starkly different profiles emerged. Haire interpreted these results as indicating that instant coffee represented a departure from homemade coffee and traditions with respect to caring for one’s family. In other words, at that time, the “labor-saving” aspect of instant coffee, rather than being an asset, was a liability in that it violated consumer traditions. Consumers were evidently reluctant to admit this fact when asked directly but were better able to express their true feelings when asked to project to another person.

Based on the projective test findings, it was obvious that there also needed to be a point-ofparity on the basis of user imagery. As a result, a successful ad campaign was launched that promoted Nescafé coffee as a way for housewives to free up time so they could devote additional time to more important household activities.

BRANDING BRIEF 10-3 Making the Most of Consumer Insights Consumer research plays a significant role in uncovering information valuable to consumerfocused companies. David Taylor, founder of the Brand Gym consultancy, defines an insight as “a penetrating, discerning understanding that unlocks an opportunity.” Taylor developed a set of criteria to evaluate insights: •

Fresh: An insight might be obvious and, in fact, be overlooked or forgotten as a result. Check again.

•

Relevant: An insight when played back to other target consumers should strike a chord.

•

Enduring: By building on a deep understanding of consumers’ beliefs and needs, a true consumer insight should have potential to remain relevant over time.

•

Inspiring: All of the team should be excited by the insight and see different but consistent applications.

Insights can come from consumer research such as focus groups, but also from using what Taylor describes as the “core insight drills.” A sample of these drills is as follows: •

How could the brand or category do more to help improve people’s lives?

•

What do people really value in the category? What would they not miss?

•

What conflicting needs do people have? How can these tradeoffs be solved?

•

What bigger market is the brand really competing in from a consumer viewpoint?

What could the brand do more of to better meet these higher-order needs?

187 Copyright © 2020 Pearson Education, Inc.

•

What assumptions do people make about the market that could be challenged?

•

How do people think the product works, and how does it work in reality?

•

How is the product used in reality? What other products are used instead of the brand, where the brand could do a better job?

These drillscan help companies unearth consumer insights that lead to better products and services, and ultimately to stronger brands.

BRANDING BRIEF 10-4 Netnography as a Digital Research Technique An ethnographic technique for digital environments called netnography has become more popular as a marketing research tool. Two types of data can be gathered to conduct research in online forums: (1) the actual communications in online communities and (2) researchers’ observations regarding interactions among community members.

Netnography involves six stages: (1) developing a research plan; (2) establishing entrée; (3) collecting and triangulating data; (4) analyzing and interpreting data; (5) ensuring ethical standards; and (6) reporting on research findings and associated insights.

There are pros and cons of netnography. It is descriptive, utilizes multiple approaches, adaptable, and can provide deep insights. It is less obtrusive and costs less than focus groups or in-depth interviews. However, it is limited to digital environments and social media users, so there could be self-selection bias.

BRANDING BRIEF 10-5 How P&G Innovates Using Qualitative Research Data Procter & Gamble uses quantitative and qualitative data as part of its brand management processes. Its successful product, Swiffer, was the result of ethnographic research. They found that more than half of the time use to mop was being used to clean the mop. They created Swiffer, which was a blockbuster hit and showed that the qualitative insights have value.

BRANDING BRIEF 10-6 Gatorade’s Social Media Command Center Gatorade as a Social Media Command Center at its Chicago headquarters. It has a control room with six bit monitors that display data visualizations that include things such as the number of tweets, key terms consumers are using with the brand name, sentiment, and trending topics.

188 Copyright © 2020 Pearson Education, Inc.

The listening center allows the brand to optimize the landing page to ensure it is relevant, which has increased engagement by 250 percent. Gatorade is able to respond to feedback quickly, including requests and resolution of customer service issues.

Gatorade has invested in augmented and virtual reality, as well as YouTube 360.

BRANDING BRIEF 10-7 Understanding Attribution Modeling Marketers are interested in understanding the return-on-investment of social media and digital marketing. Attribution modeling captures which touchpoints led to conversions.

Attributions can be made across online touchpoints and sales, but it is more challenging to account for online interactions in offline interactions. It is also difficult to separate the impact of offline marketing and promotions. A second challenge is difficulty tracking consumer behavior across devices. A third challenge is attributing a conversion to one of many touch points. Marketers may consider first-touch attribution models, which assign credit to the first touch point, or last-touch attribution models, which assign credit to the last interaction before the conversion. In contrast, linear attribution and more complex attribution models consider multiple touch points.

Brand Focus

BRAND FOCUS 10.0 Young & Rubicam’s Brand Asset Valuator BrandAsset® Valuator (BAV), originally developed by Young & Rubicam, is the world’s largest database of consumer-derived information on brands. The BAV model is developmental in that it explains how brands grow, how they get into trouble, and how they recover. BAV measures brands on four fundamental measures of equity value plus a broad array of perceptual dimensions. It provides comparative measures of the equity value of thousands of brands across hundreds of different categories, as well as a set of strategic brand management tools for planning: brand positioning, brand extensions, joint branding ventures, and other strategies designed to assess and direct brands and their growth. BAV is also linked to financial metrics and is used to determine a brand’s contribution to a company’s valuation.

BAV represents a unique brand equity research tool. Respondents evaluate brands in a category-agnostic context. Brands are percentile ranked against all brands in the study for each brand metric. Thus, by comparing brands across as well as within categories, BAV is able to draw the broadest possible conclusions about how consumer-level brand equity is created and built—or lost.

Four Pillars

189 Copyright © 2020 Pearson Education, Inc.

There are four key components of brand health in BAV, namely, energized differentiation, relevance, esteem, and knowledge. Each pillar is derived from various measures that relate to different aspects of consumers’ brand perceptions. Taken together, the four pillars trace the progression of a brand’s development.

Relationship among the Pillars—Examining the relationships between these four dimensions—a brand’s “pillar patterns”—reveals much about a brand’s current and future status. Brands often strive to build awareness, but if the brand’s pillars are not in the proper alignment, then consumer knowledge of a brand becomes an obstacle that may need to be surmounted before the brand can continue to build healthy momentum.

The PowerGrid BrandAsset® Valuator has integrated the two macro dimensions of Brand Strength (Energized Differentiation and Relevance) and Brand Stature (Esteem and Knowledge) into a visual analytical representation known as the PowerGrid. The PowerGrid depicts the stages in the cycle of brand development—each with its characteristic pillar patterns—in successive quadrants.

Brands generally begin their life in the lower left quadrant, where they first need to develop Relevant Differentiation and establish their reason for being. Most often, the movement from there is “up” into the top left quadrant. Increased Differentiation, followed by Relevance, initiates growth in Brand Strength. The upper right quadrant, the Leadership Quadrant, is populated by brand leaders—those that have high levels of both Brand Strength and Brand Stature. Brands that fail to maintain their Brand Strength—their Relevant Differentiation—begin to fade and move “down” into the bottom right quadrant.

Applying BAV to Google Google is a dramatic example. Google achieved leadership status faster than any other brand measured in BAV. Google built each brand pillar, beginning with Energized Differentiation, both quickly and strongly. After rapidly establishing Energized Differentiation, Google built the other three pillars. It took only three years for Google’s percentile-ranking on all four pillars to reach the high 90s. From the BAV perspective, there are three main contributing factors: 1) consistently strong brand attributes that translate into competitive advantages; 2) successful brand extensions into new categories; and 3) successful expansion into global markets and the fast establishment of brand leadership.

Competitive Advantages on Brand Attributes—Google’s leadership is supported by competitive advantages on the factors that contribute to the strength of the key pillars.

Google is stronger than the competitive average on the Cutting Edge (innovation) factor and the Bold personality factor. Both of these factors build Google’s Energized Differentiation.

Google’s advantage on the Dependability (trust) factor helps keep the Relevance pillar strong, and Google’s strength on the Superiority (best brand) factor supports both the Relevance and the Esteem pillars.

Successful Category Extensions—Google has done a masterful job of entering new categories with sub-brands. Most of the sub-brands also have very high Brand Strength, 190 Copyright © 2020 Pearson Education, Inc.

which helps replenish the Brand Strength of the Google corporate brand. In this way, the leadership of the sub-brands helps support the parent brand, a common theme among strong parent brands with sub-brands. The significant strength of Google’s image profile has made entrance into new categories easier.

Successful Global Expansion—BAV shows global brands must build consistently strong Brand Strength, Brand Stature, and power on key factors that drive brand pillars and meaning in each market. Google has achieved leadership status in global markets the same way it achieved leadership status in the United States of America—by quickly “maxing out” on Brand Strength and Brand Stature. In all countries recently surveyed, Google is a superleadership brand on the PowerGrid.

Summary There is a lot of commonality between the basic BAV model and the brand resonance model. The brand resonance framework maintains that brand salience and breadth and depth of awareness are a necessary first step in building brand equity. The BAV model treats familiarity in a more effective manner—almost in a warm feeling or friendship sense—and thus, sees it as the last step in building brand equity, more akin to the resonance component itself.

The main advantage of the BAV model is that it provides rich category-agnostic descriptions and profiles across a large number of brands. It also provides focus on four key branding dimensions. It provides a brand landscape in which marketers can see where their brands stand relative to other prominent brands in many different markets.

The descriptive nature of the BAV model does mean that there is potentially less insight as to exactly how a brand could rate highly on those factors. Nevertheless, the BAV model represents a landmark study in terms of its ability to enhance marketers’ understanding of what drives top brands and where their brands fit in a vast brandscape.

Discussion Questions and Answers 1. Pick two competing brands and use the free association technique to create a mental map of them. What differences can you discern between them?

Answers will vary. Students may be divided into groups and asked to employ the free association technique to identify sources of brand equity for both brands.

Page: 366 Learning Objective 1: Describe effective qualitative research techniques for tapping into consumer brand knowledge.

AACSB: Analytic Skills 2. Run an experiment to see whether you can replicate Mason Haire’s instant coffee experiment (see Branding Brief 10-2). Do the same attributions still hold? If not, can you replace coffee with a brand combination from another product category that would produce pronounced differences?

191 Copyright © 2020 Pearson Education, Inc.

Answers will vary. One possible category that might produce the differences of the Mason Haire experiment is over-the-counter children’s cold remedies. There may be major perceptual differences regarding parents that buy name-brand remedies versus parents that by store brand or generic products.

Page: 367 Learning Objective 1: Describe effective qualitative research techniques for tapping into consumer brand knowledge.

AACSB: Analytic Skills 3. Pick a product category. Can you profile the brand personalities of the leading brands in the category using Aaker’s brand personality inventory?

Answers will vary. The truck category is one in which many of the brands might possess high ratings in many of the above indices and have distinct personalities.

Page: 371 Learning Objective 1: Describe effective qualitative research techniques for tapping into consumer brand knowledge.

AACSB: Analytic Skills 4. Describe how social media data can be utilized in understanding brand perceptions.

Social media mentions can be mined and categorized to create a mental map. Social media listening can also be used to keep track of trends related to the brand, like people’s current valence and how much people are talking about it.

Page: 380 Learning Objective 4: Explain the role of social media monitoring “control rooms” as a marketing research tool.

AACSB: Analytic Skills 5. Describe how social media monitoring is changing how brands can monitor consumers’ thoughts and perceptions regarding a brand. What are the implications of this trend for brand management as a whole?

Social media monitoring tracks brand and product mentions across online and social media channels. Brand managers get information about the volume of messages, consumer sentiment, valence of posts, and contexts. It helps track engagement across platforms, as well as related topics and trends. It can help identify customer concerns and improve targeting of promotional offers and positioning efforts. Data is often presented in visual formats for ease of interpretation. Brand managers need to increasingly be aware of ROI, word-of-mouth, and the consumer control of brand messaging. Social media monitoring can provide information that leads to insights.

192 Copyright © 2020 Pearson Education, Inc.

Page: 380 Learning Objective 4: Explain the role of social media monitoring “control rooms” as a marketing research tool.

AACSB: Analytic Skills 6. Describe what attribution modeling is. Why is it important in today’s communication environment?

Firms decide how they want to assign credit for the meaningful action, which is determined by the firm in line with communication objectives. Sometimes, firms use the first click, sometimes they use the last click, and sometimes they used an average. It is more challenging to account for offline activities as well. Marketers also may have trouble tracking across multiple devices.

Page: 383 Learning Objective 3: Outline how big data can help with understanding brand perceptions and brand positioning.

AACSB: Analytic Skills 7. Think of your brand relationships. Can you find examples of brands that fit into Fournier’s different categories?

Answers will vary. Students may be divided into groups where each group may choose one category and come up with examples of brands that fit their category. They may then be asked to compare their list of brand examples to assess whether the same brand has fallen into different categories.

Page: 386 Learning Objective: Identify effective quantitative research techniques for measuring brand awareness, image, responses, and relationships.

AACSB: Analytic Skills Exercises and Assignments 1. Ask students to conduct a modern-day version of the shopping cart experiment described in Branding Brief 10-2: Once Upon a Time . . . You Were What You Cooked.

Update the list and choose a focal product to vary across two versions. For example: 1 whole roasting chicken

1 whole roasting chicken

1 package Thomas English muffins

1 package Thomas English muffins

4 ears fresh corn

4 ears fresh corn

Jar of Grey Poupon mustard

Jar of Kraft mustard

193 Copyright © 2020 Pearson Education, Inc.

Breyer’s vanilla bean ice cream

Breyer’s vanilla bean ice cream

2 onions

2 onions

How could the managers of the focal brands use the results in their marketing planning?

Page: 367 Learning Objective 1: Describe effective qualitative research techniques for tapping into consumer brand knowledge.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out after the class is introduced to the concept of projective techniques to identify the sources of brand equity.

2. Tell students to conduct a study about the brand image of the school or program in which they all are currently enrolled. What implications do the findings have for the school’s marketing strategy?

Page: 378 Learning Objective 1: Describe effective qualitative research techniques for tapping into consumer brand knowledge.

AACSB: Analytic Skills Question Type: Group Time to complete the exercise: 15–18 minutes This activity may be carried out after the class is introduced to the concept of ethnographic and experiential methods to research consumers.

3. Have students pick brands of their choice and conduct quantitative research by employing various types of scale questions to draw numerical representations and summaries. This activity will help them assess the depth and breadth of brand awareness; the strength, favorability, and uniqueness of brand associations; the positivity of brand judgments and feelings; and the extent and nature of brand relationships.

Page: 384 Learning Objective 2: Identify effective quantitative research techniques for measuring brand awareness, image, responses, and relationships.

AACSB: Analytic Skills 194 Copyright © 2020 Pearson Education, Inc.

Question Type: Group Time to complete the exercise: 15 minutes This activity may be carried out after the class is introduced to quantitative research techniques.

Key Take-Away Points 1. Sources of brand equity arise from the customer mind-set.

2. Measuring sources of brand equity requires knowing how consumers shop for and use products and services, and what consumers know, think, and feel about brands.

3. Measuring sources of customer-based brand equity requires measuring brand awareness and brand image that lead to the customer response.

4. Consumer knowledge toward a brand may be uncovered using either quantitative or qualitative methods, often in combination. <Use Figure 10-13 Here> 5. Qualitative measures are best for capturing specific consumer insights about brands, products, and services, while quantitative insights can be employed for more generalizable information.

6. Quantitative measures of brand knowledge can help to more definitively assess the depth and breadth of brand awareness; the strength, favorability, and uniqueness of brand associations; the positivity of brand judgments and feelings; and the extent and nature of brand relationships.

195 Copyright © 2020 Pearson Education, Inc.

Chapter 11 Measuring Outcomes of Brand Equity: Capturing Market Performance Learning Objectives 1. Recognize the multidimensionality of brand equity and the importance of multiple methods to measure it.

2. Contrast different comparative methods to assess brand equity.

3. Explain the basic logic of how conjoint analysis works.

4. Review different holistic methods for valuing brand equity.

5. Describe the relationship between branding and finance.

Overview The ideal way to measure brand equity would be a brand equity index that summarizes the health of the brand in an easy calculation. However, brand equity is multidimensional and complex, so it requires different types of measures to know what is happening to their brands and why.

Chapter 11 applies some of the measurement techniques described in Chapter 10 to get a sense of the brand’s overall health. A brand with positive brand equity can enjoy greater perception of better product or service performance, stronger brand loyalty/less vulnerability to competitive marketing actions and crises, larger margins and more inelastic responses to price increases and elastic responses to price decreases, greater trade cooperation and support, increased marketing communication effectiveness, and more opportunities to extend and license the brand name. Chapter 11 describes procedures that allow a firm to assess whether its marketing programs have, indeed, generated such outcomes.

The chapter reviews comparative methods, which help assess the specific benefits of brand equity. Holistic methods attempt to estimate the overall or summary value of a brand and are used to derive an overall brand value, either in terms of utility or money.

Brand Focus 11.0 “Financial Perspectives on Brands and the Brand Value Chain” discusses the relationship between brand equity valuations and stock market information and performance. It also analyzes the accounting implications of branding.

Chapter Outline I. Preview 1. Brand equity is a multidimensional concept that requires many different types of measures.

196 Copyright © 2020 Pearson Education, Inc.

2. Applying multiple measures increases the diagnostic power of marketing research and the likelihood that managers will better understand what is happening to the brands and why.

3. Positive brand equity can enjoy six important customer-related benefits: a. Perception of better product or service performance b. Greater loyalty and less vulnerability to competitive marketing actions and marketing crises c. Larger margins and more inelastic responses to price increases and elastic responses to price decreases d. Greater trade cooperation and support e. Increased marketing communication effectiveness f. Opportunity for successful licensing and brand extension 4. The customer-based brand equity model maintains the benefits, and the ultimate value of the brand, depend on the underlying components of brand knowledge and sources of brand equity.

5. The chapter reviews comparative methods and then holistic methods.

6. The interplay between branding and financial considerations is included in Brand Focus 11.0.

II. Comparative Methods <Use Objectives 1 and 2 Here> 1. Comparative methods are research studies or experiments that examine consumer attitudes and behavior toward a brand to estimate benefits associated with having high awareness and strong, favorable, and unique brand associations.

2. Brand-based comparative approaches use experiments or analyses that compare a group that sees a branded marketing element to a group that sees the same element attributed to a competitive or fictitious brand.

3. Marketing-based comparative approaches use experiment or analyses that ask consumers to respond to changes in elements of the marketing program or activity for the target brand or competitive brands.

A. Brand-Based Comparative Approaches 1. Competitive brands can be useful benchmarks in brand-based comparative approaches.

197 Copyright © 2020 Pearson Education, Inc.

2. Consumers may have a particular brand or exemplar in mind when they interpret marketing activity for a fictitiously names or unnamed version of a product or service: a. Consumers may make inferences to supply missing information based on knowledge of an exemplar. b. It may be instructive to evaluate a proposed new ad campaign, new promotions offering, or new product when it is attributed to one or more major competitors.

3. Blind studies that ask customers to use or examine a product with or without brand identifications can help identify differences.

4. Brand-based comparative approaches are useful to determine brand equity benefits related to price margins and premiums.

5. The main advantage of a brand-based comparative approach is that because it holds all aspects of the marketing program fixed, it isolates the value of the brand: a. Brand-based comparative methods are particularly applicable when the marketing activity under consideration represents a change from past marketing of the brand. <Use T-MOBILE Example Here> b. A crucial consideration with the brand-based comparative approach is the realism we can achieve in the experiment or analyses.

B. Marketing-Based Comparative Approaches 1. Marketing-based comparative approaches hold the brand fixed and examine consumer response based on changes in the marketing program.

2. Marketing-based comparative approaches are often used to determine price premiums or to assess price sensitivity and willingness to play thresholds.

3. Marketing-based comparative approaches can also be used to assess consumer response to different advertising strategies, executions, or media plans. a. A/B testing or split testing is used in digital environments. b. Brand extensions can be evaluated as part of a longer survey.

4. Marketing-based comparative approaches are easy to implement, but it can be difficult to discern whether consumer responses are being caused by brand knowledge or generic product knowledge.

198 Copyright © 2020 Pearson Education, Inc.

C. Conjoint Analysis <Use Objective 3 Here> 1. Conjoint analysis is a survey-based multivariate technique that enables marketers to profile the consumer decision process for products and brands: a. Consumers express preferences or make choices among carefully design product profiles. b. Researchers determine the trade-offs consumers are making between brand attributes and the relative importance they attach to them. c. The value consumers attach to each attribute level is called a part worth.

2. Brand and price trade-off is one application that has been used by an ad agency to assess advertising effectiveness and brand value.

3. Academic researchers have employed conjoint techniques to show how extendible brand names are, to evaluate the effectiveness of corporate image programs, and to identify relevant attributes driving consumer preferences.

4. It allows marketers to study brands and product attributes simultaneously, but may violate consumers’ expectations based on what they know about brands.

III. Holistic Methods <Use Objective 4 Here> 1. Holistic methods place an overall value on the brand in abstract utility terms or concrete financial terms.

2. The residual approach examines the value of the brand by subtracting consumers’ preferences for the brand—based on physical product attributes alone—from their overall brand preferences.

3. The valuation approach places a financial value on brand equity for accounting purposes, mergers and acquisitions, or other such reasons. <Use LIZ CLAIBORNE Example Here> A. Residual Approaches 1. The rationale behind residual approaches is the view that brand equity is what remains of consumer preferences and choices after we subtract physical product effects.

2. Several researchers have defined brand equity as the incremental preference over and above what would result without brand identification.

199 Copyright © 2020 Pearson Education, Inc.

3. Some researchers have focused on analysis of brand value based on data sets from supermarket scanners of consumer purchases.

4. Choice experiments can also be used to define an equalization price—a proxy for brand equity, the price that equates the utility of a brand to the utilities that could be attributed to a rand in the category where no differentiation occurred.

5. Multi-attribute attitude models divide brand equity into three components: brand awareness, attribute perception biases, and nonattribute preference: 1. The attribute-perception biased component of brand equity is the difference between subjectively perceived attribute values and objectively measured attribute values.

2. The nonattribute preference component of brand equity is the difference between subjectively perceived attribute values and overall preference.

6. Brands can also be shown in two components: brand-specific associations and general brand impressions (based on a more holistic view).

7. Residual approaches provide a financially oriented approximation of brand equity, but it is most appropriate for brands with a lot of product-related attribute associations because these measures can’t distinguish between nonproduct-related attribute associations.

8. Residual approaches take a fairly static view of brand equity by focusing on consumer preferences.

B. Valuation Approaches 1. Brands are a key source of value to a firm, but there are wide variations in valuation percentages accounted for by brand names. <Use Table 11-1 Here> 2. The ability to put a price tag on the value of a brand name is useful for the following reasons: a. Mergers and acquisitions b. Brand licensing c. Fund-raising d. Brand portfolio decisions e. Internal resource allocation decisions and understanding ROI 3. The assets of a firm can be either tangible or intangible: 200 Copyright © 2020 Pearson Education, Inc.

a. Tangible assets include property, plant, and equipment; current assets; and investments in stocks and bonds. b. We can estimate the value of tangible assets using accounting book values and reported estimates of replacement costs. c. Intangible assets are factors of production or specialized resources that permit the company to earn cash flows in excess of the return on tangible assets. d. Goodwill includes patents, trademarks, and licensing agreements. e. Brand assets are intangible assets that are governed by the same accounting principles that involve reporting of intangible assets: i. Brands developed in-house are not valued explicitly on the balance sheet. ii. Brand acquisitions are reported on the balance sheet because there is a defined cost of purchase associated with an acquired brand, which can be reported as an expense. f. Brand valuations are based at least in part on consumers’ perceptions, which can be fickle and difficult-to-measure. g. Brands are among many intangible assets. h. Brand value on balance sheets may be subject to impairment, for example in the event of negative publicity or loss of reputation. i. In the United States, private companies can amortize goodwill for book purposes, over a 10-year period, or less. j. Brand equity cannot be included in financial reporting because of the absence of verifiable costs, inability to verify a certain transaction or series of transactions.

4. Firms can choose from cost, market, and income approaches to determine the value of a brand in an acquisition or merger: a. The cost approach maintains that brand equity is the amount of money that would be required to reproduce or replace the brand. b. The market approach uses the present value of the future economic benefits to be derived by the owner of the asset. c. The income approach argues that brand equity is the discounted future cash flow from the future earnings stream for the brand.

IV. Brand Valuation: A Review of Major Approaches

201 Copyright © 2020 Pearson Education, Inc.

<Use Objective 5 Here> 1. One academic research study proposed a technique for estimating a firm’s brand equity derived from financial market estimates of brand-related profits.

2. Interbrand, BrandZ, and Brand Finance combine brand equity measurement and financial valuation in deriving estimates of brand value.

A. Interbrand 1. Interbrand’s approach takes into account different ways in which a brand benefits an organization both internally and externally from attracting and retaining talent to delivering on customer expectations.

2. There are three key components of Interbrand’s brand value assessment: a. Financial forecast b. Role of brand c. Strength analysis 3. For the financial forecast, the principle is the worth of brands can be calculated based on the estimates of present value of its future cash flows.

4. The role of brand measures the portion of the customer decision to purchase that is attributable to brand—exclusive of other purchase drivers.

5. Brand strength is the ability of the brand to secure the delivery of expected future earnings.

B. BrandZ 1. BrandZ is based on the Meaningfully Different Framework that suggests brands can create value if they offer three key benefits: a. They are meaningful (they meet customer needs). b. They are different (they are unique and they set trends). c. They are salient (they are top of mind).

2. The benefits translate into power, premium, and potential.

3. Earnings are apportioned across a portfolio of brands and an estimate of financial value is generated before the methodology attempts to isolate the value of the brand from other drivers of in-market or logistical factors that can drive value such as availability, distribution, or price.

202 Copyright © 2020 Pearson Education, Inc.

4. Financial Value is multiplied by Brand Contribution, which is expressed as a percentage of Financial Value, while Brand Value is the dollar amount a brand contributes to the overall value of corporations.

C. Brand Finance 1. Brand Finance’s approach to brand equity measurement is based on the relief from royalty approach.

2. Brand Finance calculates the brand strength on a scale of 1 to 100 using data from the Brand Asset Valuator database, which results in a Brand Strength Index.

3. The methodology assesses the brand royalty rate by applying the BSI score to the royalty rates that are applicable to a given industry.

4. Industry-specific royalty rates are identified through databases containing comparable licensing agreements.

5. The royalty rates, when applied to forecasted revenues, help determine brand value.

D. Comparing the Major Brand Valuation Approaches 1. All three approaches are based on some variation of the income-based approach to brand valuation—they are based on projections of income from brands into the foreseeable future.

2. Interbrand and BrandZ adopt the economic profit method, whereas Brand Finance adopts the relief from royalty method.

3. All three methods compute the present value of projected future earnings based on an estimate of brand strength and an application of a discount rate, even though they do it different ways.

4. All three approaches use available financial and market data and compute the economic value added.

5. The types of data used to measure brand perceptions vary across the three approaches.

6. Brand valuation and the brands on the balance sheet debate are controversial subjects, and there is not a single, universally agreed-upon approach. <Use Table 11-2 Here> <Use The Science of Branding 11.1 Here>

203 Copyright © 2020 Pearson Education, Inc.

The Science of Branding

THE SCIENCE OF BRANDING 11-1 Understanding Brand Valuation The Marketing Accountability Standards Board (MASB) launched in 2007 to propose standards for marketing performance measurement and identifies processes that would link marketing activities with financial performance. It sets standards for brand valuation via an interdisciplinary team (academics, marketing, and finance practitioners) that conducted a study of 120 brands. The study identified a brand strength metric and showed how to link the measure to market share and cash flows. Brand strength, measured using brand preference, explained 77 percent of the variation in unit shares across the 120 brands. They proposed that the estimate of market share can be transformed into brand valuation by multiplying the share with the price and making assumptions about production costs, category size, and category penetration.

The model is based on the following assumptions: 1. Brand strength drives market share.

2. Market share drives velocity.

3. Velocity and market share determine operating cash flow.

4. Real options and operating cash flow drive brand value.

According to MASB, brand preference drives the net present value of the brand’s cash flows and the value of a brand is driven by preference toward the brand. The MASB’s approach attempts to provide a systematic framework to help companies value their brands which may become a standard that can be reported on balance sheets.

Brand Focus

BRAND FOCUS 11.0 Financial Perspectives on Brands and the Brand Value Chain Brands can be seen as a key link in a value-creation chain, which consists of four components: 1) What companies do; 2) what customers think and feel; 3) what customers do; and 4) how financial markets react.

Brand Quality Information Brand quality information helps move stock prices. Aaker and Jacobson examined the association between yearly stock return and yearly brand changes for 34 companies and the changes in current-term return on investment (ROI). They found that brand attitude changes were associated with stock return changes. The gains in stock returns averaged nearly 30 percent while declines were linked to average losses of 10 percent.

204 Copyright © 2020 Pearson Education, Inc.

Brand quality information can impact risk of a firm’s stock returns across two types of risk: idiosyncratic risk (volatility) and systematic risk (in tandem with the stock market).

Bharadwaj and colleagues found changes in brand quality are related to stock returns and increases in quality can lower the idiosyncratic risk associated with a firm. Unanticipated changes in quality could also increase perceptions of systematic risk.

Key Takeaways: Information about brand quality moves stock prices and increases stock market returns; improvements in quality can lower firm risk or volatility of stock returns.

Brand Quality and Rating Dispersions Quality rating variability across customers is another factor. Luo and colleagues uncovered that it was good and bad to have brand quality rating dispersions. Ratings dispersion lowers both returns associated with a brand and risk.

Dimensions of Brand Equity and Stock Market Valuation and Returns Mizik and Jacobsen examined how different dimensions of brand equity influenced stock market returns using the Brand Asset Valuator (BAV) Model to demonstrate its effect on a company’s stock market returns. They found that relevance and energy dimensions of brand equity significantly impacted stock market returns, where relevance had a stronger impact than energy. Esteem and knowledge were more directly influential in accounting measures, and differentiation impacted accounting performance in a subsequent time-period. Another study showed energy, along with relevance, differentiation, esteem, and knowledge, could improve valuation accuracy by about 16 percent relative to predictions based on accounting variables (ROI) alone.

Brand Equity and Risk Rego, Billet, and Morgan found brand equity had a substantial impact on lowering downside systematic and idiosyncratic risk.

Negative News (e.g., Recalls) and Performance of Competitors Borah and Tellis found that recall events increased negative chatter among competitors and led to lowering of competitors’ sales and stock market performance.

Brand Portfolio Characteristics Morgan and Rego analyzed how aspects of a brand’s portfolio—number of brands owned, number of segments marketed, how brands compete, and customer perceptions of quality and price—impact marketing and financial performance—1) customer loyalty; 2) market share; 3) marketing efficiency; 4) ratio of selling, general, and administrative expenses to sales; 5) financial performance (Tobin’s q); 6) cash flow; and 7) cash flow variability.

Findings showed larger portfolios of brands can increase financial performance and reduce cash flow variability; portfolios with higher quality positioning enjoy higher performance; and portfolios with high-price positioning have lower financial performance.

Brand Architecture 205 Copyright © 2020 Pearson Education, Inc.

Rao and colleagues compared branded house, house of brands, and mixed (corporate names for some products, individual names for others) brand architecture strategies on Tobin’s q, which is a forward-looking way of capturing a firm’s stock market performance based on intangible assets. Corporate branding had a higher Tobin’s q while mixed branding had a lower Tobin’s q. Corporate branding increases the firm’s ability to engage in cross-selling, which enhances efficiency related to brand name usage across categories. Further research showed brand architecture strategies can have significant implications for a variety of different types of risk associated with a firm and can have an impact on reputation, dilution, cannibalization, and brand stretch.

Marketing Expenditures Edeling and Fischer reviewed 83 prior studies to see how much changes in marketing expenditures and brand relationships influenced firm value and found that changes in brand relationships had a significant impact on firm value.

Marketing is focused on sales impact. Finance executives tend to focus on financial outcomes (e.g., cost of capital). Fischer and Himme looked at how marketing and financial metrics interact and found the finance and marketing goals are highly interconnected.

Brand Extensions Research by Lane and Jacobsen and, separately, by Horsky and Swyngedouw showed that stock market reactions to brand extensions and names changes could be based on how much prior brand equity is involved. When prior brand equity is high, extensions and name changes could elicit a more positive reaction from investors.

Brand Alliances and Marketing Agreements Research on brand alliances showed a positive increase in stock market returns when technology companies formed and announced brand alliances, where networks of alliance partners strengthened outcomes. Further, research on cobranded partnerships showed an increase of 1 percent, where the brand image consistency, agreement exclusivity, and product innovativeness could strengthen the value of cobranded partnerships.

Brand Mergers and Brand Acquisitions When brands merge or are acquired, it can strengthen stock market value of the acquirer or the target firm, particularly when the target and acquirer firm’s product offerings are related or the acquired brands have prices and quality positioning that are higher than the acquiring firm’s existing portfolio.

Brand Equity and Customer Acquisition or Retention Research shows that brand equity dimensions (differentiation, relevance, esteem, and knowledge) can enhance customer retention and acquisition and customer profitability.

Differentiation is a key element, leading to higher customer profitability and lower acquisition and retention rates.

206 Copyright © 2020 Pearson Education, Inc.

Marketing Expenditures on Social Media and Consumer Mind-Set Metrics Earned social media impacted brand awareness and purchase intent but not customer satisfaction. Owned social media impacted brand awareness and customer satisfaction.

Purchase intent and customer satisfaction influence shareholder value.

Research on the relative impact of traditional ads and social media ads on Facebook and consumer-to-consumer conversations on brand building and customer acquisition showed traditional advertising helped build brands and acquire customers and social media could improve the impact of traditional ads.

Discussion Questions and Answers 1. Choose a product. Conduct a branded and unbranded experiment. What do you learn about the equity of the brands in that product class?

Answers will vary. The classic example of the brand-based comparative approach is “blind testing” research studies in which different consumers examine or use a product with or without brand identification. Students may be divided into groups for this purpose and then see the differences that emerge.

Page: 402 Learning Objective 2: Contrast different comparative methods to assess brand equity.

AACSB: Analytic Skills 2. Can you identify any other advantages or disadvantages of the comparative methods?

Comparative methods are useful for developing strategies. A concern with comparative methods is how well specified the models are—there are infinite variety of marketing activities. If a marketing activity is strongly identified with a brand, it may be difficult to attribute some aspect of the marketing program to a fictitiously named or unnamed version of the product or service in a believable fashion. Marketing-based comparative approaches are easy to implement, but it is hard to attribute consumer responses to brand knowledge (versus more generic product knowledge). Conjoint-based approaches help isolate aspects of products or marketing programs, but some of the stimuli may violate what consumers know about brands.

Page: 403, 405 Learning Objective 2: Contrast different comparative methods to assess brand equity.

AACSB: Analytic Skills 3. Pick a brand and conduct an analysis similar to that done with the Planters brand. What do you learn about its extendibility as a result?

207 Copyright © 2020 Pearson Education, Inc.

Answers will vary. Students may be divided into groups to better analyze a brand of their choice.

Page: 405 Learning Objective 2: Contrast different comparative methods to assess brand equity.

AACSB: Analytic Skills 4. Go to Interbrand’s Web site (www.Interbrand.com). Compare the top 10 brands from the current year to the list from the previous year. What brands entered the top 10, and which ones left the top 10? What contributed to these shifts in brand value? Which brands showed the most increases or decreases in brand value? Why? Answers will vary depending on the year the assignment is done. In 2018, the top ten global brands were 1) Apple, 2) Google, 3) Amazon, 4) Microsoft, 5) Coca-Cola, 6) Samsung, 7) Toyota, 8) Mercedes-Benz, 9) Facebook, and 10) McDonald’s. Amazon was the top growing brand, with 56% growth. In 2017, the top 10 brands were 1) Apple, 2) Google, 3) Microsoft, 4) Coca-Cola, 5) Amazon, 6) Samsung, 7) Toyota, 8) Facebook, 9) Mercedes-Benz, and 10) IBM. That year, Facebook and Amazon experienced high growth. The Interbrand approach arrives at a single figure that represents the strength of the brand. Student responses may be informed by the report that describes the Hallmarks of top growing brands in a given year. In 2018, brand strength was a reward for companies that took risks.

Page: 409 Learning Objective 4: Review different holistic methods for valuing brand equity.

AACSB: Analytic Skills 5. Select a brand from Interbrand’s top 100 brand names (one which you know is publicly traded on a stock exchange). Go to a finance Web site (e.g., Google Finance or Yahoo Finance) and locate its market capitalization. Determine how much of the brand’s value is as a percentage of its market capitalization. Describe what this percentage means, and how it relates to brand valuation.

Student responses will vary depending on the brand they choose and the timing of the assignment. Table 11-1 can be used as an example. Interbrand’s approach looks at the ongoing investment and management of the brand as an economic asset, it takes into account all the different ways in which a brand benefits an organization both internally and externally.

Page: 409 Learning Objective 4: Review different holistic methods for valuing brand equity.

AACSB: Reflective Thinking

208 Copyright © 2020 Pearson Education, Inc.

Exercises and Assignments 1. Have students identify brands that have the highest equity levels in their categories.

Discuss the likely reasons for the preeminence of the brands, and what the implications for marketing strategy are. Examples of product categories might include motels, computers, sunglasses, automobiles, ski equipment, and airlines.

Page: 409 Learning Objective 1: Recognize the multidimensionality of brand equity and the importance of multiple methods to measure it.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 10 minutes This activity may be carried out at the end of the class.

2. Have several groups of students take a brand-based comparative approach by conducting a product purchase or consumption research on an existing product with the brand identification being hidden for an unbranded control group. This activity will help students understand better the concept of blind testing in research studies.

Page: 403 Learning Objective 2: Contrast different comparative methods to assess brand equity.

AACSB: Analytic Skills Question Type: Group Time to complete the exercise: 12 minutes This activity may be carried out after the class is introduced to application of brandbased comparative approaches.

3. Have students divided into groups. Have each group pick a brand of their choice and have one group at a time to treat the others as consumers and assess their response to different advertising strategies, executions, or media plans of their chosen brand. This activity will help students understand better the application of marketing-based comparative approaches.

Page: 402 Learning Objective 2: Contrast different comparative methods to assess brand equity.

AACSB: Analytic Skills 209 Copyright © 2020 Pearson Education, Inc.

Question Type: Groups Time to complete the exercise: 15–18 minutes This activity may be carried out after the class is introduced to marketing-based comparative approaches.

4. Ask students to identify brands that are market leaders in their categories, but that are weak on other dimensions. Analyze the reasons for the weaknesses and describe strategies for overcoming them.

Page: 408 Learning Objective 4: Review different holistic methods for valuing brand equity.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 12–15 minutes This activity may be carried out at the end of the class.

Key Take-Away Points 1. Comparative methods are a means to better assess the effects of consumer perceptions and preferences on aspects of the marketing program.

2. Holistic methods estimate an overall value on the brand.

3. Four general guidelines for creating and measuring ROI from brand marketing activities include: Spend wisely—focus and be creative; Look for benchmarks—examine competitive spending levels and historical company norms; Be strategic—apply brand equity models; Be observant—track both formally and informally.

4. Multiple research measures and methods should be used to assess the multiple potential sources and outcomes of brand equity.

210 Copyright © 2020 Pearson Education, Inc.

Chapter 12 Designing and Implementing Brand Architecture Strategies Learning Objectives 1. Define the key components of brand architecture.

2. Define a brand-product matrix.

3. Outline the principles of a good brand portfolio.

4. Assemble a basic brand hierarchy for a brand.

5. Describe how a corporate brand is different from a product brand.

6. Explain the role of brand architecture in strengthening a brand’s value and a firm’s performance.

7. Understand how sustainability initiatives, corporate social responsibility, and green marketing can enhance a brand.

Overview This chapter introduces identifies factors that affect the successful launch of new products and services and discusses the concepts of brand architecture, brand portfolios, and brand hierarchy, tools that can help a company make decisions regarding branding strategy.

Brand architecture strategy determines which brand elements they apply to new and existing products and services, which help consumers understand products and services and organize them in their minds. The brand-product matrix is a graphical representation of all the products sold by a firm. Each row of the matrix is labeled with a brand name, while each column represents a product. Thus, the rows of the matrix correspond to brand lines (all the products sold under a particular brand name) while the columns correspond to product lines, also known as brand portfolios (all the brands marketed in particular product categories). A firm’s branding strategy can be characterized according to its breadth, which refers to the number and nature of products that bear the same brand name, and its depth, which refers to the number and nature of brands in the same product category. Marketers can use the brand-product matrix to determine whether and where to make connections across products and brands.

A brand hierarchy visually illustrates the possible relationships that can be formed among the firm’s products through the selection of common and distinctive brand elements. The levels of the hierarchy might include the corporate or company brand at the top, followed by a family brand used in more than one product category, an individual brand that typically is restricted to one product category, and a modifier that designates a specific item or model.

Because a company’s marketing activity may result in different types of associations becoming linked to the brand names at various levels of the hierarchy, each name has the potential to impact the equity of brands at levels above and below it.

211 Copyright © 2020 Pearson Education, Inc.

The chapter concludes by discussing corporate branding strategies, including corporate responsibility, corporate image campaigns, and corporate name changes. Brand Focus 12.0 discusses corporate social responsibility, cause marketing, and green marketing.

Chapter Outline I. Preview 1. The successful launch of new products and services is of paramount importance to firms’ long-term financial prosperity.

2. Firms must maximize brand equity across all the different brands and products and services they offer.

3. The brand architecture strategy determines which brand elements they apply to their new and existing products and services—so consumers can understand products and services and organize them in their minds.

4. Firms employ complex brand architecture strategies that are reflected in brand names, which consist of multiple brand-name elements, and each element may signify an important aspect of a brand’s architecture.

5. Brand portfolios and brand hierarchies help define relationships among brands and products and help characterize and formulate brand architecture strategies.

6. Corporate branding strategies, corporate image dimensions, and specific issues associated with corporate brand management are covered.

II. Developing a Brand Architecture Strategy <Use Objective 1 Here> 1. A firm’s brand architecture strategy helps marketers determine which products and services to introduce, and which brand names, logos, symbols, and so forth to apply to new and existing products.

2. It defines the brand’s breadth or boundaries and its depth or complexity.

3. The role of brand architecture is to clarify brand awareness and to improve brand image.

III. Chapter Overview 1. Step 1: Defining brand potential 2. Step 2: Identifying brand extension opportunities 3. Step 3: Branding new products and services <Use Figure 12-1 Here> 212 Copyright © 2020 Pearson Education, Inc.

<Use The Science of Branding 12-1 Here> A. Step 1: Defining Brand Potential 1. Three important characteristics: a. Brand vision b. Brand boundaries c. Brand positioning 2. Articulating the brand vision, management’s view of the brand’s long-term potential, is influenced by how well the firm is able to recognize the current and possible future brand equity 3. A key aspect of changing brand architecture is the shifting boundaries of the brand, and many brands have transcended their initial market boundaries to become much more.

4. Sometimes marketers adopt a sequential approach to extending their brand, thereby gradually expanding brand meaning. <Use Branding Brief 12-1> 5. Without a clear understanding of its current equity, it is difficult to understand what a brand could be built on.

6. Brand vision needs to be aspirational, so the brand has room to grow and improve in the future, yet it cannot be unobtainable.

7. Brand vision relates to the higher-order purpose of the brand, based on keen understanding of consumer aspirations and brand truths.

8. Defining brand boundaries based on the brand vision and positioning and identifying the products or services the brand should offer, the benefits it should supply, and the needs it should satisfy: a. A broad brand is one with an abstract positioning that is able to support a higher-order promise applicable in multiple product settings. b. It often has a transferable point-of-difference, thanks to a widely relevant benefit supported by multiple reasons-to-believe or supporting attributes. c. All brands have boundaries. d. To improve market coverage, companies target different segments with multiple brands in a portfolio.

9. Brand positioning puts some specificity into brand vision.

213 Copyright © 2020 Pearson Education, Inc.

a. The four key ingredients are: i. Competitive frame of reference ii. Points-of-difference iii. Points-of-parity iv. Brand mantra b. The brand mantra should offer rational and emotional benefits and should be sufficiently robust to permit growth, relevant enough to drive consumer and retailer interest, and differentiated enough to sustain longevity.

B. Step 2: Identifying Brand Extension Opportunities 1. Determining the brand vision, boundaries, and positioning helps define the brand potential and provides a clear sense of direction for the brand.

2. Step 2 is to identify new products and services to achieve that potential through a well-designed and implemented brand extension strategy.

3. A brand extension is a new product introduced under an existing brand name: a. Line extensions are new product introductions within existing categories. b. Category extensions are new product introductions outside of existing categories.

4. It is important to carefully plan to optimal sequence of brand extensions to achieve brand potential.

5. Launching a brand extension is harder than it might seem—the vast majority of new products are extensions, and the vast majority of new products fail, so the implication is too many brand extensions fail.

6. An increasingly competitive marketplace will be even more unforgiving to poorly positioned and marketed extensions in the years to come.

C. Step 3: Specifying Brand Elements for Branding New Products and Services 1. The final step in developing the brand architecture is to decide on the specific brand elements to use for any particular new product or service associated with the brand.

2. One way to distinguish brand architecture strategies is by looking at whether a firm is employing an umbrella corporate or family brand for all its products, known as a branded house (BH) or a collection of individual brands with individual names, known as a house of brands (HOB).

214 Copyright © 2020 Pearson Education, Inc.

3. Most firms adopt a strategy between the two end points, employing various types of sub-brands.

4. A good sub-branding strategy can tap associations and attitudes about the company or family brand as a whole, while also allowing for the creation of new brand beliefs to position the extension in the new category.

5. Sub-brands play an important brand architecture role by signaling to consumers to expect similarities and differences in the new product.

6. In the absence of financial commitments to support disciplined and consistent marketing that establishes brand meaning, marketers are advised to adopt the simplest brand hierarchy possible.

IV. Brand Portfolios 1. A brand portfolio includes all brand sold by a company in a product category.

2. We judge a brand portfolio by its ability to maximize brand equity: any one brand in the portfolio should not harm or decrease the equity of others.

3. Ideally, each brand maximizes equity in combination with all other brands in the portfolio.

4. Firms introduce multiple brands in the same category because no one brand is viewed equally favorably by all the different distinct market segments the firm would like to target: a. They can pursue different price segments, channels of distribution, geographic boundaries, etc. b. They can increase shelf presence and retailer dependence in the store. c. They can attract consumers seeking variety who may otherwise switch to another brand. d. They can increase internal competition within the firm. e. They can yield economies of scale in advertising, sales, merchandising, and physical distribution.

5. Marketers need to trade off market coverage and other considerations with costs and profitability: a. A portfolio is too big if profits can be increased by dropping brands. b. It is not big enough if profits can be increased by adding brands.

215 Copyright © 2020 Pearson Education, Inc.

c. Brand lines with poorly differentiated brands are likely to be characterized by much cannibalization and require appropriate pruning. <Use Branding Brief 12-2 Here> 6. The basic principle in designing a brand portfolio is to maximize market coverage so that no potential customers are being ignored, but to minimize brand overlap so brands aren’t competing among themselves to gain the same customer’s approval; each brand should have a distinct target market and positioning. <Use Figure 12-3 Here> 7. Flankers or fighter brands typically create stronger points-of-parity with competitors’ brands so that more important, and more profitable, flagship brands can retain their desired positioning: a. Fighters must not be so attractive that they take sales away from their higher priced comparison brands or referents. b. If they are connected to the other brands in the portfolio in any way, they must not be designed so cheaply that they reflect poorly on these other brands.

8. Cash cows hold on to a sufficient number of customers and maintain their profitability with virtually no marketing support: a. Marketers can effectively milk these cash cows by capitalizing on their reservoir of existing brand equity. b. An example is Netflix’s DVD service, which has loyal customers and an operating profit of 50%.

9. Low-end, entry-level, or high-end, prestige brands leverage associations from other brands and distinguish themselves on price and quality: a. Low-end brands attract customers to the brand franchise. b. High-end brands add prestige and credibility to the entire portfolio.

V. Brand Hierarchies 1. A brand hierarchy is a useful means of graphically portraying a firm’s branding strategy by displaying the number and nature of common and distinctive brand elements across the firm’s products, revealing their explicit ordering.

2. We can brand a product in different ways depending on how many new and existing brand elements we use, and how we combine them for any one product.

216 Copyright © 2020 Pearson Education, Inc.

<Use Figure 12-5 Here> 3. The simplest representation from top to bottom might be: a. Corporate or company brand b. Family brand c. Individual brand d. Modifier (designating item or model) e. Product description A. Levels of a Brand Hierarchy 1. Corporate or company brand level is one brand and, for legal reasons, it almost always must be present somewhere on the product or package: a. Some firms use the corporate brand, while it is virtually invisible in other firms. b. Corporate image is the consumer associations to the company or corporation making the product or providing the service.

2. Family brand level, or range brand or umbrella brand, is used in more than one product category but is not necessarily the name of the company or the corporation: a. Most firms typically support only a handful of family brands. b. Marketers may apply family brands instead of corporate brands if products are too dissimilar to fit with one company brand or if they want to link common associations to multiple, distinct products. c. Firms have to support marketing programs of family brands may become weaker and less favorable.

3. Individual brands are restricted to one product category, but can be customized and supported by marketing activity to meet the needs of a specific customer group: a. All brand elements can focus on a certain target market. b. If the brand fails, the risk to other brands or the company is minimal. c. It is difficult, complex, and expense to develop separate marketing programs to build sufficient levels of brand equity.

217 Copyright © 2020 Pearson Education, Inc.

4. Modifier means to designate a specific item or model type or a particular version or configuration of the product: a. Adding a modifier can signal refinements or differences among brands related to factors such as quality levels, attributes, function, etc. b. Modifiers can help make products more understandable and relevant to consumers or even to the trade. c. They can become trademarks if they are able to develop a unique association with the parent brand.

5. Product descriptors may not be a brand element, but it may be an important ingredient of branding strategy because it helps consumers understand what the product is and does, and who it competes with.

B. Designing a Brand Hierarchy 1. Designing the right brand hierarchy is crucial. <Use Branding Brief 12-3 Here> 2. Brand elements at each level of the hierarchy may contribute to brand equity through their ability to create awareness and foster strong, favorable, and unique brand associations and positive responses.

3. The challenge in setting up brand hierarchy is to decide: a. The specific products to be introduced for any one brand b. The number of levels of the hierarchy to use c. The desired brand awareness and image at each level d. The combinations of brand elements from different levels of the hierarchy, if any, to use for any one particular product e. The best way to link any one brand element, if at all, to multiple products <Use Figure 12-6 Here> 4. When deciding which products to introduce, the principles of growth, survival, and synergy can help guide decisions: a. The principle of growth maintains that investments in market penetration or expansion versus product development for a brand should be made according to ROI opportunities. b. The principle of survival states that brand extensions must achieve brand equity in their categories (avoiding “me too” extensions).

218 Copyright © 2020 Pearson Education, Inc.

c. The principle of synergy states that brand extensions should enhance the equity of the parent brand.

5. Given product boundaries and an extension strategy in place, the first decision to make is which level or levels of the branding hierarchy to use: a. Most firms choose to use more than one level, so they can communicate additional, specific information about products and because developing brands at higher levels of the hierarchy is economical. b. The practice of combining an existing brand with a new brand is called subbranding or hybrid branding. c. Sub-branding can create a strong connection to the company or family brand and allows for the creation of brand-specific beliefs. <Use GATORADE Example Here> d. Sub-brands help organize selling efforts. e. Marketers can employ a host of brand elements as part of a sub-brand. f. The principle of simplicity is based on the need to provide the right amount of branding information to consumers—no more and no less. g. The desired number of levels of the brand hierarchy depends on the complexity of the product line or product mix. <Use ACURA Example Here> 6. Achieving the desired level of awareness and strength, favorability, and uniqueness of brand associations may take some time and call for a considerable change in consumer perceptions: a. The principles of relevance and differentiation should guide the brand knowledge creation process. b. The principle of relevance is based on the advantages of efficiency and economy; the greater the value of an association in the firm’s marketing, the more efficient and economical it is to consolidate meaning into one brand linked to all products: i. The more abstract the association, the more likely it is to be relevant in different product settings. ii. Benefit associations can cut across product categories. c. The principle of differentiation is based on the disadvantages of redundancy.

219 Copyright © 2020 Pearson Education, Inc.

d. A flagship product is one that best represents or embodies the brand to consumers. e. Combining brand elements from different levels can work but marketers need to decide how much emphasis to give each. f. The prominence of a brand element is its relative visibility compared with other brand elements. g. The principle of prominence states that the relative prominence of the brand elements determines which become the primary one(s) and which the secondary one(s): i. Primary brand elements should convey the main product positioning and points-of-difference. ii. Secondary brand elements convey a more restricted set of supporting associations such as points-of-parity or additional points-of-difference. h. The more prominent the brand element, the more emphasis consumers will give it in forming their brand opinions. i.

A brand endorsement strategy uses a brand element on the package, sign, or product but does not include it in the brand name; it establishes maximum distance between the corporate or family brand and the individual brand.

j.

Marketers can use the branding strategy screen to dial up or dial down different brand elements. <Use Figure 12-7 Here>

k. Brand elements may be linked to multiple products based on the principle of commonality. <Use Table-1 Here> VI. Corporate Branding 1. A corporate brand is distinct from a product brand because it can encompass a much wider range of associations.

2. A corporate brand name may be more likely to evoke associations of common products and their shared attributes or benefits, people and relationships, programs and values, and corporate credibility.

3. Building a strong corporate brand can necessitate that the firm keep a high public profile to influence and shape some of the more abstract associations.

220 Copyright © 2020 Pearson Education, Inc.

4. A firm must be willing to subject itself to more scrutiny and be extremely transparent in its values, activities, and programs.

5. A corporate brand offers a host of potential marketing advantages if corporate brand equity is carefully built and nurtured. <Use Branding Brief 12-4 Here> 6. Corporate brand equity is the differential response by consumers, customers, employees, other firms, or any relevant constituency to the words, actions, communications, products, or services provided by an identified corporate brand entity. <Use The Science of Branding 12-2 Here> A. Corporate Image Dimensions 1. A corporate or company brand may evoke strong associations to a product attribute, type of user, usage situation, or overall judgment.

2. If a corporate brand is linked to products across diverse categories, some of its strongest associations are likely to be intangible attributes, abstract benefits, or attitudes that span each of the different product categories.

3. A high-quality corporate image association creates perceptions that a company makes products of the highest quality 4. An innovative corporate image association creates consumer perceptions of a company as developing new and unique marketing programs, especially with respect to product introductions or improvements. <Use Branding Brief 12-5 Here> 5. Corporate image associations may reflect characteristics of employees of the company: a. Service employees and retail employees can affect brand equity. b. Toxic culture can also affect brand equity.

6. A customer-focused corporate image association creates consumer perceptions of a company as responsive to and caring about its customers.

7. Corporate image associations may reflect company values and programs that do not always directly relate to the products: a. Firms can run corporate-image ad campaigns to describe to consumers, employees, and others their philosophy and actions with respect to organizational, social, political, or economic issues.

221 Copyright © 2020 Pearson Education, Inc.

b. A socially responsible corporate image association portrays the company as contributing to community programs, supporting artistic and social activities, and attempting to improve the welfare of society as a whole. c. An environmentally concerns corporate image association projects a company whose products protect or improve the environment and make more effective use of scarce natural resources. <Use Brand Focus 12.0 Here> <Use BRITISH AIRWAYS Example Here> 8. Corporate credibility is an important set of abstract brand associations that depends on three factors: a. Corporate expertise b. Corporate trustworthiness c. Corporate likability 9. A highly credible company may be treated more favorably by other external constituencies. <Use L.L. BEAN Example Here> 10. A strong corporate reputation can help a firm survive a brand crisis and avert public outrage that could depress sales or block expansion plans.

B. Managing the Corporate Brand 1. Corporate social responsibility, corporate image campaigns, and corporate name changes are specific issues that arise in managing a corporate brand.

2. The role of a firm in society—how it treats its employees, shareholders, local neighbors, and other stakeholders—can impact consumer purchase decisions. <Use TOMS SHOES Example Here> 3. Corporate image campaigns are designed to create associations to the corporate brand as a whole, so they tend to ignore or downplay individual products or subbrands. <Use PHILIPS Example Here> 4. A number of different objectives are possible in a corporate brand campaign, with the first three being particularly critical in terms of building customer-based brand equity: a. Build awareness of the company and the nature of its business 222 Copyright © 2020 Pearson Education, Inc.

b. Create favorable attitudes and perceptions of company credibility c. Link beliefs that can be leveraged by product-specific marketing d. Make a favorable impressions on the financial community e. Motivate present employees and attract better recruits f. Influence public opinion on issues 5. A corporate image campaign may be useful when mergers or acquisitions transform the company.

6. Brand line campaigns promote a range of products associated with a brand line. <Use GENERAL MILLS Example Here> 7. Corporate names may have to change for many reasons, but they should be the right reasons pursued the right way: a. A merger or acquisition is often the impetus to reevaluate naming strategies. b. There are many nuances to identifying brand names for acquisition. <Use The Science of Branding 12-3 Here> c. Brand divestitures, leveraged buyouts, or the sale of assets may also necessitate brand name changes. d. Significant shifts in corporate strategy may necessitate name changes.

8. Renaming can yield growth opportunities, but name changes are complicated, time-consuming, and expensive: a. Firms should evaluate candidate names in terms of memorability, meaningfulness, likability, protectability, adaptability, and transferability. b. If the consumer market is the primary objective, the name may reflect or be suggestive of certain product characteristics, benefits, or values.

9. Once the firm has chosen a new name, it needs to be introduced to stakeholders and the public carefully and with research.

VII. Brand Architecture Guidelines 1. Brand architecture is a classic example of the art and science of marketing: a. It is important to establish rules and conventions and to be disciplined and consistent.

223 Copyright © 2020 Pearson Education, Inc.

b. It is also important to be flexible and creative.

2. Brand hierarchy may not be symmetric: a. Corporate objectives, consumer behavior, or competitive activity may dictate significant deviations in branding strategy. b. Brand elements may receive more or less emphasis, or not be present at all, depending on the products and markets.

3. There are six guidelines a. Adopt a strong customer focus b. Create broad, robust brand platforms c. Avoid overbranding and having too many brands d. Selectively employ sub-brands e. Selectively extend brands f. Ensure brand acquisitions mesh well with current brand architecture The Science of Branding

THE SCIENCE OF BRANDING 12-1 The Brand–Product Matrix The brand–product matrix is a graphical representation of all the brands and products sold by the firm. The rows of the matrix represent brand–product relationships. They capture the firm’s brand-extension strategy in terms of the number and nature of products sold under its different brands. A brand line consists of all products sold under a particular brand. The columns of the matrix represent product-brand relationships. They capture the brand portfolio strategy in terms of the number and nature of brands to be marketed in each category. The brand portfolio is the set of all brands and brand lines that a particular firm offers for sale to buyers in a particular category. <Use Figure 12-2 Here> A firm’s brand architecture strategy is characterized according to its breadth (in terms of brand–product relationships and brand extension strategy) and its depth (in terms of product-brand relationships and the brand portfolio or mix).

A product line is a group of products within a product category that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same type of outlets, or fall within given price ranges. A product mix (or product assortment) is the set of all product lines and items that a particular seller makes 224 Copyright © 2020 Pearson Education, Inc.

available to buyers. A brand mix (or brand assortment) is the set of all brand lines that a particular seller makes available to buyers.

Understanding the brand–product matrix and developing the right brand architecture strategy is key to success for many large firms. Firms must decide what areas of the business and associated target segments receive focus, how to tailor brand architecture to suit the needs of the predefined target market, and how to divest areas of the business that are not selected as focus areas.

THE SCIENCE OF BRANDING 12-2 Brand Architecture and Firm Performance Two types of brand architecture strategies are typically used by firm: 1) a single corporate brand name is used across all entities in the portfolio, or BH; and 2) distinct brands are not linked to the corporate brand and are cultivated for specific market segments, or HOB. BH was linked to the highest financial values, using stock market returns, in one study. Investors may underappreciate that a multitude of brands distributes the risk over more brands.

Brand architecture strategies have implications for a variety of different types of risk associated with a firm and can be related to impact on reputation, dilution, cannibalization, and brand stretch. Sub-branding may cause a brand to overextend, which may increase risk associated with a firm.

The characteristics of a brand portfolio might also impact the marketing and financial performance of firms, including: 1) number of brands owned; 2) number of segments in which they are marketed; 3) degree to which the brands in the firm’s portfolio compete with one another; 4) consumer perceptions of the quality and price of the brands in the firm’s portfolio. Brand architectures strategies may impact the stock returns accruing to the firm as well as the volatility and exposure associated with those returns. Investors value the efficiencies associated with BH.

THE SCIENCE OF BRANDING 12-3 When Brands Trade Hands Building products and brands internally can be slow and costly, and new product failures rates are high. A brand has different growth prospects depending on which firm owns it, which is a concern in a merger or acquisition context. Firms acquire brands from external sources to improve their competitive strength or to establish a presence in a new market or segment. As brand acquisitions are increasing in frequency and scope, academic research has explored issues surrounding acquisitions.

A key question that arises is whether these acquisitions benefit the acquiring firm by increasing its market share and by adding shareholder value and, if so, under what conditions? Researchers found that when the acquiring firm marketing capabilities overall were higher, investors increased how they valued the brand acquisition. Managers should carefully consider the nature of the resources available internally to ensure successful transfer of brands from the target to the acquiring firm. Managers should ensure that the following 225 Copyright © 2020 Pearson Education, Inc.

conditions are present to achieve successful transfer: 1) a strong target brand with significant brand equity; 2) strong organizational marketing management capability within the acquiring firm; 3) a low level of acquiring firm diversification. The potential for brand name change is also a factor in the success of an acquisition, as investors realize there are significant risks to a brand’s equity when an acquired brand undergoes a significant name change. <Use Figure 12-2 Here> Brand acquisitions represent a viable alternative to organic growth particularly for managers faced with high new product development costs and high rates of failure.

Branding Briefs

BRANDING BRIEF 12-1 Google: Expanding Beyond Search Google had a brand architecture dilemma as it expanded beyond search. It dominated the search industry for more than a decade, overcoming competition from Yahoo! and Microsoft’s Bing. Google sub-brands include Google Earth, Google maps, Google Play, and it has acquired other brands. In 2016, it unveiled a Google-branded smartphone, a virtualreality headset, a voice-activated home assistant, and a Wi-Fi router.

Google’s brand architecture has used a hybrid approach, which combines the corporate branded house (BH) approach with a portfolio of different brand names, or a house of brands (HOB) strategy. As the brand moved beyond its core business and explored risky ventures, the brand name’s lack of relevance was a challenge.

In 2016, Google reorganized itself by creating a parent company, Alphabet, which allowed Google to work in different areas without compromising the meaning of the Google brand name. Google remains one of the most successful technology brands in history.

BRANDING BRIEF 12-2 Expanding the Marriott Brand Marriott International grew to an international hospitality giant from a single root beer stand in Washington, D.C. in the 1920s. The Marriotts added hot food to their root beer stand and renamed their business the Hot Shoppe. As the number of regional Hot Shoppes grew, Marriott expanded into in-flight catering by serving food on Eastern, American, and Capital Airlines. Hot Shoppes began its food service management business and opened its first hotel in Arlington, Virginia. Hot Shoppes, which was renamed Marriott Corporation in 1967, grew nationally and internationally by making strategic acquisitions and entering new service categories. By 1977, sales topped $1 billion.

Marriott continued to diversify its business. The company initiated a segmented marketing strategy for its hotels by introducing the moderately priced Courtyard by Marriott brand.

Courtyard hotels were designed to offer travelers greater convenience and amenities, such as balconies and patios, large desks and sofas, and pools and spas.

226 Copyright © 2020 Pearson Education, Inc.

In 1993, Marriott Corporation split into two, forming Host Marriott to own the hotel properties, and Marriott International to manage them and franchise its brands. Marriott International bought a stake in the Ritz-Carlton luxury hotel group and expanded again in 1997 by acquiring the Renaissance Hotel Group. It further expanded to include TownePlace Suites, Fairfield Suites, and Marriott Executive Residences. Marriott added a new hotel brand in 1998 with the introduction of SpringHill Suites. The following year, the company acquired corporate housing specialist ExecuStay Corporation and formed ExecuStay by Marriott, now a franchise business.

The launch in 2007 of stylish EDITION hotels put Marriott in the luxury boutique market.

The Autograph Collection was also introduced in 2011, a diverse collection of highpersonality, upper-upscale independent hotels. AC Hotels by Marriott was another lifestyle hotel entry in 2011.

Today, Marriott International is one of the leading hospitality companies in the world, with 6,000 properties in 122 countries and territories worldwide that brought in almost $22 billion in global revenues in 2017. Its growth has been aided by acquisitions and by sharing its brand architecture with prospective guests on its Web sites to aid them in their lodging decisions. <Use Figure 12-4 Here> Overall, Marriott has approached its brand architecture decisions in a systematic way, ensuring market coverage and minimizing overlap.

BRANDING BRIEF 12-3 Netflix: Evolving a Brand Architecture to Grow the Brand Founded in 1997, Netflix pioneered the DVD-by-mail category, successfully challenging traditional video stores and driving industry leader Blockbuster into bankruptcy in the process. Netflix’s bold formula for success included flawless service delivery combined with a state-of-the-art movie recommendation engine for users. The company sponsored a contest with a $1 million prize to anyone who could improve its recommendation algorithm.

Netflix was focused on innovation, so it dove head-first into streaming technology, which resulted in challenges when it changed its pricing model at the same time as a deal with Starz ended. More than 600,000 customers terminated their accounts based on perceptions that they were paying more for less. The company then rebranding movies-by-mail to Qwikster and added video games, which caused a negative consumer response. It reversed its strategies and fixed the problems and has been deliberate and strategic in strengthening its brand since. It successfully pursued original programming and strengthened its brand presence in the entertainment category.

BRANDING BRIEF 12-4 Corporate Reputations: The Most Admired U.S. Companies

227 Copyright © 2020 Pearson Education, Inc.

Every year, Fortune magazine conducts a comprehensive survey of business perceptions of the companies with the best corporate reputations. The 2017 survey included the 1,500 largest U.S. and non-U.S. companies in 64 industry groups. To create industry lists, 3,800 respondents rated companies in their industry on nine criteria: (1) quality of management; (2) quality of products or services; (3) innovativeness; (4) long-term investment value; (5) financial soundness; (6) ability to attract, develop, and keep talented people; (7) responsibility to the community and the environment; (8) wise use of corporate assets; and (9) global competitiveness. Many of companies changed since 2010, but Apple has stayed in the top 10 for years. Fortune’s top 10 most admired companies in 2017 included: 1. Apple 2. Amazon.com 3. Starbucks 4. Berkshire Hathaway 5. Disney 6. Alphabet 7. General Electric 8. Southwest Airlines 9. Facebook 10. Microsoft Another informative survey, the RQ 2017 study of corporate reputations, conducted each year since 1999 by Harris Interactive and the Reputation Institute, demonstrated both the enduring character of corporate reputations and their ability to change quickly at the same time. Researchers determine which companies should be rated on the basis of a preliminary sampling of over 30,000 members of the U.S. general public, utilizing the proprietary Harris Poll online panel. Respondents are asked first to identify the 60 most visible companies and then to rate them on 20 different attributes that make up the Reputation Quotient (RQ) instrument. The attributes are then grouped into six different reputation dimensions: emotional appeal, products and services, social responsibility, vision and leadership, workplace environment, and financial performance. The 2017 rankings were: 1. Amazon 2. Wegmans 3. Publix 4. Johnson & Johnson

228 Copyright © 2020 Pearson Education, Inc.

5. Apple 6. UPS 7. Walt Disney 8. Google 9. Tesla 10. 3M Company

BRANDING BRIEF 12-5 Corporate Innovation at 3M 3M has fostered a culture of innovation and improvisation from its very beginnings. 3M makes more than 50,000 products, including adhesives, contact lenses, and optical films.

Each year, 3M launches scores of new products, and the company generates significant revenues from those introduced within the past five years. It regularly ranks among the top 10 U.S. companies each year in patents received. Under new Chief Technology Officer Ashish Khandpur, 3M raised its R&D spending budget from 5.5 percent of revenue in 2012 to 6 percent by 2017, and increase of $160 million annually. The firm is able to consistently produce innovations in part because it promotes a corporate environment that facilitates new discoveries: •

3M encourages everyone, not just engineers, to become product champions.

•

Each promising new idea is assigned to a multidisciplinary venture team headed by an executive champion.

•

3M expects some failures and uses them as opportunities to learn how to make products that work.

•

3M introduced social networks into its innovation process in 2010, inviting 75,000 global employees and over 1,200 other people to participate in its annual Markets of the Future brainstorming session. It leads to more than 700 new ideas and nine new markets so far.

Some of the innovations that 3M focused on in 2017 include utilizing Information and Communications Technologies to foster innovation, economic growth, and progress; helping Western Europe achieve the Industry 4.0 plan, which will make the manufacturing sector more efficient through computerization; and increasing sustainability through its organization’s infrastructure.

Brand Focus

BRAND FOCUS 12.0 229 Copyright © 2020 Pearson Education, Inc.

Corporate Social Responsibility and Brand Strategy Corporate Social Responsibility and Brand Strategy A key initiative that many firms have embraced is the rise of corporate social responsibility (CSR). Fortune 500 companies in the United States and the United Kingdom are spending more than $15 billion on corporate social responsibility initiatives. CSR activities can increase consumers’ preferences for a firm’s goods by providing a signal of quality and can create a halo effect that consumers’ value.

CSR has been broadly defined as the impact of business behavior on society. It is defined as “an organization’s obligation to maximize its positive impact and minimize its negative impact on society.” CSR activities include cause-related marketing, green marketing, sustainability, etc.

CSR activities improve brand perceptions by: •

Increasing legitimacy

•

Affecting credibility

•

Building brand awareness

•

Enhancing brand image

•

Evoking brand feelings

•

Creating a sense of brand community <Use ALS ICE BUCKET CHALLENGE Example Here>

•

Eliciting brand engagement

Designing Cause-Marketing Programs Cause marketing comes in many forms related to education, health, the environment, the arts, and so on. Some firms have used cause marketing very strategically to gain a marketing advantage.

A danger is that the promotional efforts behind a cause-marketing program could backfire if cynical consumers question the link between the product and the cause and see the firm as self-serving and exploitive, as a result. The hope is that cause marketing strikes a chord with consumers and employees, improving the image of the company and energizing these constituents to act.

Green Marketing

230 Copyright © 2020 Pearson Education, Inc.

A special case of cause marketing is green marketing. Although environmental issues have long affected marketing practices, especially in Europe, companies are increasingly recognizing that the environment is an important issue to their customers and shareholders and, therefore, to their bottom lines. <Use GE Example Here> There have been obstacles to branding related to green marketing programs: •

Overexposure and lack of credibility

•

Consumer behavior

•

Poor implementation

In the United States, firms continue to strive to meet the wishes of consumers concerning the environmental benefits of their products, while maintaining necessary profitability.

Discussion Questions and Answers 1. Pick a company. As completely as possible, characterize its brand portfolio and brand hierarchy. How would you improve the company’s branding strategies?

Answers will vary. Students may be divided into groups to analyze a company on its brand portfolio and hierarchy.

Page: 432 Learning Objectives 3 and 4: Outline the principles of a good brand portfolio; Assemble a basic brand hierarchy for a brand.

AACSB: Analytic Skills 2. How do technology companies leverage their brand name, and what key characteristics of their brand architecture do they typically follow? For example, contrast the brand architecture of Google and Yahoo! over the years.

Student responses may vary. Students should be directed to Branding Brief 12-1 on page 429 for information about Google.

Pages: 426, 429 Learning Objective 1: Define the key components of brand architecture.

AACSB: Analytic Skills 3. Pick your favorite clothing brand. What brand extension opportunities can you identify for it? Which, according to you, would fail?

231 Copyright © 2020 Pearson Education, Inc.

Students answers may vary. Students should be able to think about possible line extensions and category extensions.

Page: 435 Learning Objective 1: Define the key components of brand architecture.

AACSB: Analytic Skills 4. What are some of the product strategies and communication strategies that General Motors could use to further enhance the level of perceived differentiation between its divisions? How can online digital marketing and social media be utilized to strengthen the distinctions across brands within a particular portfolio?

As far as product strategies go, GM could minimize overlap between its divisions by eliminating models with similar positioning within different divisions. Also, GM could alter up its product line to keep the divisional positioning distinct from one another. For example, many have criticized the Cadillac Escalade in spite of its success because Cadillac has traditionally stood for luxury cars, not trucks. From a communications standpoint, GM might avoid running umbrella advertising campaigns that emphasize the GM name, using divisional and individual product ads exclusively.

Digital marketing and social media can provide information that helps GM target specific lifestyle and psychographic segments with messaging that distinguishes among the brands. Also, including the voice of the customer in the brand meaning can help shape the brand’s position in the marketplace, depending on who is talking about the brand and what they are saying.

Page: 432 Learning Objective 4: Assemble a basic brand hierarchy for a brand.

AACSB: Reflective Thinking 5. Identify a company that has organized its brand architecture using multiple levels in the hierarchy.

Review the design principles summarized in Table 12-1 and describe whether the brand architecture successfully follows these design principles. If not, how would you improve the brand architecture?

Answers will vary. Design goals include specifying products to introduce for growth, survival, or synergy; the number of levels in the hierarchy for simplicity; and combining elements from different levels for prominence or commonality. Students may be divided into small groups to compare and contrast their responses.

Page: 446 Learning Objective 6: Explain the role of brand architecture in strengthening a brand’s value and a firm’s performance.

AACSB: Analytic Skills 232 Copyright © 2020 Pearson Education, Inc.

6. Scan recent news stories for an announcement concerning an acquisition of a brand. Provide a justification for the acquisition from the acquirer’s standpoint. Describe the pros and cons of the acquisition.

Answers will vary. The Science of Branding 12-3 provides some insights that might shape general responses, as opposed to the specific information about the chosen acquisition. Students should recognize the importance of a maintained focus on acquired brands and the impact of brand architecture. Students may be divided into small groups to compare and contrast their responses.

Page: 455 Learning Objective 6: Explain the role of brand architecture in strengthening a brand’s value and a firm’s performance.

AACSB: Analytic Skills 7. Consider the companies listed in Branding Brief 12-4 as having strong corporate reputations. By examining their Web sites, can you determine why they have such strong corporate reputations?

Answers will vary. Examples students can choose from which are in Branding Brief 12-4 include the most admired U.S. companies as of 2017, which included 1) Apple, 2) Amazon.com, 3) Starbucks, 4) Berkshire Hathaway, 5) Disney, 6) Alphabet, 7) General Electric, 8) Southwest Airlines, 9) Facebook, and 10) Microsoft. The Branding Brief also includes the RQ Ranking, which adds 2) Wegmans, 3) Publix, 4) Johnson & Johnson, 6) UPS, 9) Tesla, and 10) 3M Company to the list of options. Students may be divided into small groups to look at the Web sites in class.

Page: 446 Learning Objective 5: Describe how a corporate brand is different from a product brand.

AACSB: Analytic Skills Exercises and Assignments 1. Have students select a brand with a multiple-level brand hierarchy and analyze the supporting marketing communications program to determine how the upper- and lowerlevel names are linked and differentiated.

For example, what benefits does Miller Lite receive from each level of the brand hierarchy? How are these benefits communicated in advertising and promotion? How does the product relate to other products that share brand names in the hierarchy?

Page: 456 Learning Objective 1: Assemble a basic brand hierarchy for a brand.

AACSB: Analytic Skills 233 Copyright © 2020 Pearson Education, Inc.

Question Type: Group Time to complete the exercise: 12–15 minutes This activity may be carried out after the class is introduced to the concept of brand hierarchies.

2. Assign students the task of identifying pairs of competing brands with different branding strategies (e.g., Kraft salad dressing and Wishbone, Arm & Hammer deodorant and Dry Idea, Hershey’s chocolate bar, and Baby Ruth). What conclusions, if any, can be drawn from comparing and contrasting the types of associations consumers have for each brand in the pair?

Page: 455 Learning Objective 1: Define the key components of brand architecture.

AACSB: Analytic Skills Question Type: Group Time to complete the exercise: 10–12 minutes This activity may be carried out at the end of the class.

3. Have the class divided into groups and assign a brand to each group. Have the groups characterize the brand architecture strategy for their brands using the brand–product matrix. This activity will provide the students a better view and understanding of brand line, brand portfolio, product line, product mix, and brand mix.

Page: 427 Learning Objective 1: Define the key components of brand architecture.

AACSB: Analytic Skills Question Type: Group Time to complete the exercise: 12–15 minutes This activity may be carried out at the end of the class.

4. Have the class divided into groups and have them assess the corporate branding for a brand of their choice. The students may then suggest changes that can be brought about to improve the corporate branding effect for the brands.

Page: 437 Learning Objective 5: Describe how a corporate brand is different from a product brand.

234 Copyright © 2020 Pearson Education, Inc.

AACSB: Analytic Skills Question Type: Group Time to complete the exercise: 15 minutes This activity may be carried out after the class is introduced to the concept of corporate branding.

Key Take-Away Points 1. A key aspect of managing brand equity is adopting a proper branding strategy.

2. Brand names consist of a combination of different names and other brand elements.

3. A brand architecture strategy for a firm identifies which brand elements a firm chooses to apply across the various products or services it sells.

4. Combining the brand–product matrix, the brand portfolio, and the brand hierarchy with customer, company, and competitive considerations can help a marketing manager formulate the optimal brand architecture strategy.

5. The brand–product matrix is a graphical representation of all the firm’s brands and products, with brands as rows and the corresponding products as columns.

6. Marketers should judge potential extensions by how effectively they leverage existing brand equity to a new product, as well as how effectively the extension, in turn, contributes to the equity of the existing parent brand.

7. Brand architecture strategy is characterized according to its breadth in terms of brand– product relationships and brand extension strategy, and according to its depth in terms of product-brand relationships and the brand portfolio or mix.

8. A firm may offer multiple brands in a category to attract different and potentially mutually exclusive market segments.

9. Brand can take on very specialized roles in the portfolio: as flanker brands to protect more valuable brands, as low-end entry-level brands to expand the customer franchise, as high-end prestige brands to enhance the worth of the entire brand line, or as cash cows to milk all potentially realizable profits.

10. A brand hierarchy reveals an explicit ordering of all brand names by displaying the number and nature of common and distinctive brand name elements across a firm’s products.

11. One simple representation of possible brand elements is corporate or company brand (on top), family brand, individual brand, and modifier (on bottom).

235 Copyright © 2020 Pearson Education, Inc.

12. When marketers use multiple brand names, as with a sub-brand, the relative visibility of each brand element determines its prominence.

13. Marketers must define the desired awareness and image at each level of the brand hierarchy for each product.

14. We want to create associations relevant to as many brands nested at the level below as possible and to distinguish brands at the same level.

15. Corporate or family brands can establish a number of valuable associations that differentiate the brand, such as common product attributes, benefits, or attitudes; people and relationships; programs and values; and corporate credibility.

16. In a brand acquisition or merger context, name changes can result in a sudden loss of brand equity.

17. Corporate social responsibility is increasingly important for brands.

236 Copyright © 2020 Pearson Education, Inc.

Chapter 13 Introducing and Naming New Products and Brand Extensions Learning Objectives 1. Define the different types of brand extensions.

2. List the main advantages and disadvantages of brand extensions.

3. Summarize how consumers evaluate extensions and how extensions contribute to parent brand equity.

4. Outline the key assumptions and success criteria for brand extensions.

Overview This chapter considers the role of product strategy in creating, maintaining, and enhancing brand equity by developing guidelines to improve the introduction and naming of new products and brand extensions. Recognizing that brands are among their most valuable assets, many firms leverage the brand value by introducing products under their strongest brand names. Firms seek to build power or mega brands that establish a broad market footprint and appeal to multiple customer segments with multiple products under one brand umbrella. Brand extensions apply an established brand name to a new product in the same product category (line extension) or in a different product category (category extension).

Brand extensions can facilitate new product acceptance by reducing consumers’ perceived risk, raising the probability of gaining distribution and trial, increasing the efficiency of promotional expenditures, lowering the costs of marketing programs, eliminating new brand development costs, allowing for packaging and labeling efficiencies, and permitting consumer variety seeking. They can provide feedback benefits to the parent brand by clarifying the meaning of a brand, enhancing the parent brand image, attracting new customers to the brand franchise, and thereby expanding market coverage, revitalizing the brand, and facilitating subsequent extensions.

However, brand extensions can confuse or frustrate consumers, encounter retailer resistance, hurt the parent brand image if they fail, cannibalize sales of the parent brand, diminish the parent brand’s identification with any one category, create unfavorable associations for the parent brand if they succeed, dilute the overall meaning of the parent brand, and eliminate the opportunity to develop a new brand with its own unique image and equity.

A firm engaging in a brand extension strategy should: 1) define actual and desired consumer knowledge about the brand, 2) identify possible extension candidates, 3) evaluate the potential of each candidate, 4) evaluate extension feedback effects, 5) consider possible competitive advantages and reactions, 6) design a marketing program to launch the extension, and 7) evaluate the success of the extension and its impact on the equity of the parent brand.

The chapter concludes by providing a detailed case study of Apple’s brand extension and growth strategies in Brand Focus 3.0.

237 Copyright © 2020 Pearson Education, Inc.

Chapter Outline I. Preview 1. New products can help a brand grow and achieve its potential.

2. Chapter 13 develops guidelines to improve the introduction and naming of new products and brand extensions.

3. Firms have decided to leverage the value associated with existing brands by introducing a host of new products under their strongest brand names: a. Many firms seek to build power or mega brands that establish a broad market footprint, appealing to multiple customer segments with multiple products all underneath one brand umbrella. b. Marketers are also realizing that too many product variations can be counterproductive, and ill-advised brand proliferation may actually repeal consumers.

4. The chapter describes brand extensions and outlines their advantages and disadvantages.

5. It presents a simple model of how consumers evaluate brand extensions and offers managerial guidelines for introducing and naming new products and brand extensions.

6. The chapter concludes with a summary of key academic research findings on brand extensions, followed by a detailed case study of Apple’s brand extension and growth strategies through the years.

II. New Products and Brand Extensions <Use Objective 1 Here> 1. Ansoff’s product and market expansion grid, known as the growth matrix, categorizes growth strategies according to whether they rely on existing or new products, and whether they target existing or new customers or markets. <Use Figure 13-1 Here> <Use Branding Brief 13-1 Here> 2. Existing products can further penetrate existing customer markets or push into additional ones, but new-product introductions are often vital to the long-run success of a firm.

3. When a firm introduces a new product, it can use one of three approaches for branding it: 238 Copyright © 2020 Pearson Education, Inc.

a. It can develop a new brand, individually chosen for the new product. b. It can apply one of its existing brands. c. It can use a combination of a new brand and an existing brand.

4. A brand extension occurs when a firm uses an established brand name to introduce a new product: a. When a new brand is combined with an existing brand, the brand extension can also be a sub-brand. b. An existing brand that gives birth to a brand extension is the parent brand. c. If the parent brand is already associated with multiple products through brand extensions, it may also be called a family brand.

5. Brand extensions fall into two general categories: a. Line extensions are new products within a product category the parent brand currently serves. b. Category extensions are applications where marketers apply the parent brand to a different product category from the one it currently serves.

6. Eighty to 90 percent of new product introductions in a given year are typically line or brand extension, but the product failure rate in the consumer goods sector are around 80 percent: a. A lack of a well-established brand name has surfaced as a key factor in product failure. b. Even so, many new products are introduced each year as new brands.

III. Advantages of Extensions <Use Objective 2 Here> Well-planned and well-implemented extensions offer a number of advantages that we can broadly categorize as those that facilitate new-product acceptance and those that provide feedback to the parent brand or company as a whole. <Use Figure 13-2 Here> A. Facilitate New-Product Acceptance 1. A well-known and well-liked brand helps consumers form expectations of its performance that transfer over to the extension if the brand associations are relevant to the new product.

239 Copyright © 2020 Pearson Education, Inc.

2. The inferences may improve the strength, favorability, and uniqueness of the extension’s brand associations.

3. If a new product is connected to a family brand, it can reduce perceived risk by customers.

4. Perceptions of corporate credibility—in terms of the firm’s expertise and trustworthiness—can be valuable associations in introducing brand extensions.

5. Retailers may be more likely to stock and promote a product introduced as an extension based on its increased likelihood of success.

6. Promotional expenditures are more efficient. <Use MOVIE SEQUELS AS LINE EXTENSIONS Here> <Use Figure 13-3 Here> 7. Extensions can reduce the costs of introductory and follow-up marketing programs because of the push and pull considerations in distribution and promotion.

8. Developing new brand elements is expensive; brand extensions can help avoid the cost of developing a new brand.

9. A brand extension can create a billboard effect in retail, increasing visibility on the shelf and can allow for packaging and labeling efficiencies if similar or identical packages and labels are used for extensions.

10. Brand variants within a product category permit consumer variety-seeking. <Use L’OREAL Example Here> B. Provide Feedback Benefits to the Parent Brand <Use Objective 3 Here> 1. Extensions can help parent brands clarify the meaning of a brand to consumers and define the kinds of markets in which it competes: a. Broader brand meaning is often necessary, so firms do not draw narrow boundaries around their brand and miss market opportunities or become vulnerable to well-planned competitive strategies. b. Thinking more broadly about product meaning can inspire different marketing programs and new-product opportunities. <Use Figure 13-4 Here> 2. Extensions can enhance the parent brand image: 240 Copyright © 2020 Pearson Education, Inc.

a. According to the customer-based brand equity model, one desirable outcome of a successful brand extension is that it may enhance the parent brand image by strengthening an existing brand association, improving the favorability of an existing brand association, adding a new brand association, or a combination of these. b. Successful brand extensions can clarify the parent brand’s core values and improve consumer perceptions of its credibility.

3. Extensions can bring new customers into the brand franchise and increase market coverage by creating news and bringing attention to the parent brand may benefit the family brand as a whole. <Use COKE ZERO Example Here> 4. Extensions can revitalize the brand.

5. Extensions can permit subsequent extensions.

IV. Disadvantages of Brand Extensions A. Can Confuse or Frustrate Consumers 1. Consumers may get confused or frustrated if they do not know which version of the product is right for them.

2. In some situations, greater product variety may induce shoppers to buy less.

3. Many retailers do not have enough shelf space to stock a large number of new products, so consumers may be disappointed if a new product is not available.

4. If a firm launches extensions that consumers feel are inappropriate, they may question the integrity or competence of the brand.

B. Can Encounter Retailer Resistance 1. The number of consumer packaged-goods stock-keeping units (SKUs) outpaces the growth of retail space in year-on-year percentage growth.

2. Own-brand or private-label goods continue to grow as a percentage of total grocery sales.

3. It has become impossible for a grocery store or supermarket to offer all the different varieties available across all the different brands in any product category.

4. Retailers often feel that many line extensions are “me-too” products that duplicate existing brands and should not be stocked, even if there is space. <Use Figure 13-5 Here> 241 Copyright © 2020 Pearson Education, Inc.

C. Can Fail and Hurt Parent Brand Image 1. Worst case scenario is if an extension fails and harms the parent brand image in the process.

2. A firm increases the risk of an expected problem when it links the brand to multiple products, particularly if the extension is well-known and does not have adequate performance.

D. Can Succeed, but Diminish Identification with Any One Category 1. Brand extensions may obscure the brand’s identification with its original categories, reducing brand awareness.

2. The brand needs to secure a dominant association to quality in the minds of consumers without strong product identification that might otherwise limit it. <Use Branding Brief 13-2 Here> E. Can Succeed, but Hurt the Image of the Parent Brand 1. If customers see a successful brand extension’s attribute or benefit associations as inconsistent or even conflicting with the corresponding associations for the parent brand, they may change their perceptions of the parent brand.

2. For example, pursuing the affordable luxury segment hurt Coach’s image as a luxury brand.

F. Can Dilute Brand Meaning (Especially evident with high-quality or prestige brands) <Use GUCCI Example Here> G. Can Cause the Company to Forego the Chance to Develop a New Brand V. Understanding How Consumers Evaluate Brand Extensions <Use Figure 13-6 Here> A. Managerial Assumptions <Use Objective 4 Here> 1. Consumers use their existing brand knowledge, and what they know about the extension category to infer what the extension product might be like.

2. Four basic conditions must generally hold true: 1. Consumers have some awareness of and positive associations about the parent brand in memory.

242 Copyright © 2020 Pearson Education, Inc.

2. At least, some of these positive associations will be evoked by the brand extension.

3. Negative associations are not transferred from the parent brand.

4. Negative associations are not created by the brand extension.

B. Brand Extensions and Brand Equity 1. For the brand extension to create equity, it must have sufficient awareness and achieve necessary and desired points-of-parity and points-of-difference.

2. Brand awareness depends on the marketing program and resources devoted to spreading the word about the extension.

3. The creation of a positive image for a perception depends on salience of parent brand associations; favorability of inferred associations in the extension context; and uniqueness of inferred associations in the extension context.

4. Competitive leverage is the set of advantages a brand conveys to an extended product in the new category.

5. Marketers must establish any required points-of-parity in the product category for extension products, particularly when the extension is dissimilar to the parent brand.

6. An extension must strengthen or add favorable and unique associations to the parent brand and not diminish the strength, favorability, or uniqueness of any existing associations.

7. The effects of an extension on consumer brand knowledge depend on four factors: 1. How compelling the evidence is about the corresponding attribute or benefit association in the extension context.

2. How relevant or diagnostic the extension evidence is for the attribute or benefit for the parent brand.

3. How consistent the extension evidence is with the corresponding parent brand associations.

4. How strongly existing attribute or benefit associations are held in consumer memory for the parent brand.

8. Feedback effects that change brand knowledge are most likely when consumers view information about the extension as equally revealing about the parent brand, and when they hold only a weak and inconsistent association between the parent brand and that information.

243 Copyright © 2020 Pearson Education, Inc.

<Use The Science of Branding 13-1 Here> C. Vertical Brand Extensions 1. Vertical brand extensions extend the brand up into more premium market segments or down into more value-conscious segments, are a common means of attractive new groups of consumers.

2. The equity of the parent brand can be transferred in either direction to appeal to consumers who otherwise would not consider it.

3. Vertical extensions have advantages: a. An upward extension can improve brand image. b. Extensions in either direction can offer consumers variety, revitalize the parent brand, and permit further extensions in a given direction.

4. Vertical extensions have disadvantages: a. A vertical extension to a new can confuse or frustrate consumers who have learned to expect a certain price range from a brand. b. If the upward extension is sub-branded on the basis of a new attribute addition, then competitive brands sharing that attribute may enter the picture and the parent brand may suffer. c. Consumers may reject the extension, which could hurt the parent brand’s image. d. For prestige brands, firms must maintain a balance between availability and scarcity so people aspire to be customers and do not feel excluded. e. Downward extensions can harm a parent brand’s image by introducing associations common to lower-priced brands, such as inferior quality or reduced service. f. Successful downward extensions can cannibalize sales of a parent brand.

5. Firms often adopt sub-branding strategies to distinguish their lower-priced entries or more difficult vertical extensions, upward brand stretches.

6. It is possible to use certain brand modifiers to signal a noticeable quality improvement—super-brands—to move the master brand up-market in a less risky way. <Use Branding Brief 13-3 Here> VI. Evaluating Brand Extension Opportunities 244 Copyright © 2020 Pearson Education, Inc.

<Use Figure 13-9 Here> A. Define Actual and Desired Consumer Knowledge about the Brand 1. Profiling actual and desired brand knowledge structures helps identify possible brand extensions as well as guide decisions that contribute to their success.

2. Because the introduction of an extension can change brand meaning, it can affect consumer response to all subsequent marketing activity.

B. Identify Possible Extension Candidates 1. Marketers should consider parent brand associations—especially as they relate to brand positioning and core benefits—and product categories that might seem to fit with that brand image in the minds of consumers.

2. Brainstorming and consumer research can help generate category extension candidates.

3. One or more associations can serve as the basis of fit.

C. Evaluate the Potential of the Extension Candidate 1. Marketers should assess—through judgment and research—the likelihood that the extension will realize the advantages and avoid the disadvantages of brand extensions.

2. The analysis of the 3Cs—consumer, corporate, and competitive factors—as well as category factors can be useful: a. Consumer factors include forecasts of the strength, favorability, and uniqueness of all associations (and inferred associations) to the brand extension. b. Common pitfalls include: i. Failing to take all consumers’ brand knowledge structures into account. ii. Overlooking how literal consumers can be in evaluating brand extensions. <Use BIC Example Here> c. Corporate and competitive factors can influence the success of extensions: i. Too many extensions products and too strongly entrenched competitions can put a strain on company resources.

245 Copyright © 2020 Pearson Education, Inc.

ii. Brand counterextensions—where a competing brand in the extension category launches its own extension in the parent brand’s category—can pose a significant threat. d. Category factors include cost interdependencies between products and consistency of the associated brand image across items that use the same brand: i. Line extensions of strong brands are more successful than extensions of weak brands. ii. Line extensions of symbolic brands enjoy greater market success than those of less symbolic brands. iii. Line extensions that receive strong advertising and promotional support are more successful than those extensions that receive meager support. iv. Line extensions entering earlier into a product subcategory are more successful than extensions entering later, but only if they are extensions of strong brands. v. Firm size and marketing competencies also play a part in an extension’s success. vi. Earlier line extensions have helped in the market expansion of the parent brand. vii. Incremental sales generated by line extensions may compensate for the loss in sales due to cannibalization.

D. Design Marketing Programs to Launch Extension 1. Brand extensions retain one or more elements from the existing brand: a. Packaging can be a critical component of brand equity. b. A brand extension can retain or modify one or more brand elements from the parent brand as well as adopt its own brand elements. c. New brand elements are often necessary to help distinguish the brand extension and build awareness and image.

2. Consumers perceptions of value must guide pricing decisions, distribution strategies must blend push and pull considerations, and the firm must integrate marketing communications by mixing and matching communication options: a. The less similar the extension is to the parent brand, the more important it is to establish necessary and competitive points-of-parity.

246 Copyright © 2020 Pearson Education, Inc.

b. Consumers must understand how the new product relates to existing products in order to minimize possible cannibalization or confusion.

3. Brand extensions will often leverage the same secondary associations as the parent brand—although competing in the extension category may require some additional fortification.

E. Evaluate Extension Success and Effects on Parent Brand Equity VII. Extension Guidelines Based on Academic Research <Use Figure 13-9 Here> 1. Successful brand extensions occur when the parent brand has favorable associations and consumers perceive a fit between the parent brand and the extension product.

2. There are many bases of fit—both product-related and nonproduct-related attributes and benefits may influence extension fit.

3. Depending on their knowledge of the product categories, consumers may perceive fit based on technical or manufacturing commonalities, or on surface considerations such as necessary or situational complementarity.

4. High-quality brands stretch farther than average-quality brands, although both types have boundaries.

5. A brand that consumers see as prototypical for a product category can be difficult to extend outside the category. <Use CLOROX Example Here> 6. Concrete attribute associations tend to be more difficult to extend than abstract benefit associations.

7. Consumers may transfer associations that are positive in the original product class but become negative in the extension context.

8. Consumers may infer negative associations about an extension, perhaps even based on other inferred positive associations.

9. It can be difficult to extend into a product class that consumers see as easy to make.

10. A successful extension can not only contribute to the parent brand image but also enable a brand to extend even farther.

11. An unsuccessful extension hurts the parent brand only when there is a strong basis of fit between the two.

247 Copyright © 2020 Pearson Education, Inc.

12. An unsuccessful extension does not prevent a firm from backtracking and introducing a more similar extension.

13. A cobranded brand extension can leverage the success and equity of two brands.

14. Both similar and dissimilar brands can partner successfully in a cobranded extension to achieve greater synergies.

15. Vertical extensions can be difficult and often require sub-branding strategies.

16. The most effective advertising strategy for an extension is one that emphasizes information about the extension (rather than reminders about the parent brand).

17. Individual differences can affect how consumers make an extension decision and will moderate extension effects: a. Incremental theorists, who believe the personality traits of a brand are malleable, are more accepting of brand extensions than consumers known as entity theorists, who believe a brand’s traits are fixed. b. Another important individual difference relates to self-construal, or how people view and make sense of life and their life (independent versus interdependent). c. Brand-schematic consumers are more likely than others to process or organize information according to their brand knowledge, while brandschematic consumers use other information like product characteristics or attributes as a frame of reference. d. Another individual difference is regulatory focus (prevention focus versus promotion focus.)

18. Cultural differences across markets can influence extension success.

The Science of Branding

THE SCIENCE OF BRANDING 13-1 Scoring Brand Extensions When identifying and evaluating brand extensions, it is helpful to have a summary tool to judge their viability. The following checklist can provide some guidance: 1. Does the parent brand have strong equity?

2. Is there a strong basis of extension fit?

3. Will the extension have necessary points-of-parity and points-of-difference?

4. How can marketing programs enhance extension equity?

248 Copyright © 2020 Pearson Education, Inc.

5. What implications will the extension have on parent brand equity and profitability?

6. How should feedback effects be best managed? <Use Figure 13-7 Here> It’s also useful to employ more systematic analysis of proposed extensions. The Brand Extendibility Scorecard is designed to help marketers conduct thoughtful, thorough analysis of brand extensions. It serves as a means to an end and is designed to inform decisionmaking, not to provide black-and-white “go or no-go” decisions. Three of its four main criteria follow the classic “3 Cs” perspectives—the consumer, company, and competitive point of view—to judge brand positioning. The fourth criterion is unique to the Scorecard and measures brand equity feedback. <Use Figure 13-8 Here> Within each criterion, there are two major factors and one minor factor. Major factors are scored on a 10-point scale, minor factors on a 5-point scale. Maximum points are awarded if the extension candidate is clearly ideal on that factor, using either company or industry measures. While scoring extensions, relative performance is important as absolute performance. Ranking extension candidates by their scores can provide a clear sense of priority. By first scoring recent successful and unsuccessful extensions for the brand and even for competitors, the marketing team becomes more familiar with the scorecard.

Branding Briefs

BRANDING BRIEF 13-1 Growing the McDonald’s Brand Market saturation, global health concerns, and economic uncertainty have presented significant obstacles to McDonald’s growth. To overcome these, the company has employed a number of different growth strategies that can be classified using the Ansoff growth matrix. As a result of these strategies, the company’s financial fortunes have rebounded, and McDonald’s has outperformed many of its peers in revenue growth. The brand has even been credited with producing a “halo effect” that is “driving growth for the entire quickservice restaurant category.” In the face of fierce competition, McDonald’s continues to provide new products to match consumer needs and focuses on cutting costs.

Market Penetration After markets were saturated in 2002, rather than trying to grow by adding new restaurants, McDonald’s would grow by generating greater returns from the ones it had. Thus, instead of investing in new real estate, the firm made huge investments in upgrading the facilities and operations of existing stores. One important way McDonald’s made it easier for its customers to spend more money was by expanding to 24-hour service at many stores. The menu has been constantly fine-tuned so there are offerings to suit any meal or snack opportunity. Breakfast has become an essential part of the McDonald’s revenue equation. A quarter of its domestic revenue—more than $6 billion—and half its profits come from 249 Copyright © 2020 Pearson Education, Inc.

breakfast. Snack Wraps and smoothies entice customers between meals. McDonald’s decade-long “I’m Lovin’ It” global advertising campaign has served as the perfect vehicle to support new product launches and enhance loyalty.

Market Development There are over 33,000 restaurants worldwide in 119 different countries today, and 1.5 million employees serve 69 million customers daily in the United States, Europe, the Middle East, the Asia-Pacific region, Africa, Canada, and Latin America. One key to its global success has been McDonald’s willingness to adapt its menu to different cultural preferences and regional tastes. The chain offers specialized menu items. McDonald’s targets different demographic and psychographic market segments as well. The product offerings in Happy Meals have been tweaked through the years to appeal to both children and their parents.

Product Development McDonald’s found its popularity in its core markets under threat as international concern grew about the role of fast food in poor health and obesity, highlighted by the 2001 book Fast Food Nation and the 2004 movie Super Size Me, among other critiques. McDonald’s responded by overhauling its menu. The shift in focus toward healthy eating and physical activity was emphasized by McDonald’s recasting of Ronald McDonald as its “Chief Happiness Officer,” a sports enthusiast who donned a more athletic version of his traditional yellow-and-red clown suit and snowboarded, skateboarded, and juggled fruit in a new TV spot. The company also tapped into the growing premium-coffee trend in the United States by launching McDonald’s Premium Roast coffee. McDonald’s also introduced a new line of premium hamburger and chicken sandwiches and offered the 20-piece Chicken McNugget offering to compete in the shared-meals segment.

Diversification McDonald’s has done some diversification to target new customers with new service offerings. It extended its brand in 2001 with the opening of its first domestic McCafé, a gourmet coffee shop inspired by the success of Starbucks that had debuted in Portugal and Austria. Another extension is McTreat, an ice cream and dessert shop. Several Golden Arch Hotels in Switzerland failed to make it, but it offers wedding packages at three locations in Hong Kong.

BRANDING BRIEF 13-2 Are There Any Boundaries to the Virgin Brand Name?

Virgin’s brand strategy is to go into categories where consumer needs are not well met and do different things—and do things differently—to better satisfy consumers. Branson founded the Virgin record label and launched Virgin Atlantic Airways. Later, he made millions on the sale of his record label, his Virgin record retail chain, and his Virgin computer games business. After licensing the use of the Virgin name to European startup airlines, he licensed the Virgin name for use on personal computers and set up joint ventures to market Virgin Vodka and Virgin Cola. Later, he took over six of the United Kingdom’s government rail lines and established Virgin Rail. In 1999, he launched Virgin Mobile and 250 Copyright © 2020 Pearson Education, Inc.

branched into e-commerce with the debut of Virgin.com. Today, the Virgin Group employs over 71,000 people, spans 30 countries, and contains more than 60 branded companies marketing such diverse product areas as travel, lifestyle, media and mobile, money, people and planet, music, health care, and alcohol.

When Virgin ventures are poorly received, as Virgin Cola, Virgin Vodka, Virgin PCs, Virgin Jeans, Virgin Brides, and Virgin Clothing were in recent years, experts worry about the cumulative negative effect of these unsuccessful brands on the company’s overall equity.

Some critics believe Virgin consumer products will do little more than generate publicity for Virgin airlines. They also warn of overexposure, even with the young, hip audience the Virgin brand has attracted.

Among the new products Branson is launching are Virgin Oceanic, for oceanic exploration, and Virgin Galactic, for space tourism on rocket ships. Yet Virgin has become more disciplined about its expansion in recent years: The company pursues new businesses only if they are expected to generate more than $150 million in sales within three years. Virgin is also placing great emphasis on sustainability and the environment. It quickly ends failed brand extensions, so they do not have a negative impact on the brand.

BRANDING BRIEF 13-3 Levi Extends Its Brand For years, market power had been shifting away from suppliers like Levi and toward retailers. Levi adopted a segmentation strategy to convince different types of retailers (department stores, specialty chains, upscale boutiques, and mass merchants) to carry its products. Under the segmentation strategy, Levi’s brands ranged from a relatively inexpensive discount line to $150-and-up vintage designs. Levi created the Signature by Levi Strauss & Co. brand to sell at mass merchants and began selling to Walmart in 2003.

Signature, positioned as a premium mass brand, carried new labels and styles manufactured from less expensive fabric. The Levi Strauss & Co. name appeared in cursive. At that time, Levi priced Signature jeans at $23—more than other mass brands but below its $29 regular brand.

Initially, the segmentation strategy created rough spots for other Levi brands. Orders from department stores slipped and sales of regular Levi’s, which had finally steadied leading up to the launch of the Signature brand, resumed their decline. Furthermore, a new high-fashion line called Type 1 failed. In 2006, Walmart’s price-chopping move ultimately proved effective and Signature jeans began to sell more quickly. The company also added lines of Signature baby clothing, bags and wallets, and men’s khaki pants, selling to other mass retailers such as Kmart and Meijer.

Levi attempted to expand into premium segments, selling premium lines such as Levi’s Capital E to Bloomingdales and Barney’s New York. The upward stretch has proven to be more challenging. The biggest launch was another discount brand, DENIZEN from Levi’s, first introduced into Asia in 2010. The name was chosen because it means “inhabitant” or someone belonging to a community of family and friends.

251 Copyright © 2020 Pearson Education, Inc.

Levi’s has continue to innovation through line extensions of the 501 brand like the CT (customized and tapered) jean, 501 Stretch, and 501 Skinny and offers some styles online to bypass traditional retail channels.

Brand Focus

BRAND FOCUS 13.0 Apple: Creating a Tech Megabrand A Brief History Apple was cofounded by Steve Jobs and Steve Wozniak in 1976. It initially manufactured personal computers entered the laptop segment in the 1990s, entered smaller consumer electronics with the iPod in 2001, launched the iTunes music store in 2003 and dropped the “Computer” from its name, then expanded into smartphones, tablets, smartwatches, and the Apple Pay. It launched SIRI in 2011 and reached more than one million iPad apps by March 2016 in its App Store. In June 2017, it had the highest market capitalization of any public company—$810 billion—and its annual profitability in net income terms was $45 billion.

Apple has maintained a focus on quality, design, and ease of use as it extended its brand name into multiple categories. Apple’s ability to seamlessly integrate between hardware and software along with vast digital content availability across devices have enabled Apple to provide exceptional value to its customers.

Apple’s Brand Image Apple’s mission has evolved from being a computer manufacturer to a mobile devices company and its former slogan, “Think Different” embodies a culture and guides Apple’s product offerings. Apple avoids introducing products that lack distinctiveness. A critical success factor is the user’s ability to switch across Apple devices with ease and the availability of identical features across multiple devices. Another one is the ability for devices to seamlessly connect to each other. It uses consistent brand elements (principle of commonality).

Apple’s brand image is linked to the personality of Steve Jobs, who emphasized excellence, innovation, and quality. Apple has a premium brand image, so Apple products are considered luxuries and act as symbols of status. Communications emphasize the futuristic nature of devices that enable the user to do things that were previously difficult or impossible. It creates buzz on social media (e.g., “Shot on iPhone”).

Apple Brand Strategy Over Time and Across Categories Apple has followed four types of growth strategies (Ansoff matrix) to strengthen its brand and its profitability: 1. Existing products—existing markets. For example, Apple has offered upgrades to existing customers.

252 Copyright © 2020 Pearson Education, Inc.

2. Existing products—new markets. For example, Apple has lowered prices of high-end products and offered line extensions that appeal to newer market segments (e.g., the vertical extension strategy with the iPod). Some cannibalization occurs; it is part of the strategy.

3. New products—existing markets. Apple offered complementary products to existing users (e.g., Apple Pay, Apple Music). <Use Figure 13-10 Here> 4. New products—new markets. Apple diversified into software, digital content, and retail outlets.

MARKETING PROGRAMS AND ACTIVITIES Product Apple’s product strategy involves entering into new markets with technologically advanced products that perform well and are well designed. Apple believes in continuous innovation.

Pricing Apple has used premium pricing approaches and has employed a skimming strategy. It used the vertical extension strategy with the iPod to minimize competitive threats while broadening the appeal of the iPod across customer segments.

Marketing Communications Apple limits its advertising through traditional mass media but used inspirational ad campaigns.

Distribution Apple distributes its product across online and bricks-and-mortar retail stores. Most of its sales take place online, but Apple’s retail stores are an important branding touchpoint.

Apple Brand Hierarchy and Extension Strategy Apple’s line and brand extensions have resulted in a product portfolio that is high in breadth, length, and depth. <Use Figure 13-11 Here> Brand and Line Extension Strategy Apple always focused on a key set of associations to support extensions across disparate categories. The points-of-differentiation included reinvention, innovation, and offering an exceptional user experience. Apple’s extensions have offered spillover effects.

FUTURE CHALLENGES FOR THE APPLE BRAND 253 Copyright © 2020 Pearson Education, Inc.

Sales Growth Apple’s top three product lines represent 90 percent of Apple’s total sales and the sales of those three products are falling.

Competition Competition from Alphabet Google (Android), Microsoft Windows, Samsung Galaxy, and Motorola’s Moto Z, as well as Fire Tablets, have posed challenges for the Apple brand.

Perceptions of superior functionality of the Android operating system and challenges with reaching new segments of customers in countries where they cannot afford high prices limits future growth of Apple.

Antibrand Activism The polarization of the brand landscape is a consequence of how closely digital devices are linked to consumers’ identities as individuals—so Android fans may dislike Apple.

Conclusion The Apple brand was valued at $178 billion by Interbrand. A key feature of the brand is its duality—its ability to appeal both rationally and emotionally to its customers. Its strategies have caused many consumers to develop deep, emotional connections with their Apple products.

Discussion Questions and Answers 1. Pick a brand extension. Use the models presented in the chapter to evaluate its ability to achieve its own equity as well as contribute to the equity of a parent brand. If you were the manager of that brand, what would you do differently?

Answers will vary. The class may be divided into groups and each group may be assigned with a brand extension.

Page: 484 Learning Objective 4: Outline the key assumptions and success criteria for brand extensions.

AACSB: Analytic Skills 2. Do you think Virgin’s brand is overextended? What are the arguments for or against?

Answers will vary. Students may refer Branding Brief 13-2 to inform their responses.

Page: 479 Learning Objective 4: Outline the key assumptions and success criteria for brand extensions.

254 Copyright © 2020 Pearson Education, Inc.

AACSB: Analytic Skills 3. How successful do you predict these recently proposed extensions will be? Why? a. Mont Blanc (famous for pens): fragrances and other accessories (watches, cufflinks, sunglasses, and pocket knives) b. Evian (famous for water): high-end spas c. Starbucks (famous for coffee): film production and promotion d. A company such as LinkedIn which enables networking for employment opportunities: a business magazine Answers will vary. Students may be divided into four groups, each choosing a proposed brand extension.

Page: 482 Learning Objective 4: Outline the key assumptions and success criteria for brand extensions.

AACSB: Analytic Skills 4. Consider the following brands, and discuss the extendibility of each: a. Harley-Davidson b. Red Bull c.

Tommy Hilfiger

d. Whole Foods e.

Netflix

f.

U.S. Marines

g. Grey Goose Vodka h. LEGO i.

BlackBerry

j.

Las Vegas

k. Kate Spade l.

Game of Thrones 255 Copyright © 2020 Pearson Education, Inc.

m. ESPN Answers will vary. The class may be divided into twelve groups, each being assigned with a brand.

Page: 484 Learning Objective 3: Summarize how consumers evaluate extensions and how extensions contribute to parent brand equity.

AACSB: Analytic Skills 5. There are four fake brand extensions among the following list; the other six were marketed at one point.

Can you identify the four fakes? a. Ben-Gay Aspirin: Pain Relief That Comes with a Warm Glow b. Burberry Baby Stroller: For Discriminating Newborns c.

Smith & Wesson Mountain Bikes: Ride without fear

d. Atlantic City Playing Cards: Talcum-Coated for Easy Shuffling e.

Pond’s Toothpaste: Reduces the Appearance of Fine Wines

f.

Slim Jim Beef-Flavored Throat Lozenges: For Meat Lovers Who Like to Sing Karaoke

g. Frito-Lay Lemonade: A Tangy, Crunchy Thirst Quencher h. Cosmo Yoghurt: Spoon It Up, Slim Down Those Thighs i.

Richard Simmons Sneakers: Shake Your Cute Little Booty to the Oldies

j.

Madonna Condoms: For Men Who Are Packing

The six real brand extensions are: Ben-Gay Aspirin; Smith & Wesson Mountain Bikes; Pond’s Toothpaste; Richard Simmons Sneakers; and Madonna Condoms.

The four fake brand extensions are: Burberry Baby Stroller; Atlantic City Playing Cards; Slim Jim Beef-Flavored Throat Lozenges; Frito-Lay Lemonade; and Cosmo Yoghurt.

Page: 484 Learning Objective 1: Define the different types of brand extensions.

AACSB: Analytic Skills

256 Copyright © 2020 Pearson Education, Inc.

Exercises and Assignments 1. Challenge students to identify brands with the greatest number of line extensions.

Discuss the implications of such proliferation for the company, consumers, the trade, and the brand’s competitive position. Robitussin cough syrup, Trojan condoms, L’eggs pantyhose, and Pampers diapers are examples of brands with numerous line extensions.

Page: 469 Learning Objective 1: Define the different types of brand extensions.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 8–10 minutes This activity may be carried out at the end of the class.

2. Do #1 above, but look at category extensions instead.

Page: 469 Learning Objective 1: Define the different types of brand extensions.

AACSB: Analytic Skills Question Type: Individual/Group Time to complete the exercise: 8–10 minutes This activity may be carried out at the end of the class.

3. Have students pick two competing brands (preferably two that have not introduced category extensions) and poll consumers regarding possible extensions for each. Analyze the differences and the reasons for them.

Page: 484 Learning Objective 3: Summarize how consumers evaluate extensions and how extensions contribute to parent brand equity.

AACSB: Analytic Skills Question Type: Individual Time to complete the exercise: 15–18 minutes This activity may be carried out at the end of the class.

257 Copyright © 2020 Pearson Education, Inc.

4. Have students pick out brand extensions that they think failed. The students may then assess the reason behind the failures based on the disadvantages of brand extensions the text talks about.

Page: 477 Learning Objective 2: List the main advantages and disadvantages of brand extensions.

AACSB: Analytic Skills Question Type: Individual Time to complete the exercise: 10–12 minutes This activity may be carried out at the end of the class.

Key Take-Away Points 1. A brand extension occurs when a firm uses an established brand name to introduce a new product.

2. Extensions can be either introduced in a product category currently served by the parent brand (i.e., line extension), or a completely different product category (i.e., category extension).

3. The basic assumptions behind brand extensions are 1) consumers have some awareness of and positive associations about the parent brand in memory and 2) the brand extension will evoke some of these.

4. Marketers assume there will not be negative feedback effects from the brand extension to existing products.

5. The extension’s ability to establish its own equity will depend on the salience of consumers’ associations with the parent brand in the extension context and the favorability and uniqueness of any associations they infer.

6. Marketers need to carefully consider brand extension strategies by 1) defining actual and desired consumer knowledge about the brand; 2) identify possible extension candidates; 3) evaluate the potential of extension candidates; 4) design marketing programs to launch extensions; 5) evaluate extension success and effects on parent brand equity.

258 Copyright © 2020 Pearson Education, Inc.

Chapter 14 Managing Brands Over Time Learning Objectives 1. Understand the important considerations in brand reinforcement.

2. Describe the range of brand revitalization options available to a company.

3. Outline the various strategies to improve brand awareness and brand image.

4. Define the key steps in managing a brand crisis.

Overview The health and well-being of a brand can be significantly affected by both external forces related to shifts in consumer behavior, competitive strategies, government regulations, technological advances, and other areas. The firm’s strategic focus may force minor and major adjustments in the way it markets its brands.

Any marketing action a firm takes today can change consumers’ brand awareness or brand image and have an indirect effect on the success of future marketing activities. Marketers have a difficult time trying to anticipate future consumer responses.

Brand Focus 14.0 discusses the concept of responding to a brand crisis by throwing light on how Tylenol’s product tampering crisis was handled, followed by discussing crisis marketing guidelines.

Chapter Outline I. Preview 1. The constant change in the marketing environment is one of the challenges in managing brands: shifts in consumer behavior, competitive strategies, government regulations, technological advances, and other areas can affect the fortunes of a brand.

2. The firm’s own strategic focus may force minor or major adjustments in the way it markets its brands.

3. Effective brand management requires proactive strategies designed to maintain or enhance customer-based brand equity in the face of the different forces.

4. Any marketing action a firm takes can change consumers’ brand awareness or brand image and have an indirect effect on the success of future marketing activities.

259 Copyright © 2020 Pearson Education, Inc.

5. Marketers may have a particularly difficult time trying to anticipate future consumer responses; new knowledge structures that will influence future consumer response often don’t exist until the short-term marketing actions occur.

6. Marketers must actively manage brand equity over time by reinforcing the brand meaning and making adjustments to the marketing program to identify new sources of brand equity.

II. Reinforcing Brands <Use Objective 1 Here> 1. We reinforce brand equity by marketing actions that consistently convey the meaning of the brand to consumers in terms of brand awareness and brand image: a. What products does the brand represent, what benefits does it supply, and what needs does it satisfy? b. How does the brand make those products superior? What strong, favorable, and unique brand associations exist in the minds of consumers?

2. Brand meaning in terms of products, benefits, and needs, as well as in terms of product differentiation, depends on the firm’s general approach to product development, branding strategies, and strategic concerns.

3. Brand reinforcement examines three key issues: a. Advantages of maintaining brand consistency b. Importance of protecting sources of brand equity c. Trade-offs between fortifying and leveraging brands 4. Brands can never stay still; they must be constantly moving forward. <Use COLDPLAY Example Here> <Use Figure 14-1 and 14-2 Here> A. Maintaining Brand Consistency 1. Maintaining consistency involves two key aspects: a. Consistency of marketing support b. Consistency of brand associations

260 Copyright © 2020 Pearson Education, Inc.

2. Brand consistency is critical to maintaining the strength and favorability of brand associations.

3. Another way to achieve a consistent appeal is through retro-marketing, or convincing consumers that heritage brands have nostalgic appeal that can help consumers connect with their past.

4. Inadequate marketing support is an especially dangerous strategy when combined with price increases. <Use DELTA Example Here> 5. Brand such as Disney, McDonald’s, Mercedes Benz, and others have been true to their strategies once thy achieved a preeminent market leadership position.

6. Managing brand equity with consistency may require making numerous tactical shifts and changes to maintain the strategic thrust and direction of the brand: a. The most effective tactics for a particular brand at any one time can vary. b. Prices may move up and down, product features may be added or dropped, ad campaigns may employ different creative strategies and slogan, and different brand extensions may be introduced or withdrawn to create the same desired knowledge structures in consumers’ minds.

7. Many brands have kept a key creative element in their marketing communication programs over the years and have created advertising equity. <Use Branding Brief 14-1 Here> 8. Brands sometimes return to their roots to remind existing or lapsed customers and to attract new ones.

9. Older, heritage brands can reach into their past in different ways to develop successful new marketing campaigns: a. Dubbed “retro-branding” or “retro-advertising” by some marketing pundits, the tactic is a means to tie in with past advertising that was, and perhaps could still be, a key source of brand equity. b. Retro-branding can activate and strengthen brand associations that would be virtually impossible to recreate with new advertising today. c. Heritage can be a powerful point-of-difference—at least as long as it conveys expertise, longevity, and experience and not just age. d. Anniversaries and milestones of longevity can be excellent opportunities to launch a campaign to celebrate.

261 Copyright © 2020 Pearson Education, Inc.

e. Marketers should focus as much on the future of the brand as on its past, of course, perhaps emphasizing how all that the brand has gone through will benefit its customers in the future. f. Research shows that nostalgic advertising can positively influence consumers: i. One empirical study confirmed that intentionally nostalgic advertisements yielded favorable attitudes toward the advertisement and the brand. ii. Another study identified a potential source of nostalgic purchase behavior, called “intergenerational influence,” or the influence of a parent’s purchase behavior and brand attitudes on a child’s behavior and attitudes. g. Some brands attempt to make the case that their enduring appeal is still relevant for lapsed users today. <Use Branding Brief 14-2 Here> B. Protecting Sources of Brand Equity 1. Consistency guides strategic direction and does not prescribe the tactics of the supporting marketing program for the brand at any one point in time.

2. Unless a change in consumer behavior, competition, or the company makes the strategic positioning of the brand less powerful, there is likely little need to deviate from a successful positioning.

3. Brand should always look for powerful new sources of brand equity, but the top priority is to preserve and defend those that already exist.

4. Brand crises are unavoidable. <Use Branding Brief 14-3 Here> <Use The Science of Branding 14-1 Here> 5. The two principles to keep in mind as you craft a response to a crisis or scandal to recover brand reputation are swiftness and sincerity: a. The longer it takes a firm to respond to a marketing crisis, the more likely customers will form negative impressions based on unfavorable media coverage or word-of-mouth and/or permanently switch to alternatives. b. Public acknowledgement of the severity of the impact on consumers and willingness to take necessary and feasible steps to solve the crisis reduce the chance that consumers will form negative attributions for the firm’s behavior.

262 Copyright © 2020 Pearson Education, Inc.

<Use Table 14-1 Here> C. Fortifying versus Leveraging 1. Marketers face trade-offs between activities that fortify brand equity and those that leverage or capitalize on existing brand equity to reap some financial benefit.

2. Marketers can design marketing programs that mainly try to capitalize on or maximize brand awareness and image (reducing advertising expenses, seeking increasingly higher price premiums, or introducing brand extensions).

D. Fine-Tuning the Supporting Marketing Program 1. Marketers are more likely to change the specific tactics and supporting marketing program for the brand than its basic positioning and strategic direction.

2. For brands whose core associations are primarily product-related performance attributes or benefits, innovations in product design, manufacturing, and merchandising are critical to maintaining or enhancing brand equity: a. Product innovations are critical for performance-based brands whose sources of equity reside primarily in product-related associations. b. It is important not to change products too much, especially if the brand meaning for consumers is wrapped up in the product design or makeup. c. In making product changes to a brand, marketers want to reassure loyal consumers that it is a better product, but not necessarily a different one.

3. For brands whose core associations are primarily nonproduct-related attributes and symbolic or experiential benefits, relevance in user and usage imagery is especially critical: a. Nonproduct-related associations may be easier to change through a new advertising campaign that communicates a different user or usage situation. b. Ill-conceived or too-frequent repositionings can blur the image of a brand and confuse or perhaps alienate consumers. c. It is dangerous to flip-flop between product-related performance and nonproduct-related imagery associations because of the fundamentally different marketing and advertising approaches each entails. <Use JCPENNEY Example Here> E. Revitalizing Brands <Use Objective 2 Here>

263 Copyright © 2020 Pearson Education, Inc.

1. Prominent and admired brands have fallen on hard times or completely disappeared.

2. Some brands have made impressive comebacks in recent years as marketers breathed new life into their customer franchises.

3. Brands may have to return to their roots to recapture lost sources of equity or brand meaning may have to fundamentally change to recapture market leadership.

4. The comeback trail must include revolutionary changes to reinforce brand meaning.

5. To turn around fortunes of a brand: a. Marketers must look for the original sources of brand equity. b. Marketers need to accurately and completely characterize the breadth and depth of brand awareness; the strength, favorability, and uniqueness of brand associations and brand responses held in consumer memory; and the nature of consumer-brand relationships. c. Marketers must assess the extent to which key brand associations are adequately functioning as points-of-difference or points-of-parity to properly position the brand. d. Marketers must decide whether to retain the same positioning or create a new one and, if the latter, which positioning to adopt.

6. Revitalization strategies obviously run along a continuum, with pure, back-tobasics at one end and pure reinvention at the other. <Use FEBREZE Example Here> <Use Branding Brief 14-4 Here> <Use Branding Brief 14-5 Here> <Use Branding Brief 14-6 Here> 7. With an understanding of the current and desired brand knowledge structures in hand, the two strategic options to best refresh old sources of brand equity or create new ones to achieve the intended positioning are: a. Expand the depth or breadth of brand awareness, or both, by improving consumer recall and recognition of the brand during purchase or consumption settings.

264 Copyright © 2020 Pearson Education, Inc.

b. Improve the strength, favorability, and uniqueness of the brand associations making up the brand image.

8. Tactically, we can refurbish lost sources of brand equity and establish new ones in the same three ways we create sources of brand equity to start with: a. By changing brand elements b. By changing the supporting marketing program c. By leveraging new secondary associations F. Expanding Brand Awareness <Use Objective 3 Here> 1. Depth of awareness is often not the problem with a fading brand; it is the breadth of brand awareness, meaning consumers think of the brand in very narrow ways.

2. If the brand has reasonable consumer awareness and a positive brand image, the most appropriate starting point can be to increase usage by changing brand salience and awareness: a. Increase the level or quantity of consumption (most relevant for impulse purchases where usage increases with availability). b. Increase frequency of consumption (attractive for market leaders): i. Identify additional or new usage opportunities via communications that highlight more frequent use in existing situations or in new situations: 1. Remind consumers to use the brand as close as possible in time to situations for which it could be used. <Use CHOBANI Example Here> 2. Increase perceptions of usage.

3. Provide consumers with information about when they need to replace the product.

4. Persuade consumers of benefits of more regular usage. ii. Identify new and completely different ways to use the brand. <Use COACH Example Here> G. Improving Brand Image 265 Copyright © 2020 Pearson Education, Inc.

1. We may need to create a new marketing program to improve the strength, favorability, and uniqueness of brand associations making up the brand image: a. We may need to bolster any positive associations that have faded or to neutralize negative associations that have been created and create additional positive associations. b. Marketers need to identify the target market: i. Retain vulnerable customers. ii. Recapture lost customers. iii. Identify neglected segments. iv. Attract new customers. <Use TOMMY HILFIGER Example Here> 2. Regardless of the type of target market segment, repositioning the brand sometimes requires us to establish more compelling points-of-difference: a. Make mature brands more contemporary. b. Change brand elements.

III. Adjustments to the Brand Portfolio A. Migration Strategies a. The brand migration strategy helps consumers to understand how various brands in the portfolio can satisfy their needs as they change over time, or as the products and brands themselves change over time. b. Managing brand transitions is especially important in rapidly changing, technologically intensive markets. c. A corporate or family branding strategy in which brands are ordered in a logical manner could provide the hierarchical structure in consumers’ minds to facilitate brand migration.

B. Acquiring New Customers a. Firms must proactively develop strategies to attract new customers, especially younger ones. b. The challenge often lies in marking a brand relevant to vastly different generations and cohort groups or lifestyles.

266 Copyright © 2020 Pearson Education, Inc.

c. The challenge is greater when the brand has a strong personality or user image associations that tie it to one particular consumer group.

C. Retiring Brands a. A fading brand may be retrenched to reduce the number of product types. b. Marketing support can be eliminated if a large and loyal enough customer base exists (harvest). c. An orphan brand may have a customer base that is too small to warrant advertising and promotional expenditures. d. A product may be discontinued or divested/sold.

D. Obsoleting Existing Products a. Technological changes and shifting consumer tastes can often spell trouble for brands that have not kept up with changes in the marketplace. b. Discontinuing brands or deliberate obsoleting can pave the way for innovative new brands. c. The decision depends on existing and latent equity of the brand.

The Science of Branding

THE SCIENCE OF BRANDING 14-1 Understanding Brand Crises <Use Objective 4 Here> 1. Consumers respond differently to brand crises depending on the brand’s personality.

2. Consumers with strong relationships with brands may be more likely to punish the brand if they experience a crisis due to a sense of injustice or betrayal.

3. Consumers with strong brand relationships may be more willing to forgive the brand or counter argue when the crisis does not impact them directly.

4. Crises involving related brands can impact the parent brand and other brands in the category as well as other brands that carry the brand name.

5. Brand crises can provide opportunities to strengthen relationships with customers.

In most cases, crises incidents can be detrimental to a brand’s reputation.

Branding Briefs

BRANDING BRIEF 14-1 267 Copyright © 2020 Pearson Education, Inc.

Patagonia Patagonia has a mission and values focused on sustainability. It makes things to last and to be useful and asks its consumers not to buy things they don’t need or can’t use. As a result of its commitment to social and environmentally responsible business practices, the brand resonates with consumers. In 2007, Fortune named Patagonia the “Coolest Company on the Planet” and it introduced the Footprint Chronicles. In 2008, the company began sharing practices of greening supply chain and built a sustainability index. It founded the Sustainable Apparel Coalition in coordination with Walmart and collaborated with its competitors on a dying process. It launched a “Worn Wear” program to repair used items and keep them out of landfills. It drops suppliers that do not behave in a socially responsible way. In 2017, Patagonia announced it will accept used closing for store credit, repairing and reselling the used items as Worn Wear.

BRANDING BRIEF 14-2 Pabst The Pabst Blue Ribbon (PBR) brand was born in 1882, was a major U.S. beer brand through 1977, then declined due to competition, quality problems, and ownership changes. However, sales of PBR spiked in Portland, Oregon in 2001 because young trendsetters were adopting the beer as a blue-collar alternative to big brands and craft brews favored by their parents.

Pabst capitalized on the market through word-of-mouth, on-premise promotions, event sponsorships, and licensed merchandise aimed at hipsters. By letting the brand’s image be created as much by consumers as by the company, Pabst grew sales over the next nine years.

Its new parent company tried to revitalize other brands that were popular in the early 1970s.

BRANDING BRIEF 14-3 Volkswagen In September 2015, the Environmental Protection Agency found that Volkswagen cars sold in the United States were equipped with software that falsely improved the performance of diesel engines on emissions tests. It acknowledged the cheating. An analysis of Twitter data using (1) the frequency of mentions of the Volkswagen brand name, (2) the sentiment towards the brand, and (3) topics that dominated the conversation at various points of time indicated that the frequency of mentions varied and seemed to parallel actions by Volkswagen. The findings suggested that while sentiment toward the brand was extremely negative at the beginning of the scandal, sentiment became more neutral over time. <Use Table 14-1 Here>

BRANDING BRIEF 14-4 Harley-Davidson Motor Company Harley-Davidson has twice narrowly escaped bankruptcy and is today one of the most recognized brands in the world. In recovering from its financial downfalls, Harley-Davidson realized its product needed to better live up to the brand promise. Harley’s back-to-basics 268 Copyright © 2020 Pearson Education, Inc.

approach to revitalization centered on improving factories and production process to achieve higher levels of quality. The company also dialed up marketing efforts to better sell its products. Establishing a broader access point with consumers to make the brand relevant to more people, Harley was able to attract a diverse customer base that went way beyond the traditional biker image. The company also changed the way it went to market.

The company established an owners’ club, the Harley Owners Group (HOG), which sponsors bike rallies, charity rides, and other motorcycle events. Every Harley owner becomes a member for free by signing up at the www.hog.com Web site. Harley-Davidson began a licensing program to protect its trademarks and promote the brand. Early efforts primarily supported the riding experience with products like T-shirts, jewelry, small leather goods and other products appealing to riders. Currently, the primary target for licensed products is existing customers through the Harley dealer network. To attract new customers, though, Harley-Davidson has licensed children’s clothing, toys, games, and many other items aimed at children and sold beyond the dealer network. As business grew, Harley-Davidson created Harley-Davidson MotorClothes to produce traditional riding gear along with men’s and women’s casual sportswear and accessories to reach an ever-expanding and diverse customer base of riders and non-riders.

Harley-Davidson continues to promote its brand with grassroots marketing efforts. Many employees and executives at the company own Harleys and often ride them with customers, making traditional advertising almost unnecessary. For women and smaller riders, Harley offers Sportster motorcycles that are built low to the ground with narrower seats, softer clutches, and adjustable handlebars and windshields. Several times a year Harley dealers hold garage parties for women to help them learn about their bikes. Women now represent about 12 percent of sales.

Harley-Davidson maintains about 50% market share of motorcycles in the United States; its market share in Europe is around 10%. In 2015, Harley-Davidson opened 40 new international dealerships with plans to add 150 more by 2020. However, it was plagued with recalls that were reminiscent of their brand troubles in the 1970s and, ultimately, revenue declined. Revenues and stock price dipped in early 2016, but Harley is increasing revenues and stock prices. They introduced a new engine that provides more power and comfort while minimizing bumps and engine noise.

BRANDING BRIEF 14-5 A New Morning for Mountain Dew Mountain Dew was launched in 1969, unsuccessfully attempted to bring the brand to urban teenagers in the 1980s, and then hit its stride in the 1990s, experiencing phenomenal doubledigit growth. Mountain Dew was the fastest-growing major U.S. soft drink for much of the decade. Growth was fueled by some edgy advertising from PepsiCo’s long-time ad agency BBDO that was funny and fast-paced. The tag line “Do the Dew” was a strong call to action, and the ads were a high-energy blast of adrenalin.

The next decade saw much product expansion, introduction of nontraditional marketing, and a pioneering digital strategy. To better connect with its core teen audience, Mountain 269 Copyright © 2020 Pearson Education, Inc.

Dew increased its sponsorship of the Mix Tape street basketball tour and the Dew Action Sports Tour. The company also launched the Dew U loyalty program, in which drinkers exchanged codes printed under bottle caps for a variety of goods available on the Dew U Internet site. In 2005, Mountain Dew launched another brand extension, a highly caffeinated energy drink called MDX aimed at the estimated 180 million video game players, by introducing it as the official soft drink of the E3 Electronics Entertainment Expo.

All these actions helped Mountain Dew remain the number four carbonated U.S. beverage in terms of sales throughout the decade. A logo change on the packaging occurred in 2008, as the company chose the simpler “Mtn Dew.” An even bigger change was a viral marketing experiment in crowdsourcing that put customers into the actual product development process. The initial “Dewmocracy” campaign began in 2007 and included an online game in which players designed a new drink.

The follow-up Dewmocracy campaign in 2009 raised the stakes. Mountain Dew marketers put the bulk of their marketing budget online to allow consumers to select three new flavors to be distributed nationwide. Enormous buzz followed—much of it generated by the actual product users, as intended.

During NBA All-Star 2017, Mountain Dew created the game beyond the game fan experience with marketing activations and a rallying cry to “Do You.” It also increased its presence in E-Sports Sponsorship.

BRANDING BRIEF 14-6 Remaking Burberry’s Image Burberry, founded in 1856 by 21-year-old Thomas Burberry, was a veritable “fashion disaster” in the mid-1990s. Yet, within a span of several years, with the help of contemporary designs and updated marketing, the brand shrugged off its staid image and became fashionable again. One of Burberry’s first moves to freshen the brand was to leverage its classic beige-check plaid in a series of accessories that quickly became bestsellers, including handbags, scarves, and headbands. Another was rejuvenating the check itself by using different colors, patterns, sizes, and materials. Burberry was careful to maintain a balance between the contemporary and the traditional. It also sought to leverage other iconic imagery, such as the trench coat and the Prorsum horse insignia. Another key to Burberry’s turnaround was refreshing its advertising. The ads were credited with bringing a “rebellious, streetwise image to the brand.” The company gave its retail stores a makeover as well in order to match the contemporary feel of the new designs.

Together, these different efforts turned the company’s fortunes around. After peaking in 2002 with a successful IPO, the brand began to suffer from overexposure and a slew of counterfeit products. Following a holiday sales slump in 2004, the company knew it had to set a different course. A number of marketing changes were implemented. The trademark tan/black/white/red Burberry plaid was dialed down and made more discreet. More emphasis was placed on high-margin accessories—non-apparel accounts for one-third of revenue—and high-end fashions.

270 Copyright © 2020 Pearson Education, Inc.

Benefiting from vibrant emerging markets such as China, a constantly updated new product pipeline, and one of the most advanced digital strategies of any luxury brand, Burberry found itself in 2011 with annual revenues over $2 billion, far exceeding financial forecasts. In 2015, Burberry launched a 40-piece capsule collection called Burberry XO Barneys New York which was inspired by the Prorsum collection. It launched with a feature on Barneys’ microsite, a digital lookbook, and an Instagram initiative. Burberry invested in mobile marketing through a partnership with Apple and WeChat.

Brand Focus

BRAND FOCUS 14.0 Responding to a Brand Crisis Originally introduced by McNeil Laboratories as a liquid alternative to aspirin for children, Tylenol achieved nonprescription status when McNeil was bought by Johnson & Johnson (J&J) in 1959. J&J’s initial marketing plan promoted a tablet form of the product for physicians to prescribe as a substitute for aspirin when allergic reactions occurred. Tylenol consists of acetaminophen, a drug as effective as aspirin in the relief of pain and fever but without the stomach irritation that often accompanies aspirin use. Backed by this selective physician push, sales for the brand grew slowly but steadily over the course of the next 15 years. Advertising support for the brand was heavy.

The Tylenol Product Tampering Crisis All this success came crashing to the ground in the first week of October 1982, with the news that seven people had died in the Chicago area after taking Extra-Strength Tylenol capsules that turned out to contain cyanide poison. Consumer confidence was severely shaken. Most marketing experts believed the damage to the brand’s reputation was irreparable and that Tylenol would never fully recover.

The Tylenol Product Tampering Recovery Within the first week of the crisis, J&J issued a worldwide alert to the medical community, set up a 24-hour toll-free telephone number, recalled and analyzed sample batches of the product, briefed the Food and Drug Administration, and offered a $100,000 reward to apprehend the culprit of the tampering. The company began a voluntary withdrawal of the brand by repurchasing 31 million bottles with a retail value of $100 million. It stopped advertising, and all communications with the public were in the form of press releases. To monitor consumer response to the crisis, J&J started to conduct weekly tracking surveys with 1,000 consumer respondents. The company introduced a capsule exchange offer, promoted in half-page press announcements in 150 major markets across the country, that invited the public to mail in bottles of capsules and receive tablets in exchange. Although well intentioned, this offer met with poor consumer response.

Later, J&J made its return to TV advertising with the goals of convincing Tylenol users they could continue to trust the safety of Tylenol products and encouraging the use of the tablet form until tamper-resistant packaging was available. Six weeks after the poisonings and after intense behind-the-scenes activity, the chairman of J&J held a live teleconference with 600 271 Copyright © 2020 Pearson Education, Inc.

news reporters throughout the United States to announce the return of Tylenol capsules to the market in a new, triple-sealed package that was regarded as virtually tamperproof. To get consumers to try the new packaging, the company undertook the largest program of couponing in commercial history.

Millions of coupons offering a free Tylenol product (valued up to $2.50) were distributed in Sunday newspapers nationwide. J&J’s ad agency developed three ad executions using the testimony of loyal Tylenol users with the goal of convincing consumers that they could continue to use Tylenol with confidence. By February 1983, sales for Tylenol had almost fully returned to the lofty pretampering sales levels the brand had enjoyed six months earlier.

Johnson & Johnson and McNeil Consumer Healthcare’s remarkable recovery from the brink of disaster allowed the company to reap the benefits of market leadership. The tide began to turn in the 1990s, however, as the possibility of liver damage and even death from taking more than the recommended dosage of Tylenol was found.

Tylenol’s Quality Control Crises Concerns about dosage were exacerbated by a series of disastrous quality-control scandals and problems. These wounds were self-inflicted, and although no deaths occurred, the care, comfort, and confidence of Tylenol customers was at stake, making Johnson & Johnson’s actions highly troubling. Cost-cutting and a change in oversight procedures let several defective products fall through the cracks, while errors in judgment after the fact only compounded the problems.

J&J recalled several hundred batches of Tylenol, Motrin, Benadryl, and St. Joseph’s Aspirin, 20 months after it reportedly first began to receive consumer complaints about moldysmelling bottles that made some people feel ill. The culprit was the breakdown of a chemical used to treat wood pallets that transported and stored product packaging in a Las Piedras, Puerto Rico facility. J&J also recalled millions of bottles of Tylenol, Benadryl, Zyrtec, and Motrin because excessively high levels of an active drug, metal specks, or ingredients that had failed testing requirements led to possible safety violations.

These unprecedented quality-control miscues cost the company $1 billion in sales and, perhaps more importantly, the trust, respect, and admiration of the public it had worked so hard to preserve back in 1982. After much criticism contrasting his handling of the quality control problems with the product tampering crisis, CEO William Weldon stepped down in April 2012.

Crisis Marketing Guidelines Another brand sharply criticized for its crisis response was Exxon. Although this company spent millions of dollars advertising its gasoline and crafting its brand image over the years, it essentially ignored the need to market its corporate identity and image. Brands as diverse as Wendy’s restaurants, Firestone tires, Tyco diversified holdings, and Vioxx painkiller have all experienced a potentially crippling brand crisis. Marketing managers must assume that at some point in time, a similar incident will occur. In general, the better they have established

272 Copyright © 2020 Pearson Education, Inc.

brand equity and a strong corporate image—especially credibility and trustworthiness—the more likely their firm can weather the storm.

Careful preparation and a well-managed crisis management program are also critical, however. The two keys to effectively managing a crisis are that the firm’s response should be swift and that it should be sincere.

Swiftness—The longer it takes a firm to respond to a marketing crisis, the more likely that customers will form negative impressions based on unfavorable media coverage or word-ofmouth. Perhaps worse, they may decide they do not really like the brand after all and permanently switch to alternatives.

Sincerity—Swift actions must also come across as sincere. Public acknowledgment of the severity of the impact on consumers and willingness to take whatever steps are necessary and feasible to solve the crisis reduce the chance that consumers will form negative attributions for the firm’s behavior.

Brand crises are difficult to manage because, despite a firm’s best efforts, these situations are hard to control. To some extent, the firm is at the mercy of public sentiment and media coverage, which it can attempt to direct and influence but which sometimes take on a life of their own. Swift and sincere words and actions go a long way toward defusing the situation.

Discussion Questions and Answers 1. Which external changes in the marketing environment influence management decisions for automotive brands over time?

Students should be encouraged to examine all kinds of external sources of change (e.g., political, economical, social, technological, environmental, and legal).

Page: 513 Learning Objective 1, 2: Understand the important considerations in brand reinforcement; Describe the range of brand revitalization options to a company.

AACSB: Analytic Skills 2. Pick a product category. Examine the histories of the leading brands in that category over the last decade. How would you characterize their efforts to reinforce or revitalize brand equity?

Answers will vary. The class may be divided into groups and each group may be assigned with a product category.

Page: 515 Learning Objectives 1 and 2: Understand the important considerations in brand reinforcement and describe the range of brand revitalization options to a company.

273 Copyright © 2020 Pearson Education, Inc.

AACSB: Analytic Skills 3. Identify a fading brand. What suggestions can you offer to revitalize its brand equity? Try to apply the different approaches suggested in the chapter. Which strategies would seem to work best?

Excite@Home is a fading brand that still could be revitalized. The company could find new applications for the brand, such as an online media and entertainment provider, a full-service corporate services provider, and a consumer research provider.

Excite@Home could also attempt to enter new markets globally in order to increase its market coverage. A new marketing program might improve the image of the company in the minds of consumers.

Page: 525 Learning Objective 3: Outline the various strategies to improve brand awareness and brand image.

AACSB: Analytic Skills 4. Try to think of additional examples of brands that adopted either a back-to-basics or reinvention revitalization strategy. How well did the strategies work?

After a slump in the mid-1990s under Quaker Oats management, the Triarc Beverage Group bought the Snapple brand and employed a back-to-basics revitalization strategy to help get the brand back on its feet. Triarc returned to classic ad styles, reinstated the familiar fan favorite “Snapple Lady,” reverted to the former distribution system, and utilized classic packaging. Triarc successfully turned Snapple around before selling it to Cadbury-Schweppes in 2000. Miller High Life employed a reinvention revitalization strategy as it repositioned the brand from “The Champagne of Bottled Beers” to a more earthy, everyday beer with the help of narrative ads that focused on the product and commonplace usage occasions. Miller High Life enjoyed success in the early 2000s using this reinvention strategy.

Page: 525 Learning Objective 2: Describe the range of brand revitalization options to a company.

AACSB: Analytic Skills 5. Choose a brand that has recently experienced a marketing crisis. How would you evaluate the marketers’ response? What did they do well? What did they not do well?

How did the company utilize social media to control the crisis incident? Which of the recovery approaches used by the company worked well, particularly in social media?

Answers will vary. Students must ensure that their answers reflect current brand developments and perhaps the region of the world where the student is located.

274 Copyright © 2020 Pearson Education, Inc.

Page: 522 Learning Objective 4: Define the key steps in managing a brand crisis.

AACSB: Analytic Skills Exercises and Assignments 1. Ask students to pick a classic Disney movie—Snow White, Cinderella, Lady and the Tramp, 101 Dalmatians, etc.—and analyze the company’s strategy for maintaining brand equity in the film over the years. Factors examined might include the theater re-release schedule, limits on the number of video copies made available, and the marketing communications campaign that accompanies a re-release.

Page: 512 Learning Objective 1: Understand the important considerations in brand reinforcement.

AACSB: Analytic Skills Question type: Individual Time to complete the exercise: 10–12 minutes This activity may be carried out at the end of the class.

2. Have students identify brands that have had long, robust lives, analyze the reasons for their continued success, and suggest ways their parent companies might leverage or capitalize on their equity. Possible brands include Wrigley’s, Campbell’s, Crest, and Gillette.

Page: 515 Learning Objective 3: Outline the various strategies to improve brand awareness and brand image.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 15–18 minutes This activity may be carried out at the end of the class.

4. Have groups of students pick out a real crisis faced by a brand. The students may then discuss how the crisis could have been handled differently.

Page: 521 Learning Objective 4: Define the key steps in managing a brand crisis.

275 Copyright © 2020 Pearson Education, Inc.

AACSB: Analytic Skills Question type: Group Time to complete the exercise: 12–15 minutes This activity may be carried out after the class is taught about responding to a brand crisis.

Key Take-Away Points 1. Effective brand management requires taking a long-term view and recognizing any changes in the supporting marketing program for a brand may affect the success of future marketing programs.

2. A long-term view dictates proactive strategies designed to maintain and enhance customer-based brand equity over time, in the face of external changes in the marketing environment and internal changes in a firm’s marketing goals and programs.

3. Marketers reinforce brand equity by actions that consistently convey the meaning of the brand.

4. The strategy for reinforcing brand meaning depends on the nature of the brand association.

5. In managing brand equity, managers have to make trade-offs between those marketing activities that fortify the brand and reinforce its meaning and those that attempt to leverage or borrow from existing brand equity to reap a financial benefit.

6. Revitalizing a brand requires marketers to either recapture lost sources of brand equity or establish new ones.

7. Although changing brand awareness is probably the easiest means of creating new sources of rand equity, a new marketing program to improve the strength, favorability, and uniqueness of brand associations is often required.

8. Managers must avoid destroying equity when they reposition the brand image and must consider the role of different brands in the portfolio and their relationships over time.

9. If a brand encounters a crisis, being swift and sincere are important.

276 Copyright © 2020 Pearson Education, Inc.

Chapter 15 Managing Brands Over Geographical Boundaries and Market Segments Learning Objectives 1. Understand the role of a regional marketing strategy with a focus on marketing based on geodemographics, ethnicity, and age.

2. Understand the rationale for developing a global brand.

3. Outline the main advantages and disadvantages of developing a standardized global marketing program.

4. Define a global brand and describe the strategic steps in developing a global brand positioning.

5. Describe how to tailor different marketing mix elements to global markets.

6. Describe some of the unique characteristics of brand building in emerging growth markets such as China.

Overview Chapter 15 looks at managing brand equity in different types of market segments, both in domestic markets and in international markets. It examines market segments within the U.S. market to showcase brand management issues over regional, demographic, and cultural market segments and takes an in-depth look at millennials as a demographic group.

It provides a basic rationale for taking brands into new international markets and considers broader issues in developing a global brand strategy. It looks at the pros and cons of developing a standardized global marketing program before concentrating on specific strategic and tactical issues in building global customer-based brand equity. It ends with Brand Focus 15.0, which addresses branding issues in the high growth Chinese market.

Chapter Outline I. Preview 1. Chapter 15 looks at managing brand equity in different types of market segments, both in domestic markets and in international markets.

2. It examines market segments within the U.S. market to showcase brand management issues over regional, demographic, and cultural market segments, including an in-depth look at millennials as a demographic group.

3. It provides information on international issues and global branding strategies: a. It reviews the basic rationale for taking brands to new international markets.

277 Copyright © 2020 Pearson Education, Inc.

b. It considers broader issues in developing a global brand strategy. c. It examines the pros and cons of developing a standardized global marketing program.

4. It concentrates on the specific strategic and tactical issues in building global customer-based brand equity, organized around the “Ten Commandments of Global Branding.”

5. It addresses branding issues in the Chinese market in Brand Focus 15.0.

II. Regional Market Segments 1. Regional marketing has grown due to high-quality data about purchasing behavior in-store and online: a. Facebook and Google include geotargeting and the ability to target different segments. b. Syndicated data from companies like AC Nielsen provide insights about where consumers live, where they shop, and what media they use. c. A regional targeting strategy can make a brand more relevant and appealing.

2. There are downsides to regionalization: a. Marketing efficiency may suffer. b. Costs may rise. c. Regional campaigns may force local producers to become more competitive and blur a brand’s national identity. <Use UNDERSTANDING BEHAVIOR STAGES AND LIFESTYLES OF CONSUMERS USING NIELSEN’S SPECTRA Here> III. Other Demographic and Cultural Segments <Use Objective 1 Here> 1. Any market segment can be a candidate for a specialized marketing and branding program a. Demographic dimensions such as age, income, gender, ethnicity, and race, as well as psychographic considerations, often relate to differences in shopping behaviors or attitudes about brands. b. Differences can serve as the rationale for separate branding and marketing programs.

278 Copyright © 2020 Pearson Education, Inc.

2. Decisions about segmentation depend on the costs and benefits of customized marketing efforts relative to programs with a less targeted focus.

A. Marketing Based on Age 1. Millennials are consumers born after 1980 that have distinct traits that single them out from a marketing standpoint. <Use Campbell’s Soup Marketing Memo Here> 2. Millennials have distinguishing features.

B. Marketing Based on Ethnicity 1. Different ethnicities have unique characteristics, tastes, and preferences such that brands are customized and tend to be more appealing. <Use Table 15-1 Here> 2. African Americans have not been effectively targeted, perhaps because English is their first language and they watch network television, so companies may rely on general marketing campaigns to reach them: a. Black people have different preferences, customs, and require special effort. b. African Americans often exhibit strong togetherness and pride in heritage. c. They are often seen as style leaders who set fashion trends among younger people. d. The challenge is to create relevant marketing programs and communication campaigns that accurately portray brand personality and avoid fostering stereotypes, offending sensibilities, or lumping market segments together.

3. Hispanics and Latinos have been targeted with unique marketing and advertising strategies: a. Unique ads that are developed for a specific Hispanic ethnic group can be three times more effective than those translated into Spanish. b. Social networking has special resonance for Hispanics and Latinos in the United States as a way to keep in touch with family members elsewhere. c. Hispanic and Latinos are heavy users of online video. d. They are underserved in terms of digital marketing and advertising spends.

4. Asian Americans are among the fastest growing groups in the United States:

279 Copyright © 2020 Pearson Education, Inc.

a. Asian American household have a larger-than-average ownership of Internet devices, greater emphasis on marriage, parenthood, hard work, and career success. b. Companies like Costco and Toyota have developed marketing campaigns to target Asian Americans.

5. The downside to targeting specific ethnic or cultural groups is some consumers do not like being targeted on the basis of being different since it reinforces their image as outsiders or a minority.

6. Consumers who are not targeted may feel alienated or distanced from the company and brand. <Use BEST PRACTICE CASE STUDIES IN MARKETING TO ETHNIC GROUPS Here> IV. Global Branding <Use Objectives 2-4 Here> A. Why Should a Brand Focus on Global Markets?

1. Perception of slow growth and increased competition in domestic markets 2. Belief in enhanced overseas growth and profit opportunities 3. Desire to reduce costs from economies of scale 4. Need to diversify risk 5. Recognition of global mobility of customers B. Advantages of Global Marketing 1. Economies of scale in production and distribution 2. Lower marketing costs 3. Power and scope 4. Consistency in brand image 5. Ability to leverage good ideas quickly and efficiently 6. Uniformity of marketing practices <Use Figure 15-1 Here> C. Disadvantages of Global Marketing 280 Copyright © 2020 Pearson Education, Inc.

1. Differences in consumer needs, wants, and usage patterns for products 2. Differences in consumer response to branding elements 3. Differences in consumer response to marketing mix elements 4. Differences environment

in brand and product development and the competitive

5. Differences in the legal environment 6. Differences in marketing institutions 7. Differences in administrative procedures <Use Figure 15-2 Here> <Use The Science of Branding 15-1 Here> D. Differences in Consumer Response to Branding Elements 1. Linguistic differences across countries can twist or change the meaning of a brand name.

2. Lexicon is a well-known brand consultancy that uses linguists to assess brand names for clients.

3. Mental representations of verbal information are coded mainly visually among Chinese and in a phonological manner among English speakers.

E. Differences in Consumer Responses to Marketing Mix Elements 1. Consumers in different parts of the world feel differently about marketing activity.

2. There are also differences in advertising style and how consumers use social media.

3. Price sensitivity, promotion responsiveness, sponsorship support, and other activities may differ by country.

F. Differences in Brand and Product Development and the Competitive Environment 1. Products may be at different stages of their life cycle in different countries.

2. Perceptions and positions of brands may differ across countries, based on local market conditions.

3. The nature of competition may also differ; brand managers should have a plan to address unexpected rivals.

281 Copyright © 2020 Pearson Education, Inc.

G. Differences in the Legal Environment 1. The legal restrictions change from country to country: a. Global ad campaigns have different restrictions in different countries. b. Social media advertising is subjected to restrictions.

2. Data privacy laws have been instituted in the European Union.

H. Differences in Marketing Institutions 1. Channels of distribution, retail practices, media availability, and media costs vary significantly from country to country.

2. The prevalence of online shopping, smartphones, supermarkets, and other institutions also may vary considerably, particularly in developing countries.

I. Differences in Administrative Procedures 1. It may be difficult to achieve the control necessary to implement a standardized global marketing program: a. Local offices may resist having their autonomy threatened. b. Local managers may raise objections to things that were not invented in the country.

2. Local managers who feel their autonomy is reduced may be less motivated.

V. Strategies for Creating and Managing Global Brands A. Creating Global Brand Equity: 1. Establish breadth and depth of brand awareness.

2. Create points-of-parity and points-of-difference.

3. Elicit positive, accessible brand responses.

4. Forge intense, active brand relationships.

5. Marketers must consider how to achieve brand salience, brand performance, brand imagery, brand judgments, brand feelings, and brad resonance in each market.

B. Global Brand Positioning

282 Copyright © 2020 Pearson Education, Inc.

1. It is recommended that companies evolve a global brand positioning derived from a deep understanding of how brands must be positioned across various markets: a. Brand positioning means creating mental maps, defining core brand associations, identifying points-of-parity and points of difference, and crafting a brand mantra. b. Some companies have a global brand positioning document that addresses a number of questions. c. The answers to the following questions will guide how to structure a global brand positioning and will help identify which aspects of a brand’s positioning can be modified based on local considerations: i. How relevant is the brand’s mental map from the home market to a new market? How appropriate is the positioning? What is the existing level of awareness? How valuable are the core brand associations, points-ofparity, and points-of-difference? ii. What changes should we make to the positioning? Do we need to create any new associations? Should we not recreate any existing associations?

Should we modify any existing associations? iii. How should we create this new mental map? Can we still use the same marketing activities? What changes should we make? What new marketing activities are necessary?

2. In evolving a brand’s global positioning, we need to define a hierarchy of brand associations in the global context that defines which associations we want consumers in all countries to hold and which we want consumers only in certain countries to have: a. We must be attuned to similarities and differences across markets. b. A brand can modify different aspects of its marketing mix to improve its appeal to various global markets. <Use HAAGEN-DAZ Example Here> <Use Branding Brief 15-1 Here> VI. Customizing Marketing Mix Elements in Local Markets for Global Brands A. Product Strategy 1. Marketers may forego basic consumer research and put existing products on the shelf in new markets to see what will happen, so they learn about consumer differences after the fact.

283 Copyright © 2020 Pearson Education, Inc.

2. One solution to the trade-off between global and local brands is to sell both types of brands as part of the brand portfolio in a category.

3. Standardized international marketing programs work with some products, in some places, some of the time.

B. Communication Strategy 1. Advertising is one area of marketing communications in which many firms face challenges internationally.

2. Even if positioning is the same, creative strategies may have to differ to some degree.

3. Different countries can be more or less receptive to different creative styles.

4. With the growth of social media and digital marketing, companies should carefully evaluate their options for communicating with consumers using online media.

5. The penetration of satellite and cable TV has expanded broadcast media options.

6. Each country has its own unique media challenges and opportunities.

C. Distribution Strategy 1. Channels present challenges to many firms because there are few global retailers, especially supermarkets and grocery stores.

2. Distribution challenges are greater in continents like Africa where consumers live in urban and rural areas.

3. Companies have responded by adopting unique distribution systems.

D. Pricing Strategy 1. The value-pricing principle still generally applies to global markets.

2. Marketers need to understand consumer perceptions of the value of the brand, willingness to pay, and elasticities with respect to price changes in each country.

3. Pressures for international price alignment have arisen due to increasing numbers of legitimate imports and exports and the ability for retailers and suppliers to exploit price differences through gray imports.

4. There are three options for varying prices offered in global markets: a. Create an international price corridor that takes into account inherent differences between countries and alignment pressures.

284 Copyright © 2020 Pearson Education, Inc.

b. Introduce different brands in high-price, high-income countries and in lowprice, low-income countries, depending on the relative cost trade-offs of standardization versus customization. c. Developing a completely new product for a local market using indigenous materials is another way to provide competitive offerings.

E. Marketing to Consumers in Developing and Developed Markets 1. The distinction between developing and developed markets is blurring because some markets may have a large GDP but lack infrastructure and resources relative to more developed counterparts.

2. Brazil, Russia, India, China, and South Africa are important developing markets.

3. Consumers in emerging and developing markets have different shopping behaviors: a. Eighty percent of consumers in emerging markets buy their products from tiny bodegas, stalls, kiosks, and mom-and-pop stores. b. Smaller packaging and lower sales prices are critical when income and housing space are limited. c. Many companies have devised cheaper ways to make the right kinds of products to suit consumer demand. d. Mobile and digital strategies take on greater importance given the relatively high smart phone penetration.

F. Ten Commandments to Building Global Customer-Based Brand Equity <Use Figure 15-3 Here> 1. Understand similarities and differences in the global branding landscape.

2. Don’t take shortcuts in brand building.

3. Establish marketing infrastructure.

4. Embrace integrated marketing communications. <Use Branding Brief 15-2 Here> 5. Cultivate brand partnerships: a. One way to enter a new global market is by exporting existing brands to a new market (a geographic extension).

285 Copyright © 2020 Pearson Education, Inc.

b. Another way to enter a new global market is by acquiring existing brand already sold in the new market but not owned by the firm. c. A third way is to create a brand alliance with another firm (joint ventures, partnerships, or licensing agreements).

6. Balance standardization and customization: a. Factors that favor a more standardized marketing program include: i. Common customer needs ii. Global customers and channels iii. Favorable trade policies and common regulations iv. Compatible technical standards v. Transferable marketing skills b. Some products are more likely to retain similar marketing strategies worldwide: i. High technology products with strong functional images ii. High-image products with strong associations to fashionability, sensuality, wealth, or status iii. Services and business-to-business products that emphasize corporate images in their global marketing campaigns iv. Retailers that sell to upper-class individuals or that specialize in a salient but unfulfilled need v. Brands positioned primarily on the basis of their country of origin vi. Products that do not need customization or other special products to be able to function properly <Use Branding Brief 15-3 Here> 7. Balance global and local control: a. One approach is centralization at a home office or headquarters b. Another approach is decentralization of decision making to local foreign markets c. A third option is some combination of centralization and decentralization 286 Copyright © 2020 Pearson Education, Inc.

8. Establish operable guidelines.

9. Implement a global brand equity measurement system. <Use LEVI STRAUSS Example Here> 10. Leverage brand elements.

The Science of Branding

THE SCIENCE OF BRANDING 15-1 Key Insights Regarding Global Brand Strategies Based on Research Findings 1. Cultures place varying emphasis on the self versus the group, with implications for consumer-brand relationships: a. One important dimension on which cultures are different is whether the emphasis is on the independent self (or a focus on the individual rather than the group) or whether the culture focuses on the interdependent self (focus on the group as opposed to the individual). b. Researchers have shown that consumers in independent cultures may use brands because it strengthens their individual identity, whereas consumers in interdependent cultures may use brands because it strengthens their relationship with the social group.

2. Vertical and horizontal cultural contexts cause differences in how consumers relate to high-status brands: a. The power-distance dimension is defined as the extent to which society accepts inequality in power distribution and reflects the hierarchical or vertical nature of society. b. In high power distance cultures, global brands can help consumers reflect social status. c. Research reveals those in horizontal cultures place a great deal of emphasis on equality, so they may prefer brand names that convey uniqueness without being high status.

3. Brands can be symbolic of culture, and this has strategic implications for managers: a. Brands can by symbolic of cultural identity, and the symbolism can influence global strategy. b. Culturally symbolic brands are preferred when consumers have a high level of cultural identification within a given culture or when their social identity is threatened.

287 Copyright © 2020 Pearson Education, Inc.

c. Cultural symbolism is an important contextual factor that influences how individuals react to advertising using multiple languages.

4. Brands have different personalities across cultures: a. Consumers project their own personality preferences in various cultures onto global brands. b. A large cross-national study suggested that meanings derived from brands and brand personalities are culture-specific.

Branding Briefs

BRANDING BRIEF 15-1 Marketing to Ethnic Groups Branding Brief 1 provides examples of brands that effectively appealed to different ethnic groups. The first example is Verizon’s marketing to African Americans through a gospel music festival. The second example is CoverGirl cosmetics’ successful targeting of African Americans with unique colors in its make-up line. The third example is Buchanan’s Whisky’s campaign that targeted Hispanic Americans and Latinos with a music partnership and messages of empowerment. The fourth example is Toyota’s campaign that targeted Asian Americans with a web series, which won over Chinese, Vietnamese, and Korean immigrants living in America. Collectively, the examples communicate the value of highlighting ethnicities and capturing values and interests that resonate with the target audience.

BRANDING BRIEF 15-2 Coca-Cola’s Global Brand Strategy with Local Elements Coca-Cola pursued aggressive global branding in the 1920s, finding such creative placements for its logo as on dogsleds in Canada and on the walls of bullfighting arenas in Spain. Its popularity throughout the world was fueled by colorful and persuasive advertising that cemented its image as the “all-American” beverage.

Despite immense scope, Coca-Cola did not institute a uniform marketing program in each of its global markets. Rather, the company often tailored the flavor, packaging, price, and advertising to match tastes in specific markets. Local managers were assigned responsibility for sales and distribution programs of Coke products to reflect the marked differences in consumer behavior across countries. Coke essentially keeps the same basic look and packaging of the product everywhere.

The company simultaneously stresses that the brand be relevant and well positioned against the competition. To keep it relevant, Coca-Cola uses different advertising agencies in different countries in order to make the brand feel local. The marketing mix is designed in each country to stress that Coke is positioned positively on attributes relative to local competitive products.

288 Copyright © 2020 Pearson Education, Inc.

In 1999, Coca-Cola’s new global marketing mantra became “Think Local. Act Local.”

Intended to get Coca-Cola back to the basics, the strategy meant hiring more local staff and allowing field managers to tailor marketing to their regions. The results of this hyperlocal focus were missed sales targets and local advertising that, in some cases, did not fit with the carefully crafted Coke image. The company scrapped the “Think Local. Act Local” mantra in favor of a hybrid strategy where local executives took direction from Coke’s Atlanta headquarters with room for interpretation at the local level.

In 2016, Coca-Cola announced a unified creative campaign called “Taste the Feeling,” which underscores the Coca-Cola is a simple pleasure which makes everyday moments special.

Coca-Cola conducts business with more than 400 brands in more than 200 countries. Threequarters of its revenues come from outside the United States. Its combination of local and global brands enables Coca-Cola to exploit the benefits of global branding and global trends in tastes while tapping into traditional domestic markets at the same time.

BRANDING BRIEF 15-2 Marketing to Bicultural Consumers Using Bilingual Advertising The multicultural consumer landscape is large, making up nearly 40 percent of the U.S. population and 232 million people living outside their home countries around the globe.

When advertising to multiculturals, marketers should be aware that members of ethnically diverse populations may be at different stages of assimilation in the host country, meaning they have varying degrees of receptiveness to bicultural marketing efforts. Bicultural ads— ads that blend the words from the home language—can be appealing to the bicultural population under certain circumstances. However, bilingual ads only work when paired with brands that don’t have strong monocultural connotations.

Marketing to a bicultural audience means appealing to two identities, and it is important to ensure the associations of the brand mesh well with the themes of the bilingual or multicultural advertising. It is important to evolve an integrated communications approach which incorporates bilingual and multicultural themes across a range of marketing activations.

BRANDING BRIEF 15-3 Managing Global Nestle Brands For about 15 years, Nestlé spent more than $30 billion on acquisitions in different countries, including major brands like Carnation dairy, Perrier and San Pellegrino, Stouffer’s, Rowntree confectionery, Ralston Purina pet food, and Buitoni-Perugina pasta and chocolate. These acquisitions resulted in valuable economies of scale in developed markets.

In less-developed markets, however, the company adopted a different strategy. It manipulated ingredients or processing technology for local conditions and then applied the appropriate brand name. To limit risks and simplify its efforts in new markets, the company attacked with a handful of labels selected from a set of strategic brand groups. Then it concentrated its advertising and marketing money on just two or three brands.

289 Copyright © 2020 Pearson Education, Inc.

Nestlé attempts to balance global and local control in managing its brands. Some decisions, such as branding, follow strict corporate guidelines. The company has six strategic corporate brands—Nestlé, Nescafé, Nestea, Maggi, Buitoni, and Purina. There are 70 different strategic international brands, including Nesquik line of chocolate milk products as well as product brands Kit Kat, Friskies, and Perrier. Eighty-three strategic regional brands include Aquarel and Contrex. Finally, there are a host of local brands that are only important to particular countries.

Nestlé had used a decentralized management approach, in which most decisions were primarily made by the local managers. The company consolidated factory management by region and combined oversight of similar products into strategic business units. Nestlé’s more centralized management approach enabled the company to focus on growing its core brands at each level. Despite tough economic conditions, the company experienced organic growth of approximately 4.2 percent in 2015.

Brand Focus

BRAND FOCUS 15.0 China’s Global Brand Ambitions <Use Objective 6 Here> China, the world’s most populous country with 1.3 billion people, was closed to the West from 1949 to 1978 and has industrialized at a remarkable rate since its admission to the World Trade Organization in 2001. It is now the world’s second-largest economy, with a $41 billion trade surplus in 2016. It accounts for 25 percent of manufacturing worldwide, produces 80% of the world’s air-conditioners, 70% of its mobile phones, and 60% of its shoes. Recently, due to labor shortages and strikes, there has been a push to increase wages.

A Growing Consumer Class China has the world’s largest number of billionaires and nearly four million millionaires, which triggered an interest in consuming conspicuously, which precipitated a windfall for foreign luxury-goods manufacturers. With a rapidly expanding middle class, China made the country the world’s largest luxury market. Luxury brands have flocked to China to try to cash in. Despite the fortunate wealthy few, vast numbers of urban and especially rural poor have been left behind. Despite the concerns generated by the wealth polarization, China’s consumer class still harbors enough purchasing power to attract foreign brands, including Chevrolet, Buick, Cadillac, Apple, and Starbucks.

Lenovo in China Lenovo is the number one PC seller in China, with a network of more than 15,000 stores, an international workforce of 27,000 employees, 10 international laboratories, and a global presence in more than 160 countries. Lenovo is the largest PC manufacturer with nearly 19 percent of the worldwide market and has products like a gaming laptop called Legion, Thinkpad laptops, and Motorola smartphones, as well as new products like a VR headset and Lenovo Smart Assistant. Speed of decision making and examining strategic moves are 290 Copyright © 2020 Pearson Education, Inc.

keys to the company’s success. Its top executives from around the world meet and its global marketing features computers as machines that empower people to do things. Lenovo approaches its global market with care and caution.

Discussion Questions and Answers 1. Pick a product category. How are different leading brands targeting different geodemographic market segments? How are brands targeting different ethnic groups with their advertising?

Students may use examples from the text or come up with their own, so their responses may vary. The examples in the Spectra example from Nielsen, which begin on Page 547, may be useful. The Toyota example may be used as an example of marketing based on ethnicity.

Page: 548 Learning Objective 1: Understand the role of a regional marketing strategy with a focus on marketing based on geodemographics, ethnicity, and age.

AACSB: Analytic Skills 2. Pick a car brand. How is this brand targeting different demographic market segments?

Answers may vary. Students’ answers might address age/family life cycle stage and income. If we consider VW as an example, segmentation based on income would make the VW Up! model the cheapest option, followed by VW Polo, VW Golf, VW Sharan, etc., with the VW Touareg being the most expensive option. The “R” versions of several of these cars are race editions for especially high-end consumers.

Age/family status are reflected by the VW Up! which is a very small city car for young people, the VW Sharan being a 7-seater designed for families, and the Golf Sports van with its ample leg space and low door sills making entry easier for the elderly.

Page: 553 Learning Objective 4: Define a global brand and describe the strategic steps in developing a global brand positioning.

AACSB: Analytic Skills 3. Pick a product category. Consider the strategies of market leaders in different countries. How are they the same and how are they different?

Answers will vary. The class may be divided into groups with each group choosing different products from the same product category. This will make comparison of market strategies easier.

Page: 558

291 Copyright © 2020 Pearson Education, Inc.

Learning Objective 4: Define a global brand and describe the strategic steps in developing a global brand positioning.

AACSB: Analytic Skills 4. Identify how consumers’ usage of social media and digital media channels varies across markets. How can a brand manager utilize this information to improve their brand presence in different global markets?

Hispanic consumers are heavy users of media and they are underserved based on the digital marketing and advertising spending. There is an opportunity to reach this audience. Consumers in Latin America comprise the fourth largest mobile market and more than half of the smartphones are used to access social media, which has implications for advertising creative and tracking. Companies with lower penetration or access will often have Internet kiosks, community access centers, or infomercial vans that help bring the communications to communities.

Page: 558 Learning Objective 4: Define a global brand and describe the strategic steps in developing a global brand positioning.

AACSB: Analytic Skills Exercises and Assignments 1. Ask students to visit the Benetton website (www.benetton.com) to view the company’s advertising. What are the advantages and disadvantages of the type of ads Benetton runs?

How are reactions to the ads likely to differ across countries?

Page 558: Learning Objective 3: Outline the main advantages and disadvantages of developing a standardized global marketing program.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 10–12 minutes This activity may be carried out at the end of the class.

2. Assign students the task of introducing an American brand into a specific country in which it is not sold. What would be the challenges associated with such an introduction?

What marketing strategies would be necessary? How would the strategies differ from those used in the United States?

Page: 573 292 Copyright © 2020 Pearson Education, Inc.

Learning Objective 6: Describe some of the unique characteristics of brand building in emerging growth markets such as China.

AACSB: Analytic Skills Question type: Individual Time to complete the exercise: 15 minutes This activity may be carried out at the end of the class.

3. Tell students to find a brand whose success in the United States is bigger than in its home country. Is the situation the result of differences in marketing or markets? In what other countries might the situation be the same?

Page: Learning Objective 6: Describe some of the unique characteristics of brand building in emerging growth markets such as China.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 15–18 minutes This activity may be carried out at the end of the class.

4. Have students pick a brand of their choice and assess its global branding success as against the Ten Commandments of Global Branding provided in Figure 15-3.

Page: 564 Learning Objective 4: Define a global brand and describe the strategic steps in developing a global brand positioning.

AACSB: Analytic Skills Question type: Individual/Group Time to complete the exercise: 8–10 minutes This activity may be carried out at the end of the class.

Key Take-Away Points 1. Marketers must properly define and implement a global branding strategy.

293 Copyright © 2020 Pearson Education, Inc.

2. Global marketing programs provide a number of advantages, including economies of scale, lower marketing costs, increased credibility, consistency in brand image, and the ability to establish uniformity and control of marketing practices worldwide.

3. Standardization increases the likelihood that companies can realize the advantages.

4. Disadvantages include differences in consumer needs and wants and their usage patterns for products; consumer response to the marketing mix elements; product development and the competitive environment; the legal environment; marketing institutions; and administrative procedures.

5. Building global customer-based brand equity means creating brand awareness and a positive brand image in each country where the brand is sold.

6. Marketers are increasingly blending global objectives with local or regional concerns.

7. Big differences exist in global marketing between developed and developing or emerging markets and marketers must fundamentally rethink every aspect of their marketing programs.

294 Copyright © 2020 Pearson Education, Inc.

Chapter 16 Closing Observations Learning Objectives 1. Understand the six future brand imperatives.

2. Identify the ten criteria for the brand report card.

3. Outline the seven deadly sins of brand management.

Overview The final chapter reviews the customer-based brand equity framework, highlights managerial guidelines and key themes from previous chapters, and summarizes some success factors for branding.

In order to maximize brand equity, firms must develop products that fit with a brand’s meaning and satisfy the needs and wants of consumers; decide on the points of parity and points of difference that will result in the best market position; provide superior delivery of benefits; maintain innovation in design, manufacturing, and marketing; be seen as expert, trustworthy, and likable; communicate with a consistent voice; employ a full range of complementary brand elements and supporting marketing programs; and design and implement a brand hierarchy and brand portfolio that establishes the optimal relationship among the company’s offerings.

It provides a brand report card in Branding Brief 16-1 and presents seven deadly sins of brand management before discussing specific applications of brand in different industries in Brand Focus 16.0 Outline I. Preview 1. The final chapter provides closing observations concerning strategic brand management.

2. It presents the brand report card.

3. It concludes by considering specific applications of branding in different industries.

II. Strategic Brand Management Guidelines A. Summary of Customer-Based Brand Equity Framework 1. Strategic brand management includes the design and implementation of marketing programs and activities to build, measure, and manage brand equity.

295 Copyright © 2020 Pearson Education, Inc.

2. The CBBE recognizes the importance of the customer in the creation and management of brand equity.

3. The CBBE is defined as the differential effect that consumers’ brand knowledge has on their response to their marketing of the brand.

4. The premise of customer-based brand equity is the power of the brand that lies in the minds and hearts of consumers, what they’ve experienced, learned, and felt about the brand over time. a. The brand is like a node in memory with different associations. b. Brand knowledge has two components: brand awareness and brand image: <Use Figure 16-1 Here> i. Brand awareness has breadth and depth, and is related to the strength of the brand node or trace in memory, as reflected by brand recall or recognition. ii. Brand image is consumer perceptions of and preferences for a brand, measured by the various types of brand associations held in memory.

5. Sources of brand equity include brand awareness and the strength, favorability, and uniqueness of brand association: a. Strength of brand associations are functions of the amount, or quantity, of processing that information initially receives and the nature, or quality, of the processing. b. Favorable associations are desirable to customers, successfully delivered by the product, and conveyed by the supporting marketing program. c. Unique, meaningful points-of-difference (PODs) can create the differential response that leads to customer-based brand equity. <Use Figure 16-2 Here> 6. The outcomes of brand equity—benefits associated with the creation of a positive brand image and marketing programs that register the brand in memory and link it to strong, favorable, and unique associations—include: a. Improved perceptions of product performance b. Greater customer loyalty c. Less vulnerability to competitive marketing actions d. Less vulnerability to marketing crises 296 Copyright © 2020 Pearson Education, Inc.

e. Higher margins B. Tactical Guidelines 1. We can build brand equity in three major ways: a. Through the initial choice of the brand elements making up the brand b. Through marketing activities and the design of the marketing program c. Through the leverage of secondary associations that link the brand to other entities like a company, geographic region, channel of distribution, and other brand person or event <Use Figures 16-3 and 16-4 Here> 2. A dominant theme across many of the different ways to build brand equity is the importance of complementarity and consistency: a. Ensuring complementarity means choosing different brand elements and supporting marketing activities so that the potential contribution to brand equity compensates for the shortcomings of others. b. Consistency across elements helps create the highest level of awareness and the strongest and most favorable associations possible.

3. Brand equity can be measured indirectly via its potential sources and directly via its possible outcomes: a. Breadth and depth of brand awareness b. Strength, favorability, and uniqueness of brand associations c. Valence of brand responses d. Nature of brand relationships 4. The brand value chain depicts the relationship broadly by considering how marketing activity affects sources of brand equity.

5. A brand equity measurement system, a set of research procedures designed to provide timely, accurate, and actionable information for marketers about their brands, needs to be properly designed and implemented: <Use Figure 16-5 Here> a. The dominant theme in measuring brand equity is the need to employ a full complement of research techniques and processes that capture as much as possible the richness and complexity of brand equity.

297 Copyright © 2020 Pearson Education, Inc.

b. Some of the traditional brand audit and tracking activities could employ social media listening and other digital research tools as a substitute or complement to existing efforts.

6. Managing brand equity requires taking a broad, long-term perspective of brands: a. Brand hierarchies must define common and distinct brand elements among various nested products. b. Changes in current marketing programs and activities and in the marketing environment can affect consumers’ brand knowledge structures and their response to future marketing programs and activities. <Use Figures 16-6 and 16-7 Now> c. It is important to maintain balance in marketing activities and of making moderate levels of change in the marketing program over time.

III. What Makes a Strong Brand?

1. To create a strong brand and maximize brand equity, marketing managers must: a. Understand brand meaning and market appropriate products and services in an appropriate manner. b. Properly position the brand. c. Provide superior delivery of desired benefits. d. Employ a full range of complementary brand elements, supporting marketing activities and secondary associations. e. Embrace integrated marketing communications and communicate with a consistent voice. f. Measure consumer perceptions of value and develop a pricing strategy accordingly. g. Establish credibility and appropriate brand personality and imagery. h. Maintain innovation and relevance for the brand. i.

Strategically design and implement a brand architecture strategy.

j.

Implement a brand equity management system to ensure that marketing actions properly reflect the brand equity concept.

2. The brand report card provides detail on the requirements. <Use Objective 2 Here> 298 Copyright © 2020 Pearson Education, Inc.

<Use Branding Brief 16-1 Here> 3. There are seven deadly sins of brand management: <Use Objective 3 Here> a. Failure to fully understand the meaning of the brand b. Failure to live up to the brand promise c. Failure to adequately support the brand d. Failure to be patient with the brand e. Failure to adequately control the brand f. Failure to properly balance consistency and change with the brand g. Failure to understand the complexity of brand equity measurement and management <Use Figure 16-8 Here> 4. Procter & Gamble (P&G) is one of the most skilled brand-builders. <Use Branding Brief 16-2 Here> IV. Future Brand Priorities <Use Objective 1 Here> 1. The importance of branding is unlikely to change because consumers will continue to value the functions brands provide: a. Well-managed brands can simplify, communicate, reassure, and provide important meaning to consumers. b. Brands allow consumers to reduce risk and gain satisfaction in their lives.

2. Managing brands to achieve their potential is challenging: a. The pace of change in the environment has greatly accelerated in the past decade. b. Consumers are increasingly diverse, enlightened, and empowered. c. Rapidly changing technology has profoundly affected how consumers live and shop, as well as how marketers learn about consumer needs and wants.

3. The rules of the branding game have changed: 299 Copyright © 2020 Pearson Education, Inc.

a. Marketers are rethinking or altering branding policies and practices. b. There are six branding imperatives to help managers navigate challenges of brand management in the years to come. <Use Figure 16-9 Here> A. Fully and Accurately Factor the Consumer into the Branding Equation 1. The consumer owns the brand.

2. The growth of social media platforms as a stage for customer-to-customer interactions increases customer power.

3. Consumers are producers of brand meaning.

4. Consumer voice should be incorporated into every branding decision, including brand architecture, naming products and services, etc.

5. Increasing diversity and empowerment of customers offers challenges: a. Permission marketing, one-to-one marketing, brand journalism, and digital personalization allow brands to address multiple constituents. b. There is more transparency due to changes in the digital environment, so consumers are more involved in shaping brands’ fortunes (where some consumers get involved with some of the brands they use some of the time—but can still make a difference).

B. Go Beyond Product Performance and Rational Benefits 1. Developing better-designed products and services requires a clear, comprehensive, up-to-date understanding of consumers and how they purchase and use products and services and think and feel about brands.

2. Design is a function of sensory aspects consumers encounter and experience with a brand.

3. Design considerations will increasingly drive the innovation pipeline.

C. Make the Whole of the Marketing Program Greater than the Sum of the Parts 1. Major shifts in the media industry have emerged due to a number of factors a. The rise of digital media channels b. Fragmentation of TV viewership c. Growing use of streaming services 300 Copyright © 2020 Pearson Education, Inc.

d. Video gaming e. Use of mobile phones f. Explosion of social media g. Online blogs and social communities h. Greater importance of events, experience, and buzz marketing 2. Firms have a host of ways to distribute and sell their products online or offline, directly or indirectly: a. Marketers are embracing different types of personal and mass media and combining digital marketing techniques, real-world experiential communications, and traditional mass media practices. b. Marketers are merging online and offline channels to maximize coverage and impact. c. Digital brands are embracing ways of connecting with consumers in offline worlds and acquiring bricks-and-mortar outlets.

3. The challenge for top brands is assembling the best set of channel and communication options to maximize sales in the short run and brand equity in the long run.

4. Channel and communication options need to work effectively regardless of consumer history or past experience: a. It is important to use online, interactive communications to affect consumers directly at all stages of the consumer decision funnel and to reinforce offline marketing efforts. b. Social media and online communities help brands create active customer engagement involvement. c. Sometimes there are undesirable effects on branding. d. Mobile platforms allow marketers to connect with consumers and provide the right brand information at the right time and right place.

D. Understand Where You Can Take a Brand (and How) 1. The successful launch of new products and services and the entry of existing products and services into new markets and customers segments are of paramount importance

301 Copyright © 2020 Pearson Education, Inc.

2. Growth requires a well-thought-out and well-implemented brand architecture strategy that clarifies three key issues: a. The potential of a brand in terms of the breadth of its market footprint. b. The types of product and service extensions that would allow a brand to achieve that potential. c. The brand elements, positioning, and images that identify and are associated with all the offerings of a brand in different markets and to different consumers.

3. A good brand architecture defines brand boundaries/guardrails for appropriate and inappropriate line and category extensions: a. What products or services the brand could represent b. What benefits it could supply c. What needs it could satisfy 4. Too many brand extensions fail; they are not creating sufficient relevance and differentiation in their new product or service categories.

5. By combining new brand elements with existing parent brand elements, subbranding can signal the intended similarity or fit of the new extension with its parent brand: a. Sub-branding can facilitate access to associations and attitudes to the company or family brand while allowing for new brand beliefs creation that position the extension to be created. b. Sub-branding can help protect or shield the parent brand from negative feedback associated with the extension. c. Sub-branding typically requires significant investments and disciplined and consistent marketing to establish proper brand meanings.

E. Do the “Right Thing” with Brands 1. Increased media coverage has brought greater transparency and awareness of companies’ internal and external actions and statements.

2. Brand marketers must embrace social responsibility and ethically and morally proper behavior at all times.

3. Brand managers must protect and respect the brand promise and meaning.

F. Take a Big Picture View of Branding Effects. Know What Is Working (and Why)?

302 Copyright © 2020 Pearson Education, Inc.

1. Marketers increasingly have to do more with less in their marketing budgets and persuasively justify all marketing expenditures: a. A challenge is brand accountability that is hard to measure since marketing activities have long-term, broad, and varied effects. b. Marketers must adopt comprehensive, cohesive, and actionable models to help them develop ROI insights and interpretations: i. The brand positioning model ii. The brand resonance model iii. The brand value chain c. Marketing should create or enhance the equity and value of a brand to its various constituents.

G. Finding the Branding Sweet Spot 1. Brands need to find balance in managing brands by finding the branding sweet spot.

2. Managers must reconcile trade-offs in brand management and strike the balance between simplicity and complexity in all brand’s decision making and activities: a. Short-run sales versus long-run brand equity b. Global control versus local customization c. Retaining versus acquiring customers d. Investing in online versus offline advertising 3. Companies have employed a variety of strategies to creatively address branding trade-offs: a. Breakthrough product or service innovations b. Improved business models c. Expanded or leveraged resources d. Enhanced or embellished marketing e. Perceptional framing to overcome misperceptions f. Sheer creativity and inspiration

303 Copyright © 2020 Pearson Education, Inc.

4. The trade-off between sales-generating and brand-building activities requires that marketing communications affect both short run (sales) and long run (brand building) outcomes.

5. To be effectively positioned, the brand must have points-of-difference where it excels, and at least points-of-parity versus competitors where it may be seen as inferior.

6. When solutions are developed to achieve balance, brands have to avoid oversimplification but not overcomplicate branding.

H. New Capabilities for Brand Marketers 1. Brand management is undergoing a transformation.

2. The following skills are critical for brand managers: a. Analytical and quantitative capabilities b. Storytelling and creativity c. Collaboration and teamwork d. Strategic thinking and understanding current and future trends e. Empathy and understanding f. Digital marketing and technological and computing skills Branding Briefs

BRANDING BRIEF 16-1 The Brand Report Card The Brand Report Card can reveal how well a brand is being managed. The brand is rated on a scale of 1 to 10 (1 = extremely poor; 10 = extremely good) for each of the characteristics below: Score 1. Managers understand what the brand means to consumers.

•

Have you created detailed, research-driven mental maps of your target customers?

•

Have you attempted to define a brand mantra?

•

Have you outlined customer-driven boundaries for brand extensions and guidelines for marketing programs?

304 Copyright © 2020 Pearson Education, Inc.

2. The brand is properly positioned.

•

Have you established category, competitive, and correlational points-of-parity?

•

Have you established desirable, deliverable, and differentiated points-of-difference?

3. Customers receive superior delivery of the benefits they value most.

•

Have you attempted to uncover unmet consumer needs and wants?

•

Do you relentlessly focus on maximizing your customers’ product and service experiences?

4. The brand takes advantage of the full repertoire of branding and marketing activities available to build brand equity.

•

Have you strategically chosen and designed your brand name, logo, symbol, slogan packaging, signage, and other brand elements to build brand awareness and image?

•

Have you implemented integrated push and pull strategies that target intermediaries and end customers, respectively?

5. Marketing and communications efforts are seamlessly integrated (or as close to it as humanly possible). The brand communicates with one voice.

•

Have you considered all the alternative ways to create brand awareness and link brand associations?

•

Have you ensured that common meaning is contained throughout your marketing communication program?

•

Have you capitalized on the unique capabilities of each communication option?

•

Have you been careful to preserve important brand values in your communications over time?

•

Have you leveraged digital and social media channels optimally to communicate your intended message to the target audience?

•

Have you utilized the capabilities of mobile marketing to communicate with your desired target audience at a time, place, and manner that are most appropriate?

6. The brand’s pricing strategy is based on consumer perceptions of value.

•

Have you estimated the added value perceived by customers?

•

Have you optimized price, cost, and quality to meet or exceed consumer expectations?

305 Copyright © 2020 Pearson Education, Inc.

7. The brand uses appropriate imagery to support its personality.

•

Have you established credibility by ensuring that the brand and the people behind it are seen as expert, trustworthy, and likable?

•

Have you established appropriate user and usage imagery?

•

Have you crafted the right brand personality?

8. The brand is innovative and relevant.

•

Have you invested in product and marketing improvements that provide improved benefits and better solutions for your customers?

•

Have you stayed up-to-date and in touch with your customers?

9. For a multiproduct, multibrand company, the brand architecture is strategically sound.

•

For the brand hierarchy, are associations at the highest levels relevant to as many products as possible at the next lower levels, and are brands well-differentiated at any one level?

•

For the brand portfolio, do the brands maximize market coverage while minimizing their overlap at the same time?

10. The company has in place a system to monitor brand equity and performance.

•

Have you created a brand charter that defines the meaning and equity of the brand and how it should be treated?

•

Do you conduct periodic brand audits to assess the health of your brands and to set strategic direction?

•

Do you conduct routine tracking studies to evaluate current marketing performance?

•

Do you regularly distribute brand equity reports that summarize all brand-relevant research and information to assist marketing decision making?

•

Have you assigned people within the organization the responsibility of monitoring and preserving brand equity?

BRANDING BRIEF 16-2 Reinvigorating Branding at Procter & Gamble Procter & Gamble (P&G) has been a leader in marketing for much of its 160-plus years of existence. P&G became even larger with the $57 billion acquisition of Gillette in 2005. P&G 306 Copyright © 2020 Pearson Education, Inc.

has been struggling to maintain its leadership status due to dramatic shifts taking place in marketing. In 2015, David Taylor became the new CEO of P&G and ushered in a new era with a few key priorities: •

Building category growth by changing consumer habits and/or rethinking how consumers are interacting with products

•

Streamlining its product portfolio by divesting brands that were in categories that hurt profitability and growth so it could focus on more promising categories

•

Driving innovation and new products in established and smaller categories

•

Embracing new communications strategies including social media and adjusting digital ad spend to protect brand safety. It uses a results-driven approach to digital media usage

•

Adopting a new brand management structure to focus on brand identity and enhancing brand valuation

Brand Focus

BRAND FOCUS 16.0 Special Applications Online Creating a brand online brings a special set of challenges. Many of the guidelines for business-to-business, high-tech, retailing, and small businesses identified below will apply: •

Don’t forget the brand-building basics.

•

Create strong brand identity.

•

Generate strong consumer pull.

•

Selectively choose brand partnerships.

•

Maximize relationship marketing.

<Use Figure 16-10 Here> Industrial and Business-to-Business Products Industrial goods and business-to-business marketing sometimes call for different branding practices: •

Adopt a corporate or family branding strategy and create a well-defined brand hierarchy.

307 Copyright © 2020 Pearson Education, Inc.

•

Link non-product-related imagery associations.

•

Employ a full range of marketing communication options.

•

Leverage equity of other companies that are customers.

•

Segment customers carefully and develop tailored branding and marketing programs.

<Use Figure 16-11 Here> <Use Figure 16-12 Here> High-Tech Products The distinguishing feature of high-tech products is that they change rapidly over time because of innovations and R&D breakthroughs. The short product life cycles for high-tech products have several significant branding implications: •

Establish brand awareness and a rich brand image.

•

Create corporate credibility associations.

•

Leverage secondary associations of quality.

•

Avoid overbranding products.

•

Selectively introduce new products as new brands and clearly identify brand extensions.

<Use Figure 16-13 Here> Services The level of sophistication in service branding has greatly increased in recent years: •

Maximize service quality by recognizing the myriad ways to affect consumer service perceptions.

•

Employ a full range of brand elements to enhance brand recall and signal more tangible aspects of the brand.

•

Create and communicate strong organizational associations.

•

Design communication programs that augment consumers’ service encounters and experiences.

•

Establish a brand hierarchy by creating distinct family brands or individual brands as well as meaningful ingredient brands.

308 Copyright © 2020 Pearson Education, Inc.

<Use Figure 16-14 Here> Retailers Retailers and other channel intermediaries can affect the brand equity of the products they sell, as well as create their own brand equity, by establishing awareness and associations to their product assortment, pricing and credit policy, and quality of service: •

Create a brand hierarchy by branding the store as a whole, as well as individual departments, classes of service, or any other noteworthy aspects of the retail service or shopping experience.

•

Enhance manufacturer’s brand equity.

•

Establish brand equity at all levels of the brand hierarchy by offering added value in the selection, purchase, or delivery of product offerings.

•

Create multichannel shopping experiences.

•

Avoid overbranding.

<Use Figure 16-15 Here> Small Businesses Building brands is a challenge for small businesses because of their limited resources and budgets. They usually do not have the luxury of making mistakes and must design and implement marketing programs much more carefully. Nevertheless, many entrepreneurs have built their brands into powerhouses essentially from scratch. Because there are usually limited resources behind a small-business brand, marketing focus and consistency are critically important. Creativity is also paramount for finding new ways to market ideas about products to consumers: •

Emphasize building one or two strong brands.

•

Focus the marketing program on one or two key associations.

•

Employ a well-integrated set of brand elements.

•

Design creative brand-building push campaigns and consumer-involving pull campaigns that capture attention and generate demand.

•

Leverage as many secondary associations as possible.

<Use Figure 16-16 Here>

309 Copyright © 2020 Pearson Education, Inc.

Discussion Questions and Answers 1. What do you think makes a strong brand? Can you add any criteria to the list provided?

Answers will vary. Some examples may include ensuring brand awareness and recall in a way that the brand knowledge has positive associations; having strong and valued points of differentiation and points of parity; having better-designed products and services that provide a wider range of compelling consumer benefits; and having a strong brand image. Students may reference the categories in the brand report card. A related criterion is the establishment of a brand equity measurement system.

Page: 580 Learning Objective 2: Identify the ten criteria for the brand report card.

AACSB: Reflective Thinking 2. Consider the deadly sins of brand management. Do you see anything missing from the list of seven in Figure 16-8?

Answers will vary. Another sin might be the failure to recognize the role of consumers in the creation of brand equity.

Page: 587 Learning Objective 3: Outline the seven deadly sins of brand management.

AACSB: Reflective Thinking 3. Pick one of the special applications of branding and choose a representative brand within that category.

How well do the five guidelines apply? Can you think of others not listed?

Answers will vary. The class may be divided into groups with each group choosing one special application of their choice.

Page 600: Learning Objective 2: Identify the ten criteria for the brand report card.

AACSB: Analytic Skills 4. What do you see as the future of branding? How will the roles of brands change? What different strategies might emerge for building, measuring, and managing brand equity in the coming years? What do you see as the biggest challenges? How have the advent of social media and the availability of digital marketing tools changed brand management?

Student answers may reflect current developments and will vary. The six criteria noted in the chapter include: 1. Fully and accurately factor the consumer into the branding equation.

310 Copyright © 2020 Pearson Education, Inc.

2. Go beyond product performance and rational benefits.

3. Make the whole of the marketing program greater than the sum of the parts.

4. Understand where you can take a brand (and how).

5. Do the right thing with brands (embrace social responsibility and manage brands for the long-run).

6. Take a big picture view of branding effects. Know what is working and why.

Page: 590 Learning Objective 1: Understand the six future brand imperatives.

AACSB: Analytic Skills 5. Consider the trade-offs involved with achieving marketing balance. Can you identify a company that has excelled in achieving balance on various trade-offs?

Answers will vary. To find the branding sweet spot, managers must reconcile trade-offs in brand management and strike the balance between simplicity and complexity in all brand’s decision making and activities. Trade-offs are pervasive in marketing a brand— short-run sales versus long-run brand equity, global control versus local customization, and retaining versus acquiring customers, to name just a few.

Page: 598 Learning Objective 3: Outline the seven deadly sins of brand management.

AACSB: Analytic Skills Exercises and Assignments Because most students will be involved with a brand audit project that would be nearing completion by the time the material in this chapter is covered, it does not make much sense to include additional exercises and assignments at this point. If students are not doing a brand audit project, however, then it may make sense to have a “mini” version of the project for brands assigned by the instructor or chosen by the students.

Key Take-Away Points 1. The challenges and complexities of the modern marketplace make efficient and effective marketing an imperative.

2. The businesses that win in the twenty-first century will be those whose marketers successfully build, measure, and manage brand equity.

311 Copyright © 2020 Pearson Education, Inc.

3. Effective brand management requires consistent application of these guidelines across all aspects of the marketing program, but the guidelines are a point of departure in the process of creating a world-class brand.

4. Each branding situation and application is unique and requires careful scrutiny and analysis about how best to apply, or perhaps in some cases ignore, recommendations and guidelines.

5. Smart marketers will capitalize on every tool at their disposal—and devise new ones—in their relentless pursuit of brand preeminence.

312 Copyright © 2020 Pearson Education, Inc.