Building & managing brands Flashcards
Different types of firm resources:
So why exactly do companies care so much about brands?
Strong brands are important for a company’s long-term financial success!
Brand Equity:
What makes Starbucks more valuable than Grumpy Mule Coffee?
- Brand Equity: “Hot topic” since the 80s
- Many different definitions of brand equity but at the core, they are all describing how a brand name can add value to a product.
“A set of assets and liabilities linked to a brand, its name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or that firm’s customers”
Brand equity has a financial and consumer aspect
Financial aspect of brand equity:
Strong brands are important for a company’s long-term financial success!
- Usually high market share
- Low price elasticity
- Higher price points (retail price)
- Strong product brand usually positively related to perception of employer brand
- Discourages market entries of competitors
- Good distribution & bargaining power with regards to retailers
- Allows for legal protection
- Represents less risk for investors
BUT: This financial value is rather a result of BE rather than its definition… The reason why BE arises lies on the consumer side.
Positive customer-based brand equity:
If consumers react more favorably to an element of the marketing mix for the brand, than they do for the same marketing mix element, when it is attributed to a fictiously named/ unnamed version of the product.
(Keller 1993)
“Shakespeare was wrong. A rose by any other name would not smell as sweet.
Not only do you see what you want to see, you also smell what you want to smell. Which is why the single most important decision in marketing of perfume is the name.”
- Al Ries and Jack Trout, Authors of ‘Positioning: The Battle for Your Mind’
The famous beer experiment:
Respondents consistently perceive (the exact same) beer to be better tasting when was branded vs. unbranded
McClure et al. (2004): Coke vs. Pepsi
Does the brain react differently depending on the brand?
- Blind test: Coke and Pepsi activate the same brain regions – responsible for sensory information/ taste
⇒ Prefrontal Cortex: Pepsi preferred as sweeter (triggers stronger reward)
- With brands visible: Coca-Cola activates other brain regions (hippocampus) which are responsible for memories, emotions, associations.
⇒ Especially if you are a loyal Coke drinker.
Consumer aspect of brand equity:
A consumer’s preference for a brand that goes beyond any objective consideration of the product. It is influenced by what the consumer knows about the brand, what he connects with it and what his attitude is.
- Higher willingness- to-pay
- Less sensitive to changes in price
- And all the other elements that lead to the financial value.
Brand Equity has both, a financial and a consumer perspective!
- The positive financial value of a brand doesn‘t just miraculously appear.
- It is a result of consumer‘s value perceptions with regards to a brand.
Brand equity: Antecedents and consequences
Brand awareness: Recognition vs. Recall
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Aided awareness: Recognition
- “Do you know the brand PJ Smoothies?”
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Unaided awareness: Recall
- “Which ice cream brands do you know (at least by name)?”
Brand Awareness: Top of Mind
“Which is the first brand that comes to mind when thinking about online retailers/take away coffee/cars…?”
Brand Awareness: Dominance =
When customers can’t recall any brand but yours for a particular product category.
Brand Awareness Pyramid:
- Brand awareness is a crucial ingredient for brand equity
- It is crucial for intentional brand purchases
- But also important for low-involvement situations, as familiarity triggers liking (“mere exposure effect”)
Mere Exposure Effect:
A psychological phenomenon whereby people feel a preference for people or things simply because they are familiar. Also known as the exposure effect and the familiarity principle. This is interesting because it has no basis in logic. Just because we see a stranger occasionally does not make them any more trustworthy…we just feel like they are because we “know” them.
Example: Even if he has never met either of them, a person is more likely to feel an affinity with someone he passes on his street occasionally than for a complete stranger
Brand Attitude =
A learned predisposition to behave in a consistently favorable or unfavorable manner with respect to a given object.
- Learned ⇒ Connected to experiences
- Predisposition to behave ⇒ Connected to behavioral actions
- Consistently ⇒ Similar behavior in similar situations
Brand attitudes range from very positive to very negative.
A strong, positive brand attitude is a crucial prerequisite for building brand equity.
3 Components of attitudes:
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Cognitive Component“Thinking”
- “I think Coca-Cola is a tasty soft drink”
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Affective Component“Feeling”
- “I feel positively about Coke”
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Attitude → Conative component“Acting”
- “When I am thirsty and want to buy a softdrink**, I will grab a Coke”
Consumers build attitudes based on certain associations.
Sources of attitude formation:
- Knowledge and experience
- Family and friends
- Media/Internet/ etc.
However: Can you think of discrepancies between attitude and behavior?
Brand image and brand identity:
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Brand Image = refers to perceptions about a brand as reflected by the brand associations held in consumer memory.
- Public perception of the brand
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Brand Identity = how a business presents itself to — and wants to be perceived by — its consumers. It encompasses the essential and characteristic features of a brand.
- A company‘s self-perception of the brand
Brand identity =
⇒ What is the „soul“ of the brand?
⇒ What are the primary characteristics that shall define the brand?
⇒ What is the core competence of the company that stands behind this brand?
Factors which influence brand identity:
- Product-related aspects (ingredients, quality, country/ region of origin…)
- Company-related aspects (company is: young, innovative, trendy…)
- Brand personality (brand is: exciting, sincere, competent, sophisticated, rugged)
- Brand as symbol (visual associations with the logo, origin)
Brand identity – Example: Jack Wolfskin
Company-related aspects
- German producter of ourdoor apparel and gear
- Job ad: “We are at home outdoors – what about you? We are looking for brave summiteers who don’t want to stay put. Leave your footprint at Jack Wolfskin. ”
Product-related aspects
- “That makes our products unique: Whether weatherproof membrane, suspension system or insulation. Discover our versatile technologies for an optimum of “At home outdoors” experience. ”
Brand personality
- “We are at home outdoors. There’s nowhere we’d rather be. The vastness attracts us, time sustains us.“ ⇒ ruggedness
- “Our products are designed to protect, keep you warm and dry, whilst being comfortable and reliable and lasting for many years.” ⇒ competence
Brand as symbol
- Connection to nature/ outdoor
Brand image: Perceptions about a brand as reflected by the brand associations
Identity vs. Image
There can be vast differences between self-perception (“How we want to be seen”) and other (public) perception (“How we are actually seen”).
How to measure Brand Equity?
How to measure Brand Equity? Hybrid Approaches
Brief recap: Functional vs. Emotional benefits
Brand strategy alternatives:
Achieving high levels of brand awareness is a necessary starting point for all brands!
⇒ But it is even more important for functional brands (as there is little difference between what brand users feel about the brand…)
- For functional brands, a high level of brand awareness alone, or paired with some perceptions about quality, can be enough to drive purchases.
- In fact, many functional brands stay at this level, few manage to reach differentiation or an emotional bond…
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Symbolic/ emotional brands must try to go beyond this level, reaching differentiation, relevance and an emotional bond in the mind of the customer.
- Achieving positive brand attitude and a brand image with positive emotional associations is key.
Brand management strategies for symbolic/ emotional brands:
- Strategies based on personal meaning
- Strategies based on social differentiation
- Strategies based on social integration
Strategies based on Personal Meanings
The core idea is to create a personality for a brand so that it takes on human characteristics.
⇒ The brand as a human-like character who we can develop a relationship with.
- Role of the brand: A relationship partner
- Role of the customer: Interaction with the brand, building a personal relationship
- Requirement: Deep personal connection
Brands as human-like characters with personalities
Brands as relationship partners: PC vs. Mac
What kind of personality do those 2 brands have?
Who would you rather be friends with?
Type of relationship partners:
- Arranged Marriages
- Casual Buddies
- Flings
- Secret Love affairs
- Casual Friends
- Childhood friends
- Best Friendships
- Kinships
- Rebounds
- Enmities
Brands as our childhood friends
Strategies based on social differentiation:
- Brands that enable us to be told apart from a certain social group.
- E.g. If a brand has “cool capital” means that it has to be rejected by other groups
Strategies based on social integration:
Idea: Brands help us to assign ourselves to a social group
Main question for firms: How do you manage brand communities, thereby generating consumer loyalty?
- Fournier (2009, HBR): Getting Brand Communities Right*
- “Too often, companies isolate their community-building efforts within the marketing function. That is a mistake. For a brand community to yield maximum benefit, it must be framed as a high- level strategy supporting business-wide goals.”*
- Still best example for this: Harley Davidson
- 1983: HD faced extinction, leveraged buyback that saved the company,
- 1985: Complete reformulation of the competitive strategy and business model around a brand community philosophy ⇒ “The “brotherhood” of riders
- Connection between the company and its customers, e.g. staffing all community events with own employees rather than outsource it
- Executives were required to spend time in the field with customers and bring their insights back to the firm.
Getting Brand Communities Right:
Brand Communities Example: Lululemon
Brand management strategies for functional:
- Making use of pre-conscious processes
- Pre-conscious level of awareness
- Making use of minimal cognitive processes
- Minimal cognitive effort, using short-cuts and heuristics
Making use of pre-conscious processes: Mere Exposure Effect (Zajonc 1968)
Rating of Chinese symbols of US students (manipulating high and low repetition frequency)
What does this mean?
⇒ Raise brand awareness through repetition of communication! This is KEY for functional brands.
Making use of pre-conscious processes: Classical conditioning - Pavlov‘s Dog
How does classical conditioning take place?
Making use of minimal cognitive processes: Short-cuts and heuristics:
Managing multiple brands, Example:
Managing multiple brands, Strategic decision: What kind of brand architecture?
⇒ Always a tradeoff: Autonomy vs. Synergy
“Branded House”: Umbrella Brand Strategy
The Umbrella Brand Strategy summarises all product offerings of a company under one parent brand.
Pros
- Positive transfer effects, esp. for new products
- All brands carry the branding effort (also cheaper to introduce new products, as it is not necessary to establish new brands)
- Easier to communicate with stakeholders simultaneously (esp. investors)
Cons:
- Negative transfer effects are possible (esp. in case of brand crises)
- Developing a clear brand profile is difficult, only general positioning possible (e.g. high quality)
- Targeting specific segments & specific positioning (e.g. high quality, high price as well as low price, lower quality,) is difficult.
House of Brands Strategy:
Different products are managed through unique brands, which have no or little connection to the parent brand.
Pros:
- Brands are better shielded from negative transfer effects in the case of brand crises
- Specific segmentation & clear profiling possible (e.g. one brand targets more affluent consumers, another brand targets more price-sensitive consumers)
Cons:
- High cost of building and maintaining brands (one product carries the whole branding effort)
- Slow process of building brand personality
Hybrid: Family Brand Strategy
Some brands are associated closely with the parent brand while some other sub- brands dissociate or have a distant relationship with its
Pro’s & con’s of hybrid brands
are basically a mix and match of the 2 previous slides!
Pros:
- Specific profiling is possible for the different product lines
- Several products carry the branding efforts
- Positive image transfer of family brand onto new products possible
Cons:
- Positioning of brands must be in line with respective family brand
- Risk of negative transfer effects of one brand onto other brands within the brand family.
Discussion: House of Brands & raising awareness for the parent brand?
Large multibrand companies (e.g. P&G, Unilever…) increasingly put their parent brand in the spotlight through marketing communication, which is interesting as it kind of defies the original idea of a house of brands (brands stand for themselves, with little connection to the parent brand).
Pros:
- Parent brand gives product brand further credibility
- Consumers are increasingly interested in the origin of products
- Adds potential to marketing communication
Cons:
- “Demystification” of very strong product brands “It‘s all the same anyways” ⇒ Advantage for retail brands (e.g. Buy the cheaper Tesco diapers, instead of Pampers?)
- Damage of the parent brand and other brands in the house of brands in the case of product crises
Some take-aways…
- Functional and symbolic/ emotional brands require different approaches to branding
- Symbolic brands often rely on strategies based on personal meaning, social differentiation, and – integration.
- Functional brands often rely on precognitive processes (brand-awareness is key here) and minimal cognitive processes.
- Managing multiple brands requires strategic decisions with regards to the brand architecture.
