Lecture 6

Question 1

What are some general factors that can reduce value of brand over time?

Answer 1

image/reputation problems
increase costs
new compositions
Quality problems
stopped innovation
changing trends
change in management

Question 2

What are the 3 key groups for declining value of brand?

Answer 2

1. Managerial actions (mistakes, human error)
2. Environmental factors (External)
3. Competitors actions

Question 3

What factors is included in managerial actions?

Answer 3

Product quality - compromises can be made because of price cutting. Done to increase profits or because of price wars to compete with other brands. Should be avoided to compete on price because it does not increase the perceived value (core marketing factor) and thus does not generate profit or a sustainable product.

Price increases - if the brand increases the price but not the value consumers will lose interest in the product.

Price cuts - diluting the brand. For example using cheaper materials, can create disastrous quality problems.

Brand neglect - When a brand is part of a portfolio of brands, the less profitable brands don’t receive enough support.

Inability to stay w target market - example is GAP in the 90s. Tried to reach out to teenagers and tried to do it very fast (in one year). Does not work because the consumer usually don’t change their perception of the brand in that short of time.

Inability to anticipate change - Blockbuster and Netflix.

Question 4

What is an example of environmental factors?

Answer 4

Cigarette brands have been affected by changes in tax and legal regulations. The industry is facing an increasing number of regulations and strong negative publicity.

Alcohol consumption, new law on pub opening hours in UK, higher tax on beer, only specific type of promotion in supermarkets.

Question 5

What is an example of competitors action?

Answer 5

Puma and Adidas were almost completely squeezed out of the U.S. market by Nike and Reebok.

Question 6

What are the Possible strategies for declining brands?

Answer 6

1. Harvesting (cash cow)
2. sell the brand
3. discontinue
4. relaunch

Question 7

When do you usually sell the brand?

Answer 7

When the brand is no longer in line with the current strategy or the core business.

Question 8

Expalin what harvesting means?

Answer 8

When the brand has a very strong and loyal consumer base that will continue to buy it anyway even without marketing support while the product is not attracting anymore for new consumers ( Borsallinohat). This typically involves: 1. Avoiding any additional investment 2. Greatly reducing operating expenses, 3. Raising prices.

Question 9

What does usually a relaunch intend?

Answer 9

Extends the life cycle of the brand

For example Lacoste:
stop selling in no luxury retailers
opening own brand shops
expanded its collaborations
once the company was back at a good place they launched new products.

Question 10

What are 5 possible persisting sources of brand equity to relaunch brand?

Answer 10

1. Story
   Heritage and history of the brand. BMW bought the mini cooper to relaunch.
2. Authenticity
   Associations with how and where products are made. Champagne can only be made in champagne region.
3. Ritual
   Placing a lime in the neck of a Corona has given this Mexican Beer premium status in market led by European and US beer companies. There are rituals within all heritage brands. You just need to extract them
4. Icons

Your brands most significant signals. Big mac for mcdonalds. Jeep car for Jeep.

5. Community

A Close knit community is a powerful brand signal.