CHAPTER 7: LEVERAGING SECONDARY BRAND KNOWLEDGE TO BUILD BRAND EQUITY Kevin Lane Keller Tuck School of Business Dartmouth College

Figure 2-9 Building Customer-Based Brand Equity BRAND BUILDING TOOLS AND OBJECTIVES CONSUMER KNOWLEDGE EFFECTS BRANDING BENEFITS Choosing Brand Elements Brand name Memorability Logo Meaningfulness Symbol Appeal Character Transferability Packaging Adaptability Slogan Protectability Developing Marketing Programs Product Tangible and intangible benefits Price Value perceptions Distribution channels Integrate”push” and “pull” Communications Mix and match options Leverage of Secondary Associations Company Country of origin Channel of distribution Other brands Endorsor Event Awareness Meaningfulness Transferability Possible Outcomes Greater loyalty Less vulnerability to competitive marketing actions and crises Larger margins More elastic response to price decreases More inelastic response to price increases Greater trade cooperation and support Increased marketing communication efficiency and effectiveness Possible licensing opportunities More favorable brand extension evaluations Brand Awareness Depth Breadth Recall Recognition Purchase Consumption Brand Associations Strong Favorable Unique Relevance Consistency Desirable Deliverable Point-of-parity Point-of-difference 1

LEVERAGING SECONDARY BRAND KNOWLEDGE TO BUILD BRAND EQUITY Brand equity comes through: Brand Elements Marketing program activities and product- price, distribution Marketing communication Indirect approach of building brand equity is Leveraging Secondary Brand Knowledge. 30

LEVERAGING SECONDARY BRAND KNOWLEDGE TO BUILD BRAND EQUITY Brand associations may themselves be linked to other entities, creating secondary associations: Company (through branding strategies) Country of origin (through identification of product origin) Channels of distribution (through channels strategy) Other brands (through co-branding) Special case of co-branding is ingredient branding Characters (through licensing) Celebrity spokesperson (through endorsement advertising) Events (through sponsorship) Other third-party sources (through awards and reviews) 30

Conceptualizing the Leveraging Process Linking the brand equity to some other entity- some source factor or related person, place, or things- may create new set of associations from the brand to the entity, as well as effecting existing brand associations. Creation of new brand associations: Consumers may form a mental association from the brand to this other entity and, consequently, to any or all associations, judgments, feelings, and the like linked to that entity. Secondary brand knowledge is most likely to effect evaluation of a new product when consumers lack either the motivation or the ability to judge product related concerns. They may be more likely to make the purchase decision on the basis of secondary considerations such as what they feel, think, or know about the country from which the product came, the store in which it is sold, or some other characteristics. 30

Conceptualizing the Leveraging Process Linking the brand to some other entity may not only create new brand associations to the entity but also affect existing brand associations. This characterization process is called “Cognitive Consistency”-what is true for the entity must be true for the brand. Effects on existing brand knowledge Meaningfulness of the knowledge of the entity Transferability of the knowledge of the entity Awareness and knowledge of the entity In transferring secondary knowledge the basic questions to answer: What do consumers know about the other entity? Does any of these knowledge affect what they think about when it becomes linked or associated in some fashion with this other entity? Judgments or feelings may transfer more rapidly than more specific associations, which are likely to seem irrelevant or be too strongly linked to the original entity to transfer. The transferring process depends largely on the strength of the linkage or connection in consumer’s mind between the brand and other entity. 30

Conceptualizing the Leveraging Process Guidelines: Leveraging secondary brand knowledge may allow marketers to create or reinforce an important point of difference versus competitions, or competitive point of parity. When choosing to emphasize source factors or particular person, place, or things, marketers should take into account consumers’ awareness as well as how the associations, judgment, or feelings for it might be linked to the brand or existing brand. Commonality: leveraging strategy make sense when consumer have associations to other entity that are congruent with desire brand associations. Example-”New Zealand Wool” Complementarity: Marketers challenge here is to ensure that less congruent knowledge for the entity has either direct or an indirect effect brand knowledge. 30

Ways by which we can link Secondary Brand Knowledge to the Brand Company: Branding strategy are an important determinant of the strength of association from the brand to the company and other existing brands. Three main branding options exist for a new product: Create a new product Adopt and modify an existing brand Combine an existing and new brand Country of Origin: the country or geographic location from which it originated may also become linked to the brand and generate secondary associations. Many countries have become known for expertise in certain product categories or for conveying a particular types of image. The world is becoming a “Cultural Bazar” where consumer can pick and choose brand originating in different countries, based on beliefs about quality of certain types of products from certain countries or the image that these brand or products communicate. Consumer from any where of the world may choose to wear: Italian Suits, Exercise in American Athletic Shoes, Japanese MP3 player, Drive a German Car, 30

Ways by which we can link Secondary Brand Knowledge to the Brand Country of Origin: Other geographic association besides country of origin are possible, such as state, region and cities. It is possible to create POD because consumers’ identification and belief about the country. It is typically a legal necessity for the country of origin to appear somewhere on the product or package. Associations to the country of origin have potential to be created at the point of purchase and to affect brand association there. country of origin or specific geographic region is not without potential disadvantages. Country of origin associations from both a domestic and a foreign perspective. 30

Conceptualizing the Leveraging Process Channel of Distribution: channels of distribution can directly affect the equity of the brands they sell because consumers associations linked to the retail stores through “Image Transfer” process. Associations to product assortment, pricing and credit policy, quality of service, and so on have their own brand images in consumer minds. Retailers create these image by the product or brand they stock and the means by which they sell them. Ex- “If it is sold by Nordstrom, it must be good quality”. The transfer of brand image can be both positive or negative for the brand. Ex- Levi’s Jeans. 30

Co-Branding Occurs when two or more existing brands are combined into a joint product or are marketed together in some fashion Examples: Sony Ericsson Yoplait Trix Yogurt Nestle’s Cheerios Cookie Bars

Advantages of Co-Branding Borrow needed expertise Leverage equity you don’t have Reduce cost of product introduction Expand brand meaning into related categories Broaden meaning Increase access points Source of additional revenue

Disadvantages of Co-Branding Loss of control Risk of brand equity dilution Negative feedback effects Lack of brand focus and clarity Organizational distractions

Guidelines for Co-Branding There should have adequate brand awareness; strong, favorable, unique; and positive consumer judgment and feelings. Two brand separately have sufficient brand equity. There is a logical fit between the brand: right kind of fit in values, capabilities and goal in addition appropriate balance in brand equity. Legalizing the contract and finalizing the financial arrangement. For brand alliance marketers should ask themselves: What capabilities do we not have? What resource constrains do we face? What growth goals or revenue needs do we have? In assessing joint branding opportunities marketers should ask themselves: Is it a profitable business venture? How does it help to maintain or strengthen brand equity? Is there any possible risk of dilution of brand equity? Does it offer many extrinsic advantages such as learning opportunities?

Ingredient Branding A special case of co-branding which creates brand equity for materials, components, or parts that are necessarily contained within other branded products Examples: Betty Crocker baking mixes with Hershey’s chocolate syrup Intel inside From consumer perspective, branded ingredients are often signal for quality. The uniformity and predictability of ingredient brands can reduce the risk and reassurance consumer as it become industry standard. Ingredient brand seeks cost-effective means of differentiation and seeks opportunities for expanding their sales. Ex- Singapore Airlines

Ingredient Branding Advantages: Disadvantages: Guidelines: From the perspective of making and supplying the ingredient: benefit of branding is creating consumer pull, generate greater sales and greater margin. There may be stable and long term supplier-buyer relationships. From the manufacturer of the host product , the benefit is leveraging the equity from the ingredient to enhance its own brand. Disadvantages: It is not without risk The cost of supporting marketing and communication program can be higher. There is a loss of control as there is difference between suppliers and manufacturers marketing program. Sustainability of competitive advantages may be uncertain. Guidelines: Consumers must firs perceive that the ingredient matters to the performance and success of the product. Consumers must be convinced that not all ingredient brands are the same and that the ingredient is superior. A distinctive symbol or logo must be designed to clearly signal to consumers that the host product contains the ingredient. A coordinated push and pull program must be put in place such that consumers understand the importance and advantages of branded ingredient.

Ingredient Branding A special case of co-branding which creates brand equity for materials, components, or parts that are necessarily contained within other branded products Examples: Betty Crocker baking mixes with Hershey’s chocolate syrup Intel inside From consumer perspective, branded ingredients are often signal for quality. The uniformity and predictability of ingredient brands can reduce the risk and reassurance consumer as it become industry standard. Ingredient brand seeks cost-effective means of differentiation and seeks opportunities for expanding their sales. Ex- Singapore Airlines

Licensing Involves contractual arrangements whereby firms can use the names, logos, characters, and so forth of other brands for some fixed fee Examples: Entertainment (Star Wars, Jurassic Park, etc.) Television and cartoon characters (The Simpsons) Designer apparel and accessories (Calvin Klein, Pierre Cardin, etc.)

Celebrity Endorsement Draws attention to the brand Shapes the perceptions of the brand Celebrity should have a high level of visibility and a rich set of useful associations, judgments, and feelings Q-Ratings to evaluate celebrities

Celebrity Endorsement: Potential Problems Celebrity endorsers can be overused by endorsing many products that are too varied. There must be a reasonable match between the celebrity and the product. Celebrity endorsers can get in trouble or lose popularity. Many consumers feel that celebrities are doing the endorsement for money and do not necessarily believe in the endorsed brand. Celebrities may distract attention from the brand.

Sporting, Cultural, or Other Events 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. The main means by which an event can transfer associations is credibility.

Third-Party Sources Marketers can create secondary associations in a number of different ways by linking the brand to various third-party sources. Third-party sources can be especially credible sources. Marketers often feature them in advertising campaigns and selling efforts . Example: J.D. Power and Associates’ well-publicized Customer Satisfaction Index