Marketing & Services Management MSc Marketing & Services Management Branding Strategy Dr. Weiyue (Jimmy) Wang

Branding To understand: what is brand what is brand equity five categories of brand equity by Aaker what is customer-based brand equity how to build a brand equity brand building implications advantages of strong brands

Product Vs. Brand A product is anything that is capable of satisfying consumer functional needs. A brand gives a product a distinctive identity through the creation of a name, design or, more usually, some combination of these. Functional need, emotional need

Why brands are so important – customer perceptions – Coke V Pepsi Blind (%) Branded (%) Prefer Pepsi 51 23 Prefer Coke 44 65 Equal/Don’t Know 5 12 Strong brand names affect perceptions and preferences

Why brand? Company perspective Customer perspective Helps with ever growing choice Reduces search costs Reduces psychological risks Gives customers confidence – heritage/reputation Therefore allows for easier choice – one more decision you don’t have to make! Can obtain premium prices Or sell at market price to increase volume And then benefit from economies of scale Reduces new product risks Distinctive identity – difficult to copy Good products/brands add value Builds internal pride

What is a brand? A brand is a name that is given to a particular product or service or range of products or services (Kotler, Keller, Brady, Goodman, Hansen, 2009). A brand is a name, term, sign, symbol, design or combination of these, which is used to identify the goods or services of one seller and to differentiate them from those of competitors (Kotler, Wong, Saunders, Armstrong, 2005) Ownership Differentiation Image Identity Added value Relationship

Brand Equity – D Aaker Brand equity is a set of brand 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 to that firm’s customers (Aaker, 1991, p.15) Brand equity can be grouped into five categories: brand loyalty / brand awareness / perceived quality / brand associations / other brand assets

Five categories of Aaker’s brand equity – brand loyalty Brand loyalty: a measure of the attachment that a customer has to a brand When a brand makes a change, e.g. price, product feature, etc., how likely its customers will be to switch to another brand No loyalty --- committed loyalty Maintain and enhance loyalty: treat customer right / stay close to customer / measure or manage customer satisfaction / create switching costs / provide extras

Five categories of Aaker’s brand equity – brand awareness Ability of a potential buyer to recognise or recall that a brand is a member of a certain product category Level of awareness: top of mind awareness, brand recall, brand recognition, unawareness The way from awareness to sales How to achieve awareness: be different or memorable / involve a slogan or Jingle / symbol exposure / event sponsorship / brand extensions / recall needs repetition

Five categories of Aaker’s brand equity – perceived quality Customer’s perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives Customer perceived quality ≠ customer satisfaction Perceived quality generates values: a premium price / willingness to buy / differentiation / brand extension

Five categories of Aaker’s brand equity – brand associations Anything linked in memory to a brand All associations: product attributes, intangibles, customer benefits, relative price, country of origin effect, competitors, product class, personality, life style, celebrity endorsement

Five categories of Aaker’s brand equity – other assets Patents, trademarks, channel relationships, etc

Customer-based brand equity – Kevin Lane Keller Customer-based brand equity occurs when the consumer has a high level of awareness and familiarity with the brand and holds some strong, favorable and unique brand associations in memory Sources of brand equity: brand awareness & brand image (brand knowledge) Brand knowledge is the key to create brand equity and consists of a brand note in memory with a variety of associations linked to it

Building a strong brand: The Four Steps of Brand Building Ensure identification of the brand with customers and an association of the brand in customers’ minds Establish the totality of brand meaning in the minds of consumers Elicit the proper customer responses to the brand identification and brand meaning Convert brand response to create an intense, active loyalty relationship between customers and the brand

Four Questions Customers ask of Brands Who are you? (brand identity) What are you? (brand meaning) What about you? What do I think or feel about you? (brand responses) What about you and me? What kind of association and how much of a connection would I like to have with you? (brand relationships)

Brand Building Implications Customers own brands. Don’t take shortcuts with brands. Brands should have a duality. Brands should have richness. Brand resonance provides important focus.

Marketing advantages of strong brands 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 Additional brand extension opportunities Etc.

Leveraging Secondary Associations Creation of new brand associations Effects on existing brand knowledge Awareness and knowledge of the entity Meaningfulness of the knowledge of the entity Transferability of the knowledge of the entity These secondary associations may lead to a transfer of: Response-type associations Judgments (especially credibility) Feelings Meaning-type associations Product or service performance Product or service imagery 30

Types of Secondary Associations Company Co-branding Extensions Other brands COO employees Brand People Places Endorsers Channels Things Events Licensing Third party

Leveraging Secondary Associations 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) Characters (through licensing) Celebrity spokesperson (through endorsement advertising) Events (through sponsorship) Other third-party sources (through awards and reviews) 30

Company branding strategies Corporate brand associations Corporate brand visibility/dominance New brand / modify an existing brand / combine existing and new brand Product responses (consumer evaluation and behaviour) Influenced by fit, consumer involvement, perceived risk

Country of origin Consumer attitude towards foreign products French wine, Japanese electronics, Russian vodka, Scottish whiskey, German car, etc… Made-in-… vs. Manufactured-in-… But mitigated by trial and direct experience, and moderated by product type, consumer involvement, and other personal values. Domestic products as well, Particularly for international marketing, international branding strategy

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 Haagen-Dazs & Balleys Dell Computers with Intel Processors Dell and Intel: we call ingredients

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

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, also be credible in terms of expertise, trustworthiness, and likeability.

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-published Customer Satisfaction Index, Interbrand publish Top 100 brands

Leveraging Secondary Associations 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

What we have achieved? what is brand what is brand equity five categories of brand equity by Aaker how to build a brand equity brand building implications advantages of strong brands Building customer-based brand equity Secondary association