Ashesi University COURSE TITLE : STRATEGIC BRAND MANAGEMENT SEMESTER : SECOND, 2010/2011 MODULE 7: Leveraging Secondary Brand Associations to Build Equity Lecturer: Ebow Spio

Learning Outcomes Explain how a brand can build equity through the leverage of related or secondary associations Gain the skill to leverage brand equity through secondary associations

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 Secondary associations are those related to other entities to which a brand is linked, such as the parent company, country of origin, channels of distribution, spokespeople, events, characters, other brands, and third-party sources. The link may lead consumers to assume or infer that beliefs, attitudes and perceptions they have for the external source also hold for the brand. This ability to “borrow” equity from the people, places, or things associated with the brand creates additional leverage for marketers beyond that generated by brand elements and marketing programs. 1

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 Secondary brand knowledge may be quite important to creating strong favourable, and unique associations or positive responses if existing brand associations and responses in a fresh and different way. It can also be an effective way to reinforce existing associations and responses in a fresh and different way. Leverage can only occur when consumers are familiar with the external source and associations for the source are relevant to the brand. The basic questions we want to ask about transferring secondary knowledge from another entity are: What do consumers know about the other entity? And does any of this knowledge affect what they think about the brand when it becomes linked or associated in some fashion with this other entity? Certain kind of entities are more likely to inherently create or affect certain kinds of brand knowledge than others. E.g. events may be especially conducive to the creation of experiences; people may be especially effective for the elicitation of feelings. The more consumers see similarity between the entity and the brand, the more likely they will infer similar knowledge about the brand. 30

Leveraging Secondary Associations Brand associations may themselves be linked to other entities, creating secondary associations: Company (through branding strategies) e.g. Bon Aqua by Coca Cola Country of origin (through identification of product origin) Sony from Japan Channels of distribution (through channels strategy) Other brands (through co-branding) Special case of co-branding is ingredient branding e.g. Intel Inside Characters (through licensing) Celebrity spokesperson (through endorsement advertising) Accenture and Tiger Woods Events (through sponsorship) MTN and FIFA 2010 Other third-party sources (through awards and reviews) Glo CAF awards Company Association: Three main branding options exist for a new product: Create a new brand, Adopt or modify an existing brand or combine an existing brand and a new brand 30

Leveraging Secondary Associations 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 31

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 Siemens and Porsche design which produce a range of kettles, toasters and coffee machines Star Alliance which includes 16 different airlines such as Lufthansa, Singapore Airlines The Smart Car : Swatch and Mercedes Benz

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: To create a strong co-brand both brands should have adequate brand awareness; sufficiently strong, favourable and unique associations; and positive consumer judgments and feelings. There must also be a logical fit between the two brands i.e. values, capabilities and goals as wells as appropriate balance of brand equity. When comes to execution, marketers need detailed plans to legalize contracts, make financial arrangements and coordinate marketing programmes.

Ingredient Branding A special case of co-branding that involves creating brand equity for materials, components, or parts that are necessarily contained within other branded products Examples: Intel inside 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. From a consumer behaviour perspective, branded ingredients are often a signal of quality.

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, Spider Man, Shriek , Micky Mouse of Disney etc.) Television and cartoon characters (The Simpsons) Designer apparel and accessories (Calvin Klein, Pierre Cardin, Ralph Lauren etc.) In effect a firm is “ renting” another brand to contribute to the brand equity of its own product. Licensing can be quite lucrative for the licensor.

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

Key Points Brands can “borrow” equity from their association with people, places, programs, and other non-product-based sources. Secondary associations are strongest when consumers have awareness and strong, favorable, and unique perceptions of the external source. Secondary associations are most likely to affect evaluations when consumers lack the ability or motivation to judge product attributes. Leveraging secondary associations can be problematic because it requires marketers to give up some degree of control over the branding process.

Tutorial Questions The Boeing Company makes a number of different types of aircraft for the commercial airline industry, e.g., the 727, 747, 757, 767, and 777 jet models. Is there any way for Boeing to adopt an ingredient branding strategy with their jets? How? What would be the pros and cons? After winning major championships, star players often complain about their lack of endorsement offers. Similarly, after every Olympics, a number of medal-winning athletes lament their lack of commercial recognition. From a branding perspective, how would you respond to the complaints of these athletes? Think of the country in which you live. What image might it have with consumers in other countries? Are there certain brands or products that are highly effective in leveraging that image in global markets? Pick a brand. Evaluate how it leverages secondary associations. Can you think of any ways in which the brand could more effectively leverage secondary brand knowledge?