Facilitated by Holly Hapke November 16, 2017 Branding 1, 2, 3 Facilitated by Holly Hapke November 16, 2017

WHY? A name, term, design, symbol, or other feature Branding A. A brand is a name, term, symbol, design, or other feature that identifies one seller’s good or service as distinct from those of other sellers. 1. A brand name is that part of a brand that can be spoken, including letters, words, and numbers; a brand name is often a product’s only distinguishing characteristic. 2. A brand mark is an element of a brand that cannot be spoken, often a symbol or design. 3. A trademark is a legal designation indicating that the owner has exclusive use of the brand or part of that brand and that others are prohibited by law from using it. 4. A trade name is the full legal name of an organization rather than the name of a specific product.

Value of Branding to Buyers Identifies specific products Reduces purchase time Provides a form of self-expression Helps evaluate quality Reduces perceived risk in purchase Offers potential psychological reward Value of Branding 1. To buyers a) Brands help customers identify specific products that they like and do not like, which facilitates the purchase of those items that satisfy individual needs. b) A brand helps a buyer evaluate the quality of products, especially when the person lacks the ability to judge a product’s characteristics; that is, a brand may symbolize a certain quality level to a purchaser, and the person in turn lets that perception of quality represent the quality of the item. c) A brand helps buyers reduce their perceived risk when making a purchase. A brand helps reduce a buyer’s perceived risk of purchase. d) A brand can give buyers the psychological reward that comes from owning a brand that symbolizes status.

Value of Branding to Sellers Identifies the firm’s products Makes repeat purchasing easier Assists in new product introduction Assists in promotional efforts Fosters brand loyalty Increases profitability To sellers a) Sellers’ brands identify each firm’s products, which makes repeat purchasing easier for consumers. Branding also facilitates promotional efforts because each branded item implicitly all similarly branded items. b) To the extent that buyers become loyal to a specific brand, the firm’s market share for that product achieves a certain level of stability, which allows the firm to use its resources more efficiently and to attract repeat customers.

Brand Loyalty A customer’s favorable attitude toward a specific brand Degrees of Brand Loyalty Brand Recognition Brand Preference Brand Insistence Brand Loyalty 1. Brand loyalty is a customer’s favorable attitude toward a specific brand. A strong brand loyalty increases the likelihood that a consumer will consistently purchase this brand when the need arises. a) Development of brand loyalty in a customer reduces his or her risks and shortens the time spent buying the product. b) The degree of brand loyalty for products varies from one product category to another. 2.There are three degrees of brand loyalty. a) Brand recognition occurs when a customer is aware that a brand exists and views it as an alternative to purchase if his or her brand is unavailable or if the other available brands are unfamiliar to the customer. b) Brand preference is a stronger degree of brand loyalty. A customer definitely prefers one brand over competitive offerings and will purchase the brand if available, but will accept a substitute. c) Brand insistence is the strongest and least common degree of brand loyalty, in which a customer strongly prefers a specific brand, will accept no substitute, and will go to great lengths to acquire it. 3. Brand loyalty seems to be on the decline, in part to marketers’ increased reliance on sales, coupons, and other promotions, and in part to the array of similar products from which customers can choose. 4. Although brand loyalty is a challenge to build, it makes a significant contribution to a sustainable competitive advantage.

Discussion Question Do you have any brand insistence? Do you know anyone who is brand insistent and will accept no substitutes?

Brand Equity 1. Brand equity is the marketing and financial value associated with a brand’s market strength. 2. Brand equity includes proprietary brand assets, such as patents and trademarks, as well as brand name awareness, brand loyalty, perceived brand quality, and brand association. a) Recognition of a brand leads to familiarity, and familiar brands are more likely to be viewed as reliable and of higher quality. A familiar brand is more likely to be in a buyer’s consideration set. b) Customers with brand loyalty are less vulnerable to competitors’ actions and provide brand visibility and reassurance to potential new customers. c) A brand name may be used as a substitute for judgment of quality in instances where a judgment on quality is impossible. Perceived brand quality helps to support a premium price, allowing a marketer to avoid severe price competition. d) Marketers associate a particular lifestyle or certain personality with a specific brand to appeal to consumers who can relate to the image. 3. Although brand equity is difficult to measure, it represents the value of a brand to an organization. An organization may pay a premium to purchase a brand from another company because it is less risky than developing its own. 4. A brand’s overall value rises and falls with profitability, brand awareness, brand loyalty, and perceived brand quality and with the strength of positive brand association.

Selecting a Brand Name Be easy for customers to say, spell and recall Indicate the product’s major benefits Be distinctive Selecting a Brand Name 1. Marketers should consider a number of factors when selecting a brand name. a) The name should be easy for customers to say, spell, and recall. b) If possible, the brand name should suggest the product’s uses and special characteristics in a positive way and avoid negative or offensive references. c) A brand should be distinctive enough to set it apart from competitors’ brands. d) If a marketer intends to use a brand for a product line, the brand must be designed to be compatible with all products in the line. e) A brand should be designed so that it can be used and recognized in all types of media.

Branding beyond the visual Selecting a Brand Name 1. Marketers should consider a number of factors when selecting a brand name. a) The name should be easy for customers to say, spell, and recall. b) If possible, the brand name should suggest the product’s uses and special characteristics in a positive way and avoid negative or offensive references. c) A brand should be distinctive enough to set it apart from competitors’ brands. d) If a marketer intends to use a brand for a product line, the brand must be designed to be compatible with all products in the line. e) A brand should be designed so that it can be used and recognized in all types of media.

Perceptual Map Perceptual maps

Types of Vehicles Perceptual Map Performance Compact Full-Size Perceptual maps Environmental Consciousness

On the perceptual map, where does each vehicle fit in terms of performance, environmental consciousness, and size? Ford F-150 Prius Mercedes S-Class Ford Escape Hybrid Ford Focus Chevy Volt Cadillac SUV Answers: Ford F-150—Performance, full-size Prius—Environmental Consciousness, compact Mercedes S-Class—Performance, Full-size Ford Escape Hybrid—Environmental consciousness, full-size Ford Focus—Performance, compact Chevy Volt—Environmental consciousness, compact Cadillac SUV—Performance, full size

Contact Information Holly Hapke University of Kentucky 435 M Gatton College of Business & Economics Lexington, KY 40506 859-257-4920 holly.hapke@uky.edu @hapkeu