Brand The Holy Grail of Advertising Mktg 340 Lecture 2

What do these companies have in common? Coca Cola IBM Microsoft GE Nokia

Top 5 Global Brands of 2009, according to Interbrand

These? Coca Cola Microsoft IBM GE Nokia

Top 5 brands in 2001, according to Interbrand

What’s a brand? 'Customers must recognize that you stand for something.' - Howard Schultz, Starbucks 'Brands are the express checkout for people living their lives at ever increasing speed.' – Brandweek 'Products are made in the factory, but brands are created in the mind.' - Walter Landor

Brand What the consumer believes the product delivers Tangible elements – The product – The retail environment – Factories – Advertising and marketing communications – Name and logo – Packaging – Employees/Service Intangible elements – Corporate, personnel and environmental policies – Values of corporation – Culture and country issues – Media reports/publicity – Personality and attitude

Brand identity vs. brand equity Brand identity – The elements of the brand promise as communicated through logos, colors, packaging, retail channel, philosophy, jingles, personality, attitude, management, corporate culture, etc. Brand equity – The value delivered back to the company based on the product’s market domination and the consumers’ belief that the promise is delivered

Best Global Brands Coca-Cola $68,734 ($m) 2. IBM $60,211 ($m) 3. Microsoft$56,647 ($m) 4. GE $47,777 ($m) 5. Nokia $34,864 ($m) ….based on what? eports/best_global_brands_2009.html

Brand metrics: what’s a brand worth? Interbrand uses – Financial analysis of the global corporation, determination of earnings based on brand preference, likelihood of future earnings based on brand stability and consumer choice Alix Partners uses: – Level of awareness, consumer trust

Why brand? Differentiation in a crowded field The average Fortune 1000 company manages 240 brands The number of brands in a company portfolio has increased 76% of Fortune 1000 companies manage more than 100 brands

Brand Benefits for consumers and firms Consumers – Assurance of product quality – Confidence of category – Reduces uncertainty – Psychological and social acceptance – Simplifies choice Company – Easier new product introduction – Can charge a higher price – Customer loyalty – Increased purchases – Positive word of mouth – Resists competition better – Attract better employees – Positive attention from financial analysts – More power with channel

Brand image as a strategic advantage Built on the strengths of the company (“salient features”) – Nike = athletic performance – Apple = stylish and advanced electronics Viewed through the consumers eyes Informs firm decisions about communications, product development, distribution (is the decision true to the brand image?) May require adjustment or total change

Positioning the brand Helping the consumer distinguish between a product/firm and its competitors Can position by – User-- attributes – Against competitor-- product class – Use/application-- cultural symbol – Price

Different approaches to toothpaste positioning By attribute/benefit whitens teeth By competitor better than Colgate By price cheapest cavity prevention By user for children By use for after coffee By cultural symbol clean and fresh as snow By product class better than mouthwash

Brand Identifiers Name and logo: – enhances recognition and understanding of the brand attribute/distinction – Allows for easier new product introduction (brand extension) Packaging: – enhances decision making at the point of purchase

Brand Strength Qualities of great brands: – A compelling idea – A core purpose and supporting values – Management commitment – Consistency – Superior products – Distinctive positioning and experience – Internal/external alignment – Relevance

Harley Davidson – Apple – Others?

Industry in Transition Consolidation Globalization Client demands Media clutter Media fragmentation Budget fragmentation Drive for quantification Consumer demand for customization

Transition Time of purchase Increasing importance of brand Consumer fatigue and cynicism Rise of Integrated Marketing Communications New technology Compensation

Agency financial models Commission-based compensation Fee for Services Mark-ups Pay for Results

U.S. Top 10 Advertisers (traditional media Jan-Dec 08-09) Company Procter and Gamble$3.2 b$2.7b General Motors$2.2 b$2.2 b At&T$2.0 b$1.9 b Verizon$2.1 b$2.2 b Johnson & Johnson$1.3 b$1.25 b Time Warner$1.3 b$1.2 b Toyota$819 m$427 m General Electric$807 mna Ford$742 m$467 m Pepsi$730 mna

2008 Ad spending trends

Actually…. Media spending for 2009… – Internet advertising+7.3 – Network tv-7.6 – Spot tv-23.7 – Newspaper-19.7 – Consumer magazines-16.6 – Radio-20.3 – Total spending change

Media allocations 2008

Media allocations 2009

Change in ad spend by category 08-09

Top product placements (Jan – Nov) Biggest Loser6,248 American Idol4,636 Extreme Makeover3,371 America’s Tough Jobs2,807 One Tree Hill2,575

Brand placement vs. advertising Q4/09

Find these agencies Adweek Agency Report Card 2008http:// ay/special-reports/report- card/e3i9797ecafefe6fc8b5b4a7feb271b553a View work from: – Ogilvy (C-) – Crispin Porter Bogusky (B+)