A Framework for Marketing Management Chapter 8 Creating Brand Equity Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Chapter Questions What is a brand, and how does branding work? What is brand equity, and how is it built, measured, and managed? What are the important decisions in developing a branding strategy? Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Brand A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. The Role of Brands Identify the maker Simplify decision making and reduce risk Simplify product handling and tracing Organize inventory and accounting Offer legal protection Signify quality Create barriers to entry Secure a competitive advantage Secure price premium Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. The Scope of Branding Branding—endowing products and services with the power of a brand. It’s all about creating differences between products. Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Brand Equity Brand equity—the added value endowed on products and services, reflected in how customers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands for the firm. Customer-based brand equity—the differential effect that brand knowledge has on consumer response to that brand’s marketing. Arises from customer response. Differences in response are a result of brand knowledge. Differential response is reflected in perceptions, preferences, and behaviors related to the brand’s marketing. Copyright 2009, Prentice-Hall, Inc.

Marketing Advantages of Strong Brands Improved perceptions Greater loyalty Less vulnerable to competitors Less vulnerable to crises Larger margins More inelastic responses to price increases More elastic responses to price decreases Greater trade cooperation Increased marketing communication effectiveness Possible licensing opportunities Brand extension opportunities Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Brand Promise The marketer’s vision of what the brand must be and do for consumers. Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Brand Equity Drivers Brand elements Marketing activities Meaning transference Copyright 2009, Prentice-Hall, Inc.

Criteria for Choosing Brand Elements Building the Brand Memorable Meaningful Likeability Defending the Brand Transferable Adaptable Protectible Copyright 2009, Prentice-Hall, Inc.

Designing Holistic Marketing Activities Personalization—ensuring that the brand and its marketing are as relevant as possible to as many customers as possible. Integration—mixing and matching marketing activities to maximize their individual and collective efforts. Internalization—ensuring employees and marketing partners understand basic branding notions and know how they can help (or hurt) brand equity. Copyright 2009, Prentice-Hall, Inc.

Leveraging Secondary Associations Linking the brand to other information in memory that conveys meaning to consumers. Sources: Other brands Places Things People Copyright 2009, Prentice-Hall, Inc.

Measuring Brand Equity Brand audit Brand tracking Brand valuation Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Managing Brand Equity Brand reinforcement Brand revitalization Copyright 2009, Prentice-Hall, Inc.

Brand Strategy and Customer Equity Develop new brand elements. Apply existing brand elements. Use a combination of old and new brand elements. Copyright 2009, Prentice-Hall, Inc.

Table 8.3: Branding New Products Brand extension Sub-brand Parent brand Family brand Line extension Category extension Brand line Brand mix Branded variants Licensed product Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Branding Decisions Individual names Blanket family names Separate family names for all products Corporate name, combined with individual product names Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Brand Extensions Advantages Improved odds of success Positive consumer expectations Retailer support Leverage current brand awareness Reduced cost of the launch campaign Feedback benefits Disadvantages Brand dilution Risk to brand integrity Risk of harm to parent brand Cannibalization Lost opportunity to create a new brand Copyright 2009, Prentice-Hall, Inc.

Reasons for Multiple Brands in Portfolio To increase shelf presence and retailer dependence To attract consumers seeking variety To increase internal competition To yield economies of scale Copyright 2009, Prentice-Hall, Inc.

Brand Roles in a Brand Portfolio Flankers—“fighter” brands. Cash cows—“milk” these brands because they are profitable. Low-end entry level—attract customers to the franchise. High-end prestige—high-priced brand used to add prestige and credibility. Copyright 2009, Prentice-Hall, Inc.

Copyright 2009, Prentice-Hall, Inc. Customer Equity The sum of lifetime values of all customers. Customer lifetime value is affected by revenue and cost considerations related to: Acquisition Retention Add-on spending Copyright 2009, Prentice-Hall, Inc.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc.   Publishing as Prentice Hall Copyright 2009, Prentice-Hall, Inc.