9-1 © 2006 by Nelson, a division of Thomson Canada Limited 5/26/2016 Slides developed by: Peter Yannopoulos Chapter 9 Brand Strategy

9-2 © 2006 by Nelson, a division of Thomson Canada Limited Manufacturers make products consumers buy brands Essence of Branding

9-3 © 2006 by Nelson, a division of Thomson Canada Limited What is a Brand? A name, symbol, logo, trademark, or design that is used to identify brands, differentiate them from competitors, and protect consumers and companies from counterfeit products or imitators A name, symbol, logo, trademark, or design that is used to identify brands, differentiate them from competitors, and protect consumers and companies from counterfeit products or imitators

9-4 © 2006 by Nelson, a division of Thomson Canada Limited What is a Commodity? A product that is perceived as lacking any meaningful differences such as grain, potatoes, and aluminum A product that is perceived as lacking any meaningful differences such as grain, potatoes, and aluminum

9-5 © 2006 by Nelson, a division of Thomson Canada Limited Components of Brands Product category Product attributes Product features Product category Product attributes Product features PRODUCT BRAND Trademark Logo Sign Trust Design Personality Relationships Emotional benefits Symbols Brand name Brand image

9-6 © 2006 by Nelson, a division of Thomson Canada Limited Types of Brands Experiential brands Functional brands Image brands Types of Brands

9-7 © 2006 by Nelson, a division of Thomson Canada Limited Importance of Brands for Consumers Reduce perceived risk Shorthand device Enhance perceived value Importance of Brands for Consumers

9-8 © 2006 by Nelson, a division of Thomson Canada Limited Types of Perceived Risk Physical risk Functional risk Social risk Financial risk Types of perceivedrisk Psychological risk

9-9 © 2006 by Nelson, a division of Thomson Canada Limited Importance of Brands for Companies Product differentiation Credibility Adding value Source of future revenues Enhancing effectiveness of marketing activities Legal protection Capitalizing on the strength of the brand

9-10 © 2006 by Nelson, a division of Thomson Canada Limited Brand Equity A set of assets and liabilities linked to the product or service that add to its value A set of assets and liabilities linked to the product or service that add to its value

9-11 © 2006 by Nelson, a division of Thomson Canada Limited Elements of Brand Equity Brand awareness Brand loyalty Perceived quality Brand associations Other proprietary assets

9-12 © 2006 by Nelson, a division of Thomson Canada Limited Methods of Measuring the Value of Brands Price Premium Customer preference Replacement costs Financial market value Historical costs MeasuringBrandValue Earnings

9-13 © 2006 by Nelson, a division of Thomson Canada Limited Earnings Method Example Average after tax profits $550 million Expected earnings for an equivalent unbranded product - 55 million Earnings attributed to the brand$495 million Brand strength factor X 12 Estimated value of brand $5.9 billion

9-14 © 2006 by Nelson, a division of Thomson Canada Limited The World’s Most Valuable Brands 2005 RANK BRAND VALUE $MILLIONS (U.S.) COCA-COLA 67,525 MICROSOFT59,941 IBM 53,376 GE46,996 INTEL35,588 NOKIA26,452 DISNEY26,441 McDONALD’S26,014 TOYOTA24,837 MARLBORO21, RANK BRAND VALUE $MILLIONS (U.S.) COCA-COLA 67,525 MICROSOFT59,941 IBM 53,376 GE46,996 INTEL35,588 NOKIA26,452 DISNEY26,441 McDONALD’S26,014 TOYOTA24,837 MARLBORO21,189

9-15 © 2006 by Nelson, a division of Thomson Canada Limited Strategic Roles of Brands Sub-brands Licensed brands Endorser brands Co-branding StrategicRoles of Brands Brand extensions

9-16 © 2006 by Nelson, a division of Thomson Canada Limited Brand Extensions A brand extension involves using a well-known brand name to introduce a new brand that belongs to a different product category

9-17 © 2006 by Nelson, a division of Thomson Canada Limited Risks of Brand Extensions Dilution Differences in image Inferiority of new brand Risks of brandextensions

9-18 © 2006 by Nelson, a division of Thomson Canada Limited Co-Branding Co-branding is about two or more brands forming one product or marketed together in some way

9-19 © 2006 by Nelson, a division of Thomson Canada Limited Risks of Co-Branding Overexposure Confusion Dilution Risks of Co-branding Lack of fit Loss of control

9-20 © 2006 by Nelson, a division of Thomson Canada Limited Endorser Brands An endorser brand is an established brand that endorses another product

9-21 © 2006 by Nelson, a division of Thomson Canada Limited Types of Endorser Brands Shadow Conventional Token Types of Endorser Brands

9-22 © 2006 by Nelson, a division of Thomson Canada Limited Sub-Brands Sub-brands are brands related to the parent brand but reflect the specific association or personality of a specific brand

9-23 © 2006 by Nelson, a division of Thomson Canada Limited Types of Sub-Brands Descriptors Drivers Types of Sub- brands

9-24 © 2006 by Nelson, a division of Thomson Canada Limited Licensed Brands Brand licensing involves agreements among firms whereby a firm pays another so it can use the name, logo, character, or trademark of the other brand to market its own product or merchandise

9-25 © 2006 by Nelson, a division of Thomson Canada Limited Risks of Licensing Short life Confusion Tarnishing of brand image Overexposure Risks of Licensing

9-26 © 2006 by Nelson, a division of Thomson Canada Limited Barriers to Successful Brand Building Pressure to compete on price Fragmented markets and media Complex brand strategies and relationships Changing strategies Bias against innovation Insufficient investment Short-term mentality

9-27 © 2006 by Nelson, a division of Thomson Canada Limited Building Strong Brands Take a long-term view of the brand’s profitability Link the brand with unique, strong, favourable, and consistent associations Engage in continuous product improvement and innovation Integrate marketing activities Adapt to consumer and market changes

9-28 © 2006 by Nelson, a division of Thomson Canada Limited Desired Characteristics of Effective Brand Names Name is simple, easy to pronounce, spell, and understand Name is distinctive Name suggests product benefits or attributes Name projects a distinctive quality Name can be legally protected Name is easy to translate into other languages Name uses letters that invoke favourable buyer feelings