1. Brands and Consumers Professor S.J. Grant Spring 2007 BUYER BEHAVIOR, MARKETING 3250

2. Outline What is a brand? Brands add value Case study: Brand equity How are brands built? Laddering and goal-based positioning Leveraging a brand Brand extensions Co-branding Global branding

3. What is a Brand? A name, term, sign, symbol or design (or combination of these) intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors Well-established brands activate a network of associations in consumers’ minds

4. Brands Add Value RANK BRAND 2004 1 COCA-COLA 2 MICROSOFT 3 IBM 4 GE 5 INTEL 6 DISNEY 7 McDONALD’s 8 NOKIA 9 TOYOTA 10 MARLBORO BRAND VALUE ($billions) 67.4 61.4 53.8 44.1 33.5 27.1 25.0 24.0 22.7 22.1 Top 10 most valuable brands, as determined by Interbrand Group, 2004, J.P. Morgan.

5. Laddering Goal-based positioning deepens consumers’ understanding of a brand by showing brand helps to achieve goals Concrete features imply functional benefits Functional benefits imply emotional benefits Emotional benefits imply brand essence Brand essence implies goal attainment Features Emotions Essence Benefits Goal

6. The Consumer Connection Bridge Product Feature - why I believe this Product Feature Functional Benefit Emotiona l Benefit Goals Consumer Brand Functional Benefit - what it does for me Emotional Benefit - how this makes me feel Consumer Goals - how this allows me to achieve an important, universal goal

7. Laddering Physically attractive Virtuous, lean Low in calories Fat free Fat freeNutritiousbreakfast Functional Benefits Emotional Benefits Brand Essence

8. Laddering Adds life Refreshing Bubbly Goes with foodTraditional Features Functional Benefit Emotional Benefits

9. Laddering A family place Friendly CleanfacilitiesHappyMealsReliablefare Functional Benefits Emotional Benefits Brand Essence

10. Laddering Good mother Caring ChoosyMakingtoughchoicesWantingbest for kids Emotional Benefits Brand Essence Goal

11. Laddering Established elite Acceptance Preppystyling American AmericancasualQualitymaterial Functional Benefits Emotional Benefits Brand Essence

12. Leveraging the Brand Product line extensions Diet Coke Bayer Select Country Time Cider A1 Poultry Sauce Crystal Pepsi Cool Mint Listerine Hershey’s Hugs Brand extensions Marlboro Clothing BIC Perfume Jello Pudding Pops Aunt Jemima Pancake Syrup Jack Daniels Charcoal Woolite Tough Stain Rug Cleaner DuPont Stainmaster Marquis by Waterford

13. Product Line Extensions Opportunities Way to serve a segmented market Adapt to consumer variety seeking and update or expand the core brand’s image Increase shelf-space and attract more consumer attention Offer a broader range of price points and thereby serve a wider audience of consumers Utilize excess capacity Increase sales quickly Create a barrier to entry by increasing control of shelf- space

14. Product Line Extensions Threats Blurring the rationale for each product in the line Encouraging variety seeking Diluting the core brand image Increasing costs without increasing total sales, cannibalization Reducing credibility with trade if extension sales are lower than promised Offering competitors more opportunities to match products

15. Brand Extensions Brands may launch extensions as a way to leverage strong brand equity Starbucks coffee – Starbucks ice cream Hewlett Packard calculators – Hewlett Packard PCs and printers

16. Brand Extensions The “extendibility” of a brand is a function of its associations Brands that have “laddered-up” and thus connect with broad values and goals often can be extended successfully to other categories that serve the same goal (e.g. Polo) Brands that remain closely tied to their product category may only succeed with extensions to related categories (e.g., Aunt Jemima Pancake Mix and Aunt Jemima Syrup)

17. Co-Branding Ingredient brands Intel Inside Nutrasweet DuPont Stainmaster Composite brands Master Card and issuing bank Healthy Choice from Kellogg’s

18. Global Branding Global target Teens, business travelers, affluents/aspirers Global needs: simplicity, elegance, status Global category needs Yes: high tech, high signal (style, fashion) No: local tastes, rituals, personal hygiene Global equity Country-of-origin imagery relevant (Coke, Levi’s, Harley- Davidson, Chanel, Evian, Nissan) Weak, fragmented local competitors Can leverage economies of scale