Marketing Strategy paper after reading

The Brand Report Card

by Kevin Lane Keller

Reprint r00104

JANUARY – FEBRUARY 2000

Reprint Number

Narcissistic Leaders: The Incredible Pros, the Inevitable Cons R 0 0 1 0 5

Co-opting Customer Competence R 0 0 1 0 8

Coevolving: At Last, a Way to Make Synergies Work R 0 0 1 0 3

A Market-Driven Approach to Retaining Talent R 0 0 1 0 1

Common Sense and Conflict: R 0 0 1 1 1 An Interview with Disney’s Michael Eisner

A Modest Manifesto for Shattering the Glass Ceiling R 0 0 1 0 7

Communities of Practice: The Organizational Frontier R 0 0 1 1 0

F O R E T H O U G H T The Power of Positive Deviancy F 0 0 1 0 1 Green Reporting F 0 0 1 0 2 The Electronic Negotiator F 0 0 1 0 3 The New Atlantic Century F 0 0 1 0 4 Performance Appraisal Reappraised F 0 0 1 0 5 The Mismanagement of Advertising F 0 0 1 0 6

H B R C A S E S T U DY When the Boss Won’t Budge R 0 0 1 0 6

P E R S P E C T I V E S The Future of Commerce R 0 0 1 1 2

T H I N K I N G A B O U T. . . Discovering New Value in Intellectual Property R 0 0 1 0 9

M A N AG E R ’ S TO O L K I T The Brand Report Card R 0 0 1 0 4

B O O K I N R E V I E W Beating Microsoft at Its Own Game R 0 0 1 0 2

MICHAEL MACCOBY

C.K. PRAHALAD AND

VENKATRAM RAMASWAMY

KATHLEEN M. EISENHARDT AND

D. CHARLES GALUNIC

PETER CAPPELLI

SUZY WETLAUFER

DEBRA E. MEYERSON AND

JOYCE K. FLETCHER

ETIENNE C. WENGER AND WILLIAM M. SNYDER

JERRY STERNIN AND ROBERT CHOO

ANS KOLK

A CONVERSATION WITH KATHLEEN VALLEY

HERMANN SIMON AND MAX OTTE

DICK GROTE

JOHN PHILIP JONES

REGINA FAZIO MARUCA AND

JOHN M. MILHAVEN

ADRIAN J. SLYWOTZKY; CLAYTON M.

CHRISTENSEN AND RICHARD S. TEDLOW;

AND NICHOLAS G. CARR

KEVIN G. RIVETTE AND

DAVID KLINE

KEVIN LANE KELLER

J. BRADFORD DELONG AND

A. MICHAEL FROOMKIN

uilding and properl y managing brand equit y has become a priority for companies of all sizes, in all types of industries, in all types of markets.

After all, from strong brand equity flow customer loy- alty and profits. The rewards of having a strong brand are clear.

The problem is, few managers are able to step back and assess their brand’s particular strengths and weaknesses objectively. Most have a good sense of one or two areas in which their brand may excel or may need help. But if pressed, many (understandably) would find it difficult even to identify all of the fac- tors they should be considering. When you’re im- mersed in the day-to-day management of a brand, it’s not easy to keep in perspective all the parts that affect the whole.

In this article, I’ll identify the ten characteristics that the world’s strongest brands share and construct a brand report card – a systematic way for managers to think about how to grade their brand’s performance for each of those characteristics. The report card can help you identify areas that need improvement, recog- nize areas in which your brand is strong, and learn

Copyright © 1999 by the President and Fellows of Harvard College. All rights reserved. 3

M A N A G E R ’ S T O O L K I T

The world’s strongest brands share ten attributes. How does

your brand measure up?

by Kevin Lane Keller

B

more about how your particular brand is configured. Constructing similar report cards for your com- petitors can give you a clearer picture of their strengths and weaknesses. One caveat: Identifying weak spots for your brand doesn’t necessarily mean identifying areas that need more attention. Decisions that might seem straightforward – “We haven’t paid much attention to innovation: let’s direct more resources toward R&D” – can sometimes prove to be serious mistakes if they undermine another characteristic that custom- ers value more.

The Top Ten Traits The world’s strongest brands share these ten attributes:

1. The brand excels at delivering the benefits customers truly desire. Why do customers really buy a prod- uct? Not because the product is a collection of attributes but because those attributes, together with the brand’s image, the service, and many other tangible and intangible factors, create an attractive whole. In some cases, the whole isn’t even some- thing that customers know or can say they want.

Consider Starbucks. It’s not just a cup of coffee. In 1983, Starbucks was a small Seattle-area coffee retailer. Then while on vacation in Italy, Howard Schultz, now Starbucks chairman, was inspired by the ro- mance and the sense of community he felt in Italian coffee bars and cof- fee houses. The culture grabbed him, and he saw an opportunity.

“It seemed so obvious,” Schultz says in the 1997 book he wrote with Dori Jones Yang, Pour Your Heart Into It. “Starbucks sold great coffee beans, but we didn’t serve coffee by the cup. We treated coffee as pro-

duce, something to be bagged and sent home with the groceries. We stayed one big step away from the heart and soul of what coffee has meant throughout centuries.”

And so Starbucks began to focus its efforts on building a coffee bar culture, opening coffee houses like those in Italy. Just as important, the company maintained control over the coffee from start to finish – from the selection and procurement of the beans to their roasting and blending to their ultimate consumption. The extreme vertical integration has paid off. Starbucks locations thus far have successfully delivered superior bene- fits to customers by appealing to all five senses – through the enticing aroma of the beans, the rich taste of the coffee, the product displays and attractive artwork ador ning the walls, the contemporary music play- ing in the background, and even the cozy, clean feel of the tables and chairs. The company’s startling suc- cess is evident: The average Star- bucks customer visits a store 18 times a month and spends $3.50 a visit. The company’s sales and prof- its have each grown more than 50% annually through much of the 1990s.

2 . Th e b ra n d s t ays re l eva nt. In strong brands, brand equity is tied both to the actual quality of the prod- uct or service and to various intangi- ble factors. Those intangibles include “user imagery” (the type of person who uses the brand); “usage imagery” (the type of situations in which the brand is used); the type of personality the brand portrays (sincere, exciting, competent, rugged); the feeling that the brand tries to elicit in customers (purposeful, warm); and the type of relationship it seeks to build with its customers (committed, casual, sea- sonal). Without losing sight of their core strengths, the strongest brands stay on the leading edge in the prod- uct arena and tweak their intangi- bles to fit the times.

Gillette, for example, pours mil- lions of dollars into R&D to ensure that its razor blades are as technolog- ically advanced as possible, calling attention to major advances through subbrands (Trac II, Atra, Sensor, Mach3) and signaling minor im- provements with modifiers (Atra

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Rate your brand on a scale of one to ten (one being extremely poor and ten being extremely good) for each characteristic below. Then create a bar chart that reflects the scores. Use the bar chart to generate discussion among all those individuals who participate in the management of your brands. Looking at the results in that manner should help you identify areas that need improve- ment, recognize areas in which you excel, and learn more about how your partic- ular brand is configured.

It can also be helpful to create a report card and chart for competitors’ brands simply by rating those brands based on your own perceptions, both as a com- petitor and as a consumer. As an outsider, you may know more about how their brands are received in the marketplace than they do.

Keep that in mind as you evaluate your own brand. Try to look at it through the eyes of consumers’ rather than through your own knowledge of budgets, teams, and time spent on various initiatives.

Rating Your Brand

Kevin Lane Keller is the E.B. Os-

born Professor of Marketing at the

Amos Tuck School of Business at

Dartmouth College in Hanover,

New Hampshire. He is the author of

Strategic Brand Management (Pren-

tice-Hall, 1998).

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T h e B r a n d R e p o r t C a r d • M A N A G E R ’ S T O O L K I T

The brand excels at delivering the benefits customers truly desire.

Have you attempted to uncover unmet consumer needs and wants? By what methods? Do you focus relentlessly on maximizing your customers’ product and service experiences? Do you have a system in place for getting comments from customers to the people who can effect change?

The brand stays relevant. Have you invested in product improvements that provide better value for your customers? Are you in touch with your customers’ tastes? With the current market conditions? With new trends as they apply to your offering? Are your marketing decisions based on your knowledge of the above?

The pricing strategy is based on consumers’ perceptions of value.

Have you optimized price, cost, and quality to meet or exceed customers’ expectations? Do you have a system in place to monitor customers’ perceptions of your brand’s value? Have you estimated how much value your customers believe the brand adds to your product?

The brand is properly positioned. Have you established necessary and competitive points of parity with competitors? Have you established desirable and deliverable points of difference?

The brand is consistent. Are you sure that your marketing programs are not sending conflicting messages and that they haven’t done so over time? Conversely, are you adjusting your programs to keep current?

The brand portfolio and hierarchy make sense. Can the corporate brand create a seamless umbrella for all the brands in the portfolio? Do the brands in that portfolio hold individual niches? How extensively do the brands overlap? In what areas? Conversely, do the brands maximize market coverage? Do you have a brand hierarchy that is well thought out and well understood?

The brand makes use of and coordinates a full repertoire of marketing activities to build equity.

Have you chosen or designed your brand name, logo, symbol, slogan, packaging, signage, and so forth to maximize brand awareness? Have you implemented integrated push and pull marketing activities that target both distributors and customers? Are you aware of all the marketing activities that involve your brand? Are the people managing each activity aware of one another? Have you capitalized on the unique capabili- ties of each communication option while ensuring that the meaning of the brand is consistently represented?

The brand’s managers understand what the brand means to consumers.

Do you know what customers like and don’t like about a brand? Are you aware of all the core associations people make with your brand, whether intentionally created by your company or not? Have you created detailed, research-driven portraits of your target customers? Have you outlined customer-driven boundaries for brand extensions and guidelines for marketing programs?

The brand is given proper support, and that support is sustained over the long run.

Are the successes or failures of marketing programs fully understood before they are changed? Is the brand given sufficient R&D support? Have you avoided the temptation to cut back marketing support for the brand in reaction to a downturn in the market or a slump in sales?

The company monitors sources of brand equity. Have you created a brand charter that defines the meaning and equity of the brand and how it should be treated? Do you conduct periodic brand audits to assess the health of your brand and to set strategic direction? Do you conduct routine tracking studies to evaluate current market performance? Do you regularly distribute brand equity reports that summarize all relevant research and information to assist marketers in making decisions? Have you assigned explicit responsibility for monitoring and preserving brand equity?

score

Plus, SensorExcel). At the same time, Gillette has created a consis- tent, intangible sense of product su- periority with its long-running ads, “The best a man can be,” which are tweaked through images of men at work and at play that have evolved over time to reflect contemporary trends.

These days, images can be tweaked in many ways other than through tra- ditional advertising, logos, or slogans. “Relevance” has a deeper, broader meaning in today’s market. Increas- ingly, consumers’ perceptions of a company as a whole and its role in so- ciety affect a brand’s strength as well. Witness corporate brands that very visibly support breast cancer research or current educational programs of one sort or another.

3. The pricing strategy is based on consumers’ perceptions of value. The right blend of product quality, design, features, costs, and prices is very difficult to achieve but well worth the effort. Many managers are woefully unaware of how price can and should relate to what customers think of a product, and they there- fore charge too little or too much.

For example, in implementing its value-pricing strategy for the Cas- cade automatic-dishwashing deter- gent brand, Procter & Gamble made a cost-cutting change in its formu- lation that had an adverse effect on the product’s performance under certain – albeit somewhat atypical – water conditions. Lever Brothers quickly countered, attacking Cas- cade’s core equity of producing “vir- tually spotless” dishes out of the dishwasher. In response, P&G im- mediately returned to the brand’s old formulation. The lesson to P&G and others is that value pricing should not be adopted at the expense of essential brand-building activities.

By contrast, with its well-known shift to an “everyday low pricing” (EDLP) strategy, Procter & Gamble did successfully align its prices with consumer perceptions of its prod- ucts’ value while maintaining ac- ceptable profit levels. In fact, in the fiscal year after Procter & Gamble switched to EDLP (during which it also worked very hard to streamline operations and lower costs), the com-

pany reported its highest profit mar- gins in 21 years.

4.The brand is properly positioned. Brands that are well positioned oc- cupy particular niches in consumers’ minds. They are similar to and dif- ferent from competing brands in cer- tain reliably identifiable ways. The most successful brands in this regard keep up with competitors by creat- ing points of parity in those areas where competitors are trying to find an advantage while at the same time creating points of difference to achieve advantages over competi- tors in some other areas.

The Mercedes-Benz and Sony brands, for example, hold clear ad- vantages in product superiority and match competitors’ level of service. Saturn and Nordstrom lead their re- spective packs in service and hold their own in quality. Calvin Klein and Harley-Davidson excel at pro- viding compelling user and usage imagery while offering adequate or even strong performance.

Visa is a particularly good example of a brand whose managers under- stand the positioning game. In the 1970s and 1980s, American Express maintained the high-profile brand in the credit card market through a series of highly effective marketing programs. Trumpeting that “mem- bership has its privileges,” Ameri- can Express came to signify status, prestige, and quality.

In response, Visa introduced the Gold and the Platinum cards and launched an aggressive marketing campaign to build up the status of its cards to match the American Ex- press cards. It also developed an ex- tensive merchant delivery system to differentiate itself on the basis of superior convenience and accessi- bility. Its ad campaigns showcased desirable locations such as famous restaurants, resorts, and events that did not accept American Express while proclaiming, “Visa. It’s every- where you want to be.” The aspira- tional message cleverly reinforced both accessibility and prestige and

helped Visa stake out a formidable position for its brand. Visa became the consumer card of choice for fam- ily and personal shopping, for per- sonal travel and entertainment, and even for international travel, a for- mer American Express stronghold.

Of course, branding isn’t static, and the game is even more difficult when a brand spans many product categories. The mix of points of par- ity and point of difference that works for a brand in one category may not be quite right for the same brand in another.

5. The brand is consistent. Main- taining a strong brand means striking the right balance between continu- ity in marketing activities and the kind of change needed to stay rele- vant. By continuity, I mean that the brand’s image doesn’t get muddled or lost in a cacophony of marketing efforts that confuse customers by sending conflicting messages.

Just such a fate befell the Michelob brand. In the 1970s, Michelob ran ads

featuring successful young profes- sionals that confidently proclaimed, “Where you’re going, it’s Michelob.” The company’s next ad campaign trumpeted, “Weekends were made for Michelob.” Later, in an attempt to bolster sagging sales, the theme was switched to “Put a little week- end in your week.” In the mid-1980s, managers launched a campaign telling consumers that “The night belongs to Michelob.” Then in 1994 we were told, “Some days are better than others,” which went on to ex- plain that “A special day requires a special beer.” That slogan was subse- quently changed to “Some days were made for Michelob.”

Pity the poor consumers. Previous advertising campaigns simply re- quired that they look at their cal- endars or out a window to decide whether it was the right time to drink Michelob; by the mid-1990s, they had to figure out exactly what kind of day they were having as well. After receiving so many different messages, consumers could hardly

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Maintaining a strong brand means striking the right balance between continuity and change.

be blamed if they had no idea when they were supposed to drink the beer. Predictably, sales suffered. From a high in 1980 of 8.1 million barrels, sales dropped to just 1.8 mil- lion barrels by 1998.

6. The brand portfolio and hierar- chy make sense. Most companies do not have only one brand; they create and maintain different brands for different market segments. Single product lines are often sold under different brand names, and different brands within a company hold dif- ferent powers. The corporate, or companywide, brand acts as an um- brella. A second brand name under that umbrella might be targeted at the family market. A third brand name might nest one level below the

family brand and appeal to boys, for example, or be used for one type of product.

Brands at each level of the hierar- chy contribute to the overall equity of the portfolio through their indi- vidual ability to make consumers aware of the various products and foster favorable associations with them. At the same time, though, each brand should have its own boundaries; it can be dangerous to try to cover too much ground with one brand or to overlap two brands in the same portfolio.

The Gap’s brand portfolio pro- vides maximum market coverage with minimal overlap. Banana Re- public anchors the high end, the Gap covers the basic style-and-quality terrain, and Old Navy taps into the broader mass market. Each brand has a distinct image and its own sources of equity.

BMW has a par ticularly well- designed and implemented hierar- chy. At the corporate brand level, BMW pioneered the luxury sports sedan category by combining seem- ingly incongruent style and perfor- mance considerations. BMW’s clever advertising slogan, “The ulti- mate driving machine,” reinforces the dual aspects of this image and is applicable to all cars sold under the

BMW name. At the same time, BMW created well-differentiated subbrands through its 3, 5, and 7 series, which suggest a logical order and hierarchy of quality and price.

General Motors, by contrast, still struggles with its brand portfolio and hierarchy. In the early 1920s, Alfred P. Sloan decreed that his com- pany would offer “a car for every purse and purpose.” This philosophy led to the creation of the Cadillac, Oldsmobile, Buick, Pontiac, and Chevrolet divisions. The idea was that each division would appeal to a unique market segment on the basis of price, product design, user imagery, and so forth. Through the years, however, the marketing over- lap among the five main GM divi-

sions increased, and the divisions’ distinctiveness diminished. In the mid-1980s, for example, the com- pany sold a single body type (the J- body) modified only slightly for the five different brand names. In fact, advertisements for Cadillac in the 1980s actually stated that “motors for a Cadillac may come from other divisions, including Buick and Olds- mobile.”

In the last ten years, the company has attempted to sharpen the divi- sions’ blurry images by reposition- ing each brand. Chevrolet has been positioned as the value-priced, entry- level brand. Saturn represents no- haggle customer-oriented service. Pontiac is meant to be the sporty, per for mance-oriented brand for young people. Oldsmobile is the brand for larger, medium-priced cars. Buick is the premium, “near luxury” brand. And Cadillac, of course, is still the top of the line. Yet the goal remains challenging. The financial performance of Pontiac and Saturn has improved. But the top and bottom lines have never re- gained the momentum they had years ago. Consumers remain con- fused about what the brands stand for, in sharp contrast to the clearly focused images of competitors like Honda and Toyota.

7. The brand makes use of and co- ordinates a full repertoire of market- ing activities to build equity. At its most basic level, a brand is made up of all the marketing elements that can be trademarked – logos, symbols, slogans, packaging, signage, and so on. Strong brands mix and match these elements to perform a number of brand-related functions, such as enhancing or reinforcing consumer awareness of the brand or its image and helping to protect the brand both competitively and legally.

Managers of the strongest brands also appreciate the specific roles that different marketing activities can play in building brand equity. They can, for example provide detailed product information. They can show consumers how and why a product is used, by whom, where, and when. They can associate a brand with a person, place, or thing to enhance or refine its image.

Some activities, such as traditional advertising, lend themselves best to “pull” functions –those meant to cre- ate consumer demand for a given product. Others, like trade promo- tions, work best as “push” pro- grams – those designed to help push the product through distributors. When a brand makes good use of all its resources and also takes particu- lar care to ensure that the essence of the brand is the same in all activi- ties, it is hard to beat.

Coca-Cola is one of the best exam- ples. The brand makes excellent use of many kinds of marketing activi- ties. These include media advertis- ing (such as the global “Always Coca-Cola” campaign); promotions (the recent effort focused on the re- turn of the popular contour bottle, for example); and sponsorship (its extensive involvement with the Olympics). They also include direct response (the Coca-Cola catalog, which sells licensed Coke merchan- dise) and interactive media (the company’s Web site, which offers, among other things, games, a trading post for collectors of Coke memora- bilia, and a virtual look at the World of Coca-Cola museum in Atlanta). Through it all, the company always reinforces its key values of “original- ity,” “classic refreshment,” and so

Boundaries are important. Overlapping two brands in the same portfolio can be dangerous.

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harvard business review January–February 2000 7

on. The brand is always the hero in Coca-Cola advertising.

8. The brand’s managers under- stand what the brand means to con- sumers. Managers of strong brands appreciate the totality of their brand’s image – that is, all the differ- ent perceptions, beliefs, attitudes, and behaviors customers associate with their brand, whether created in- tentionally by the company or not. As a result, managers are able to make decisions regarding the brand with confidence. If it’s clear what customers like and don’t like about a brand, and what core associations are linked to the brand, then it should also be clear whether any giv- en action will dovetail nicely with the brand or create friction.

The Bic brand illustrates the kinds of problems that can arise when managers don’t fully understand their brand’s meaning. By emphasiz- ing the convenience of inexpensive, disposable products, the French company Société Bic was able to cre- ate a market for nonrefillable ball- point pens in the late 1950s, dispos- able cigarette lighters in the early 1970s, and disposable razors in the early 1980s. But in 1989, when Bic tried the same strategy with per- fumes in the United States and Eu- rope, the effort bombed.

The perfumes – two for women (“Nuit” and “Jour”) and two for men (“Bic for Men” and “Bic Sport for Men”) – were packaged in quarter- ounce glass spray bottles that looked like fat cigarette lighters and sold for about $5 each. They were displayed in plastic packages on racks at checkout counters throughout Bic’s extensive distribution channels, which included 100,000 or so drug- stores, super markets, and other mass merchandisers. At the time of the launch, a Bic spokesperson de- scribed the products as logical exten- sions of the Bic heritage: “High qual- ity at affordable prices, convenient to purchase and convenient to use.” The company spent $20 million on an advertising and promotion blitz that featured images of stylish peo- ple enjoying the perfumes and used the tag line “Paris in your pocket.”

What went wrong? Although their other products did stand for conve-

nience and for good quality at low prices, Bic’s managers didn’t under- stand that the overall brand image lacked a certain cachet with cus- tomers – a critical element when marketing something as tied to emo- tions as perfume. The marketers knew that customers understood the message they were sending with their earlier products. But they didn’t have a handle on the associations that the customers had added to the brand image – a utilitarian, imper- sonal essence – which didn’t at all lend itself to perfume.

By contrast, Gillette has been careful not to fall into the Bic trap. While all of its products benefit from a similarly extensive distribution system, it is very protective of the name carried by its razors, blades,

and associated toiletries. The com- pany’s electric razors, for example, use the entirely separate Braun name, and its oral care products are marketed under the Oral B name.

9. The brand is given proper sup- port, and that support is sustained over the long run. Brand equity must be carefully constructed. A firm foundation for brand equity requires that consumers have the proper depth and breadth of awareness and strong, favorable, and unique associ- ations with the brand in their mem- ory. Too often, managers want to take shortcuts and bypass more ba- sic branding considerations – such as achieving the necessary level of brand awareness – in favor of concen- trating on flashier aspects of brand building related to image.

A good example of lack of support comes from the oil and gas industry in the 1980s. In the late 1970s, con- sumers had an extremely positive image of Shell Oil and, according to market research, saw clear differ- ences between that brand and its major competitors. In the early 1980s, however, for a variety of rea- sons, Shell cut back considerably on its advertising and marketing. Shell has yet to regain the ground it lost. The brand no longer enjoys the same

special status in the eyes of con- sumers, who now view it as similar to other oil companies.

Another example is Coors Brew- ing. As Coors devoted increasing at- tention to growing the equity of its less-established brands like Coors Light, and introduced new products like Zima, ad support for the flag- ship beer plummeted from a peak of about $43 million in 1985 to just $4 million in 1993. What’s more, the fo- cus of the ads for Coors beer shifted from promoting an iconoclastic, in- dependent, western image to reflect- ing more contemporary themes. Per- haps not surprisingly, sales of Coors beer dropped by half between 1989 and 1993. Finally in 1994, Coors be- gan to address the problem, launch- ing a campaign to prop up sales that

returned to its original focus. Mar- keters at Coors admit that they did not consistently give the brand the attention it needed. As one com- mented: “We’ve not marketed Coors as aggressively as we should have in the past ten to 15 years.”

10. The company monitors sources of brand equity. Strong brands gen- erally make good and frequent use of in-depth brand audits and ongoing brand-tracking studies. A brand audit is an exercise designed to assess the health of a given brand. Typically, it consists of a detailed internal descrip- tion of exactly how the brand has been marketed (called a “brand in- ventory”) and a thorough external investigation, through focus groups and other consumer research, of ex- actly what the brand does and could mean to consumers (called a “brand exploratory”). Brand audits are par- ticularly useful when they are sched- uled on a periodic basis. It’s critical for managers holding the reins of a brand portfolio to get a clear picture of the products and services being of- fered and how they are being mar- keted and branded. It’s also impor- tant to see how that same picture looks to customers. Tapping cus- tomers’ perceptions and beliefs often uncovers the tr ue meaning of a

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Tapping customers’ perceptions and beliefs often uncovers the true meaning of a brand.

cerned that some of its characters (among them Mickey Mouse and Donald Duck) were being used in- appropriately and becoming over- exposed. To determine the severity of the problem, Disney undertook an extensive brand audit. First, as part of the brand inventory, managers compiled a list of all available Dis- ney products (manufactured by the company and licensed) and all third- party promotions (complete with point-of-purchase displays and rele- vant merchandising) in stores world- wide. At the same time, as part of a brand exploratory, Disney launched its first major consumer research study to investigate how consumers felt about the Disney brand.

The results of the brand inventory were a revelation to senior man- agers. The Disney characters were on so many products and marketed in so many ways that it was difficult to understand how or why many of the decisions had been made in the first place. The consumer study only reinforced their concerns. The study indicated that people lumped all the product endorsements together. Disney was Disney to consumers, whether they saw the characters in films, or heard them in recordings, or associated them with theme parks or products.

Consequently, all products and services that used the Disney name or characters had an impact on Dis- ney’s brand equity. And because of the characters’ broad exposure in the marketplace, many consumers had begun to feel that Disney was ex- ploiting its name. Disney characters were used in a promotion of Johnson Wax, for instance, a product that would seemingly leverage almost nothing of value from the Disney name. Consumers were even upset when Disney characters were linked to well-regarded premium brands like Tide laundry detergent. In that case, consumers felt the characters added little value to the product. Worse yet, they were annoyed that the characters involved children in a purchasing decision that they other- wise would probably have ignored.

If consumers reacted so negatively to associating Disney with a strong brand like Tide, imagine how they

reacted when they saw the hundreds of other Disney-licensed products and joint promotions. Disney’s char- acters were hawking everything from diapers to cars to McDonald’s ham- burgers. Consumers reported that they resented all the endorsements because they felt they had a special, personal relationship with the char- acters and with Disney that should not be handled so carelessly.

As a result of the brand inventory and explorator y, Disney moved quickly to establish a brand equity team to better manage the brand franchise and more selectively eval- uate licensing and other third-party promotional opportunities. One of the mandates of this team was to en- sure that a consistent image for Dis- ney – reinforcing its key association with fun family entertainment – was conveyed by all third-party products and services. Subsequently, Disney declined an offer to cobrand a mutual fund designed to help parents save for their children’s college expenses. Although there was a family associa- tion, managers felt that a connection with the financial community sug- gested associations that were incon- sistent with other aspects of the brand’s image.

The Value of Balance Building a strong brand involves maximizing all ten characteristics. And that is, clearly, a worthy goal. But in practice, it is tremendously difficult because in many cases when a company focuses on improving one, others may suffer.

Consider a premium brand facing a new market entrant with compara- ble features at a lower price. The brand’s managers might be tempted to rethink their pricing strategy. Lowering prices might successfully block the new entrant from gaining market share in the short term. But what effect would that have in the long term? Will stepping outside its definition of “premium” change the brand in the minds of its target cus- tomers? Will it create the impres- sion that the brand is no longer top of the line or that the innovation is no longer solid? Will the brand’s message become cloudy? The price change may in fact attract customers

brand, or group of brands, revealing where corporate and consumer views conflict and thus showing managers exactly where they have to refine or redirect their branding efforts or their marketing goals.

Tracking studies can build on brand audits by employing quanti- tative measures to provide current information about how a brand is performing for any given dimension. Generally, a tracking study will col- lect information on consumers’ per- ceptions, attitudes, and behaviors on a routine basis over time; a thor- ough study can yield valuable tacti- cal insights into the short-term ef- fectiveness of marketing programs and activities. Whereas brand audits measure where the brand has been, tracking studies measure where the brand is now and whether marketing programs are having their intended effects.

The strongest brands, however, are also supported by formal brand- equity-management systems. Man- agers of these brands have a written document –a “brand equity charter”– that spells out the company’s gen- eral philosophy with respect to brands and brand equity as concepts (what a brand is, why brands matter, why brand management is relevant to the company, and so on). It also summarizes the activities that make up brand audits, brand tracking, and other brand research; specifies the outcomes expected of them; and in- cludes the latest findings gathered from such research. The charter then lays out guidelines for imple- menting brand strategies and tactics and documents proper treatment of the brand’s trademark – the rules for how the logo can appear and be used on packaging, in ads, and so forth. These managers also assemble the results of their various tracking sur- veys and other relevant measures into a brand equity report, which is distributed to management on a monthly, quarterly, or annual basis. The brand equity report not only de- scribes what is happening within a brand but also why.

Even a market leader can benefit by carefully monitoring its brand, as Disney aptly demonstrates. In the late 1980s, Disney became con-

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from a different market segment to try the brand, producing a short- term blip in sales. But will those cus- tomers be the true target? Will their purchases put off the brand’s original market?

The trick is to get a handle on how a brand performs on all ten attributes and then to evaluate any move from all possible perspectives. How will this new ad campaign affect cus- tomers’ perception of price? How will this new product line affect the brand hierarchy in our portfolio? Does this tweak in positioning gain enough ground to offset any poten- tial damage caused if customers feel we’ve been inconsistent?

One would think that monitoring brand performance wouldn’t neces- sarily be included in the equation. But even effectively monitoring brand performance can have nega- tive repercussions if you just go through the motions or don’t fol- low through decisively on what you’ve learned.

Levi-Strauss’s experiences are telling. In the mid-1990s, the com- pany put together a comprehensive brand-equity-measurement system. Practically from the time the sys- tem was installed, it indicated that the brand image was beginning to slip, both in terms of the appeal of Levi’s tight-fitting flagship 501 brand of jeans and how contemporary and cutting edge the overall Levi’s brand was. The youth market was going for a much baggier look; competitors were rushing in to fill the gap. Dis- tracted in part by an internal reengi- neering effort, however, Levi’s was slow to respond and when it did, it came up with underfunded, trans-

parently trendy ad campaigns that failed to resonate with its young tar- get market. Its market share in the jeans category plummeted in the lat- ter half of the 1990s. The result? Levi’s has terminated its decades- long relationship with ad agency Foote, Cone & Belding and is now at- tempting to launch new products and new ad campaigns. For Levi’s, putting in the system was not enough; perhaps if it had adhered more closely to other branding prin- ciples, concentrating on innovating and staying relevant to its custom- ers, it could have better leveraged its market research data.

Negative examples and caution- ary words abound, of course. But it is important to recognize that in strong brands the top ten traits have a posi- tive, synergistic effect on one an- other; excelling at one characteristic makes it easier to excel at another. A deep understanding of a brand’s meaning and a well-defined brand position, for example, guide devel- opment of an optimal marketing program. That, in turn, might lead to a more appropriate value-pricing strategy. Similarly, instituting an ef- fective brand-equity-measurement system can help clarify a brand’s meaning, capture consumers’ reac- tions to pricing changes and other strategic shifts, and monitor the brand’s ability to stay relevant to consumers through innovation.

Brand Equity as a Bridge Ultimately, the power of a brand lies in the minds of consumers or cus- tomers, in what they have experi- enced and learned about the brand over time. Consumer knowledge is

really at the heart of brand equity. This realization has important man- agerial implications.

In an abstract sense, brand equity provides marketers with a strategic bridge from their past to their future. That is, all the dollars spent each year on marketing can be thought of not so much as expenses but as in- vestments – investments in what consumers know, feel, recall, be- lieve, and think about the brand. And that knowledge dictates appro- priate and inappropriate future di- rections for the brand – for it is con- sumers who will decide, based on their beliefs and attitudes about a given brand, where they think that brand should go and grant permis- sion (or not) to any marketing tactic or program. If not properly designed and implemented, those expendi- tures may not be good investments – the right knowledge structures may not have been created in consumers’ minds – but they are investments nonetheless.

Ultimately, the value to market- ers of brand equity as a concept de- pends on how they use it. Brand eq- uity can help marketers focus, giving them a way to interpret their past marketing performance and de- sign their future marketing pro- grams. Everything the company does can help enhance or detract from brand equity. Marketers who build strong brands have embraced the concept and use it to its fullest to clarify, implement, and communi- cate their marketing strategy.

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