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StrategicBrandManagement--KevinLaneKellerVanithaSwaminathan--2019--Pearson--9781292314969--eae448c39778ec706422a8b5537d6536.pdf
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Building, Measuring, and Managing Brand Equity
Strategic Brand Management
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Building, Measuring, and Managing Brand Equity
Kevin Lane Keller Tuck School of Business
Dartmouth College
Vanitha Swaminathan Katz Graduate School of Business
University of Pittsburgh
Strategic Brand Management
Fifth Edition
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Dedication
This book is dedicated to the memories of my father and mother
with much love, respect, and admiration. —KLK
This book is dedicated to the memory of my father, to my mother, and to my family,
with much love and gratitude. —VS
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PART I Opening Perspectives 31
CHAPTER 1 Brands and Brand Management 31
PART II Developing a Brand Strategy 67
CHAPTER 2 Customer-Based Brand Equity and Brand Positioning 67
CHAPTER 3 Brand Resonance and the Brand Value Chain 106
PART III Designing and Implementing Brand Marketing Programs 141
CHAPTER 4 Choosing Brand Elements to Build Brand Equity 141
CHAPTER 5 Designing Marketing Programs to Build Brand Equity 177
CHAPTER 6 Integrating Marketing Communications to Build Brand Equity 214
CHAPTER 7 Branding in the Digital Era 249
CHAPTER 8 Leveraging Secondary Brand Associations to Build Brand Equity 291
PART IV Measuring and Interpreting Brand Performance 327
CHAPTER 9 Developing a Brand Equity Measurement and Management System 327
CHAPTER 10 Measuring Sources of Brand Equity: Capturing Customer Mind-Set 361
CHAPTER 11 Measuring Outcomes of Brand Equity: Capturing Market Performance 400
PART V Growing and Sustaining Brand Equity 425
CHAPTER 12 Designing and Implementing Brand Architecture Strategies 425
CHAPTER 13 Introducing and Naming New Products and Brand Extensions 468
CHAPTER 14 Managing Brands Over Time 511
CHAPTER 15 Managing Brands Over Geographic Boundaries and Market Segments 546
PART VI Closing Perspectives 579
CHAPTER 16 Closing Observations 579
BRIEF CONTENTS
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CONTENTS
Preface 21
About the Authors 29
PART I Opening Perspectives 31
CHAPTER 1 Brands and Brand Management 31
Preview 32
What Is a Brand? 32 Brand Elements 32
Brands versus Products 33
BRANDING BRIEF 1-1: Coca-Cola’s Branding Lesson 35
Why Do Brands Matter? 36 Consumers 36
Firms 37
Can Anything Be Branded? 38
BRANDING BRIEF 1-2: Branding Commodities 39
Physical Goods 40
THE SCIENCE OF BRANDING 1-1: History of Branding 40
THE SCIENCE OF BRANDING 1-2: Understanding Business-to-Business Branding 41
Services 42
BRANDING BRIEF 1-3: Adobe 43
Retailers and Distributors 44
Digital Brands 44
People and Organizations 46
Sports, Arts, and Entertainment 47
BRANDING BRIEF 1-4: Place Branding 49
Geographic Locations 49
Ideas and Causes 49
What Are the Strongest Brands? 49
THE SCIENCE OF BRANDING 1-3: On Brand Relevance and Brand Differentiation 51
Branding Challenges and Opportunities 52 Unparalleled Access to Information and New Technologies 52
Downward Pressure on Prices 52
Ubiquitous Connectivity and the Consumer Backlash 53
Sharing Information and Goods 53
Unexpected Sources of Competition 54
Disintermediation and Reintermediation 54
Alternative Sources of Information about Product Quality 55
Winner-Takes-All Markets 55
Media Transformation 56
The Importance of Customer-Centricity 57
The Brand Equity Concept 58
Strategic Brand Management Process 59 Identifying and Developing Brand Plans 59
Designing and Implementing Brand Marketing Programs 59
9
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10 CONTENTS
Measuring and Interpreting Brand Performance 60
Growing and Sustaining Brand Equity 61
Review 61
Discussion Questions 62
BRAND FOCUS 1.0: Unlocking the Secrets of Digital Native Brands 62
Notes 64
PART II Developing a Brand Strategy 67
CHAPTER 2 Customer-Based Brand Equity and Brand Positioning 67
Preview 68
Customer-Based Brand Equity 68 Defining Customer-Based Brand Equity 68
Brand Equity as a Bridge 69
Making a Brand Strong: Brand Knowledge 71
Sources of Brand Equity 72 Brand Awareness 72
Brand Image 76
Identifying and Establishing Brand Positioning 77 Basic Concepts 77
Target Market 78
Nature of Competition 81
Points-of-Parity and Points-of-Difference 82
BRANDING BRIEF 2-1: Subaru Finds Its Groove 82
Positioning Guidelines 84 Defining and Communicating the Competitive Frame of Reference 84
Choosing Points-of-Difference 85
Establishing Points-of-Parity and Points-of-Difference 86
BRANDING BRIEF 2-2: Positioning Politicians 87
Straddle Positions 88
Updating Positioning over Time 88
THE SCIENCE OF BRANDING 2-1: Brand Values Pyramid 91
Developing a Good Positioning 93
Defining a Brand Mantra 93 Brand Mantras 93
BRANDING BRIEF 2-3: Nike Brand Mantra 94
BRANDING BRIEF 2-4: Disney Brand Mantra 95
THE SCIENCE OF BRANDING 2-2: Branding Inside the Organization 97
Review 97
Discussion Questions 98
BRAND FOCUS 2.0: The Marketing Advantages of Strong Brands 98
Notes 100
CHAPTER 3 Brand Resonance and the Brand Value Chain 106
Preview 107
Building a Strong Brand: The Four Steps of Brand Building 107 Brand Salience 107
Brand Performance 112
Brand Imagery 113
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CONTENTS 11
THE SCIENCE OF BRANDING 3-1: How Customer Experiences Define a Brand 116
Brand Judgments 117
Brand Feelings 119
Brand Resonance 120
BRANDING BRIEF 3-1: Building Brand Communities 121
Brand-Building Implications 122
BRANDING BRIEF 3-2: How Digital Platform-Based Brands Create Customer Engagement 127
The Brand Value Chain 128 Value Stages 129
Implications 131
Review 132
Discussion Questions 134
BRAND FOCUS 3.0: Creating Customer Value 134
Notes 137
PART III Designing and Implementing Brand Marketing Programs 141
CHAPTER 4 Choosing Brand Elements to Build Brand Equity 141
Preview 142
Criteria for Choosing Brand Elements 142 Memorability 143
Meaningfulness 143
Likability 143
Transferability 143
Adaptability 144
THE SCIENCE OF BRANDING 4-1: Counterfeit Business Is Booming 145
Protectability 146
Options and Tactics for Brand Elements 147 Brand Names 147
URLs 153
Logos and Symbols 154
Characters 155
BRANDING BRIEF 4-1: SoftBank’s Otosan, the Talking Dog 156
Slogans 158
BRANDING BRIEF 4-2: Updating Betty Crocker 158
Jingles 161
Packaging 162
Putting It All Together 166
BRANDING BRIEF 4-3: Do-Overs with Brand Makeovers 166
Review 168
Discussion Questions 169
BRAND FOCUS 4.0: Legal Branding Considerations 169
Notes 172
CHAPTER 5 Designing Marketing Programs to Build Brand Equity 177
Preview 178
New Perspectives on Marketing 178
Integrating Marketing 180
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12 CONTENTS
BRANDING BRIEF 5-1: Yeti Is the “Cooler” Brand 180
Personalizing Marketing 181
Reconciling the Different Marketing Approaches 186
Product Strategy 186 Perceived Quality 186
Managing Customers Post-Purchase 187
Pricing Strategy 189
THE SCIENCE OF BRANDING 5-1: Understanding Consumer Price Perceptions 190
Consumer Price Perceptions and Setting Prices 190
Summary 195
Channel Strategy 196 Channel Design 196
THE SCIENCE OF BRANDING 5-2: Research on Omnichannel 198
Indirect Channels 198
BRANDING BRIEF 5-2: Chew on This: How Milk-Bone Brushing Chews Connected with Customers 200
Direct Channels 202
Online Strategies 204
Summary 204
Review 205
Discussion Questions 205
BRAND FOCUS 5.0: Private-Label Strategies and Responses 206
Notes 209
CHAPTER 6 Integrating Marketing Communications to Build Brand Equity 214
Preview 215
The New Media Environment 216 Challenges in Designing Brand-Building Communications 216
Role of Multiple Communications 218
Three Major Marketing Communication Options 218 Advertising 218
THE SCIENCE OF BRANDING 6-1: The Importance of Database Marketing 225
Promotion 228
Online Marketing Communications 230
Events and Experiences 230
BRANDING BRIEF 6-1: Brand Building via the X Games 233
Brand Amplifiers 235 Public Relations and Publicity 235
Word-of-Mouth 236
Developing Integrated Marketing Communication Programs 236 Criteria for IMC Programs 237
THE SCIENCE OF BRANDING 6-2: Coordinating Media to Build Brand Equity 239
Using IMC Choice Criteria 241
Review 241
Discussion Questions 242
BRAND FOCUS 6.0: Empirical Generalizations in Advertising 243
Notes 245
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CONTENTS 13
CHAPTER 7 Branding in the Digital Era 249
Preview 250
Key Issues for Branding in the Digital Era 250 Changes in the Consumer Decision Journey 250
Growth of Online Retailing 252
BRANDING BRIEF 7-1: The Phenomenal Rise of Amazon 252
Advertising and Promotions Using Digital Channels 254
BRANDING BRIEF 7-2: Igniting a Digital Firestorm 254
One-to-Many to Many-to-Many Channels 255
Increase in Consumer Touchpoints 256
Increase in Data Availability 256
Digital Personalization 257
Loss of Control over Brand Message and Co-Creation of Brand Meaning 259
User Experience Is the Key to Digital Brand Success 261
THE SCIENCE OF BRANDING 7-1: Is Co-Creation of Brands and Products
Always Good? 261
Brands as Cultural Symbols 262
Brand Engagement 263 Brand Engagement Pyramid 264
Negative Brand Engagement 264
BRANDING BRIEF 7-3: Shaving the Price of Razors 265
THE SCIENCE OF BRANDING 7-2: Drivers of Brand Engagement 266
Digital Communications 266 Company Web Sites 268
E-mail Marketing 268
BRANDING BRIEF 7-4: Campaigning Using Clicks with Google AdWords 270
Overview of Social Media Paid Channels 272 Facebook 272
Twitter 274
Instagram 274
Pinterest 275
Video 275
Global Use of Social Media 277
BRANDING BRIEF 7-5: On Being Social in China 277
Mobile Marketing 278
BRANDING BRIEF 7-6: Turning Flight Delays into Marketing Opportunities 279
Influencer Marketing and Social Media Celebrities 280
Content Marketing 281 Guidelines for Good Content Marketing 281
Case Studies 282
Legal and Ethical Considerations 282
The Pros and Cons of Paid Channels and the Need for Integration 283
Brand Management Structure 284
Review 285
Discussion Questions 285
BRAND FOCUS 7.0: Understanding How Online Word-of-Mouth Influences Brands and
Brand Management 286
Notes 287
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14 CONTENTS
CHAPTER 8 Leveraging Secondary Brand Associations to Build Brand Equity 291
Preview 292
Conceptualizing the Leveraging Process 293 Creation of New Brand Associations 293
Effects on Existing Brand Knowledge 293
Guidelines 295
Company 296
BRANDING BRIEF 8-1: IBM Promotes a Smarter Planet 296
Country of Origin and Other Geographic Areas 298
BRANDING BRIEF 8-2: Selling Brands the New Zealand Way 300
Channels of Distribution 302
THE SCIENCE OF BRANDING 8-1: Understanding Retailers’ Brand Images 302
Co-Branding 303 Guidelines 304
THE SCIENCE OF BRANDING 8-2: Understanding Brand Alliances 305
Ingredient Branding 307
BRANDING BRIEF 8-3: Ingredient Branding the DuPont Way 309
Licensing 310 Guidelines 312
Celebrity Endorsement 313 Potential Problems 314
BRANDING BRIEF 8-4: Rachael Ray’s Nutrish 315
Guidelines 317
BRANDING BRIEF 8-5: Managing a Person Brand 318
Social Influencers as the New Celebrities 319
Sporting, Cultural, or Other Events 319
Third-Party Sources 320
Review 321
Discussion Questions 321
BRAND FOCUS 8.0: Going for Corporate Gold at the Olympics 322
Notes 323
PART IV Measuring and Interpreting Brand Performance 327
CHAPTER 9 Developing a Brand Equity Measurement and Management
System 327
Preview 328
The New Accountability 328
Conducting Brand Audits 329 Brand Inventory 330
Brand Exploratory 332
Brand Positioning and the Supporting Marketing Program 336
THE SCIENCE OF BRANDING 9-1: The Role of Brand Personas 337
Designing Brand Tracking Studies 338 What to Track 338
BRANDING BRIEF 9-1: Sample Brand Tracking Survey 339
Big Data and Marketing Analytics Dashboards 341 Marketing Analytics Dashboards 342
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CONTENTS 15
BRANDING BRIEF 9-2: How Taco Bell Uses Data-Driven Social Media Marketing to Engage
Its Customers 342
Establishing a Brand Equity Management System 344
BRANDING BRIEF 9-3: Understanding and Managing the Mayo Clinic Brand 344
Brand Charter or Bible 346
Brand Equity Report 347
Brand Equity Responsibilities 348
THE SCIENCE OF BRANDING 9-2: Maximizing Internal Branding 348
Review 351
Discussion Questions 351
BRAND FOCUS 9.0: Sample Rolex Brand Audit 352
Notes 359
CHAPTER 10 Measuring Sources of Brand Equity: Capturing Customer
Mind-Set 361
Preview 362
Qualitative Research Techniques 362
BRANDING BRIEF 10-1: Digging Beneath the Surface to Understand
Consumer Behavior 363
Free Association 364
THE SCIENCE OF BRANDING 10-1: Using Text Mining to Uncover Brand
Associations and Positioning 366
Projective Techniques 366
BRANDING BRIEF 10-2: Once Upon a Time . . . You Were What You Cooked 367
Zaltman Metaphor Elicitation Technique 368
Neural Research Methods 369
Brand Personality and Values 371
Ethnographic and Experiential Methods 372
BRANDING BRIEF 10-3: Making the Most of Consumer Insights 372
BRANDING BRIEF 10-4: Netnography as a Digital Research Technique 373
BRANDING BRIEF 10-5: How P&G Innovates Using Qualitative
Research Data 375
Quantitative Research Techniques 375 Brand Awareness 376
Brand Image 378
Social Media Listening and Monitoring 380
BRANDING BRIEF 10-6: Gatorade’s Social Media Command Center 381
Brand Responses 382
BRANDING BRIEF 10-7: Understanding Attribution Modeling 383
Brand Relationships 384
THE SCIENCE OF BRANDING 10-2: Understanding Brand Engagement 387
Comprehensive Models of Consumer-Based Brand Equity 389
Review 389
Discussion QuestIons 390
BRAND FOCUS 10.0: Young & Rubicam’s Brand Asset Valuator 391
Notes 397
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16 CONTENTS
CHAPTER 11 Measuring Outcomes of Brand Equity: Capturing Market
Performance 400
Preview 401
Comparative Methods 402 Brand-Based Comparative Approaches 402
Marketing-Based Comparative Approaches 403
Conjoint Analysis 405
Holistic Methods 406 Residual Approaches 407
Valuation Approaches 408
Brand Valuation: A Review of Major Approaches 412 Interbrand 412
BrandZ 413
Brand Finance 414
Comparing the Major Brand Valuation Approaches 414
THE SCIENCE OF BRANDING 11-1: Understanding Brand Valuation 416
Review 417
Discussion Questions 418
BRAND FOCUS 11.0: Financial Perspectives on Brands and the Brand Value Chain 419
Notes 421
PART V Growing and Sustaining Brand Equity 425
CHAPTER 12 Designing and Implementing Brand Architecture Strategies 425
Preview 426
Developing a Brand Architecture Strategy 426
THE SCIENCE OF BRANDING 12-1: The Brand–Product Matrix 427
Step 1: Defining Brand Potential 428
BRANDING BRIEF 12-1: Google: Expanding Beyond Search 429
Step 2: Identifying Brand Extension Opportunities 431
Step 3: Specifying Brand Elements for Branding New Products and Services 432
Summary 432
Brand Portfolios 432
BRANDING BRIEF 12-2: Expanding the Marriott Brand 433
Brand Hierarchies 436 Levels of a Brand Hierarchy 437
Designing a Brand Hierarchy 439
BRANDING BRIEF 12-3: Netflix: Evolving a Brand Architecture to Grow the Brand 439
Corporate Branding 446
BRANDING BRIEF 12-4: Corporate Reputations: The Most Admired U.S. Companies 447
THE SCIENCE OF BRANDING 12-2: Brand Architecture Strategies: House of Brands or Branded House? 447
Corporate Image Dimensions 448
BRANDING BRIEF 12-5: Corporate Innovation at 3M 449
Managing the Corporate Brand 452
THE SCIENCE OF BRANDING 12-3: When Brands Trade Hands 455
Brand Architecture Guidelines 457
Review 458
Discussion Questions 459
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CONTENTS 17
BRAND FOCUS 12.0: Corporate Social Responsibility And Brand Strategy 460
Notes 464
CHAPTER 13 Introducing and Naming New Products and Brand
Extensions 468
Preview 469
New Products and Brand Extensions 469
BRANDING BRIEF 13-1: Growing the McDonald’s Brand 470
Advantages of Extensions 472 Facilitate New-Product Acceptance 472
Provide Feedback Benefits to the Parent Brand 475
Disadvantages of Brand Extensions 477 Can Confuse or Frustrate Consumers 477
Can Encounter Retailer Resistance 477
Can Fail and Hurt Parent Brand Image 478
Can Succeed but Cannibalize Sales of Parent Brand 478
Can Succeed, but Diminish Identification with Any One Category 478
BRANDING BRIEF 13-2: Are There Any Boundaries to the Virgin Brand Name? 479
Can Succeed, but Hurt the Image of the Parent Brand 480
Can Dilute Brand Meaning 480
Can Cause the Company to Forego the Chance to Develop a New Brand 481
Understanding How Consumers Evaluate Brand Extensions 481 Managerial Assumptions 482
Brand Extensions and Brand Equity 482
Vertical Brand Extensions 484
THE SCIENCE OF BRANDING 13-1: Scoring Brand Extensions 484
BRANDING BRIEF 13-3: Mambo Extends Its Brand 487
Evaluating Brand Extension Opportunities 488 Define Actual and Desired Consumer Knowledge about the Brand 489
Identify Possible Extension Candidates 489
Evaluate the Potential of the Extension Candidate 489
Design Marketing Programs to Launch Extension 491
Evaluate Extension Success and Effects on Parent Brand Equity 492
Extension Guidelines Based on Academic Research 492
Review 500
Discussion Questions 500
BRAND FOCUS 13.0: Apple: Creating a Tech Megabrand 501
Notes 505
CHAPTER 14 Managing Brands Over Time 511
Preview 512
Reinforcing Brands 512 Maintaining Brand Consistency 515
BRANDING BRIEF 14-1: Patagonia 516
BRANDING BRIEF 14-2: Pabst 518
Protecting Sources of Brand Equity 519
BRANDING BRIEF 14-3: Volkswagen 520
THE SCIENCE OF BRANDING 14-1: Understanding Brand Crises 521
Fortifying versus Leveraging 523
Fine-Tuning the Supporting Marketing Program 523
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18 CONTENTS
Revitalizing Brands 525
BRANDING BRIEF 14-4: Harley-Davidson Motor Company 526
BRANDING BRIEF 14-5: A New Morning for Mountain Dew 528
BRANDING BRIEF 14-6: Remaking Burberry’s Image 529
Expanding Brand Awareness 531
Improving Brand Image 534
Adjustments to the Brand Portfolio 537 Migration Strategies 537
Acquiring New Customers 537
Retiring Brands 537
Obsoleting Existing Products 538
Review 539
Discussion Questions 540
BRAND FOCUS 14.0: Responding to a Brand Crisis 541
Notes 543
CHAPTER 15 Managing Brands Over Geographic Boundaries and Market
Segments 546
Preview 547
Regional Market Segments 547
Other Demographic and Cultural Segments 548 Marketing Based on Age 548
Marketing Based on Ethnicity 549
Global Branding 551
BRANDING BRIEF 15-1: Marketing to Ethnic Groups 552
Why Should a Brand Focus on Global Markets? 554
Advantages of Global Marketing 554
Disadvantages of Global Marketing 555
THE SCIENCE OF BRANDING 15-1: Key Insights Regarding Global Brand Strategies Based on
Research Findings 557
Strategies for Creating & Managing Global Brands 559 Creating Global Brand Equity 559
Global Brand Positioning 559
BRANDING BRIEF 15-2: Coca-Cola’s Global Brand Strategy with Local Elements 561
Customizing Marketing Mix Elements in Local Markets for Global Brands 562 Product Strategy 562
Communication Strategy 563
Distribution Strategy 563
Pricing Strategy 563
Marketing to Consumers in Developing and Developed Markets 564
Ten Commandments to Building Global Customer-Based Brand Equity 564
BRANDING BRIEF 15-3: Marketing to Bicultural Consumers Using Bilingual Advertising 566
BRANDING BRIEF 15-4: Managing Global Nestlé Brands 568
Review 572
Discussion Questions 572
BRAND FOCUS 15.0: China’s Global Brand Ambitions 573
Notes 574
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CONTENTS 19
PART VI Closing Perspectives 579
CHAPTER 16 Closing Observations 579
Preview 580
Strategic Brand Management Guidelines 580 Summary of Customer-Based Brand Equity Framework 580
Tactical Guidelines 582
What Makes a Strong Brand? 586
BRANDING BRIEF 16-1: The Brand Report Card 586
BRANDING BRIEF 16-2: Reinvigorating Branding at Procter & Gamble 588
Future Brand Priorities 590 Fully and Accurately Factor the Consumer into the Branding Equation 590
Go Beyond Product Performance and Rational Benefits 592
Make the Whole of the Marketing Program Greater Than the Sum of the Parts 593
Understand Where You Can Take a Brand (and How) 594
Do the “Right Thing” with Brands 596
Take a Big Picture View of Branding Effects. Know What Is Working (and Why) 596
Finding the Branding Sweet Spot 597
New Capabilities for Brand Marketers 598
Review 600
Discussion Questions 600
BRAND FOCUS 16.0: Special Applications 600
Notes 606
Index 609
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PREFACE
WHAT IS THE BOOK ABOUT? This book deals with brands—why they are important, what they represent to consumers, and what firms should do to manage them properly. As many business executives now recognize, perhaps one of the most valuable assets a firm has are the brands it has invested in and developed over time. Although brands may represent invaluable intangible assets, creating and nurturing a strong brand poses considerable challenges.
The chief purpose of this book is to provide a comprehensive and up-to-date treatment of the subjects of brands, brand equity, and strategic brand management—the design and implementa- tion of marketing programs and activities to build, measure, and manage brand equity. One of the book’s important goals is to provide managers with concepts and techniques to improve the long-term profitability of their brand strategies. We incorporate current thinking and develop- ments on these topics from both academics and industry participants, and combine a comprehen- sive theoretical foundation with enough practical insights to assist managers in their day-to-day and long-term brand decisions. And we draw on illustrative examples and case studies of brands marketed in the United States and all over the world.
We address three important questions:
1. How can we create brand equity? 2. How can we measure brand equity? 3. How can we sustain brand equity to expand business opportunities?
What’s Different about This Book? Although a number of excellent books have been written about brands, no book has really maxi- mized breadth, depth and relevance to the greatest possible extent. We developed a framework that provides a definition of brand equity, identified sources and outcomes of brand equity, and provided tactical guidelines about how to build, measure, and manage brand equity. The frame- work approaches branding from the perspective of the consumer; it is called customer-based brand equity.
Who Should Read the Book? A wide range of people can benefit from reading this book:
• Students interested in increasing both their understanding of basic branding principles and their exposure to classic and contemporary branding applications and case studies
• Managers and analysts concerned with the effects of their day-to-day marketing decisions on brand performance
• Senior executives concerned with the longer-term prosperity of their brand franchises and product or service portfolios
• All marketers interested in new ideas with implications for marketing strategies and tactics
The perspective we adopt is relevant to any type of organization (public or private, large or small), and the examples cover a wide range of industries and geographies.
NEW TO THIS EDITION As we all know, the world of marketing is undergoing a radical transformation. The growth of digital and mobile technologies has given consumers the ability to connect with each other at warped speed and on a scale that has never been witnessed before. The access to information in today’s world is unparalleled, and brand marketers are using a plethora of new digital channels to connect with consumers, creating exciting new opportunities along with daunting new chal- lenges for brands.
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22 PREFACE
NEW: A Greater Focus on Digital Branding Against this backdrop, the new edition has taken a fresh look at branding paradigms and practices through a digital lens, while retaining aspects of traditional brand management that continue to be important and relevant. We have achieved this both by updating existing material and add- ing new examples with a view toward incorporating the latest developments. More important, a whole new Chapter 7 titled “Branding in the Digital Era” has been written. This chapter pro- vides an overview of the key changes that have transformed the world of branding, has integrated a variety of new case studies to highlight these changes, and has proposed a novel way of assess- ing impact of brands on consumers using the metric of brand engagement. This chapter also pro- vides a comprehensive overview of the major digital channels, and discusses their pros and cons.
NEW Examples and Boxes in Chapters 1–16 We also highlight the many changes to the brand management function and have incorporated updated content throughout all the chapters, adding new material on important examples or topics about brands as listed in the following section:
NEW EXAMPLES AND BOXES IN FIFTH EDITION
Chapter Brand and/or Topic
1: Brands and Brand Management New Examples: Adobe, Airbnb, Nigella Lawson, LaCroix
New Brand Focus: Unlocking the Secrets of Digital Native Brands
2: Customer-Based Brand Equity and Brand Positioning
New Examples: Annie’s Homegrown, Netflix
3: Brand Resonance and Brand Value Chain New Branding Brief: How Digital-Platform-Based Brands Create Customer Engagement
4: Choosing Brand Elements to Build Brand Equity
New Examples: Scoot, Method
New Branding Briefs: Do-Overs with Brand Makeovers; The Battle over Trademarks, SoftBank’s Otosan, the Talking Dog
5: Designing Marketing Programs to Build Brand Equity
New Example: Yeti Is the Cooler Brand
New Branding Brief: Chew on This: Milk Bone Brushing Chews Connected with Customers
New Science of Branding: Research on Omnichannel
6: Integrating Marketing Communications to Build Brand Equity
New Examples: Tourism Australia, Subaru
7: Branding in the Digital Era (NEW!) New Examples: Pepsi’s Ad Misfire, Tough Mudder, John Deere – Furrow Magazine
New Branding Briefs: Campaigning Using Clicks with Google AdWords; Igniting a Digital Firestorm, On Being Social in China; Shaving the Price of Razors; The Phenomenal Rise of Amazon; Turning Flight Delays into Marketing Opportunities
New Science of Branding: Is Co-Creation of Products and Brands Always Good; Drivers of Brand Engagement
New Brand Focus: Understanding How Online Word-of- Mouth Influences Brands and Brand Management
8: Leveraging Secondary Brand Associations to Build Brand Equity
New Example: Grey Goose
New Branding Brief: Rachael Ray’s Nutrish
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PREFACE 23
In addition, we have updated nearly all the existing cases, removed outdated cases, and have provided new insights and information where applicable. Our focus on new digitally focused brands, as well as brands that have undergone major transformations, has allowed us to pro- vide in-depth timelines on innovative brands and companies including Amazon, Google, Apple, Mountain Dew, Harley Davidson, and Burberry. These timelines will help the reader trace key developments in the history of these brands.
NEW Topics in Branding The book also attempts to provide some insights into new topics relating to branding. Examples of new topics include:
• Attribution modeling • Social listening • Netnography as a research technique • Influencer marketing • Online brand engagement • New capabilities for brand marketers • Digital platform brands • Digital native vertical brands • Marketing to bicultural consumers • Managing brand crises in the social media era
Chapter Brand and/or Topic
9: Developing a Brand Equity Measurement and Management System
New Example: Domino’s Pizza
New Branding Brief: How Taco Bell Uses Data-Driven Social Media Marketing to Engage Its Customers
10: Measuring Sources of Brand Equity: Capturing Customer Mind-Set
New Branding Briefs: Gatorade’s Social Media Command Center; How P&G Innovates Using Qualitative Research Data; Netnography as a Digital Research Technique; Understanding Attribution Modeling
11: Measuring Outcomes of Brand Equity: Capturing Market Performance
New Brand Focus: Financial Perspectives on Brands and the Brand Value Chain
12: Designing and Implementing Brand Architecture Strategies
New Examples: L.L.Bean, Philips, Toms Shoes
New Branding Briefs: Google: Expanding Beyond Search; Netflix: Evolving a Brand Architecture to Grow the Brand
New Brand Focus: Corporate Social Responsibility and Brand Strategy
13: Introducing and Naming New Products and Brand Extensions
New Example: Coke Zero
New Brand Focus: Apple: Creating a Tech Megabrand
14: Managing Brands Over Time New Examples: Chobani, Febreze, JC Penney, Pabst, Volkswagen
New Branding Brief: Patagonia
New Science of Branding: Understanding Brand Crises
15: Managing Brands Over Geographic Boundaries and Market Segments
New Examples: Häagen-Dazs Global Brand, Levi Strauss, Nielsen’s Spectra Behaviorstages, Campbell’s Soup, Lenovo in China
New Branding Brief: Marketing to Bicultural Consumers Using Bilingual Advertising
16: Closing Observations New Section: New Capabilities for Brand Marketers
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24 PREFACE
SOLVING TEACHING AND LEARNING CHALLENGES The book is aimed at both students who are focusing on brand management as it relates to a career, and those students who are intellectually curious about the topic. The key challenges in teaching and learning surrounding this course can be framed as four questions that are posed by students:
1. How are these concepts relevant to the real world? 2. How do we know that this is true? Do we have any evidence that this phenomenon exists or
is true? 3. How can the frameworks proposed here be useful to a practicing manager in decision-
making? 4. How can the instructor ensure that students apply their critical-thinking skills in evaluating
the frameworks in this book?
We have two features that address the real-world applicability of our chapters. These are in-text examples and Branding Briefs. In-text examples connect to key ideas in the section, and typi- cally highlight a specific brand or an issue that a brand is facing.
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PREFACE 25
Branding Briefs are slightly longer real-world case scenarios that provide a more in-depth look into a brand’s strategy, with a view toward enhancing students’ understanding regarding a particular topic by bringing key concepts to life.
Another frequently encountered question from students is as follows: How do we know that these brands have any effect on consumers? What is the evidence for this? To address this question, we have incorporated The Science of Branding. These sections appear throughout the textbook and highlight the latest academic research on a topic. We use jargon-free language to enhance the accessibility of the material to all types of audiences, e.g., academic, practitioner, and consultant.
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26 PREFACE
Each chapter contains a Brand Focus appendix that delves into detail on specific branding- related topics such as brand audits, private labels, legal issues, etc.
DEVELOPING EMPLOYABILITY SKILLS Brand management is undergoing a transformation, and the chapters in this book have shone a spotlight on various aspects of brand management and the shifting roles of brand managers. Many of the skills that are needed to manage brands are also skills that are required in leadership roles within companies and organizations. We highlight a few of these critical skills needed in Chapter 16 of the book.
INSTRUCTOR TEACHING RESOURCES This program comes with the following teaching resources.
Supplements available to instructors at www.pearsonglobaleditions.com Features of the Supplement
Instructor’s Manual authored by Christy Ashley from The University of Rhode Island
• Chapter-by-chapter summaries
• Examples and activities not in the main book
• Teaching outlines
• Teaching tips
• Solutions to all questions and problems in the book
PowerPoints Slides include all the graphs, tables, and equations in the textbook. PowerPoints meet accessibility standards for students with disabilities. Features include, but are not limited to:
• Keyboard and screen reader access
• Alternative text for images
• High color contrast between background and foreground colors
For over a century, Rolex has remained one of the most rec-
ognized and sought-after luxury brands in the world. In 2017,
the BrandZ Top 100 Most Valuable Global Brands (which is a
ranking by Kantar Millward Brown, or KMB), the world’s most
valuable watch brand is Rolex, which has an estimated brand
value of $8.053 billion.39 The estimate is based on a complicated
formula combining financial information and consumer surveys.
KMB interviews three million consumers in more than 50 global
markets about 100,000 different brands. It uses data from Bloom-
berg and Kantar Worldpanel to analyze companies’ financial and
business performance.
To be clear, Rolex is not among KMB’s Top 100 brands. (A
brand needed a value of at least $11.3 billion to make that list.)
Rolex appears in the report on the BrandZ Luxury Top 10 list,
where it holds the #5 position (see table below). Rolex is the only
one of the top 10 luxury brands whose sole product is watches.
No other watches-only brand is included in the BrandZ report.
A thorough audit can help pinpoint opportunities and chal-
lenges for Rolex, whose brand equity has been historically strong,
as much is at stake.
“The name of Rolex is synonymous with quality. Rolex—
with its rigorous series of tests that intervene at every
stage—has redefined the meaning of quality.”
—www.rolex.com
BACKGROUND
History
Rolex was founded in 1905 by a German named Hans Wilsdorf
and his brother-in-law, William Davis, as a watch-making com-
pany, Wilsdorf & Davis, with headquarters in London, England.
Wilsdorf, a self-proclaimed perfectionist, set out to improve the
mainstream pocket watch right from the start. By 1908, he had
created a timepiece that kept accurate time but was small enough
to be worn on the wrist. That same year, Wilsdorf trademarked
the name “Rolex” because he thought it sounded like the noise
a watch made when it was wound. Rolex was also easy to pro-
nounce in many different languages.
“A” certificate after passing the world’s toughest timing test,
which included testing the watch at extreme temperature levels.
Twelve years later, Wilsdorf developed and patented the now-
famous Oyster waterproof case and screw crown. This mechanism
became the first true protection against water, dust, and dirt.
To generate publicity for the watch, jewelry stores displayed fish
tanks in their windows with the Oyster watch completely sub-
merged in it. The Oyster was put to the test on October 7, 1927,
when Mercedes Gleitze swam the English Channel wearing one.
She emerged 15 hours later with the watch functioning perfectly,
much to the amazement of the media and public. Gleitze became
the first of a long list of “ambassadors” that Rolex has used to
promote its wristwatches.
Over the years, Rolex has pushed innovation in watches to
new levels. In 1931, the firm introduced the Perpetual self-wind-
ing rotor mechanism, eliminating the need to wind a watch. In
1945, the company invented the first watch to display a number
date at the 3 o’clock position and named it the Datejust. In 1953,
Rolex launched the Submariner—the first diving watch that was
water-resistant and pressure-resistant to 100 meters. The sporty
watch appeared in various James Bond movies in the 1950s and
became an instant symbol of prestige and durability.
For decades, Swiss-made watches owned the middle and
high-end markets, remaining virtually unrivaled until the invention
of the quartz watch in 1969. Quartz watches kept more accu-
rate time, were less expensive to make, and quickly dominated
the middle market. Within 10 years, quartz watches made up
approximately half of all watch sales worldwide.40 Joe Thompson,
editor of Modern Jeweler, a U.S. trade publication, explained,
“By 1980, people thought the mechanical watch was dead.”41
Rolex proved the experts wrong. The company would not
give in to the quartz watch rage. In order to survive, however,
Rolex was forced to move into the high-end market exclusively—
leaving the middle to the quartz people—and create a strategy
to defend and build its position there. More recently, the watch
industry has undergone a significant change with the introduc-
tion of smart watches, e.g., Apple Watch, which combine the
functionality of a watch with many features of a smartphone.
Although Rolex is seen as the most valuable luxury brand of
Sample Rolex Brand Audit
BRAND FOCUS 9.0
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PREFACE 27
ACKNOWLEDGEMENTS
Kevin Lane Keller I have been gratified by the acceptance of the first four editions of Strategic Brand Management. It has been adopted by numerous universities and used by scores of marketing executives around the world. The success of the text is, in large part, due to the help and support of others whom I would like to acknowledge and thank.
My first thanks—and a big one—goes to Vanitha Swaminathan who agreed to become a co- author on this new edition. She has done a superb job leading the revision effort and updating the book in so many interesting and important ways. I am very much indebted to her scholarship and love of branding, which is reflected in everything that she does.
The Pearson team on the fifth edition was a huge help in the revision—many thanks to Ana Diaz-Caneja, Lynn Huddon, Maya Lane, Michelle Zeng, and Stephanie Wall.
I have learned much about branding in my work with industry participants, who have unique perspectives on what is working and not working (and why) in the marketplace. Our discussions have enriched my appreciation for the challenges in building, measuring, and managing brand equity and the factors affecting the success and failure of brand strategies.
I have benefited from the wisdom of my colleagues at the institutions where I have held aca- demic positions: Dartmouth College, Duke University, the University of California at Berkeley, Stanford University, the Australian Graduate School of Management, and the University of North Carolina at Chapel Hill.
I have learned a lot about branding from my co-authors on various projects. Special thanks to David Aaker for joining me in the early pursuit of brand research. He was an insightful and in- spiring research partner who always made it fun. Over the years, the doctoral students I advised, including Sheri Bridges, Christie Brown, Jennifer Aaker, Meg Campbell, and Sanjay Sood, have helped in my branding pursuits in a variety of useful ways.
Finally, thanks go to my wife, Punam Anand Keller, and two daughters, Carolyn and Allison, for their continual patience and understanding.
Vanitha Swaminathan I would like to express my sincere thanks to Kevin Lane Keller for inviting me to be a co-author on the fifth edition of Strategic Brand Management. Kevin is an intellectual giant and vision- ary in marketing and his ideas have had far-reaching impact on the field. His ability to organize complex ideas into easily accessible frameworks is unparalleled, and I greatly benefitted from his thoughtful input and guidance. It has truly been a privilege and a pleasure to work with him on this revision.
My thanks also to the Pearson team (Stephanie Wall, Lynn Huddon, Michelle Zeng, and Emily Tamburri) for keeping us on track with the revision, and for the help they provided along the way. A special note of thanks to Angela Urquhart and her team for the skillful and timely copyediting help, and to Maya Lane for handling the permissions.
I would like to thank the various students who helped me with background research on the new case studies in the book, including Jeff Chojnicki, Emma Delaney, Katie Denshaw, Tessa Drinkwater, Julian Ferrante, Ethan Guswiler, Robert Innis, Anirudh Kothari, Madeline Brierly Manning, Kaylee Philbrick, Zach Serbin, and Nicole Vivian Sloan. Thanks also to Jeff Godish, Christian Hughes, Sayan Gupta, Leah Belman, and Rabia Bayer for reviewing chapters of the book. My grateful thanks to Teresa Abney, Andy Seagram, and Francesca Van Gorp for copyedit- ing help, and to Natalia Fenton and Elizabeth Sismour for reviewing chapters. A note of thanks to Emma Delaney for help on the millennial and multicultural material. Additional research assis- tance from Dartmouth undergraduates Jordan Siegal, Charlie Lebens, Jake Johnson, and Richard Newsome-White is also greatly appreciated.
A special acknowledgment to my collaborator and friend, Professor Zeynep Gurhan-Canli, who shares my enthusiasm for research on branding, and to my mentors, Professor Srinivas Reddy, Professor Atul Parvatiyar, and Professor Jagdish Sheth. I sincerely thank my co-authors and the doctoral students that I have advised over the years. You have helped shape my scholar- ship and my research over the years and, for that, I am very grateful.
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28 PREFACE
I am also thankful to the University of Pittsburgh and my colleagues in the Department of Marketing and Business Economics, where I’ve spent a majority of my academic life. A special note of thanks to Dean Assad for enabling my vision of a Center for Branding at the Katz School of Business.
Most importantly, I would like to extend my gratitude to my family. My heartfelt thanks go to my parents and sister for their support of my education and career. I also am most grateful to my husband Jaideep, my son Nikhil, and my daughter Meghna for their continual encourage- ment, love, and enthusiastic support—they have all contributed significantly to helping me com- plete this book in a timely fashion.
GLOBAL EDITION ACKNOWLEDGMENTS Pearson would like to thank the following people for their work on the Global Edition:
Contributors Lailani Alcantara, Ritsumeikan Asia Pacific University Frank Alpert, The University of Queensland Yasser Mahfooz, King Saud University Nina von Arx-Steiner, University of Applied Sciences Northwestern Switzerland FHNW Jimmy Wong Shiang Yang, Singapore University of Social Sciences
Reviewers Per Bergfors, Copenhagen Business School Norman Chiliya, University of Witwatersrand Dalia Abdelrahman Mohamed Zaki Farrag, Qatar University Zita Kelemen, Corvinus University of Budapest
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KEVIN LANE KELLER is the E. B. Osborn Professor of Marketing at the Tuck School of Business at Dartmouth College. Professor Keller has degrees from Cornell, Carnegie-Mellon, and Duke universities. At Dartmouth, he teaches MBA courses on marketing management and strategic brand management and lectures in executive programs on those topics.
Previously, Professor Keller was on the faculty at Stanford University, where he also served as the head of the marketing group. Additionally, he has been on the faculty at the University of California at Berkeley and the University of North Carolina at Chapel Hill, been a visiting profes- sor at Duke University and the Australian Graduate School of Management, and has two years of industry experience as a marketing consultant for Bank of America.
Professor Keller’s general area of expertise lies in marketing strategy and planning, and branding. His specific research interest is in how understanding theories and concepts related to consumer behavior can improve marketing and branding strategies. His research has been published in three of the major marketing journals—the Journal of Marketing, the Journal of Marketing Research, and the Journal of Consumer Research. He also has served on the editorial review boards of those journals. With over 120 published papers, his research has been widely cited and has received numerous awards.
He has served as a consultant and advisor to marketers for some of the world’s most success- ful brands, including Accenture, American Express, Disney, Ford, Intel, Levi Strauss, L.L. Bean, Nike, Procter & Gamble, and Samsung. Additional brand-consulting activities have been with other top companies such as Allstate, Beiersdorf (Nivea), BJs, BlueCross BlueShield, Campbell, Capital One, Caterpillar, Colgate, Combe, Eli Lilly, ExxonMobil, General Mills, GfK, Goodyear, Hasbro, Heineken, Intuit, Irving Oil, Johnson & Johnson, Kodak, Mayo Clinic, MTV, Nord- strom, Ocean Spray, Red Hat, SAB Miller, Serta, Shell Oil, Starbucks, Time Warner Cable, Uni- lever, and Young & Rubicam. He has served as an expert witness for a wide variety of firms. He has also served as an academic trustee for the Marketing Science Institute and as their executive director from 2013 to 2015.
A popular and highly sought-after speaker, he has made keynote speeches and conducted marketing seminars to top executives in a variety of forums. Some of his senior management and marketing training clients have included such diverse business organizations as AT&T, Cisco, Coca-Cola, Deutsche Telekom, ExxonMobil, Fidelity, GE, Google, Hershey, Hyundai, IBM, Macy’s, Microsoft, Nestle, Novartis, PepsiCo, S.C. Johnson, and Wyeth. He has lectured all over the world, from Seoul to Johannesburg, from Sydney to Stockholm, and from Sao Paulo to Mumbai.
Professor Keller is currently conducting a variety of studies that address strategies to build, measure, and manage brand equity. In addition to Strategic Brand Management, which has been heralded as the “bible of branding,” he is also the co-author (with Philip Kotler) of the all-time best-selling introductory marketing textbook, Marketing Management, now in its fifteenth edition.
An avid sports, music, and film enthusiast, in his so-called spare time he has helped to man- age and market, as well as serve as executive producer for, one of Australia’s great rock and roll treasures, The Church, along with American power-pop legends Tommy Keene and Dwight Twil- ley. He also serves on the board of directors for The Doug Flutie, Jr. Foundation for Autism and the Lebanon Opera House. Professor Keller lives in Etna, New Hampshire, with his wife, Punam (also a Tuck marketing professor), and his two daughters, Carolyn and Allison.
ABOUT THE AUTHORS
29
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30 ABOUT THE AUTHORS
VANITHA SWAMINATHAN is Thomas Marshall Professor of Marketing at the Katz Graduate School of Business, University of Pittsburgh. She is the director of the Katz Center for Brand- ing. Her research focuses on branding strategy and the conditions that foster consumer-brand relationships. Additionally, her research investigates how firms can successfully design brand strategies—such as co-branding, brand extensions, brand acquisitions, marketing alliances— to strengthen customer loyalty as well as to firm up stock market performance. More recently, her focus is on understanding how brand managers can leverage the power of social media to build stronger relationships with customers.
Professor Swaminathan has published in various leading marketing and management journals including Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research, Marketing Science, and Strategic Management Journal. She is currently serving as area editor of Journal of Marketing, and has served as associate editor for the Journal of Consumer Psychology. She has won awards for her research, including the Lehmann award for the best dissertation-based article and Journal of Advertising’s Best Paper Award, and has been selected as Marketing Science Institute’s Young Scholar. Professor Swaminathan serves as a president of American Marketing Association's Academic Council (2018–2019) and currently serves on the American Marketing Association's Academic Council for the period 2014–2020.
Professor Swaminathan’s research and commentaries on branding and digital marketing are quoted in various international media outlets such as Forbes, Washington Post, The Miami Herald, Los Angeles Times, U.S. News & World Report, NPR, Sirius Radio, Science Daily, Slate, Pittsburgh Post-Gazette, Economic Times (India), Frontline (India), BBC Brasil (UK), and Último. She has worked with companies such as The Hershey Company, Kraft Heinz, StarKist, AC Nielsen, GlaxoSmithKline, and Procter & Gamble on marketing and branding consulting projects. She has also extensively worked with small businesses on advising them regarding their digital marketing efforts.
Professor Swaminathan lives in Pittsburgh, PA, with her husband Jaideep (who is on the fac- ulty at the University of Pittsburgh School of Medicine), and their children, Nikhil and Meghna.
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31
PART I O P E N I N G P E R S P E C T I V E S
Learning Objectives
After reading this chapter, you should be able to
1. Define “brand,” state how brand differs from a product, and explain what brand equity is.
2. Summarize why brands are important.
3. Explain how branding applies to virtually everything.
4. Describe the main branding challenges and opportunities.
5. Identify the steps in the strategic brand management process.
Brands and Brand Management 1
A brand can be a person, organization, place, or firm.
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32 PART I • OPENING PERSPECTIVES
Ever more firms and other organizations have realized that one of their most valuable assets is the
brand names associated with their products or services. In our increasingly complex world, all
of us, as individuals and as business managers, face more choices with less time to make them.
Thus, a strong brand’s ability to simplify decision making, reduce risk, and set expectations is
invaluable. Creating strong brands that deliver on that promise, and maintaining and enhancing
the strength of those brands over time, is a management imperative.
This text will help you reach a deeper understanding of how to achieve those branding goals.
Its basic objectives are:
1. To explore the important issues in planning, implementing, and evaluating brand strategies.
2. To provide appropriate concepts, theories, models, and other tools to make better branding
decisions.
We place particular emphasis on understanding psychological principles at the individual and firm
level in order to make better decisions about brands. Our objective is to be relevant for any type
of organization regardless of its size, nature of business, or profit orientation.1
With these goals in mind, this first chapter defines what a brand is. We consider the func-
tions of a brand from the perspective of both consumers and firms and discuss why brands are
important to both. We look at what can and cannot be branded and identify some strong brands.
The chapter concludes with an introduction to the concept of brand equity and the strategic brand
management process. Brand Focus 1.0 at the end of the chapter traces the historical origins of
branding.
PREVIEW
WHAT IS A BRAND? Branding has been around for centuries as a means to distinguish the goods of one producer from
those of another. The word brand is derived from the Old Norse word brandr, which means “to
burn,” as brands were and still are the means by which owners of livestock mark their animals to
identify them.2
According to the American Marketing Association (AMA), a brand is a “name, term, sign,
symbol, or design, or a combination of them, intended to identify the goods and services of one
seller or group of sellers and to differentiate them from those of competition.” Technically speak-
ing, then, whenever a marketer creates a new name, logo, or symbol for a new product, he or she
has created a brand.
However, many practicing managers refer to a brand as more than that—as something that has
created a certain amount of awareness, reputation, prominence, and so on, in the marketplace. It is
the difference between a commodity and a distinctive offering that constitutes a brand. Thus, we
can make a distinction between the AMA definition of a “brand” with a small b and the industry’s
concept of a “Brand” with a big B. The difference is important for us because disagreements about
branding principles or guidelines often revolve around what we mean by the term.
Brand Elements Thus, the key to creating a brand, according to the AMA definition, is to be able to choose a name,
logo, symbol, package design, or other characteristic that identifies a product and distinguishes
it from others. These different components of a brand that identify and differentiate it are brand
elements. We will see in Chapter 4 that brand elements come in many different forms.
For example, consider the variety of brand name strategies. Some companies, like General
Electric and Samsung, use their names for essentially all their products. Other manufacturers
assign new products individual brand names that are unrelated to the company name, like Procter
& Gamble’s (P&G) Tide, Pampers, and Pantene product brands. Retailers create their own brands
based on their store name or some other means; for example, Macy’s has its own Alfani, INC,
and Charter Club brands.
Brand names themselves come in many different forms.3 There are brand names based on
people’s names, like Estée Lauder cosmetics, Porsche automobiles, and Orville Redenbacher
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CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 33
popcorn; names based on places, like Santa Fe cologne, Chevrolet Tahoe SUV, and British Airways;
and names based on animals or birds, like Mustang automobiles, Dove soap, and Greyhound buses.
In the category of “other,” we find Apple computers, Diamond foods, and Shell gasoline.
Some brand names use words with inherent product meaning, like Lean Cuisine, Ocean Spray
100% Juice Blends, and Ticketron, or suggesting important attributes or benefits, like DieHard
auto batteries, Mop & Glo floor cleaner, Beautyrest mattresses, and the TripAdvisor travel Web
site and online community. Other names are made up and include prefixes and suffixes that sound
scientific, natural, or prestigious, like Lexus automobiles, Pentium microprocessors, and Visteon
auto supplies.
Not just names, but also other brand elements like logos and symbols can be based on people,
places, things, and abstract images. In creating a brand, marketers have many choices about the
number and nature of the brand elements they use to identify their products.
Brands versus Products How do we contrast a brand and a product? A product is anything we can offer to a market for
attention, acquisition, use, or consumption that might satisfy a need or want. Thus, a product may
be a physical good like a cereal, tennis racquet, or automobile; or a service such as an airline, bank,
or insurance company. A product could also be a retail outlet like a department store, specialty
store, or supermarket; a person such as a political figure, social media celebrity, entertainer, or
professional athlete; an organization like a nonprofit, trade organization, or arts group; or a place
including a city, state, or country; or even an idea like a political or social cause. This very broad
definition of product is the one we adopt in this book. We’ll discuss the role of brands in some of
these different categories in more detail later in this chapter and in Chapter 16.
We can define five levels of meaning for a product:4
1. The core benefit level is the fundamental need or want that consumers satisfy by consuming
the product or service.
2. The generic product level is a basic version of the product containing only those attributes
or characteristics absolutely necessary for its functioning but with no distinguishing features.
This is essentially a stripped-down, no-frills version of the product that adequately performs
the product function.
3. The expected product level is a set of attributes or characteristics that buyers normally expect
and agree to when they purchase a product.
4. The augmented product level includes additional product attributes, benefits, or related ser-
vices that distinguish the product from competitors.
5. The potential product level includes all the augmentations and transformations that a product
might ultimately undergo in the future.
Figure 1-1 illustrates these different levels in the context of an air conditioner. In many
markets, most competition takes place at the product augmentation level, because most firms can
successfully build satisfactory products at the expected product level. Harvard’s Ted Levitt argued
that “the new competition is not between what companies produce in their factories but between
what they add to their factory output in the form of packaging, services, advertising, customer
advice, financing, delivery arrangements, warehousing, and other things that people value.”5
A brand is, therefore, more than a product, because it can have dimensions that differentiate
it in some way from other products designed to satisfy the same need. These differences may be
rational and tangible—related to product performance of the brand—or more symbolic, emotional,
and intangible—related to what the brand represents.
Extending our previous example, a branded product may be a physical good like Kellogg’s
Corn Flakes cereal, Prince tennis racquets, or Ford Mustang automobiles; a service such as Delta
Airlines, Bank of America, or Allstate insurance; a digital good or service such as Match.com,
Spotify, or iTunes. It could be an online or offline store like Amazon, Bloomingdale’s department
store, Body Shop specialty store, or Safeway supermarket; a person such as Oprah Winfrey, Taylor
Swift, or Tom Hanks; a place like the city of London, state of California, or country of Australia;
an organization such as the American Red Cross, American Automobile Association, or the Roll-
ing Stones; or an idea like corporate responsibility, free trade, or freedom of speech.
Some brands create competitive advantages with product performance. For example, brands
such as Gillette, Merck, and others have been leaders in their product categories for decades, due,
M01_KELL4969_05_GE_C01.indd 33 07/05/19 10:33 AM
34 PART I • OPENING PERSPECTIVES
in part, to continual innovation. Steady investments in research and development have produced
leading-edge products, and sophisticated mass marketing practices have ensured rapid adoption
of new technologies in the consumer market. A number of media organizations rank firms on
their ability to innovate. Figure 1-2 lists 10 innovative companies that showed up on many of
those lists in 2017.
Other brands create competitive advantages through non-product-related means. For example,
Coca-Cola, Chanel No. 5, and others have been leaders in their product categories for decades
by understanding consumer motivations and desires and creating relevant and appealing images
surrounding their products. Often, these intangible image associations may be the only way to
distinguish different brands in a product category.
FIGURE 1-1
Examples of Different
Product Levels
Level Air Conditioner
1. Core Benefit
2. Generic Product
3. Expected Product
4. Augmented Product
5. Potential Product
Cooling and comfort.
Sufficient cooling capacity (BTU per hour), an acceptable energy efficiency rating, adequate air intakes and exhausts, and so on.
Consumer Reports states that, for a typical large air conditioner, consumers should expect at least two cooling speeds, expandable plastic side panels, adjustable louvers, removable air filter, vent for exhausting air, environmentally friendly R-410A refrigerant, power cord at least 60 inches long, one-year parts-and-labor warranty on the entire unit, and a five-year parts-and-labor warranty on the refrigeration system.
Optional features might include electric touch-pad controls, a display to show indoor and outdoor temperatures and the thermostat setting, an automatic mode to adjust fan speed based on the thermostat setting and room temperature, a toll-free 800 number for customer service, and so on.
Silently running, completely balanced throughout the room, and completely energy self-sufficient.
FIGURE 1-2
Ten Firms Rated Highly
on Innovation
Source: Based on Fast Com- pany’s 2018 List of Most Innovative Companies.
Apple1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Netflix
Square
Tencent
Amazon
Patagonia
CVS Health
The Washington Post
Spotify
NBA
M01_KELL4969_05_GE_C01.indd 34 07/05/19 10:33 AM
CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 35
Brands, especially strong ones, carry a number of different types of associations, and market-
ers must account for all of them when making marketing decisions. The marketers behind some
brands have learned this lesson the hard way. Branding Brief 1-1 describes the problems Coca-
Cola encountered in the introduction of “New Coke” when it failed to account for all the different
aspects of the Coca-Cola brand image.
Not only are there many different types of associations to link to the brand, but there are many
different means to create them—the entire marketing program can contribute to consumers’ under-
standing of the brand and how they value it as well as other factors outside the control of the marketer.
By creating perceived differences among products through branding and by developing a
loyal consumer franchise, marketers create value that can translate to financial profits for the firm.
The reality is that the most valuable assets many firms have may not be tangible ones, such as
plant and equipment and real estate, but intangible assets such as management skills, marketing,
One of the classic marketing mistakes occurred in April 1985
when Coca-Cola replaced its flagship cola brand with a new for-
mula. The motivation behind the change was primarily a competi-
tive one. Pepsi-Cola’s “Pepsi Challenge” promotion had posed
a strong challenge to Coke’s supremacy over the cola market.
Starting initially just in Texas, the promotion involved advertis-
ing and in-store sampling showcasing consumer blind taste tests
between Coca-Cola and Pepsi-Cola. Invariably, Pepsi won these
tests. Fearful that the promotion, if expanded nationally, could
take a big bite out of Coca-Cola’s sales, especially among younger
cola drinkers, Coca-Cola felt compelled to act.
Coca-Cola’s strategy was to change the formulation of Coke
to more closely match the slightly sweeter taste of Pepsi. To
arrive at a new formulation, Coke conducted taste tests with an
astounding number of consumers—190,000! The findings from
this research clearly indicated that consumers “overwhelmingly”
preferred the taste of the new formulation to the old one. Brim-
ming with confidence, Coca-Cola announced the formulation
change with much fanfare.
Consumer reaction was swift but, unfortunately for Coca-
Cola, negative. In Seattle, retired real estate investor Gay
Mullins founded the “Old Cola Drinkers of America” and
set up a hotline for angry consumers. A Beverly Hills wine
merchant bought 500 cases of “Vintage Coke” and sold them
at a premium. Meanwhile, back at Coca-Cola headquarters,
roughly 1,500 calls a day and literally truckloads of mail
poured in, virtually all condemning the company’s actions.
Finally, after several months of slumping sales, Coca-Cola
announced that the old formulation would return as “Coca-
Cola Classic” and join “New” Coke in the marketplace (see the
accompanying photo).
The New Coke debacle taught Coca-Cola a very important,
albeit painful and public, lesson about its brand. Coke clearly is
not just seen as a beverage or thirst-quenching refreshment by
consumers. Rather, it seems to be viewed as more of an American
icon, and much of its appeal lies not only in its ingredients but
also in what it represents in terms of Americana, nostalgia, and
its heritage and relationship with consumers. Coke’s brand image
certainly has emotional components, and consumers have a great
deal of strong feelings for the brand.
Although Coca-Cola made a number of other mistakes in
introducing New Coke (both its advertising and its packaging
probably failed to clearly differentiate the brand and communi-
cate its sweeter quality), its biggest slip was losing sight of what
the brand meant to consumers in its totality. The psychological
response to a brand can be as important as the physiological
response to the product. At the same time, American consum-
ers also learned a lesson—just how much the Coke brand really
meant to them. As a result of Coke’s marketing fiasco, it is
doubtful that either side will take the other for granted from
now on.
Sources: Patricia Winters, “For New Coke, ‘What Price Success?’”
Advertising Age, March 20, 1989, S1–S2; Jeremiah McWilliams, “Twenty-
Five Years Since Coca-Cola’s Big Blunder,” Atlanta Business News, April 26,
2010; Abbey Klaassen, “New Coke: One of Marketing’s Biggest Blunders
Turns 25,” April 23, 2010, www.adage.com.
BRANDING BRIEF 1-1
Coca-Cola’s Branding Lesson
The epic failure of New Coke taught Coca-Cola a valuable
lesson about branding.
Source: Al Freni/Time & Life Pictures/Getty Images
M01_KELL4969_05_GE_C01.indd 35 07/05/19 10:33 AM
36 PART I • OPENING PERSPECTIVES
financial and operations expertise, and, most importantly, the brands themselves. Steve Jobs, the
cofounder and CEO of Apple, famously said, “It’s a complicated and noisy world, and we’re not
going to get a chance to get people to remember much about us.” That chance to make a memory,
he says, is the essence of brand marketing.6 Jobs went on to argue:
Our customers want to know, “Who is Apple and what is it that we stand for? Where do
we fit in this world?” What we’re about isn’t making boxes for people to get their jobs
done, though we do that well. We do that better than almost anybody in some cases. But
Apple’s about something more than that: Apple, at the core, its core value, is we believe
that people with passion can change the world for the better. That’s what we believe.
This value was also recognized by John Stuart, CEO of Quaker Oats from 1922 to 1956, who
famously said, “If this company were to split up I would give you the property, plant and equip-
ment and I would take the brands and the trademarks and I would fare better than you.”7 Let’s see
why brands are so valuable.
WHY DO BRANDS MATTER? The obvious question is, why are brands important? What functions do they perform that make
them so valuable to marketers? We can take a couple of perspectives to uncover the value of brands
to both customers and firms themselves. Figure 1-3 provides an overview of the different roles
that brands play for these two parties. We will begin by discussing consumers.
Consumers As with the term product, this book uses the term consumer broadly to encompass all types of
customers, including individuals as well as organizations. To consumers, brands provide impor-
tant functions. Brands identify the source or maker of a product and allow consumers to assign
responsibility to a particular manufacturer or distributor. Most important, brands take on special
meaning to consumers. Because of past experiences with the product and its marketing program
over the years, consumers find out which brands satisfy their needs and which ones do not. As a
result, brands provide a shorthand device or means of simplification for their product decisions.8
If consumers recognize a brand and have some knowledge about it, then they do not have
to engage in a lot of additional thought or processing of information to make a product decision.
Thus, from an economic perspective, brands allow consumers to lower the search costs for prod-
ucts both internally (regarding how much they have to think) and externally (regarding how much
they have to look around). Based on what they already know about the brand—its quality, product
characteristics, and so forth—consumers can make assumptions and form reasonable expectations
about what they may not know about the brand.
The meaning imbued in brands can be quite profound, allowing us to think of the relation-
ship between a brand and the consumer as a type of bond or pact. Consumers offer their trust
and loyalty with the implicit understanding that brands will behave in certain ways and provide
FIGURE 1-3
Roles That Brands Play
Consumers
Identification of source of product Assignment of responsibility to product maker Risk reducer Search cost reducer Promise, bond, or pact with maker of product Symbolic device Signal of quality
Manufacturers
Means of identification to simplify handling or tracing Means of legally protecting unique features Signal of quality level to satisfied customers Means of endowing products with unique associations Source of competitive advantage Source of financial returns
M01_KELL4969_05_GE_C01.indd 36 07/05/19 10:33 AM
CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 37
them utility through consistent product performance and appropriate pricing, promotion, and
distribution programs and actions. To the extent that consumers realize advantages and benefits
from purchasing brands, and as long as they derive satisfaction from product consumption, they
are likely to continue to buy them.
These benefits may not be purely functional in nature. Brands can serve as symbolic devices,
allowing consumers to project their self-image. Certain brands are associated with certain types of
people and thus reflect different values or traits. Consuming such products is a means by which
consumers can communicate to others—or even to themselves—the type of person they are or
would like to be.9
Some branding experts believe that for some people, certain brands even play a religious role
of sorts and substitute for religious practices and help reinforce self-worth.10 The cultural influ-
ence of brands is profound, and much interest has been generated in recent years in understanding
the interplay between consumer culture and brands.11
Brands can also play a significant role in signaling certain product characteristics to
consumers. Researchers have classified products and their associated attributes or benefits into
three major categories: search goods, experience goods, and credence goods.12
• For search goods like grocery produce, consumers can evaluate product attributes like stur-
diness, size, color, style, design, weight, and ingredient composition by visual inspection.
• For experience goods like automobile tires, consumers cannot assess product attributes like
durability, service quality, safety, and ease of handling or use so easily by inspection, and
actual product trial and experience is necessary.
• For credence goods like insurance coverage, consumers may rarely learn product attributes.
Given the difficulty of assessing and interpreting product attributes and benefits for expe-
rience and credence goods, brands may be particularly important signals of quality and other
characteristics to consumers for these types of products.13
Brands can reduce the risks in product decisions. Consumers may perceive many different
types of risks in buying and consuming a product:14
• Functional risk: The product does not perform up to expectations.
• Physical risk: The product poses a threat to the physical well-being or health of the user or
others.
• Financial risk: The product is not worth the price paid.
• Social risk: The product results in embarrassment from others.
• Psychological risk: The product affects the mental well-being of the user.
• Time risk: The failure of the product results in an opportunity cost of finding another
satisfactory product.
Consumers can certainly handle these risks in a number of ways, but one way is obviously
to buy well-known brands, especially those with which consumers have had favorable past expe-
riences. Thus, brands can be a very important risk-handling device, especially in business-to-
business settings where risks can sometimes have quite profound implications.
In summary, to consumers, the special meaning that brands take on can change their per-
ceptions and experiences with a product. The identical product may be evaluated differently
depending on the brand identification or attribution it carries. Brands take on unique, personal
meanings to consumers that facilitate their day-to-day activities and enrich their lives. As consum-
ers’ lives become more complicated, rushed, and time-starved, the ability of a brand to simplify
decision-making and reduce risk is invaluable.
Firms Brands also provide a number of valuable functions to their firms.15 Fundamentally, they serve an
identification purpose, to simplify product handling or tracing. Operationally, brands help organize
inventory and accounting records. A brand also offers the firm legal protection for unique features
or aspects of the product. A brand can retain intellectual property rights, giving legal title to the
brand owner.16 The brand name can be protected through registered trademarks; manufacturing
processes can be protected through patents; and packaging can be protected through copyrights
and designs. These intellectual property rights ensure that the firm can safely invest in the brand
and reap the benefits of a valuable asset.
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38 PART I • OPENING PERSPECTIVES
We’ve seen that these investments in the brand can endow a product with unique associations
and meanings that differentiate it from other products. Brands can signal a certain level of quality
so that satisfied buyers can easily choose the product again.17 This brand loyalty provides predict-
ability and security of demand for the firm and creates barriers of entry that make it difficult for
other firms to enter the market.
Although manufacturing processes and product designs may be easily duplicated, lasting
impressions in the minds of individuals and organizations from years of marketing activity and
product experience may not be so easily reproduced. One advantage that brands such as Crest
toothpaste, Nike shoes, and Levi’s jeans have is that consumers have literally grown up with
them. In this sense, branding can be seen as a powerful means to secure a competitive advantage.
In short, to firms, brands represent enormously valuable pieces of legal property, capable of
influencing consumer behavior, being bought and sold, and providing the security of sustained
future revenues.18 For these reasons, huge sums, often representing large multiples of a brand’s
earnings, have been paid for brands in mergers or acquisitions. Mergers and acquisitions allow
companies to seek out undervalued brands that can be combined with existing product portfolios
of acquirers, resulting in higher earnings and profit performance for firms.
The price premium paid for many companies is clearly justified by the opportunity to earn
and sustain extra profits from their brands, as well as by the tremendous difficulty and expense of
creating similar brands from scratch. Figure 1-4 highlights the value of a brand as a percentage
of a firm’s overall value (as measured by its stock market value) for a selected set of top brands.
As can be seen in the figure, most of the value of a firm can be accounted for by its intangible
assets and goodwill, and as much as 60 percent of intangible assets can be supplied by brands.
CAN ANYTHING BE BRANDED? Brands clearly provide important benefits to both consumers and firms. An obvious question, then,
is, how are brands created? How do you “brand” a product? Although firms provide the impe-
tus for brand creation through their marketing programs and other activities, ultimately a brand
is something that resides in the minds of consumers. A brand is a perceptual entity rooted in
reality, but it is more than that—it reflects the perceptions and perhaps even the idiosyncrasies
of consumers.
To brand a product, it is necessary to teach consumers “who” the product is—by giving it a
name and using other brand elements to help identify it—as well as what the product does and
why consumers should care. In other words, marketers must give consumers a label for the product
(“here’s how you can identify the product”) and provide meaning for the brand (“here’s what this par-
ticular product can do for you, and why it’s special and different from other brand name products”).
FIGURE 1-4
Brand Value as a
Percentage of Market
Capitalization (2017)
Sources: Based on Inter- brand, “Best Global Brands 2010.” Yahoo! Finance, February 11.
Company
Apple 184.1 868.88 21%
Google 141.7 729.1 19%
Microsoft 79.9 659.9 12%
Coca-Cola 69.7 195.5 36%
Amazon 64.7 563.5 11%
Samsung 56.2 300 19%
Toyota 50.3 188.2 27%
Facebook 48.2 420.8 11%
Mercedes 47.8 79.3 60%
IBM 46.8 142 33%
Brand Value (in $ billions)
Total Value (in $ billions)
Brand Value as a Percentage of Overall Value
M01_KELL4969_05_GE_C01.indd 38 07/05/19 10:33 AM
CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 39
Branding creates mental structures and helps consumers organize their knowledge about
products and services in a way that clarifies their decision making and, in the process, provides
value to the firm. The key to branding is that consumers perceive differences among brands in a
product category. These differences can be related to attributes or benefits of the product or service
itself, or they may be related to more intangible image considerations.
When consumers are deciding between alternatives, brands can play an important decision-
making role. Accordingly, marketers can benefit from branding whenever consumers are in a
choice situation. Given the myriad choices consumers make each and every day—commercial and
otherwise—it is no surprise how pervasive branding has become. Branding Brief 1-2 considers
how even one-time commodities have been branded.
We can recognize the universality of branding by looking at some different product applica-
tions in the categories we defined previously—physical goods, services, retail stores, online busi-
nesses, people, organizations, places, and ideas. For each of these different types of products, we
will review some basic considerations and look at examples. (We consider some of these special
cases in more detail in Chapter 16.)
A commodity is a product so basic that it cannot be physically
differentiated from competitors in the minds of consumers. Over
the years, a number of products that at one time were seen
as essentially commodities have become highly differentiated
as strong brands have emerged in the category. Some notable
examples are coffee (Maxwell House), salt (Morton), bath soap
(Ivory), flour (Gold Medal), beer (Budweiser), oatmeal (Quaker),
pickles (Vlasic), bananas (Chiquita), chickens (Perdue), pineapples
(Dole), and even water (Perrier).
These products became branded in various ways. The key suc-
cess factor in each case, however, was that consumers became con-
vinced that all the product offerings in the category were not the
same, and that meaningful differences existed. In some instances,
such as with produce, marketers convinced consumers that a prod-
uct was not a commodity and could actually vary appreciably in
quality. In these cases, the brand was seen as ensuring uniformly
high quality in the product category on which consumers could
depend. In other cases, like Perrier bottled mineral water, because
product differences were virtually nonexistent, brands have been
created by image or other non product-related considerations.
One of the best examples of branding a commodity in this fash-
ion is diamonds. De Beers Group added the phrase “A Diamond
Is Forever” as the tagline in its ongoing ad campaign in 1948. The
diamond supplier, which was founded in 1888 and currently has
about a 33 percent market share, wanted to attach more emotion
and symbolic meaning to the purchase of diamond jewelry. “A
Diamond Is Forever” became one of the most recognized slogans
in advertising and helped fuel a diamond jewelry industry that’s
now worth nearly $25 billion per year in the United States alone.
After years of successful campaigns that helped generate buzz
for the overall diamond industry, De Beers began to focus on its
proprietary brands. Its 2009 campaign highlighted its new Ever-
lon line. Partly in reaction to the recession, De Beers’s marketing
also began to focus on the long-term value and staying power
of diamonds; new campaigns included the slogans “Fewer Better
Things” and “Here Today, Here Tomorrow.” In fact, the slogan
captured the sentiment that De Beers was hoping to instill through
their ad campaign and discouraged people from reselling their dia-
monds. As this example illustrates, brands can be created by image
or other non product-related considerations. With De Beers, the
brand conveys powerful emotions and symbolic value (eternal love).
Sources: Theodore Levitt, “Marketing Success Through Differentiation—of
Anything,” Harvard Business Review (January–February 1980): 83–91; San-
dra O’Loughlin, “Sparkler on the Other Hand,” Brandweek, April 19, 2004;
Blythe Yee, “Ads Remind Women They Have Two Hands,” The Wall Street
Journal, August 14 2003; Lauren Weber, “De Beers to Open First U.S.
Retail Store,” Newsday, June 22, 2005; “De Beers Will Double Ad Spend-
ing,” MediaPost, November 17, 2008, https://blog.hubspot.com/ marketing/
diamond-de-beers-marketing-campaign, accessed April 7, 2018.
BRANDING BRIEF 1-2
Branding Commodities
De Beers’ classic tagline “A Diamond Is Forever” has with-
stood the test of time.
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40 PART I • OPENING PERSPECTIVES
Physical Goods Physical goods are traditionally associated with brands and include many of the best-known and
highly regarded consumer products, like Mercedes-Benz, Nescafé, and Sony. More and more
companies selling industrial products or durable goods to other companies are recognizing the
benefits of developing strong brands. Brands have begun to emerge among certain types of physi-
cal goods that never supported brands before. We provide a brief history of branding in The Sci-
ence of Branding 1-1 section.
Branding has been adopted in a variety of industries. Let us consider the role of branding in
industrial “business-to-business” products and technologically intensive “high-tech” products.
Business-to-Business Products. The business-to-business (B2B) market makes up a huge
percentage of the global economy. Some of the world’s most accomplished and respected brands
belong to business marketers, such as ABB, Caterpillar, DuPont, FedEx, General Electric, Hewlett-
Packard, IBM, Intel, Microsoft, Oracle, SAP, and Siemens.
Branding, in one form or another, has been around for
centuries. Branding, or at least trademarks, can be traced back
to ancient pottery and stonemason’s marks, which were applied
to handcrafted goods to identify their source. Pottery and clay
lamps were sometimes sold far from the shops where they were
made, and buyers looked for the stamps of reliable potters as a
guide to quality. Subsequently, in another example of branding,
an English law passed in 1266 requiring bakers to put their mark
on every loaf of bread sold.
When Europeans began to settle in North America, they
brought the convention and practice of branding with them. The
makers of patent medicines and tobacco manufacturers were
early U.S. branding pioneers. By the early 1800s, manufacturers
had packed bales of tobacco under labels such as Smith’s Plug
and Brown and Black’s Twist. In the late 1800s and early 1900s,
mass-produced merchandise in packages largely replaced locally
produced merchandise sold from bulk containers. The develop-
ment and management of these brands was largely driven by the
owners of the firm and their top-level management. For example,
the first president of National Biscuit was involved heavily in the
1898 introduction of Uneeda Biscuits, the first nationally branded
biscuit. H. J. Heinz built up the Heinz brand name through produc-
tion innovations and spectacular promotions. Coca-Cola became
a national powerhouse due to the efforts of Asa Candler, who
actively oversaw the growth of the extensive distribution channel.
By 1915, manufacturer brands had become well established in the
United States on both a regional and national basis.
The onset of the Great Depression in 1929 posed new
challenges to manufacturer brands. Greater price sensitivity swung
the pendulum of power in the favor of retailers who pushed their
own brands and dropped nonperforming manufacturer brands.
During this time, P&G put the first brand management system into
place, whereby each of their brands had a manager assigned only
to that brand who was responsible for its financial success. In the
brand management system, a brand manager took “ ownership”
of a brand. A brand manager was responsible for developing and
implementing the annual marketing plan for his or her brand,
as well as identifying new business opportunities. The brand
manager might be assisted, internally, by representatives from
manufacturing, the sales force, marketing research, financial plan-
ning, research and development, personnel, legal, and public rela-
tions and, externally, by representatives from advertising agencies,
research suppliers, and public relations agencies.
Between 1940 and 1980, the pent-up demand for high-
quality brands led to an explosion of sales. Personal income grew
as the economy took off, and market demand intensified as the
rate of population growth exploded. Demand for national brands
soared, fueled by a burst of new products and a receptive and
growing middle class. Firm after firm during this time period
adopted the brand management system.
The merger and acquisitions boom of the mid-1980s raised
the interest of top executives and other board members as to the
financial value of brands. With this realization came an apprecia-
tion of the importance of managing brands as valuable intangible
assets. At the same time, more different types of firms began to
see the advantages of having a strong brand and the correspond-
ing disadvantages of having a weak brand. The last two decades
have seen an explosion in the interest and application of branding
as more firms have embraced the concept.
Branding in the twenty-first century has witnessed an increase
in the use of data-driven marketing approaches, and an increas-
ing reliance on digital channels for both communication and dis-
tribution. As discussed in Brand Focus 1.0, the growth of digital
native brands such as Warby Parker and Bonobos has created a
new model for brands to go direct to consumers. As more and
more different kinds of products are sold or promoted directly
to consumers, the adoption of modern marketing practices and
branding has spread further.
Sources: Adapted from George S. Low and Ronald A. Fullerton,
“Brands, Brand Management, and the Brand Manager System: A
Critical-Historical Evaluation,” Journal of Marketing Research 31
(May 1994): 173–190; Hal Morgan, Symbols of America (Steam Press,
1986); Steven Wolfe Pereira, “Are You Building a 21st Century Brand?,”
Advertising Age.com, March 5, 2018, http://adage.com/article/quantcast/
building-a-21st-century-brand/312554/.
THE SCIENCE OF BRANDING 1-1
History of Branding
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CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 41
Business-to-business branding creates a positive image and reputation for the company as
a whole. Creating such goodwill with business customers is thought to lead to greater selling
opportunities and more profitable relationships. A strong brand can provide valuable reassurance
and clarity to business customers who may be putting their company’s fate—and perhaps their
own careers!—on the line. A strong business-to-business (B2B) brand can thus provide a strong
competitive advantage.
Some B2B firms, however, carry the attitude that purchasers of their products are so well-informed
and professional that brands don’t matter. However, savvy business marketers reject that reasoning
and recognize both the importance of their brand and how they must execute well in a number
of areas to gain marketplace success.
Boeing, which manufactures everything from commercial airplanes to satellites, implemented
the “One Firm” brand strategy to unify all its different operations with a one-brand culture. The
strategy was based in part on a “triple helix” representation: (1) Enterprising Spirit (why Boeing
does what it does), (2) Precision Performance (how Boeing gets things done), and (3) Defining
the Future (what Boeing achieves as a firm).19
Another example of successful business-to-business branding is Infosys. Infosys is an Indian
IT services company that has exploited the trend among several companies to outsource their IT
functions to specialist providers. Once it achieved $2 billion in sales, Infosys rebranded itself to
other businesses as a company that could help them improve their business models. By selling
itself as a business process transformation partner rather than just an outsourcing firm, Info-
sys successfully differentiated itself from the competition. It shared the change in strategy with
50,000 of its employees and then formally sent it to targeted businesses, communicating with
c-level employees, business line managers, sourcing executives, and IT staff members. The Infosys
“Think Flat” campaign proposed that the company would enable clients to shift from managing
information to making money from it, from achieving customer satisfaction to creating customer
loyalty, from withstanding turbulence to getting ahead during industry cycles, and from grow-
ing passively to driving growth by becoming global producers.20 The Science of Branding 1-2
describes some additional, important guidelines for business-to-business branding.
Business-to-Business (B2B) purchase decisions are complex and
often high risk; therefore, branding plays an important role in B2B
markets. Six specific guidelines (developed in greater detail in later
chapters) can be defined for marketers of B2B brands.
1. Ensure the entire organization understands and sup-
ports branding and brand management. Employees at
all levels and in all departments must have a complete, up-
to-date understanding of the vision for the brand and their
role in supporting it. A particularly crucial area is the sales
force; personal selling is often the profit driver of a business-
to-business organization. The sales force must be properly
aligned so that the department can more effectively leverage
and reinforce the brand promise. If branding is done right,
the sales force can ensure that target customers recognize
the brand’s benefits sufficiently to pay a price commensurate
with the brand’s potential value.
2. Adopt a corporate branding strategy if possible and
create a well-defined brand hierarchy. Because of the
breadth and complexity of the product or service mix, compa-
nies selling business-to-business are more likely to emphasize
corporate brands (such as Cisco, GE, and Caterpillar). Ideally,
they will also create straightforward sub-brands that combine
the corporate brand name with descriptive product modifiers,
such as with DellEMC or GE. If a company has a distinctive
line of business, however, a more clearly differentiated sub-
brand may need to be developed, such as the IBM Services
division, which focuses on applying technology to help cli-
ents. This division is further segmented into two subdivisions
called IBM Global Business Services to provide infrastructure
and technology support services, and IBM Global Technology
Services, to serve the information technology services needs
of their clients, and to help provide artificial intelligence capa-
bilities to their clients.
3. Frame value perceptions. Given the highly competitive
nature of business-to-business markets, marketers must
ensure that customers fully appreciate how their offerings
are different. Framing occurs when customers are given a
perspective or point of view that allows the brand to “put
its best foot forward.” Framing can be as simple as mak-
ing sure customers realize all the benefits or cost savings
offered by the brand, or becoming more active in shaping
how customers view the economics of purchasing, own-
ing, using, and disposing of the brand in a different way.
Framing requires understanding how customers currently
think of brands and choose among products and ser-
vices, and then determining how they should ideally think
and choose.
THE SCIENCE OF BRANDING 1-2
Understanding Business-to-Business Branding
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42 PART I • OPENING PERSPECTIVES
4. Link relevant non-product-related brand associations. In
a business-to-business setting, a brand may be differentiated
on the basis of factors beyond product performance, such as
having superior customer service or well-respected customers
or clients. Other relevant brand imagery might relate to the
size or type of firm. For example, Microsoft and Oracle might
be viewed as “aggressive” companies, whereas Apple and
Google might be seen as “innovative.” Imagery may also be
a function of the other organizations to which the firm sells.
For example, customers may believe that a company with
many customers is established and a market leader.
5. Find relevant emotional associations for the brand.
B2B marketers too often overlook the power of emotions
in their branding. Emotional associations related to a sense
of security, social or peer approval, and self-respect can also
be linked to the brand and serve as key sources of brand
equity. That is, reducing risk to improve customers’ sense
of security can be a powerful driver of many decisions and
thus, an important source of brand equity. Being seen as
someone who works with other top firms may inspire peer
approval and personal recognition within the organization;
and, beyond respect and admiration from others, a business
decision-maker may just feel more satisfied by working with
top organizations and brands.
6. Segment customers carefully both within and across
companies. Finally, in a business-to-business setting, dif-
ferent customer segments may exist both within and across
organizations. Within organizations, different people may
assume the various roles in the purchase decision process:
initiator, user, influencer, decider, approver, buyer and gate-
keeper. Across organizations, businesses can vary according
to industry and company size, technologies used and other
capabilities, purchasing policies, and even risk and loyalty pro-
files. Brand building must keep these different segmentation
perspectives in mind in building tailored marketing programs.
7. Leverage digital techniques and social media marketing
approaches. In a business-to-business setting, digital mar-
keting can play an increasingly important role in allowing
companies to target current and potential customers in an
efficient manner. Incorporating digital channels into the over-
all marketing effort can help optimize a promotional mix.
Specifically, LinkedIn, Twitter, and Facebook are among the
most popular social media tools that are used by business-to-
business marketers to showcase their products and engage
with their audience. In addition to its usefulness as a lead
generation tool, social media can also allow companies to
engage with their audiences and strengthen their relation-
ships with current customers. Content marketing is another
effective way of connecting with consumers, and B2B com-
panies are increasingly using video content to engage with
their audiences.
Sources: James C. Anderson and James A. Narus, Business Market
Management: Understanding, Creating, and Delivering Value, 3rd ed.
(Upper Saddle River, NJ: Prentice Hall, 2009); Kevin Lane Keller and
Frederick E. Webster, Jr., “A Roadmap for Branding in Industrial Mar-
kets,” Journal of Brand Management, 11 (May 2004): 388–40; Philip
Kotler and Waldemar Pfoertsch, B2B Brand Management (Berlin–
Heidelberg, Germany: Springer, 2006); Kevin Lane Keller, “Building
a Strong Business-to-Business Brand,” in Business-to-Business Brand
Management: Theory, Research, and Executive Case Study Exercises,
in Advances in Business Marketing & Purchasing series, Volume 15, ed.
Arch Woodside (Bingley, UK: Emerald Group Publishing Limited,
2009), 11–31; Kevin Lane Keller and Philip Kotler, “Branding in
Business-to-Business Firms,” in Business to Business Marketing
Handbook, eds. Gary L. Lilien and Rajdeep Grewal (Northampton,
MA: Edward Elgar Publishing, 2012); IBM.Com, (2017), “IBM
Delivers First Cognitive Services Platform to Transform Busi-
ness,” https://www-03.ibm.com/press/us/en/pressrelease/52781.
wss, accessed May 2, 2018; Dave Chaffey, “Using Social Media
Marketing in B2B Markets?,” www.smartinsights.com/b2b-digital-
marketing/b2b-social-media-marketing/b2bsocialmediamarketing/,
accessed May 1, 2018; Douglas Burdett, “The 3 Social Media Net-
works That Are Best for B2B Marketing,” www.artillerymarketing.
com/blog/bid/195560/the-3-social-media-networks-that-are-best-for-
b2b- marketing, accessed May 1, 2018; Olsy Sorokina, “9 B2B Social
Media Marketing Tips for Social Media Managers,” February 12,
2015, https://blog.hootsuite.com/b2b-social-media-marketing-tips/,
accessed May 1, 2018.
High-Tech Products. Many technology companies have struggled with branding. Managed by
technologists, these firms often lack any kind of brand strategy and sometimes see branding as
simply naming their products. In many of their markets, however, financial success is no longer
driven by product innovation alone, or by the latest and greatest product specifications and fea-
tures. Marketing skills are playing an increasingly important role in the adoption and success of
high-tech products. The Branding Brief 1-3 depicts how marketing of high-tech products utilizes
many of the principles of branding, while highlighting certain key criteria for success, and uses
the Adobe brand transformation as a context.
The speed and brevity of technology product life cycles create unique branding challenges.
Trust is critical, and customers often buy into companies as much as products. Marketing budgets
may be small, although high-tech firms’ adoption of classic consumer marketing techniques has
increased expenditures on marketing communications.
Services Although strong service brands like American Express, British Airways, Ritz-Carlton, Merrill
Lynch, and Federal Express have existed for years, the pervasiveness of service branding and its
sophistication have accelerated in the past decade.
Role of Branding with Services. One of the challenges in marketing services is that they are
less tangible than products and more likely to vary in quality, depending on the particular person
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CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 43
Adobe is a worldwide leader in multimedia and creativity soft-
ware, well-known for Photoshop, an image editing software,
Acrobat Reader, the Portable Document Format (PDF), the Adobe
Creative Suite, and subsequently, Adobe Creative Cloud. Adobe
achieved record annual revenue of $7.3 billion in 2017 and was
recognized that year as being among the fastest growing brands
on Interbrand’s Best Global Brands survey. According to this survey,
Adobe’s brand valuation of $9 billion in 2017 represented an 19%
growth in brand value over the previous year. What are the keys
to Adobe’s success? Adobe’s focus on innovation and emphasis
on being customer-centric has allowed it to develop a portfolio
of products which are simultaneously innovative yet customer-
friendly. In addition, Adobe has shown that excellent design is a
key part of technology product marketing. Adobe’s advertising and
promotional campaigns to support these products have connected
with audiences at an emotional level. As an example, in the after-
math of Hurricane Harvey, a number of homes and communities
were devastated, and victims sadly lost their cherished photos.
Under Adobe’s “The Future Is Yours” campaign, high school stu-
dents in Texas, working with volunteer organizations, embarked
on a project in which they used Adobe products to restore family
photos of victims, returning them in a form that was actually even
better than new. In these and other ways, Adobe has used a novel
and well-executed brand strategy to strengthen relationships with
its customers and generate profits for the firm.
Sources: Interbrand’s Best Global Brands 2017, https://www.interbrand
.com/best-brands/best-global-brands/2017/ranking/, accessed September
29, 2018; Tim Nudd, “Ad of the Day: Adobe’s Delightful Ads Imagine
if Bob Ross Had Painted on an iPad,” February 17, 2016, www.adweek
.com/brand-marketing/ad-dayadobe-honors-bob-ross-fun-and-funny-
digital-paintingtutorials-169689/; Jack Alexander, “Students Help
Digitally Restore Photos for Hurricane Harvey Victims,” Fstoppers,
January 31, 2018, https://fstoppers.com/photoshop/students-help-digi-
tally-restore-photos-hurricane-harvey-victims-216824.
BRANDING BRIEF 1-3
Adobe
Adobe’s focus on customer-focused innovation is key to its
success in brand-building.
or people providing them. For that reason, branding can be particularly important to service firms
as a way to address intangibility and variability problems. Brand symbols may also be especially
important, because they help make the abstract nature of services more concrete. Brands can help
identify and provide meaning to the different services provided by a firm. For example, branding
has become especially important in financial services to help organize and label the myriad new
offerings in a manner that consumers can understand.
For a service firm like Mayflower,
dependable, high-quality service
is critical.
Source: Bohemian Nomad Picturemakers/Getty Images
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44 PART I • OPENING PERSPECTIVES
Branding a service can also be an effective way to signal to consumers that the firm has
designed a particular service offering that is special and deserving of its name. For example,
British Airways not only brands its premium business class service as “Club World”; it also brands
its regular coach service as “World Traveller,” a clever way to communicate to the airline’s regular
passengers that they are also special in some way and that their patronage is not taken for granted.
Branding has clearly become a competitive weapon for services.
Professional Services. Professional services firms such as Accenture (consulting), Goldman
Sachs (investment banking), and Ernst & Young (accounting) offer specialized expertise and
support to other businesses and organizations. Professional services branding is an interesting
combination of B2B branding and traditional consumer services branding.
Corporate credibility is key in terms of expertise, trustworthiness, and likability. Variability
is more of an issue with professional services because it is harder to standardize the services of a
consulting firm than those of a typical consumer services firm (like Mayflower movers or Orkin
pest control). Long-term relationships are crucial; losing one customer can be disastrous if it is
a big enough account.
One big difference in professional services is that individual employees have a lot more of
their own equity in the firm and are often brands in their own right! The challenge is, therefore, to
ensure that their words and actions help build the corporate brand and not just their own. Ensuring
that the organization retains at least some of the equity that employees (especially senior ones)
build is thus crucial, in case any of them leave.
Referrals and testimonials can be powerful when the services offered are highly intangible
and subjective. Emotions also play a big role in terms of sense of security and social approval.
Switching costs can be significant and pose barriers to entry for competitors, but clients do have
the opportunity to bargain and will often do so to acquire more customized solutions.
Retailers and Distributors To retailers and other channel members distributing products, brands provide a number of impor-
tant functions. Brands can generate consumer interest, patronage, and loyalty in a store, as con-
sumers learn to expect certain brands and products. To the extent “you are what you sell,” brands
help retailers create an image and establish positioning. Retailers can also create their own brand
image by attaching unique associations to the quality of their service, their product assortment
and merchandising, and their pricing and credit policy. Finally, the appeal and attraction of brands,
whether manufacturers’ brands or the retailers’ own brands, can yield higher price margins,
increased sales volumes, and greater profits.
Retailers can introduce their own brands by using their store name, creating new names, or
some combination of the two. Many distributors, especially in Europe, have actually introduced
their own brands, which they sell in addition to—or sometimes even instead of—manufacturers’
brands. Products bearing these store brands or private label brands offer another way for retailers
to increase customer loyalty and generate higher margins and profits.
In 2016, store brand dollar sales volume amounted to about 118.1 billion U.S. dollars, which
is about 15 percent of the overall consumer packaged goods sales in the United States.21 In Britain,
five or six grocery chains selling their own brands account for roughly half the country’s food and
packaged-goods sales, led by Sainsbury and Tesco.22 Several U.S. retailers also emphasize their
own brands. (Chapter 5 considers store brands and private labels in greater detail.)
The Internet has transformed retailing in recent years as retailers have adopted a “bricks
and clicks” approach to their business or, in many cases, become pure-play online retailers,
operating only on the Web. Regardless of the exact form, to be competitive online, many
retailers have had to improve their online service by making customer service agents avail-
able in real time, shipping products promptly, providing tracking updates, and adopting liberal
return policies.
Digital Brands Some of the strongest brands in recent years have been born online. Amazon, Google, Facebook,
and Twitter are notable examples. That wasn’t always the case. At the onset of the Internet,
many online marketers made serious—and sometimes fatal—mistakes. Some oversimplified the
branding process, equating flashy or unusual advertising with building a brand. Although such
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CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 45
marketing efforts sometimes caught consumers’ attention, more often than not, they failed to cre-
ate awareness of what products or services the brand represented, why those products or services
were unique or different, and most important, why consumers should visit their Web site.
Online marketers now realize the realities of brand building. First, as for any brand,
it is critical to create unique aspects of the brand on some dimension that is important to
consumers, such as convenience, price, or variety. At the same time, the brand needs to per-
form satisfactorily in other areas, such as customer service, credibility, and personality. For
instance, customers increasingly began to demand higher levels of service both during and
after their Web site visits.
Successful digital brands have been well positioned and have found unique ways to satisfy
consumers’ unmet needs. Brand Focus 1.0 presents an in-depth look at the phenomenon of digital
native vertical brands—that is, brands that are born online, and go direct to consumers. By offer-
ing unique features and services to consumers, the best online brands are able to avoid extensive
advertising or lavish marketing campaigns, relying more on word-of-mouth and publicity.
• Hulu enables consumers to watch videos of their past and present favorite TV programs at
their own convenience.
• Spotify allows customers to customize online radio stations with bands and genres they enjoy,
while learning about other music they might also like.
• Online encyclopedia Wikipedia provides consumers with extensive, constantly updated, user-
generated information about practically everything.
Airbnb is an example of how to build a successful online brand.
AIRBNB
Airbnb is a company which began in 2008 and has, within a decade, built up a massive platform used by
40 million people. The company matches individuals looking to rent out spaces for brief periods with travelers
and tourists looking for a temporary place to stay. Airbnb reportedly has a revenue of $900 million per year,
2,000 employees, and a service spanning 34,000 cities. Although some argue that it is in competition with
hotel chains, the company does not believe that its growth has limited the business that typically goes to hotels.
An internal study undertaken at Airbnb quantified the impact of brand-building on an enterprise. The com-
pany’s CMO was a previous executive at Coca-Cola and brought a greater understanding of the value of emotional
connection in driving brand value to a technology firm. The underlying assumption that Airbnb had to overcome
was the mindset that brand strength cannot deliver value, and technology alone is a driver of value. Through its
research, Airbnb has been able to overcome that barrier, and the result was its ability to build a strong brand.23
Airbnb used storytelling to convey its message, and its content was focused on the people who owned
the homes listed, as well as the travelers who go there. They describe how these connections are important
to the brand’s value, and how the brand itself makes it possible. Airbnb also created a brand magazine called
Pineapple which was described as a platform for stories that Airbnb’s extended family intended to share. This
publication allows readers to see how people live and create connections in cities today.24
Airbnb uses storytelling to convey its message and to build a
strong emotional connection with its customers.
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46 PART I • OPENING PERSPECTIVES
Online brands also learned the importance of off-line activities to draw customers to Web sites.
This could involve introducing new products sold offline or gaining access to brick-and-mortar
distribution channels. For example, the Echo (an Amazon product), is offered to consumers in brick-
and-mortar locations. Amazon’s acquisition of Whole Foods provided it with an opportunity to gain
access to physical locations. Home page Web addresses, or URLs, began to appear on all collateral
and marketing material. Partnerships became critical as online brands developed networks of online
partners and links. They also began to target specific customer groups—often geographically widely
dispersed—for whom the brand could offer unique value propositions. As we will describe more in
Chapter 6, Web site designs have finally begun to maximize the benefits of interactivity, customiza-
tion, and timeliness and the advantages of being able to inform, persuade, and sell all at the same time.
People and Organizations When the product category is people or organizations, the naming aspect of branding, at least,
is generally straightforward. These often have well-defined images that are easily understood
and liked (or disliked) by others. That’s particularly true for public figures such as politicians,
entertainers, and professional athletes. All these compete in some sense for public approval and
acceptance, and all benefit from conveying a strong and desirable image.
That’s not to say that only the well-known or famous can be thought of as a brand. Certainly,
one key for a successful career in almost any area is that coworkers, superiors, or even important
people outside your company or organization know who you are and recognize your skills, talents,
attitude, and so forth. By building up a name and reputation in a business context, you are essen-
tially creating your own brand.25 The right awareness and image can be invaluable in shaping the
NIGELLA LAWSON
Nigella Lawson is not your typical celebrity chef. She has no formal training, has never operated a restaurant,
and is self-admittedly lazy. In fact, her first cookbook opens with the warning that she isn’t a chef, she has
never been trained as one, and her only license comes from a love of eating. Yet Lawson has been able to
transform characteristics otherwise regarded as limitations into a brand spanning a series of award-winning
books, a string of popular BBC television series, a cookware line, and even an iPhone app. Lawson’s connec-
tion with consumers stems from her sharing their frustrations and anxieties about cooking. A former food
critic, Lawson was inspired to write her first book when she witnessed the host of a dinner party bursting into
tears over a spoiled crème caramel. Instead of challenging her fans to create ever more complicated recipes,
Lawson strives to offer pragmatic but tasty recipes that reduce rather than add stress. Whether deliberate
or not, her perceived sense of empathy with the common cook at home has earned her a loyal following.26
Nigella Lawson is among the best-known celebrity brands thanks to her prag-
matic approach to cooking and empathy for her viewers and readers, which
have resulted in a loyal base of followers.
Source: WENN Rights Ltd/Alamy Stock Photo
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CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 47
way people treat you and interpret your words, actions, and deeds.27 Nigella Lawson is one such
celebrity whose personal brand offers numerous lessons for marketers.
Similarly, organizations often take on meanings through their programs, activities, and prod-
ucts. Nonprofit organizations such as the Sierra Club, the American Red Cross, and Amnesty Inter-
national have increasingly emphasized marketing. The children’s advocate nonprofit UNICEF has
initiated a number of marketing activities and programs through the years.
Sports, Arts, and Entertainment A special case of marketing people and organizations as brands exists in the sports, arts, and entertain-
ment industries. Sports marketing has become highly sophisticated in recent years, employing traditional
packaged-goods techniques. No longer content to allow win–loss records to dictate attendance levels
and financial fortunes, many sports teams are marketing themselves through a creative combination of
advertising, promotions, sponsorship, direct mail, digital, and other forms of communication. By build-
ing awareness, image, and loyalty, these sports franchises are able to meet ticket sales targets regardless
of what their team’s actual performance might turn out to be. Brand symbols, and logos in particular,
have become an important financial contributor to professional sports through licensing agreements.
Branding plays an especially valuable function in the arts and entertainment industries that bring
us movies, television, music, and books. These offerings are good examples of experience goods:
prospective buyers cannot judge quality by inspection and must use cues such as the particular
people involved, the concept or rationale behind the project, and word-of-mouth and critical reviews.
UNICEF
UNICEF launched its “Tap Project” campaign in 2007, which asked diners to pay $1 for a glass of New York
City tap water in restaurants, with the funds going to support the organization’s clean water programs. That
was the first time UNICEF had run a consumer campaign in over 50 years. The UNICEF logo was featured on
the Barcelona soccer team’s jersey from 2006 to 2011 under an arrangement in which the team donated
$2 million annually to the organization.
UNICEF launched another consumer campaign in the UK in February 2010. This five-year “Put it Right”
campaign features celebrity ambassadors for the organization and aims to protect the rights of children.
One of UNICEF’s most successful corporate relationships has been with IKEA. The partnership, which also
emphasizes children’s rights, was established in 2000 and encompasses direct donations from IKEA and an
annual toy campaign, the sales from which directly benefit UNICEF programs.28 In 2016, IKEA partnered
with UNICEF and launched the “Let’s Play for Change” initiative, which hopes to raise funds and promote
the role of play in helping young children reach optimal brain development.29
Nonprofit organizations like UNICEF need strong brands and modern marketing
practices to help them fundraise and satisfy their organizational goals and mission.
Source: ton koene/Alamy Stock Photo
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48 PART I • OPENING PERSPECTIVES
Think of a movie as a product whose “ingredients” are the plot, actors, and director.30 Certain
movie franchises such as James Bond, Transformers, and Star Wars have established themselves
as strong brands by combining all these ingredients into a formula that appeals to consumers
and allows the studios to release sequels (essentially brand extensions) that rely on the title’s
initial popularity. For years, some of the most valuable movie franchises have featured recurring
characters or ongoing stories, and many successful recent films have been sequels. Their success
is due to the fact that moviegoers know from the title, the actors, producers, directors, and other
contributors that they can expect a certain experience—a classic application of branding.
Few brands have generated as much worldwide consumer
loyalty—and profits—as Harry Potter.
Source: WARNER BROS. PICTURES/Album/Newscom
HARRY POTTER
With its ability to transcend its original format—books—the Harry Potter film series has been likened to the
Star Wars franchise. All seven of the popular novels were turned into blockbuster movies. In the first year it
launched Harry Potter toys, Mattel saw $160 million in sales. And in 2010, Universal Studios opened a Florida
theme park based on the Harry Potter stories that has become a major attraction for fans of the franchise.
The Harry Potter empire has been praised for its attention to core marketing techniques—a good product,
emotional involvement of its consumers, word-of-mouth promotion, “tease” marketing, and brand consis-
tency. Several estimates have pegged the Harry Potter brand to be worth $25 billion as of 2016,31 which
includes $7 billion in movie sales, and an equivalent amount in books. Beyond these, Mattel and Hasbro
have collectively earned around $7 billion in toys and games relating to the Potter franchise. NBC Universal
acquired the TV rights to the Harry Potter and Fantastic Beasts movies until 2025 from Warner Bros. for as
much as $250 million. Other companies such as Johnson & Johnson, Coca-Cola, Fossil Group, and Elec-
tronic Arts have made various products featuring the Harry Potter trademark. Harry Potter also has spawned
numerous line extensions, which provide new ways for customers to experience the Harry Potter brand. For
example, in addition to the Harry Potter theme park, the brand also has a show on Broadway. These exten-
sions allow the brand to retain its cache, which at the same time refreshes its image in consumers’ minds.
Taken together, it looks like the Harry Potter brand is likely to continue for quite some time into the future.
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CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 49
A strong brand is valuable in the entertainment industry because of the fervent feelings that brands
generate as a result of pleasurable past experiences. A new album release from Robert Plant would
probably not cause much of a ripple in the marketplace, even if it were marketed as coming from a
founding member of the band Led Zeppelin. If it were to actually be released and marketed under the
Led Zeppelin name, however, greater media attention and higher sales would be virtually guaranteed.
Geographic Locations Increased mobility of both people and businesses and growth in the tourism industry have contrib-
uted to the rise of place marketing. Cities, states, regions, and countries are now actively promoted
through advertising, direct mail, and other communication tools. These campaigns aim to create
awareness and a favorable image of a location that will entice temporary visits or permanent
moves from individuals and businesses alike. Although the brand name is usually preordained by
the name of the location, there are a number of different considerations in building a place brand,
some of which are considered in Branding Brief 1-4.
Ideas and Causes Finally, numerous ideas and causes have been branded, especially by nonprofit organizations.
They may be captured in a phrase or slogan and even be represented by a symbol, such as AIDS
ribbons. By making ideas and causes more visible and concrete, branding can provide much value.
As Chapter 12 describes, marketing increasingly relies on sophisticated marketing practices to
inform or persuade consumers about the issues surrounding a cause.
WHAT ARE THE STRONGEST BRANDS? It is clear from these examples that virtually anything can be and has been branded. Which brands
are the strongest, that is, the best known or most highly regarded? Figure 1-5 reveals Interbrand’s
ranking of the world’s 25 most valuable brands in 2017 based on its brand valuation methodol-
ogy (see Chapter 11), as published in its annual “Best Global Brands” report.32
We can easily find some of the best-known brands by simply walking down a supermarket
aisle. It’s also easy to identify a number of other brands with amazing staying power that have
Branding is not limited to vacation destinations. Countries, states,
and cities, large and small, are beginning to brand their respective
images as they try to draw visitors or encourage relocation. Some
notable early examples of place branding include “Virginia Is For
Lovers” and “Shrimp on the Barbie” (Australia). Now virtually every
physical location, area, or region considers place branding.
Las Vegas ran its hugely successful “What Happens Here, Stays
Here” campaign beginning in 2003. The ads were meant to sell
Las Vegas as an experience. In 2008, the city took a different route,
selling Vegas differently and in more practical terms in light of the
economy. Las Vegas was the scene of a tragic mass shooting in
2017, one that caused sorrow and suffering to a large number of
people. In the immediate aftermath of the tragedy, the city used a
new tagline, with the theme “Vegas Strong,” to remind consum-
ers about the strength and resilience of the city, while encouraging
visitors to keep coming back. In 2018, Las Vegas reverted to the
“What Happens Here, Stays Here” campaign, based on market-
place input suggesting that customers wanted “their Vegas back.”
Branding countries to increase appeal to tourists is also a grow-
ing phenomenon. Some recent success stories include Spain’s use of
a logo designed by Spanish artist Joan Miró, the “Incredible India”
campaign, and New Zealand’s marketing of itself in relation to
The Lord of the Rings movie franchise. Some other tourist slogans
include “Essential Costa Rica. My Choice, Naturally” for Costa Rica
and “A Curious Place” for Belize. Future Brand, a brand consultancy
and research company, ranks countries on the strengths of their
respective brands. In 2017, it deemed the top five country brands to
be Switzerland, Canada, Japan, Sweden, and New Zealand.
Sources: Roger Yu, “Cities Use Destination Branding to Lure Tourists,”
USA Today, February 12, 2010; Yana Polikarpov, “Visitors Bureau
Lures Tourists to ‘Happy’ San Diego,” Brandweek, April 23, 2009;
Liz Benston, “Will Vegas Advertising That Worked Before, Work
Again?,” Las Vegas Sun, September 27, 2009; Sean O’Neill, “Care-
ful with Those Tourist Slogans,” Budget Travel, September 24, 2009;
John Cook, “Packaging a Nation,” Travel + Leisure, January 2007;
Forbes.com, “Top 25 Country Brands,” www.forbes.com/pictures/
efkk45lgim/5-new-zealand/#12d5581e7b58, accessed April 11, 2018;
Katie Richards, “MGM’s First Ad Following the Las Vegas Shoot-
ings Draws Swift Criticism on Social,” Adweek, October 18, 2017,
www.adweek.com/brandmarketing/mgms-first-ad-following-the-las-
vegasshootings-draws-swift-criticism-on-social/; Richard Velotta,
“Las Vegas ‘What Happens Here, Stays Here’ Ads Revived,” Review
Journal, January 3, 2018, www.reviewjournal.com/business/tourism/
las-vegas-what-happens-here-stays-here-ads-revived/.
BRANDING BRIEF 1-4
Place Branding
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50 PART I • OPENING PERSPECTIVES
been market leaders in their categories for decades. Brands are still among the most valuable
assets that can be owned by a firm.
As noted in Figure 1-4, as much as 60 percent of the value of a firm could be attributed to
intangible assets such as brands. Many brands endure the test of time. For example, many brands
that were number one in the United Kingdom in 1933 remain strong today: Hovis bread, Stork
margarine, Kellogg’s Corn Flakes, Cadbury’s chocolates, Gillette razors, Schweppes mixers,
Brooke Bond tea, Colgate toothpaste, and Hoover vacuum cleaners. Many of these brands have
evolved over the years, however, and made a number of changes. Most of them barely resemble
their original forms.
At the same time, some seemingly invincible brands, including Montgomery Ward, Polaroid,
and Xerox, have run into difficulties and seen their market preeminence challenged or even lost.
Although some of these failures are related to factors beyond the control of the firm, such as
technological advances or shifting consumer preferences, in other cases, the blame could probably
be placed on the action or inaction of the marketers behind the brands. Some failed to account
for changing market conditions and continued to operate with a “business as usual” attitude
or, perhaps even worse, recognized that changes were necessary but reacted inadequately or
inappropriately.
FIGURE 1-5
Twenty-Five Most
Valuable Global Brands
Sources: Based on Inter- brand, “The 100 Most Valu- able Global Brands,” 2017.
2017 Rank
SectorBrand
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Apple
Microsoft
Coca-Cola
Amazon
Samsung
Toyota
Mercedes
IBM
GE
McDonald’s
BMW
Disney
Intel
Cisco
Oracle
Nike
Louis Vuitton
Honda
SAP
Pepsi
H&M
Zara
Ikea
Technology
Technology
Technology
Beverages
Retail
Technology
Automotive
Technology
Automotive
Business Services
Diversified
Restaurants
Automotive
Media
Technology
Technology
Technology
Sporting Goods
Luxury
Automotive
Technology
Beverages
Apparel
Apparel
Retail
+3%
+6%
+10%
25%
+29%
+9%
26%
+48%
+10%
211%
+3%
+5%
0%
+5%
+7%
+3%
+3%
+8%
24%
+3%
+6%
+1%
210%
+11%
+4%
Brand Value Change in Brand Value
184,154$m
141,703$m
79,999$m
69,733$m
64,796$m
56,249$m
50,291$m
48,188$m
47,829$m
46,829$m
44,208$m
41,533$m
41,521$m
40,772$m
39,459$m
31,930$m
27,466$m
27,021$m
22,919$m
22,696$m
22,635$m
20,491$m
20,488$m
18,573$m
18,472$m
M01_KELL4969_05_GE_C01.indd 50 07/05/19 10:33 AM
CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 51
Clearly, maintaining brand relevance and differentiation is important to the success of a brand.
The Science of Branding 1-3 provides some academic insights into brand relevance and brand
differentiation and summarizes novel views of various authors on these topics.
The bottom line is that any brand—no matter how strong at one point in time—is vulner-
able and susceptible to poor brand management. The next section discusses why it is so difficult
to manage brands in today’s environment. Brand Focus 1.0 at the end of the chapter describes a
new type of entity in branding—that is, digital native vertical brands, which are born online, and
then later go direct to consumers. It is likely that this type of brand could present a unique set of
challenges and opportunities, as companies begin to leverage the power of digital marketing to
strengthen their bonds with customers.
The Importance of Brand Relevance to Winning in the Marketplace
Brand relevance is a key concept and can make the difference in
winning and keeping customers in the marketplace. Differentia-
tion is also key to brand equity and is at the heart of what makes
a brand successful. Both relevance and differentiation are impor-
tant to the models proposed in this book, and in other models of
brand-building and brand equity described later in this book—for
example, Young and Rubicam’s Brand Asset Valuator framework.
Despite their importance in various brand-building models, rel-
evance and differentiation have been the subject of many alter-
native interpretations and perspectives. We first describe Aaker’s
perspective on brand relevance. We then review Sharp and his
colleagues’ arguments, which provide a contrast to some of the
ideas regarding the role of differentiation and its importance to
brand equity.
Aaker defines brand relevance as involving multiple stages.
First, a person chooses a category, then selects a set within the
category, for further consideration. In a subsequent stage, a
brand is chosen because of its differential strength on a func-
tional attribute, or its ability to convey some emotional or self-
expressive benefits. Finally, brand evaluation is based on a user’s
experience.
It should be noted that brand relevance as developed by
Aaker—although not inconsistent—is certainly not identical to
the traditional notion of brand relevance. Brand relevance tra-
ditionally refers to whether or not a brand is worth considering
by consumers because they feel that it provides some personally
useful benefits. In Aaker’s view, brand relevance combines both
category choice and brand choice stages, and envisions the brand
as having a critical role to play in the category choice stage as
well as in the brand choice stage. A brand with a high degree
of awareness is likely to generate awareness about a category
as a whole.
For example, Uber, which began in 2009, became well-known
as a ridesharing service which can be conveniently accessed via
a mobile app. Three years later, competing brand Lyft was intro-
duced as another ride service. Uber’s prominence within the ride
service category no doubt attracted new competitors. Still, Uber’s
position as a first mover allowed it to become an exemplar brand
and dominate the category which it helped to develop, thereby
increasing its relevance. The same is true of other innovative
companies and brand names such as Airbnb, Zappos, and Tesla,
each of which radically reinvented the categories they were in,
and became dominant players. In line with this, Aaker argues as
follows: “Brand preference can also affect brand relevance. If a
brand is preferred because of a compelling brand proposition,
a strong personality, a satisfying user experience, and a positive
customer relationship, then it will affect the consideration set
and may well influence or drive attitudes toward the category or
subcategory.”
The innovativeness of a brand’s product or service offerings
may determine whether they are a dominant player within a cat-
egory or subcategory. Brands with high awareness and strong
image can raise the prominence of the category that they are
in, thus increasing the likelihood that the category is chosen,
and that they enter the consideration set. Aaker believes this
type of “brand relevance” is a critical success factor in today’s
environment.
Growth Strategies, and the Role of Niche versus Mass Marketing
The work of Sharp et al. on How Brands Grow offers unconven-
tional advice for managers and provides evidence from various
packaged goods sectors to support their arguments. Two key
points made in the book are: (1) Sharp et al. criticize the over-
emphasis on loyalty and retention, in place of acquisition of new
customers, and offer that acquisition is probably more important.
They support this argument by further suggesting that differences
between large and small brands are accounted for by differences
in penetration rather than differences in average buying. Data
from categories such as shampoo and laundry detergents is used
to support this. (2) Sharp et al. argue that there is too much
emphasis on brand differentiation and argue that it does not
translate into distinctiveness of customer profiles across major
brands. According to the authors, the lack of difference in buyer
profiles across major competitors must mean that differentiation
is not working. Instead, they advocate that brands focus their
attention on developing a consistent theme and message—that
is, more on mass marketing, than niche marketing.
Niche marketing involves focusing marketing efforts on a
specific subset of the market, which has specific needs; in con-
trast, mass marketing involves appealing to the entire market with
a standardized product, distribution approach, and advertising
campaign. Which of these is more effective? Are there conditions
which favor one versus another? Brand marketers may need to
THE SCIENCE OF BRANDING 1-3
On Brand Relevance and Brand Differentiation
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52 PART I • OPENING PERSPECTIVES
BRANDING CHALLENGES AND OPPORTUNITIES Although brands may be as important as ever to consumers, in reality, brand management may
be more difficult than ever. Let’s look at some recent developments that have significantly
complicated marketing practices and pose challenges for brand managers (see Figure 1-6).33
Unparalleled Access to Information and New Technologies Technology has produced the ability to access vast amounts of information about almost any
topic. Algorithms—such as Google search—act as a mediator between those who seek answers
and the answers themselves. Marketers are able to gain access to search terms as a window
into the minds of consumers, and search advertising has evolved to leverage this deeper under-
standing of consumers’ needs and wants, as revealed in their searches on the Internet for more
information.
As technology grows and expands and becomes embedded in the physical world, search for
information will be a facet, even in the physical world.34 For example, museums may embrace new
digital tools to enhance the museum experience in many ways. Some of the new technologies in
museums may include augmented reality to enhance the visitor experience, feature a smart assis-
tant that provides supplemental information about artwork and delivers this to a smartphone, or 3D
technology that allows consumers to reproduce, hold, and feel an accurate replica of an object.35
Over time, as these technologies become more standard, brand marketers may find opportunities
to utilize these innovative features in designing better brand experiences for their customers.
Downward Pressure on Prices As search costs of information become lower, it is easier for consumers to compare prices and
switch to the cheapest alternative with just a few clicks. This trend could encourage greater com-
modification of products and services, and the availability of third-party comparison shopping
Web sites (e.g., Kayak, Vayama for travel) further makes it difficult for brands to retain their ability
to differentiate and charge premiums.36
ask a series of key questions, the answers to which will determine
whether or not a mass marketing or niche marketing strategy will
be more appropriate for a given category and within a specific
stage of the brand’s life cycle. These questions include:
1. Is there a compelling value proposition that can appeal to a
specific segment of the population?
2. Is this target segment willing to pay a price premium over an
undifferentiated product?
3. Related, is it cost-effective to engage with niche markets rather
than offer an undifferentiated product to a larger audience?
4. What are the competitive advantages to a mass marketing
strategy versus a niche strategy? Are there incumbents in the
market that are using one or the other approach? Does the
company’s resources and culture support a mass marketing
or a niche marketing approach?
Sources: David A. Aaker, Brand Relevance: Making Competitors Irrelevant
(John Wiley & Sons, 2010); Byron Sharp, John Gerard Dawes, Jennifer
Therese Romaniuk, and John Scriven, How Brands Grow: What Marketers
Don’t Know (Oxford University Press, 2010); Frederick F. Reichheld, The
Loyalty Effect (Boston: Harvard Business School Press, 1996).
FIGURE 1-6
Challenges to Brand
Builders
Unparalleled Access to Information and New Technologies Downward Pressure on Prices Ubiquitous Connectivity and Consumer Backlash Sharing Information and Goods Unexpected Sources of Competition Disintermediation and Reintermediation Alternative Sources of Information about Product Quality Winner-Takes-All Markets Media Transformation Customer Centricity
M01_KELL4969_05_GE_C01.indd 52 07/05/19 10:33 AM
CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 53
Ubiquitous Connectivity and the Consumer Backlash The growth of digital technology has provided consumers the ability to connect with each other
throughout the day, using technologies such as multimedia mobile services. As connectivity
increases, it also lowers consumers’ attention and makes them more vulnerable to intrusions. As
a result, a backlash may develop as consumers increasingly resist marketers’ attempts to gain
access to them, and various types of software may become available to combat the intrusiveness
of communications. Apple recently introduced a technology that would prevent mobile phones
from receiving text messages while consumers are driving. Ad blocking services have been around
for some time, offering a unique way for consumers to escape from intrusive ads. Thus, while
marketers can gain unparalleled access to consumers, consumers may become protective of their
time and find ways of escaping this unwanted attention.
Sharing Information and Goods New technologies have made it increasingly possible for consumers to share information and
goods with each other. This trend has resulted in two related types of phenomena. Social media
platforms have become vehicles for consumers to meet and share information with each other.
These platforms offer various types of features to allow consumers to become online friends and
share information in various formats (pictures, text, videos, etc.). Consumers are increasingly
producers of content. Social platforms such as Facebook and Instagram are enablers of online
social interactions, allowing users to post updates about their daily whereabouts and activities.
Platforms such as YouTube have furthered the ability of consumers to broadcast content of various
forms—text, audio, video—to a global audience.
The opportunity offered by these platforms is that they enable marketers to gain very precise
information about their target audiences, including political views and entertainment preferences,
which allows for a 360-degree view of a consumer. However, these platforms have increas-
ingly faced intense scrutiny by regulatory agencies, concerned about the privacy implications
of unbridled access to customer data. Also, in the United States, social media companies have
traditionally not had to obtain permissions for use of customer data. Facebook has, in recent
times, faced a lot of scrutiny from lawmakers about its use of detailed customer information and
the subsequent legal consequences.37 In Europe, privacy laws are already in place that require
companies to gain explicit permission prior to their using consumer data for marketing purposes.
Due to the increased availability of travel
search sites such as Kayak (with easy access
to pricing information), travel brands have
to increasingly differentiate themselves
with other attributes such as quality and
service.
The Met and other museums use
technology to help transform the museum
experience.
Source: Sherbien Dacalanio/Pacific Press/Light- Rocket/Getty Images
M01_KELL4969_05_GE_C01.indd 53 07/05/19 10:33 AM
54 PART I • OPENING PERSPECTIVES
Other types of platforms are enabling sharing of specific types of goods. Napster allows for
peer-to-peer file sharing, whereas platforms such as Airbnb, Zipcar, and Uber allow individuals
with certain goods (homes for rent or cars for rides) to share these consumers with other consum-
ers, in return for a fee.
Unexpected Sources of Competition The dynamics of the digital world are such that it can be easier for companies to enter into
new categories without having to face the barriers to entry (e.g., the need for a well-estab-
lished system for distribution) that typically exist in the physical world. This means that new
competitors may crop up in unexpected places, and a digital brand has to remain vigilant for
new sources of competition.38 For example, when Amazon Movies began offering streaming
services to its customers, it came into direct competition with incumbents such as Netflix and
Apple iTunes.
Disintermediation and Reintermediation The rapid rise of the Internet has been accompanied by two trends—disintermediation and
reintermediation. Disintermediation refers to the reduction or elimination of intermediaries
from the channel of distribution, including entities such as agents, brokers, and wholesalers.
Social media platforms have unprecedented
access to customers’ media and browsing
habits, entertainment preferences, etc.,
thereby providing marketers with a unique
ability to target their offerings with greater
precision.
The sharing economy has witnessed the rise
of companies such as Zipcar and Airbnb,
which allow individuals with certain goods
(cars, homes) to rent these to other customers
in return for a fee.
M01_KELL4969_05_GE_C01.indd 54 07/05/19 10:33 AM
CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 55
For example, the travel industry has witnessed a significant decline in the need for travel agen-
cies that once offered advisory services and helped make bookings in return for a small fee or
commission. Reintermediation refers to the introduction of new intermediaries that perform
some of the same functions or have additional roles in the channel of distribution. There has
also been a significant growth of a new class of intermediaries who focus on providing reviews
to help in consumer decision-making. These information intermediaries—that is, infomedi-
aries–include online review sites such as Yelp, online consumer guides (ConsumerReports
.com), influential bloggers, and so on. As an example of reintermediation, the online Web site
TripAdvisor offers some of the services that travel agencies used to provide and acts as a valu-
able resource for travelers.
Alternative Sources of Information about Product Quality The growth of the Internet and availability of vast amounts of information about products and
brands online suggests that there are many new ways in which consumers can learn about prod-
uct quality. Figure 1-7 displays some of the ways consumers now collect information. As more
consumer decision-making is based on online word-of-mouth and reviews, there is reduced infor-
mation asymmetry between producer and consumer.39 This increase in information on product
quality certainly has reduced the reliance on brands as signals of quality.
There is no doubt that the growth of the Internet and availability of online reviews and
information has transformed the role of brands in some ways. Rather than act merely as a signal
of quality, brands now have to do much more. They have to be translators of trends, acting on
information about changing customer tastes and desires almost instantaneously. Further, given
the speed with which consumers can learn about actual quality (or what has been called by
some as “absolute value”), it is also very important that brands invest a great deal in creating
exceptional customer experiences that are worthy of buzz. We highlight several such examples
later in the book.
Winner-Takes-All Markets The availability of information about product quality in vast quantities suggests that consum-
ers are likely to become much more quality sensitive. Brands which are market leaders within
categories (i.e., brands which are seen as having high quality to consumers) are likely to be
chosen at an even greater rate. Since unambiguous quality information is available for a low
cost, consumers will gravitate towards brands that are seen as having the highest average quality
with the lowest variance. This will speed up the exit of brands that do not occupy a leadership
position in a category. Thus, brands will be under greater pressure to deliver a high quality
product or have a dominant position within the market on a particular aspect—for example,
Online review sites (TripAdvisor, Yelp)
have become powerful platforms that allow
customers to share word-of-mouth and
learn about product quality quickly, causing
the decline of traditional advisory services
(e.g., travel agents).
M01_KELL4969_05_GE_C01.indd 55 07/05/19 10:33 AM
56 PART I • OPENING PERSPECTIVES
price and after sale services. Such winner-take-all competitive outcomes, typical of sports
and entertainment industries, are likely to become increasingly common in other industries as
well.40 This phenomenon has also been documented across a variety of other industries such
as airlines, automobiles, petroleum producers, the European semiconductor industry, baby
foods, and so on, where it has been shown that three major players typically dominate any
given industry.41 We expect that the time taken to achieve this state of dominance by the three
major players will be significantly reduced in the future, and the shakeout of weaker players
will take place at an accelerated pace, due to the wide availability of product quality informa-
tion at a relatively low cost.
Media Transformation Another important change in the marketing environment is the erosion or fragmentation of tradi-
tional advertising media and the emergence of interactive and nontraditional media, promotion,
and other communication alternatives. For several reasons related to media cost, clutter, and
fragmentation—as outlined in Chapter 6—marketers have become disenchanted with traditional
advertising media, especially network television. We further explore the implications of fragmen-
tation of media for digital and social channels in Chapter 7.
The percentage of the communication budget devoted to traditional advertising has shrunk
over the years. In its place, marketers are spending more on nontraditional forms of communica-
tion. These newer communication options, which include the use of social media platforms for
advertising (generating online word-of-mouth through online social influencers), are increasingly
very effective.
Consider how P&G has dramatically changed its marketing communications in recent years.
The one-time queen of daytime TV soap operas—the company produced the shows and ran ads
during the broadcasts—P&G has dramatically overhauled the way it markets its brands. It no
longer airs any soap operas and puts more emphasis on social media instead. The company sells
Pampers diapers on Facebook, offers an iPhone application for Always feminine products that
allows women to track menstrual cycles and ask questions, and uses social media to sell its tradi-
tionally male-targeted Old Spice personal care products.42
A good example of a relatively new brand which effectively leverages newer forms of com-
munication to strengthen bonds with their customers is LaCroix.
LACROIX
LaCroix (pronounced La-CROY) is an American brand of sparkling water with no artificial sweeteners, sugars,
or sodium and available in a variety of natural flavors marketed as LaCroix (with flavors such as pure, lime,
orange, berry), and its two sub-brands, LaCroix Cúrate (including flavors such as Melón Pomelo, Kiwi Sandía,
and Muré Pepino), and LaCroix NiCola (with its flavor LaCola, which is a natural cola essence sparking
water).43 LaCroix is distributed by the Sundance Beverage Company, a subsidiary of National Beverage Corp.
LaCroix markets to its target audience by positioning itself as an “all occasion” beverage.44
FIGURE 1-7
How Credible Are Consumer Information Sources?
Source: Andrew McCaskill, “Recommendations from Friends Remain Most Credible Form of Advertising Among Consumers; Branded Websites Are the Second-Highest-Rates Form,” Press Room, September 28, 2015.
Source of Information Percentage of Respondents Rating the
Source as Credible
83%
63%
60%
Friends and Family
Television Advertising
Newspaper Advertising
Magazine Advertising 58%
M01_KELL4969_05_GE_C01.indd 56 07/05/19 10:33 AM
CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 57
The Importance of Customer-Centricity The growth of digital channels and ubiquitous connectivity has ushered in an era in which product
quality information is easily available online. This suggests that brand equity can be vulnerable to
destruction if product and service claims are not verified by actual experience. Review forums can
quickly reveal the quality of products, and consumers can learn about product quality from their
peers and online word-of-mouth. Any negative news about brands can be amplified and destroy
brand value quickly. This profound shift in the previously held central role of product in creating
brand value has had significant implications for brand marketers. In turn, brands have shifted their
emphasis to becoming more customer-centric in their marketing, focusing instead on customer
issues and concerns, as it relates to their everyday lives and society at large.
LaCroix’s unique positioning as a healthier alternative to traditional beverages and its effective use
of social media advertising are key factors enabling its success in the marketplace.
There are many elements of LaCroix’s marketing which have fueled the brand’s success, including
its positioning, use of social media marketing to generate buzz, and its use of non traditional advertising
and social influencers to build awareness and engagement. The brand has positioned itself as a healthier
alternative to carbonated beverages, which has been particularly attractive to millennial populations, who
are focused on healthy eating. LaCroix’s packaging indicates that it has no calories, no sugars, no artificial
ingredients, no genetically modified organisms, and no added phosphoric acid in its beverages, making this
a viable alternative to carbonated beverages among very health-conscious consumers.
LaCroix has distinguished itself by focusing more on social media marketing rather than traditional
advertising. This represents a big departure from norms, particularly in the beverage category. It has focused
its efforts on those social media channels where its target population (i.e., millennials) are likely to spend
time, particularly channels such as Instagram. The brand also elevates brand engagement by creating a sense
of community around the LaCroix brand. The brand maintains engagement by acknowledging all comments
made on social media by its members. It promotes social media engagement by connecting to trending
themes and topics as they emerge on social media. The LaCroix brand employs a wide range of marketing
approaches to gain attention and engagement from its consumers. In order to further appeal to health-con-
scious consumers, in a Challenge campaign the brand encouraged consumers to swap a can of diet or sugary
soda for LaCroix for 40 days and then to post stories and share photos about their experience in social media
venues.45 The colorful packaging and the consumer-sponsored stories allows the brand itself to “sparkle” on
social media venues such as Instagram. This also lends the brand a great deal of authenticity and discovery.46
Finally, LaCroix has effectively leveraged micro-influencers on social media to help drive customer
engagement.47 It also has associated its brand with various fitness programs. For example, it became a
sponsor of the month-long clean-eating campaign called the Whole30 program. LaCroix uses its hashtags
such as #LaCroixlove and #LiveLaCroix to encourage followers to distribute its cocktail and mocktail reci-
pes. While many brands only focus on online influencers, LaCroix’s unique approach is its encouragement
of microinfluencers (or influencers with smaller followings, but higher engagement). For example, when
influencer Kelly Fox posted photos of LaCroix to her 2,500-plus followers, the brand sent her vouchers for
cases of LaCroix.48
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58 PART I • OPENING PERSPECTIVES
THE BRAND EQUITY CONCEPT Marketers clearly face a number of competitive challenges, and some critics feel the response of
many has been ineffective or, worse, has further aggravated the problem. In the rest of this book,
we present theories, models, and frameworks that accommodate and reflect marketing’s new
challenges in order to provide useful managerial guidelines and suggest promising new directions
for future thought and research. We introduce a “common denominator” or unified conceptual
framework, based on the concept of brand equity, as a tool to interpret the potential effects of
various brand strategies.
One of the most popular and potentially important marketing concepts to arise in recent
years is brand equity. Its emergence, however, has meant both good news and bad news to mar-
keters. The good news is that brand equity has elevated the importance of the brand in marketing
strategy and provided focus for managerial interest and research activity. The bad news is that,
confusingly, the concept has been defined a number of different ways for a variety of purposes.
No common viewpoint has emerged about how to conceptualize and measure brand equity.
Fundamentally, branding is all about endowing products and services with the power of
brand equity. Despite the many different views, most observers agree that brand equity con-
sists of the marketing effects uniquely attributable to a brand. That is, brand equity explains
why different outcomes result from the marketing of a branded product or service than if it
were not branded. That is the view we take in this book. As a stark example of the transfor-
mational power of branding, consider the auction sales in Figure 1-8. Without such celebrity
associations, it is doubtful that any of these items would cost more than a few hundred dollars
at a flea market.49
Branding is all about creating differences. Most marketing observers also agree with the fol-
lowing basic principles of branding and brand equity:
• Differences in outcomes arise from the “added value” endowed to a product in part as a result
of past marketing activity for the brand.
• This value can be created for a brand in many different ways.
• Brand equity provides a common denominator for interpreting marketing strategies and
assessing the value of a brand.
• There are many different ways in which the value of a brand can be manifested or exploited
to benefit the firm (in terms of greater proceeds or lower costs or both).
Fundamentally, the brand equity concept reinforces how important the brand is in market-
ing strategies. Chapters 2 and 3 in Part II of the book provide an overview of brand equity and
a blueprint for the rest of the book. The remainder of the book addresses in much greater depth
how to build brand equity (Chapters 4–8 in Part III), measure brand equity (Chapters 9–11 in Part
IV), and manage brand equity (Chapters 12–15 in Part V). The concluding Chapter 16 in Part VI
provides some additional applications and perspectives.
FIGURE 1-8
Notable Recent Auction
Sales
Source: Zoe Henry, “8 Famous Items That Sold for Ridiculous Amounts of Money,” April 8, 2016.
• J.K. Rowling's chair sold for $394,000.
• Casablanca piano sold for $3.4 million.
• Wizard of Oz Lion costume sold for $3 million.
• John Lennon's guitar sold for $2.4 million.
• Andy Warhol's wig sold for $10,800.
• Keith Moon's (drummer for the band The Who) - drum set sold for nine times its estimated value for $252,487.
• Buddy Holly's glasses sold for $80,000.
• Justin Timberlake's unfinished French toast from breakfast was sold on eBay for $1,025.
M01_KELL4969_05_GE_C01.indd 58 07/05/19 10:33 AM
CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 59
The remainder of this chapter provides an overview of the strategic brand management pro-
cess that helps pull all these various concepts together.
STRATEGIC BRAND MANAGEMENT PROCESS Strategic brand management involves the design and implementation of marketing programs and
activities to build, measure, and manage brand equity. In this text, we define the strategic brand
management process as having four main steps (see Figures 1-9):
1. Identifying and developing brand plans
2. Designing and implementing brand marketing programs
3. Measuring and interpreting brand performance
4. Growing and sustaining brand equity
Let’s briefly highlight each of these four steps.50
Identifying and Developing Brand Plans The strategic brand management process starts with a clear understanding of what the brand is
to represent and how it should be positioned with respect to competitors.51 Brand planning, as
described in Chapters 2 and 3, uses the following three interlocking models.
• The brand positioning model describes how to guide integrated marketing to maximize
competitive advantages.
• The brand resonance model describes how to create intense loyalty and strong customer
relationships with customers.
• The brand value chain is a means to trace the value creation process for brands, to better
understand the financial impact of brand marketing expenditures and investments.
Designing and Implementing Brand Marketing Programs As Chapter 2 outlines, building brand equity requires properly positioning the brand in the minds
of customers and achieving as much brand resonance as possible. In general, this knowledge-
building process will depend on three factors:
1. The initial choices of the brand elements making up the brand and how they are mixed and
matched;
FIGURE 1-9
Strategic Brand
Management Process
Identifying and developing brand plans
STEPS KEY CONCEPTS
Mental maps Competitive frame of reference Points-of-parity and points-of- difference Core brand associations Brand mantra
Designing and implementing brand marketing programs
Mixing and matching of brand elements Integrating brand marketing activities Leveraging secondary associations
Measuring and interpreting brand performance
Brand value chain Brand audits Brand tracking Brand equity management system
Growing and sustaining brand equity
Brand architecture Brand portfolios and hierarchies Brand expansion strategies Brand reinforcement and revitalization
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60 PART I • OPENING PERSPECTIVES
2. The marketing activities and supporting marketing programs and the way the brand is
integrated into them; and
3. Other associations indirectly transferred to or leveraged by the brand as a result of linking
it to some other entity (such as the company, country of origin, channel of distribution, or
another brand).
Some important considerations of each of these three factors are as follows.
Choosing Brand Elements. The most common brand elements are brand names, URLs, logos,
symbols, characters, packaging, and slogans. The best test of the brand-building contribution of
a brand element is what consumers would think about the product or service if they knew only
its brand name or its associated logo or other element. Because brand elements have different
advantages, marketing managers often use a subset of all the possible brand elements or even all
of them. Chapter 4 examines in detail the means by which the choice and design of brand elements
can help to build brand equity.
Integrating the Brand into Marketing Activities and the Supporting Marketing Program. Although the judicious choice of brand elements can make some contribution to
building brand equity, the biggest contribution comes from marketing activities related to the
brand. This text highlights only some particularly important marketing program considerations for
building brand equity. Chapter 5 addresses new developments in designing marketing programs
as well as issues in product strategy, pricing strategy, and channels strategy. Chapter 6 addresses
issues in communications strategy. Chapter 7 provides an overview of the digital landscape, along
with an in-depth assessment of the pros and cons of different digital and social media channels.
Leveraging Secondary Associations. The third and final way to build brand equity is to lever-
age secondary associations. Brand associations may themselves be linked to other entities that
have their own associations, creating these secondary associations. For example, the brand may
be linked to certain source factors, such as the company (through branding strategies), countries
or other geographical regions (through identification of product origin), and channels of distribu-
tion (through channel strategy), as well as to other brands (through ingredients or co-branding),
characters (through licensing), spokespeople (through endorsements), sporting or cultural events
(through sponsorship), or some other third-party sources (through awards or reviews).
Because the brand becomes identified with another entity, even though this entity may not
directly relate to the product or service performance, consumers may infer that the brand shares
associations with that entity, thus, producing indirect or secondary associations for the brand. In
essence, the marketer is borrowing or leveraging some other associations for the brand to create
some associations of the brand’s own and thus, help build its brand equity. Chapter 8 describes
the means of leveraging brand equity.
Measuring and Interpreting Brand Performance To manage their brands profitably, managers must successfully design and implement a brand equity
measurement system. A brand equity measurement system is a set of research procedures designed
to provide timely, accurate, and actionable information for marketers so that they can make the
best possible tactical decisions in the short run and the best strategic decisions in the long run. As
described in Chapter 9, implementing such a system involves three key steps—conducting brand
audits, designing brand tracking studies, and establishing a brand equity management system.
The task of determining or evaluating a brand’s positioning often benefits from a brand
audit. A brand audit is a comprehensive examination of a brand to assess its health, uncover its
sources of equity, and suggest ways to improve and leverage that equity. A brand audit requires
understanding sources of brand equity from the perspective of both the firm and the consumer.
Once marketers have determined the brand positioning strategy, they are ready to put into
place the actual marketing program to create, strengthen, or maintain brand associations. Brand
tracking studies collect information from consumers on a routine basis over time, typically
through quantitative measures of brand performance on a number of key dimensions marketers
can identify in the brand audit or other means. Chapters 10 and 11 describe a number of measures
to operationalize brand performance.
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CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 61
A brand equity management system is a set of organizational processes designed to improve
the understanding and use of the brand equity concept within a firm. Three major steps help imple-
ment a brand equity management system: creating brand equity charters, assembling brand equity
reports, and defining brand equity responsibilities.
Growing and Sustaining Brand Equity Maintaining and expanding on brand equity can be quite challenging. Brand equity management
activities take a broader and more diverse perspective of the brand’s equity—understanding how
branding strategies should reflect corporate concerns and be adjusted, if at all, over time or over
geographical boundaries or multiple market segments.
Defining Brand Architecture. The firm’s brand architecture provides general guidelines about
its branding strategy and which brand elements to apply across all the different products sold
by the firm. Two key concepts in defining brand architecture are brand portfolios and the brand
hierarchy. The brand portfolio is the set of different brands that a particular firm offers for sale to
buyers in a particular category. The brand hierarchy displays the number and nature of common
and distinctive brand components across the firm’s set of brands. Chapter 12 reviews a three-
step approach to brand architecture and how to devise brand portfolios and hierarchies. Chapter
13 concentrates on the topic of brand extensions in which an existing brand is used to launch a
product into a different category or subcategory.
Managing Brand Equity over Time. Effective brand management also requires taking a long-
term view of marketing decisions. A long-term perspective of brand management recognizes that
any changes in the supporting marketing program for a brand may, by changing consumer knowl-
edge, affect the success of future marketing programs. A long-term view also produces proactive
strategies designed to maintain and enhance customer-based brand equity over time and reactive
strategies to revitalize a brand that encounters some difficulties or problems. Chapter 14 outlines
issues related to managing brand equity over time.
Managing Brand Equity over Geographic Boundaries, Cultures, and Market Segments. Another important consideration in managing brand equity is recognizing and accounting for
different types of consumers when developing branding and marketing programs. International
factors and global branding strategies are particularly important in these decisions. In expanding a
brand overseas, managers need to build equity by relying on specific knowledge about the experi-
ence and behaviors of those market segments. Chapter 15 examines issues related to broadening
of brand equity across market segments.
REVIEW
This chapter began by defining a brand as a name, term, sign, symbol, or design, or some com-
bination of these elements, intended to identify the goods and services of one seller or group of
sellers and to differentiate them from those of competitors. The different components of a brand
(brand names, logos, symbols, package designs, and so forth) are brand elements. A brand is
distinguished from a product, which is defined as anything that can be offered to a market for
attention, acquisition, use, or consumption that might satisfy a need or want. A product may be a
physical good, service, retail store, person, organization, place, or idea.
A brand is a product, but one that adds other dimensions that differentiate it in some way
from other products designed to satisfy the same need. These differences may be rational and
tangible—related to product performance of the brand—or more symbolic, emotional, or
intangible—related to what the brand represents. Brands themselves are valuable intangible assets
that need to be managed carefully. Brands offer a number of benefits to customers and the firms.
The key to branding is that consumers perceive differences among brands in a product cat-
egory. Marketers can brand virtually any type of product by giving the product a name and attach-
ing meaning to it in terms of what it has to offer and how it differs from competitors. A number
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62 PART I • OPENING PERSPECTIVES
DISCUSSION QUESTIONS
1. Pick your favorite branded product. What are the five levels of meaning for this product? Is
it also a brand? Why or why not?
2. Who do you think has the strongest brands? Why? What do you think of the Interbrand list
of the 25 strongest brands in Figure 1-5? Do you agree with the rankings? Why or why not?
3. Think of a branded service that you use regularly, like your bank or your phone company.
What are its brand elements? How does branding help address the intangibility and variability
of this service?
4. Can you think of yourself as a brand? What do you do to “brand” yourself?
5. What do you think of the new branding challenges and opportunities that were listed in the
chapter? Can you think of any other issues?
Digitally native vertical brands (DNVB) are brands that origi-
nate on the Web and primarily interact with customers via digi-
tal channels. A key feature of these brands is that they go direct
to consumers. Examples of successful DNVBs include Warby
Parker, Dollar Shave Club, and Bonobos, which are known to
have disrupted the status quo in their respective industries. This
section focuses on some of the key learnings from studying
digital native brands, and implications for brand management.
The term “digital native vertical brands” was coined by Andy
Dunn (founder of Bonobos) and they are typically brands which
interact and transact with consumers primarily on the Web. They
are also characterized by tight distribution control, although they
may use partnerships to extend to brick–and–mortar stores.52 This
growth in digital native brands is understandable if we consider
the growth of e-commerce in general. Overall, e-commerce is
expected to grow more than 50 percent between 2015 and 2020
and reach up to $23 billion, and is expected to account for 17
percent of all retail sales by 2022.53 Direct-to-consumer retail is
expected to reach a sales of $16 billion in 2020, growing from
$6.6 billion in 2015. The rapid pace of growth in e-commerce
(with an average annual growth of 9.3 percent),54 the dominance
of Amazon, and the parallel rise of direct-to-consumer retail have
provided conditions that are ripe for digital branding to become
key to future success.
A few characteristics of successful DNVBs include the following:
1. A relentless focus on customer acquisition, and investment
in various marketing strategies to reach a large number of
potential consumers.
2. Direct sourcing of raw materials.
3. Enhancing the customer experience by combining unique
product offerings with exceptional customer service and user
experience.
4. Engaging and building strong ties with customers through
social media, online communities, and social influencers.
5. Direct distribution to consumers.
Going direct offers four primary advantages to these firms.
First, it enables them to gain affinity to consumers and gather feed-
back about product and service offerings, which allows them to
stay closer to customers than competitors who use indirect chan-
nels of distribution. Second, going direct allows these companies
to rely less on Amazon, in particular, and provides significant cost
advantages induced by eliminating retail markups.55 Third, it allows
them to control the customer experience end-to-end, making them
more agile and responsive to customer issues. Fourth, it also allows
them better control over their message and to develop a more
authentic and consumer-focused brand.56
Unlocking the Secrets of Digital Native Brands
BRAND FOCUS 1.0
of branding challenges and opportunities faced by present-day marketing managers were outlined
related to changes in customer attitudes and behavior, competitive forces, marketing efficiency
and effectiveness, and internal company dynamics.
The strategic brand management process has four steps:
1. Identifying and developing brand plans 2. Designing and implementing brand marketing programs 3. Measuring and interpreting brand performance 4. Growing and sustaining brand equity.
The remainder of the book outlines these steps in detail.
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CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 63
Warby Parker—a digital native brand—established itself as
a credible lifestyle brand and an alternative to traditional
eyewear companies within a relatively short period of time.
While it is unclear whether digitally native brands will reach
the scale and success of traditional brands born out of the more
traditional consumer packaged goods-type brand system, some
key statistics point to their success.57 Digital native brands are
quicker to open new stores than traditional brands. For example,
within 10 years of being in business Warby Parker had 61 stores
relative to Nike, which had just one in a comparable period of
its first 10 years. Digital native brands are not as profitable or
independent as traditional brands; however, because of access to
larger amounts of venture capital funding, digital native brands
reach $100 million in sales faster than their predecessors or more
traditional brands.58
A related trend is that a number of digital native brands have
extended into brick-and-mortar stores. Rather than treating these
stores as opportunities to sell to customers, the stores typically are
inventory-free, but they serve to showcase the product offerings. In
some cases, the store can customize the product to individual cus-
tomers’ needs and wants (as we describe in the upcoming Warby
Parker example), which further strengthens customer engagement
with the brand. Even when there is in-store selling involved, the
process is much simpler, with sales people who are equipped with
mobile checkout tools to make the experience more seamless. We
next present an in-depth analysis of Warby Parker.
Warby Parker: The Future Is So Bright
Warby Parker is a manufacturer and retailer of eyeglasses, sun-
glasses, and gift cards. It was incorporated in 2009, and is based
in New York City. It has showrooms in California, Florida, Georgia,
Illinois, Louisiana, Massachusetts, New York, Oklahoma, Pennsyl-
vania, Tennessee, Texas, and Virginia.59 As of 2018, Warby Parker
had a total revenue of $30.2 million and employed 679 personnel
globally. Its founders (and co-CEOs) Neil Blumenthal and David
Gilboa, along with cofounders Andrew Hunt and Jeffrey Raider,
took a simple idea to create among the fastest-growing digital
brands in the world. How did they do it?
The concept for Warby Parker began when one of the found-
ers lost a pair of $700 glasses, and this personal experience led
the founders to question why eyeglasses were so expensive, and
why (at the time of its founding) they were not available online.
Warby Parker (whose name was based on the characters from
unpublished Jack Kerouac writings) is based on the simple prem-
ise that you could have eyeglasses ordered online and delivered
to your doorstep.60 Eyeglasses from Warby Parker typically cost
$95, and the company donates one pair as a charitable donation
for each pair sold. Within a year of their launch, the company
had sold 20,000 pairs, far exceeding their sales target for the
year, and suggested that the company had hit upon a winning
product in the marketplace.
The eyewear industry is traditionally dominated by offline
retailers, and many of the brands offered within retail outlets are
owned by the offline company Luxottica. Luxottica owned many
leading brand names in the eyewear industry including Oakley,
Ray-Ban, and the Luxottica brand.61 Luxottica also owned the
major retail outlets of LensCrafters, Pearle Vision, and Sunglass
Hut. In addition, Luxottica licensed various brand names, such as
Anne Klein, Chanel, Ralph Lauren, and Coach eyewear. Due to a
merger with Essilor, EssilorLuxottica’s combined revenue in 2016
was $16 billion and a valuation of $50 billion. Taken together,
Luxottica is a formidable competitor with a dominant presence in
the industry.62 How did Warby Parker manage to establish itself
as a credible alternative to traditional brands sold by the industry
leader Luxottica?
Against this background of a dominant competitor, and high
prices for eyeglasses, Warby Parker positioned itself as a lifestyle
brand, with unique product offerings suited to the tastes of the
millennial generation, an appealing price point, and exceptional
customer service. The brand enables customers to try on glasses
virtually, and customer service personnel are available to provide
feedback on how the glasses look. It also gives the customer the
option of ordering up to five pairs they can try on at home, and
choose the one they like best. The brand also differentiated itself
by incorporating a broader purpose and social mission. Addition-
ally, the company leveraged the power of social media and online
social influencers to generate word-of-mouth. A number of buzz-
worthy events allowed Warby Parker to become well-known,
such as its participation in New York’s Fashion Week, when it
invited models to the New York Public Library and had them
wear Warby Parker’s glasses. Warby Parker also understood the
importance of customer service early on and paid careful atten-
tion to customer issues. In addition to its online presence, Warby
Parker slowly expanded their physical presence. Warby Parker’s
physical retail outlets have an appealing ambiance, customizing
capabilities in-store, and well-trained salespeople, all of which
make these locations excellent complements to their Web site.
Finally, one further key to success of DNVB’s is the focus on
hiring and training of the right kind of employees. This investment
in employees is critical given that DNVBs employees are in many
cases directly interacting with consumers. For example, another
digital native brand called Bonobos is focused on custom-fit cloth-
ing for men.63 The company has outstanding service but credits
its people-centric culture for its success. The founder and CEO,
Andy Dunn, helped create a unique corporate culture, which was
youthful and energetic, and hired employees that were empathetic,
self-aware, and filled with positive energy. The rationale for their
employee-centric culture is summarized by their CEO Andy Dunn as
follows: ”If your team loves the brand, there’s a good chance that
your customers will love the brand, because people don’t want to
work on something that they’re not proud of. That’s where that
culture becomes really precious.”64 Bonobos has made employee
satisfaction a key focus area and has created a “Chief People Offi-
cer” to improve teamwork and leadership among its employees.
Given the appeal and success of digital native brands such as
Warby Parker and Bonobos, it is likely that the future will belong
to digital native brands. According to David Bell, the founders’
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64 PART I • OPENING PERSPECTIVES
former marketing professor at Wharton Business School, “If you
went to your kitchen, your bedroom, your bathroom, your living
room, and you went through all the stuff that was in there—it
could all be Warby-ed.”65
More broadly, branding has become part of the everyday
vernacular and it is not uncommon to hear people of all walks
of life talk about branding and branding concepts. Although the
interest in branding has many positive consequences, people
don’t always seem to understand how branding works or apply
branding concepts correctly. This is particularly true, given the
changes taking place with the growth of digital marketing and
social media marketing. For branding success, an appreciation of
and aptitude for using appropriate branding concepts—a focus
of this book—is critical.
NOTES
1. For general background and in-depth research on a number of branding issues, consult the Journal of Brand Management and Journal of Brand Strategy, Henry Stewart publications.
2. Interbrand Group, World’s Greatest Brands: An Inter- national Review (New York: John Wiley, 1992).
3. Adrian Room, Dictionary of Trade Greatest Brands: An International Review (New York: John Wiley, 1992); Adrian Room, Dictionary of Trade Name Origins (London: Routledge & Kegan Paul, 1982).
4. The second through fifth levels are based on a concep- tualization in Theodore Levitt, “Marketing Success Through Differentiation—of Anything,” Harvard Busi- ness Review (January–February 1980): 83–91.
5. Theodore Levitt, “Marketing Myopia,” Harvard Busi- ness Review (July–August 1960): 45–56.
6. Drake Baer, “Timeless Branding Lessons From A Young Steve Jobs,” Fast Company, August 12, 2013, https://www.fastcompany.com/3015526/ timeless-branding-lessons-from-a-young-steve-jobs.
7. Thomas J. Madden, Frank Fehle, and Susan M. Fournier, “Brands Matter: An Empirical Demonstration of the Creation of Shareholder Value through Brands,” Journal of the Academy of Marketing Science 34, no. 2 (2006): 224–235; Frank Fehle, Susan M. Fournier, Thomas J. Madden, and David G. Shrider, “Brand Value and Asset Pricing,” Quarterly Journal of Finance & Accounting 47, no. 1 (2008): 59–82.
8. Jacob Jacoby, Jerry C. Olson, and Rafael Haddock, “Price, Brand Name, and Product Composition Char- acteristics as Determinants of Perceived Quality,” Jour- nal of Consumer Research 3, no. 4 (1971): 209–216; Jacob Jacoby, George Syzbillo, and Jacqueline Busato- Sehach, “Information Acquisition Behavior in Brand Choice Situations,” Journal of Marketing Research 11 (1977): 63–69.
9. Susan Fournier, “Consumers and Their Brands: Devel- oping Relationship Theory in Consumer Research,” Journal of Consumer Research 24, no. 3 (1997): 343–373.
10. Susan Fournier, “Consumers and Their Brands: Devel- oping Relationship Theory in Consumer Research,” Journal of Consumer Research 24, no. 3 (1997): 343–373; Aric Rindfleisch, Nancy Wong, and James E. Burroughs, “God and Mammon: The Influence of Reli- giosity on Brand Connections,” in The Connected Cus- tomer: The Changing Nature of Consumer and Business Markets, eds. Stefan H. K. Wuyts, Marnik G. Dekimpe, Els Gijsbrechts, and Rik Pieters (Mahwah, NJ: Lawrence
Erlbaum, 2010), 163–201; Ron Shachar, Tülin Erdem, Keisha M. Cutright, and Gavan J. Fitzsimons, “Brands: The Opiate of the Nonreligious Masses?,” Marketing Science 30 (January–February 2011): 92–110.
11. For an excellent example of the work being done on culture and branding, consult the following: Grant McCracken, Culture and Consumption II: Markets, Meaning and Brand Management (Bloomington, IN: Indiana University Press, 2005) and Grant McCracken, Chief Culture Officer: How to Create a Living, Breath- ing Corporation (New York: Basic Books, 2009). For a broader discussion of culture and consumer behavior, see Eric J. Arnould and Craig J. Thompson, “Consumer Culture Theory (CCT): Twenty Years of Research,” Journal of Consumer Research 31 (March 2005): 868–882.
12. Philip Nelson, “Information and Consumer Behavior,” Journal of Political Economy 78 (1970): 311–329; and Michael R. Darby and Edi Karni, “Free Competition and the Optimal Amount of Fraud,” Journal of Law and Economics 16 (April 1974): 67–88.
13. Allan D. Shocker and Richard Chay, “How Marketing Researchers Can Harness the Power of Brand Equity.” Presentation to New Zealand Marketing Research Soci- ety, August 1992.
14. Ted Roselius, “Consumer Ranking of Risk Reduction Methods,” Journal of Marketing 35 (January 1971): 56–61.
15. Leslie de Chernatony and Gil McWilliam, “The Varying Nature of Brands as Assets,” International Journal of Advertising 8 (1989): 339–349.
16. Constance E. Bagley and Diane W. Savage, Manag- ers and the Legal Environment: Strategies for the 21st Century, 6th ed. (Mason, OH: Southwestern-Cengage Learning, 2010).
17. Tülin Erdem and Joffre Swait, “Brand Equity as a Sig- naling Phenomenon,” Journal of Consumer Psychology 7, no. 2 (1998): 131–157.
18. Charles Bymer, “Valuing Your Brands: Lessons from Wall Street and the Impact on Marketers,” ARF Third Annual Advertising and Promotion Workshop, February 5–6, 1991.
19. Elisabeth Sullivan, “Building a Better Brand,” Market- ing News 15 (September 2009): 14–17.
20. The Infosys Phenomenon,” www.imd.org, 2007; “Win- ning in the Flat World,” www.itsma.com, 2007; “Info- sys’ Slower Revenue Growth Outlook Slams Shares,” http://www.reuters.com/article/2012/04/13/us-infosys- result-idUSBRE83C08220120413, April 13, 2012.
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CHAPTER 1 • BRANDS AND BRAND MANAGEMENT 65
21. “Total Store Brand Dollar Sales Volume in the United States from 2013 to 2016 (in billion U.S. dollars),” Statista, accessed April 7, 2018, www.statista.com/ statistics/627597/total-store-brand-dollar-sales-in-the-us/.
22. Stewart Hodgson (2017), “Quintessentially British brands: It’s not just branding, it’s Marks & Spencer branding,” November 30, 2017, http://fabrikbrands.com/marks-and- spencer-branding/, accessed September 26, 2019.
23. Leigh Gallagher, “The Education of Brian Chesky,” For- tune, June 26, 2015, http://fortune.com/brian-chesky- airbnb, accessed October 21, 2018; Robert Safian, “What Airbnb Has Discovered About Building A Lasting Brand,” Fast Company, April 18, 2017, https://www.fastcompany .com/40407506/what-airbnb-has-discovered-about- building-a-lasting-brand, accessed October 21, 2018.
24. Jarom McDonald, “How Airbnb and Apple Build Their Brands with Storytelling Marketing,” Lucidpress, February 17, 2016, www.lucidpress.com/blog/how-airbnb-and- apple-use-storytelling-marketing-to-build-their-brands.
25. David Lidsky, “Me Inc.: the Rethink,” Fast Company, March 2005, 16.
26. Nigella Lawson, “How to Eat,” http://www.nigella .com/books/view/how-to-eat-13; Joe Dolce, “England’s It Girl,” http://www.gourmet.com/ magazine/2000s/2001/04/englandsitgirl.
27. University professors are certainly aware of the power of the name as a brand. In fact, one reason many pro- fessors choose to have students identify themselves on exams by numbers of some type instead of by name is so they will not be biased in grading by their knowledge of which student’s exam they are reading. Otherwise, it may be too easy to give higher grades to those students the professor likes or, for whatever reason, expects to have done well on the exam.
28. UNICEF, www.unicef.org; Ariel Schwartz, “The UNICEF TAP Project Charges Cash for Tap Water to Raise Funds, Awareness,” Fast Company, March 22, 2011; “UNICEF Aims to ‘Put It Right’ with a Five-Year Plan to Raise £55m,” Mail Media Centre, February 6, 2010; Rosie Baker, “UNICEF Brings Campaign to London Streets,” Marketing Week, February 15, 2010; IKEA, www.ikea.com.
29. “IKEA & IKEA Foundation, UNICEF and Partners Launch the ‘Let’s Play for Change’ Initiative for Chil- dren,” Unicef, November 17, 2016, www.unicef.org/ corporate_partners/index_93336.html.
30. Joel Hochberg, “Package Goods Marketing vs. Holly- wood,” Advertising Age, January 20, 1992.
31. Katie Meyer, “Harry Potter's $25 Billion Magic Spell,” Time, April 6, 2016, http://time.com/money/4279432/ billion-dollar-spell-harry-potter/, accessed October 21, 2018; Nick Wells and MarkFahey, “Harry Potter and the $25 Billion Franchise,” CNBC, October 13, 2016, www .cnbc.com/2016/10/13/harry-potter-and-the-25-billion- franchise.html.
32. For an illuminating analysis of top brands, see Francis J. Kelley III and Barry Silverstein, The Breakaway Brand: How Great Brands Stand Out (New York; McGraw- Hill, 2005).
33. Allan D. Shocker, Rajendra Srivastava, and Robert Ruekert, “Challenges and Opportunities Facing Brand Management: An Introduction to the Special Issue,”
Journal of Marketing Research 31, no. 2 (May 1994): 149–158.
34. John Deignton and Leora Kornfeld, “Interactivity’s Unan- ticipated Consequences for Marketers and Marketing.” Journal of Interactive Marketing 23, no. 1 (2009): 4–10.
35. Steve Lohr, “Museums Morph Digitally,” The New York Times, October 26, 2014, www.nytimes .com/2014/10/26/arts/artsspecial/the-met-and-other- museums-adapt-to-the-digital-age.html.
36. Martin Hirt and Paul Willmott, “Strategic Principles for Competing in the Digital Age,” McKinsey Quarterly, May 2014, www.mckinsey.com/business-functions/ strategy-and-corporate-finance/our-insights/strategic- principles-for-competing-in-the-digital-age.
37. The Times Editorial Board, “Facebook Finally Steps Up on Privacy. Now It’s Congress’s Turn,” Los Angeles Times, April 8, 2018, www.latimes.com/opinion/editorials/ la-ed-facebook-privacy-rights-20180406-story.html.
38. Martin Hirt and Paul Willmott (2014), “Strategic principles for competing in the digital age,” https:// www.mckinsey.com/business-functions/strategy-and- corporate-finance/our-insights/strategic-principles-for- competing-in-the-digital age.
39. Itamar Simonson and Emanuel Rosen, Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information (New York: Harper Col- lins, 2014).
40. Ronnie Phillips, “Rock and Roll Fantasy?: The Real- ity of Going from Garage Band to Superstardom” (Berlin: Springer Science & Business Media). ISBN 9781461459002; Randy R. Grant, John C. Leadley, and Zenon X. Zygmont The Economics of Intercolle- giate Sports (Singapore: World Scientific Publishing Co Inc.). ISBN 9789814583398.
41. Jagdish Sheth and Rajendra Sisodia. The Rule of Three: Surviving and Thriving in Competitive Markets (New York: Simon and Schuster, 2002).
42. Dan Sewell, “Procter & Gamble Moves from Soap Operas to Social Media,” USA Today, December 11, 2010.
43. “Nutritional FAQs,” LaCroix, accessed April 29, 2018, www.lacroixwater.com/nutritional-faqs/.
44. “Meridan Success Story: 8, LaCroix,” Meridian Asso- ciates Inc., accessed April 29, 2018, www.meridianai .com/success_product_lacroix.html.
45. Mike Esterl, “LaCroix Bubbles Up in Sparkling Water Brand Competition,” The Wall Street Journal, April 7, 2016, www.wsj.com/articles/lacroix-bubbles-up-in- sparkling-water-brand-competition-1460047940.
46. Tanya Dua, “The LaCroix Guide to Tapping ‘Micro- influencers’,” Digiday, May 18, 2016, https://digiday .com/marketing/the-lacroix-guide-micro-influencers/.
47 Ibid. 48. Ibid. 49. Jem Aswad, “Single Michael Jackson Glove Sold
for over $300K,” Rolling Stone, December 6, 2010; Jerry Garrett, “Putting a Price on Star Power,” The New York Times, January 28, 2011; Christies, www. christies.com; For an academic treatment of the topic, see George E. Newman, Gil Diesendruck, and Paul Bloom, “Celebrity Contagion and the Value of Objects,” Journal of Consumer Research 38 (August 2011): 215–228.
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66 PART I • OPENING PERSPECTIVES
50. For discussion of some other approaches to brand- ing, see David A. Aaker, Managing Brand Equity (New York: Free Press, 1991); David A. Aaker, Build- ing Strong Brands (New York: Free Press, 1996); David A. Aaker and Erich Joachimsthaler, Brand Leadership (New York: Free Press, 2000); Jean-Noel Kapferer, Strategic Brand Management, 2nd ed. (New York: Free Press, 2005); Scott M. Davis, Brand Asset Management (New York: Free Press, 2000); Giep Franzen and Sandra Moriarty, The Science and Art of Branding (Armonk, NY: M. E. Sharpe, 2009). For an overview of current research findings, see Brands and Brand Management: Contemporary Research Perspec- tives, eds. Barbara Loken, Rohini Ahluwalia, and Michael J. Houston (New York: Taylor and Francis, 2010) and Kellogg on Branding, eds. Alice M. Tybout and Tim Calkins (Hoboken, NJ: John Wiley & Sons, 2005).
51. For a very practical brand-building guide, see David Taylor and David Nichols, The Brand Gym, 2nd ed. (West Sussex, UK: John Wiley & Sons, 2010).
52. Juliet Carnoy, “The Rise of the Digitally Native Vertical Brand,” The Huffington Post, February 28, 2017, www .huffingtonpost.com/entry/the-rise-of-the-digitally- native-vertical-brand_us_58b4c830e4b0658fc20f9965.
53. Daniel Keyes, “E-Commerce Will Make Up 17% of All U.S. Retail Sales by 2022-And One Company Is The Main Reason.” Business Insider, August 11, 2017, www.businessinsider .com/e-commerce-retail-sales-2022-amazon-2017-8.
54. “The Top 25 Digitally Native Vertical Brands 2017,” ANA, accessed May 17, 2018, www.ana.net/ getfile/24698.
55. “A Guide to Building Digitally Native Vertical Brands,” TechStyle Fashion Group, January 5, 2018, https://techstylefashiongroup.com/guide-building- digitally-native-vertical-brands/.
56. Tom Foster, “Over 400 Startups Are Trying to Become the Next Warby Parker. Inside the Wild Race to Over- throw Every Consumer Category,” Inc. Magazine, May
2018, www.inc.com/magazine/201805/tom-foster/ direct-consumer-brands-middleman-warby-parker.html.
57. Richie Siegel, “Will the Digitally Native Brand Build- ing Playbook Produce Results?,” Business of Fash- ion, November 29, 2017, www.businessoffashion .com/ar t ic les /opinion/op-ed-wi l l - the-digi ta l native-brand-building-playbook-produce-results.
58. Ibid. 59. Capital IQ, www.capitalIQ.com. 60. “A Guide to Building Digitally Native Vertical
Brands,” TechStyle Fashion Group, January 5, 2018, https://techstylefashiongroup.com/guide-building- digitally-native-vertical-brands/.
61. Ana Gotter, “What Your Brand Can Learn from Warby Parker’s Massive Success,” Pixlee, www.pixlee.com/ blog/what-your-brand-can-learn-from-warby-parkers- massive-success/; Claire Cain Miller, “Defying Conventional Wisdom to Sell Glasses Online,” The New York Times, January 16, 2011, www.nytimes .com/2011/01/17/technology/17glasses.html.
62. Chad Bray and Elizabeth Paton, “Luxottica, Owner of Ray-Ban, in $49 Billion Merger With Essilor,” The New York Times, January 16, 2017, www.nytimes .com/2017/01/16/business/dealbook/luxottica-essilor- merger.html.
63. Barbara Thau, “Why a Store You’ve Likely Never Heard of Hints at Retail's Future,” Forbes, July 8, 2015, www.forbes.com/sites/barbarathau/2015/07/08/ bonobos/#370a6528359b.
64. Sarah Lawson, “Bonobos Just Hired a New Chief Peo- ple Officer to Scale Company Culture,” Fast Company, September 25, 2015, www.fastcompany.com/3051429/ bonobos-just-hired-a-new-chief-people-officer-to- scale-company-culture.
65. Tom Foster, “Over 400 Startups Are Trying to Become the Next Warby Parker. Inside the Wild Race to Over- throw Every Consumer Category,” Inc. Magazine, May 2018, www.inc.com/magazine/201805/tom-foster/ direct-consumer-brands-middleman-warby-parker.html.
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67
Customer-Based Brand Equity and Brand Positioning
PART I I D E V E L O P I N G A B R A N D S T R AT E G Y
Learning Objectives
After reading this chapter, you should be able to
1. Define customer-based brand equity.
2. Outline the sources and outcomes of customer-based brand equity.
3. Identify the four components of brand positioning.
4. Describe the guidelines in developing a good brand positioning.
5. Explain brand mantras and how they should be developed.
Starbucks’ unique brand
positioning helped to fuel
its phenomenal growth.
Source: AP Photo/Ted S. Warren
2
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68 PART II • DEVELOPING A BRAND STRATEGY
CUSTOMER-BASED BRAND EQUITY Two questions often arise in brand marketing: What makes a brand strong? How do you build
a strong brand? To help answer both, we introduce the concept of customer-based brand equity
(CBBE). Although a number of useful perspectives concerning brand equity have been put forth,
the CBBE concept provides a unique point of view on what brand equity is and how it should best
be built, measured, and managed.
Defining Customer-Based Brand Equity The CBBE concept approaches brand equity from the perspective of the consumer—whether the
consumer is an individual or an organization, or an existing or prospective customer. Understand-
ing the needs and wants of consumers and organizations and devising products and programs to
satisfy them are at the heart of successful marketing. In particular, marketers face two fundamen-
tally important questions: What do different brands mean to consumers? How does the brand
knowledge of consumers affect their response to marketing activity?
The basic premise of the CBBE concept is that the power of a brand lies in what customers
have learned, felt, seen, and heard about the brand as a result of their experiences over time. In other
Chapter 1 introduced some basic notions about brands, particularly brand equity, and the roles
they play in marketing strategies. Part II of the text explores how to develop brand strategies.
Great brands are not accidents. They are a result of thoughtful and imaginative planning. Anyone
building or managing a brand must carefully develop and implement creative brand strategies.
To aid in that planning, three tools or models are helpful. Like the famous Russian nesting
matryoshka dolls, the three models are interconnected and, in turn, become larger in scope: the
first model is a component in the second model; the second model, in turn, is a component in the
third. Combined, the three models provide crucial micro and macro perspectives on successful
brand building. These are the three models:
1. Brand positioning model describes how to establish competitive advantages in the minds of
customers in the marketplace;
2. Brand resonance model describes how to take these competitive advantages and create
intense, active, loyalty relationships with customers for brands; and
3. Brand value chain model describes how to trace the value creation process to better under-
stand the financial impact of marketing expenditures and investments to create loyal custom-
ers and strong brands.
Collectively, these three models help marketers devise branding strategies and tactics to maxi-
mize profits and long-term brand equity and track their progress along the way. This chapter
develops the brand positioning model; Chapter 3 reviews the brand resonance and brand value
chain models.
This chapter begins, however, by more formally examining the brand equity concept, intro-
ducing one particular view—the concept of customer-based brand equity—that will serve as a
useful organizing framework for the rest of the book.1 We will consider the sources of customer-
based brand equity to provide the groundwork for our discussion of brand positioning.
Positioning requires defining our desired or ideal brand knowledge structures and estab-
lishing points-of-parity and points-of-difference to establish the right brand identity and brand
image. Unique, meaningful points-of-difference (PODs) provide a competitive advantage and the
“reason why” consumers should buy the brand. On the other hand, some brand associations can
be roughly as favorable as those of competing brands, so they function as points-of-parity (POPs)
in consumers’ minds—and negate potential points-of-difference for competitors. In other words,
these associations are designed to provide “no reason why not” for consumers to choose the brand.
The chapter then reviews how to identify and establish brand positioning and create a brand
mantra, a shorthand expression of the positioning.2 We conclude with Brand Focus 2.0 and an
examination of the many benefits of creating a strong brand.
PREVIEW
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 69
words, the power of a brand lies in what resides in the minds and hearts of customers. The challenge
for marketers in building a strong brand is ensuring that customers have the right type of experiences
with products and services and their accompanying marketing programs so that the desired thoughts,
feelings, images, beliefs, perceptions, opinions, and experiences become linked to the brand.
We formally define customer-based brand equity as the differential effect that brand knowl-
edge has on customer response to the marketing of that brand. A brand has positive customer-based
brand equity when customers react more favorably to a product and the way it is marketed when
the brand is identified than when it is not (say, when the product is attributed to a fictitious name or
is unnamed). Thus, customers might be more accepting of a new brand extension for a brand with
positive customer-based brand equity, less sensitive to price increases and withdrawal of advertis-
ing support, or more willing to seek the brand in a new distribution channel. On the other hand,
a brand has negative customer-based brand equity if customers react less favorably to marketing
activity for the brand compared with an unnamed or fictitiously named version of the product.
Let’s look at the three key ingredients to this definition: (1) “differential effect,” (2) “brand
knowledge,” and (3) “customer response to marketing.” First, brand equity arises from differences
in customer response. If no differences occur, then the brand-name product can essentially be clas-
sified as a commodity or a generic version of the product. Competition, most likely, would then
just be based on price. Second, these differences in response are a result of customer knowledge
about the brand, that is, what they have learned, felt, seen, and heard about the brand as a result
of their experiences over time. Thus, although strongly influenced by the marketing activity of
the firm, brand equity ultimately depends on what resides in the minds and hearts of existing and
prospective customers. Third, customers’ differential responses, which make up brand equity, are
reflected in perceptions, preferences, and behavior related to all aspects of brand marketing—for
example, including choice of a brand, recall of copy points from an ad, response to a sales promo-
tion, and evaluations of a proposed brand extension. Brand Focus 2.0 provides a detailed account
of these advantages, as summarized in Figure 2-1.
The simplest way to illustrate what we mean by customer-based brand equity is to consider
one of the typical results of product sampling or comparison tests. In blind taste tests, two groups
of individuals sample a product: one group knows which brand it is, the other doesn’t. Invariably,
the two groups have different opinions despite consuming the same product.
When consumers report different opinions about branded and unbranded versions of identical
products—which almost invariably happens—it must be the case that knowledge about the brand,
created by whatever means (past experiences, marketing activity for the brand, or word of mouth),
has somehow changed customers’ product perceptions. This result has occurred with virtually
every type of product—conclusive evidence that customer perceptions of product performance
are highly dependent on their impressions of the brand that goes along with it. In other words,
clothes may seem to fit better, a car may seem to drive more smoothly, and the wait in a bank line
may seem shorter, depending on the particular brand involved.
Brand Equity as a Bridge Thus, according to the customer-based brand equity concept, consumer knowledge drives the
differences that manifest themselves in terms of brand equity. This realization has important
managerial implications. For one thing, brand equity provides marketers with a vital strategic
bridge from their past to their future.
FIGURE 2-1
Marketing Advantages
of Strong Brands
Improved perceptions of product performance Greater loyalty Less vulnerability to competitive marketing actions Less vulnerability to marketing crises Larger margins More inelastic consumer response to price increases More elastic consumer response to price decreases Greater trade cooperation and support Increased marketing communication effectiveness Possible licensing opportunities Additional brand extension opportunities
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70 PART II • DEVELOPING A BRAND STRATEGY
Brands as a Reflection of the Past. Marketers should consider all the dollars spent on manufac-
turing and marketing products each year not so much as expenses but as investments in what consumers
saw, heard, learned, felt, and experienced about the brand. If not properly designed and implemented,
these expenditures may not be good investments, in that they may not have created the right knowledge
structures in consumers’ minds, but we should consider them investments nonetheless.
Thus, the quality of the investment in brand building is the most critical factor, not the quantity
beyond some minimal threshold amount. In fact, it is possible to overspend on brand building if
money is not being spent wisely. Conversely, as we will see throughout the book, some brands are
considerably outspent but amass a great deal of brand equity through marketing activities that create
valuable, enduring memory traces in the minds of consumers, as has been the case with Netflix.
Brands as a Direction for the Future. The brand knowledge that marketers create over time
dictates appropriate and inappropriate future directions for the brand. Consumers will decide,
based on their brand knowledge, where they think the brand should go and grant permission (or
not) to any marketing action or program. Thus, the true value and future prospects of a brand rest
with consumers and their knowledge about the brand.
No matter how we define brand equity, though, its value to marketers as a concept ultimately
depends on how they use it. Brand equity can offer focus and guidance, providing a means to
interpret past marketing performance and design future marketing programs. Everything the firm
does can either enhance or detract from brand equity. Those marketers who build strong brands
have embraced the concept and use it to its fullest as a means of clarifying, communicating, and
implementing their marketing actions.
NETFLIX
From a DVD mailing business to producing top-notch original content and streaming services across devices,
Netflix is competing with major studios and is now focusing its marketing activities around getting consum-
ers to watch its growing portfolio of original content.3 Netflix has adopted a few marketing strategies that
have been key to its success. Netflix’s ability to identify and understand customers’ needs is a distinct capabil-
ity that Netflix has leveraged effectively. In order to deliver original programming, Netflix tracks when, how,
and what content or programming consumers like to watch, which then allows them to create new content
that is explicitly tailored to consumers’ tastes and behaviors. Its success with original hit shows such as Black
Mirror and Stranger Things can be attributed, in part, to the firm’s ability to use technology in novel ways
to promote the shows and engage with the audience. For example, to promote Stranger Things, it created
an app which allowed users to create content using a web tool. Likewise, the company used an app called
RateMe to accompany the show Black Mirror. It is no wonder that Netflix is hugely successful, and at the
close of 2016, had 93.8 million subscribers, adding 20 million in 2016 alone. Netflix has developed such a
strong relationship with its customers that the brand name has become a verb—the phrase “Netflix Binge”
has become part of the national vocabulary, to refer to binge-watching on Netflix.
Binge-watching on Netflix has become a popular entertainment
pastime, and “Netflix binge” has become a part of our everyday
vocabulary.
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 71
Other factors can influence brand success, and brand equity has meaning for other constitu-
ents besides customers, such as employees, suppliers, channel members, media, and the govern-
ment.9 Nevertheless, success with customers is often crucial for success for the firm, so the next
section considers brand knowledge and CBBE in more detail.
MAKING A BRAND STRONG: BRAND KNOWLEDGE From the perspective of the CBBE concept, brand knowledge is the key to creating brand equity,
because it creates the differential effect that drives brand equity. What marketers need, then, is
an insightful way to represent how brand knowledge exists in consumer memory. An influential
model of memory developed by psychologists is helpful for this purpose.10
The associative network memory model views memory as a network of nodes and connecting
links, in which nodes represent stored information or concepts, and links represent the strength
of association between the nodes. Any type of information—whether it is verbal, abstract, or
contextual—can be stored in the memory network.
Using the associative network memory model, let’s think of brand knowledge as consist-
ing of a brand node in memory with a variety of associations linked to it. Brand knowledge
has two components: brand awareness and brand image. Brand awareness is related to the
strength of the brand node or trace in memory, which we can measure as the consumer’s ability
to identify the brand under different conditions.11 It is a necessary, but not always a sufficient,
step in building brand equity. Other considerations, such as the image of the brand, often come
into play.
Brand image has long been recognized as an important concept in marketing.12 Although
marketers have not always agreed about how to measure it, one generally accepted view is that,
consistent with our associative network memory model, brand image is consumers’ perceptions
about a brand, as reflected by the brand associations held in consumer memory.13 In other words,
brand associations are the other informational nodes linked to the brand node in memory and
contain the meaning of the brand for consumers. Associations come in all forms and may reflect
characteristics of the product or aspects independent of the product.
For example, if someone asked you what came to mind when you thought of the Apple
brand, what would you say? You might reply with associations such as well-designed, easy to use,
leading-edge technology, and so forth. Figure 2-2 displays some commonly mentioned associa-
tions for Apple that consumers have expressed in the past.14 The associations that came to your
mind make up your brand image for Apple. Through breakthrough products and skillful market-
ing, Apple has been able to achieve a rich brand image made up of a host of brand associations.
Many are likely to be shared by a majority of consumers, so we can refer to the brand image of
Apple, but at the same time, we recognize that this image varies, perhaps even considerably,
depending on the consumer or market segment.
Other brands, of course, carry a different set of associations. For example, McDonald’s mar-
keting program attempts to create brand associations in consumers’ minds between its products and
quality, service, cleanliness, and value. McDonald’s rich brand image probably also includes strong
associations to Ronald McDonald, golden arches, for kids, and convenient—as well as perhaps
DISCOVERY CHANNEL
The Discovery Channel was launched with the motto “Explore Your World” and well-defined brand values
of adventure, exploration, science, and curiosity. After a detour to reality programming featuring crime and
forensics shows and biker and car content, the channel returned to its mission of producing high-quality
work that the company could be proud of and that was beneficial for people and sustainability of the envi-
ronment.4 The Discovery Channel is seen as a dominant cable channel (ranked in the top five cable channels
within the United States), with popular shows such as Shark Week, MythBusters, and Gold Rush, with a
particular appeal to certain segments of consumers (e.g., men aged 35–54).5 In another effort to strengthen
its relationships with its customers, and to reaffirm the brand’s commitment to the environment, Discovery
leveraged the power of its popular show Shark Week—an annual show dedicated to sharks—to advocate for
donations to an ocean conversation organization called Oceana.6 Today, the Discovery Channel cumulatively
reaches 94 million households within the United States.7 Internationally, the Discovery Channel has more
than 3 billion global cumulative viewers in more than 220 countries and territories.8
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72 PART II • DEVELOPING A BRAND STRATEGY
potentially negative associations, such as fast food. Whereas Mercedes-Benz has achieved strong
associations to performance and status, Volvo has created a strong association to safety. We’ll
return in later chapters to the different types of associations and how to measure their strength.
SOURCES OF BRAND EQUITY What causes brand equity to exist? How do marketers create it? Customer-based brand equity
occurs when the consumer has a high level of awareness and familiarity with the brand and holds
some strong, favorable, and unique brand associations in memory. In some cases, brand aware-
ness alone is enough to create favorable consumer response, for example, in low-involvement
decisions when consumers are willing to base their choices on mere familiarity. In most other
cases, however, the strength, favorability, and uniqueness of brand associations play a critical
role in determining the differential response that makes up brand equity. If customers perceive
the brand as only representative of the product or service category, then they will respond as if
the offering were unbranded.
Thus, marketers must also convince consumers that there are meaningful differences among
brands. Consumers must not think all brands in the category are the same. Establishing a posi-
tive brand image in consumer memory—strong, favorable, and unique brand associations—goes
hand-in-hand with creating brand awareness to build customer-based brand equity. Let’s look at
both these sources of brand equity.
Brand Awareness Brand awareness consists of brand recognition and brand recall performance:
• Brand recognition is consumers’ ability to confirm prior exposure to the brand when given
the brand as a cue. In other words, when they go to the store, will they be able to recognize
the brand as one to which they have already been exposed?
• Brand recall is consumers’ ability to retrieve the brand from memory when given the product
category, the needs fulfilled by the category, or a purchase or usage situation as a cue. In other
words, consumers’ recall of Kellogg’s Corn Flakes will depend on their ability to retrieve
the brand when they think of the cereal category or of what they should eat for breakfast or
a snack, whether at the store when making a purchase or at home when deciding what to eat.
Research reveals that many consumer decisions are made at the point of sale, where the brand
name, logo, packaging, and so on, will be physically present and visible; hence, brand recogni-
tion is very important. If consumer decisions are mostly made in settings away from the point of
purchase, on the other hand, then brand recall will be more important.15 For this reason, creating
FIGURE 2-2
Possible Associations
with the Apple Brand
Name
Source: Staff/MCT/News- com; Hyoryung Nam, Yogesh V. Joshi, and P. K. Kannan, “Harvesting Brand Information from Social Tags,” Journal of Marketing 81, no. 4 (2017): 88–108.
User-Friendly
iPhone
Innovative
Apple Logo
Cool
Creative
Stylish iPod
Steve Jobs
iTunes
Apps
Expensive
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 73
brand recall is critical for service and online brands: Consumers must actively seek the brand and
therefore be able to retrieve it from memory when appropriate.
Note, however, that even though brand recall may be less important at the point of purchase,
consumers’ brand evaluations and choices will still often depend on what else they recall about
the brand given that they are able to recognize it there. As is the case with most information in
memory, we are generally more adept at recognizing a brand than at recalling it.
Advantages of Brand Awareness. What are the benefits of creating a high level of brand
awareness? There are three—learning advantages, consideration advantages, and choice advantages.
Learning Advantages. Brand awareness influences the formation and strength of the associa-
tions that make up the brand image. To create a brand image, marketers must first establish a brand
node in memory, the nature of which affects how easily the consumer learns and stores additional
brand associations. The first step in building brand equity is to register the brand in the minds of
consumers. If the right brand elements are chosen, the task becomes easier.
Consideration Advantages. Consumers must consider the brand whenever they are making
purchase decisions to fulfill or satisfy a need. Raising brand awareness increases the likelihood
that the brand will be a member of the consideration set, the handful of brands that receive serious
consideration for purchase.16 Much research has shown that consumers are rarely loyal to only
one brand but instead have a set of brands they would consider buying and another—possibly
smaller—set of brands they actually buy on a regular basis. Because consumers typically consider
only a few brands for purchase, making sure that the brand is in the consideration set also makes
other brands less likely to be considered or recalled.17
Choice Advantages. The third advantage of creating a high level of brand awareness is that it
can affect choices among brands in the consideration set, even if there are essentially no other
associations to those brands.18 For example, consumers have been shown to adopt a decision rule
in some cases to buy only more familiar, well-established brands.19 Thus, in low-involvement
decision settings, a minimum level of brand awareness may be sufficient for product choice, even
in the absence of a well-formed attitude.20
One influential model of attitude change and persuasion, the elaboration-likelihood model,
is consistent with the notion that consumers may make choices based on brand awareness consid-
erations when they have low involvement. Low involvement results when consumers lack either
purchase motivation (they don’t care about the product or service), purchase ability (they don’t
know anything else about the brands in a category), or purchase opportunity (they don’t have the
time or face some other constraint such that they cannot make a more deliberate or thoughtful
brand choice).21
1. Consumer purchase motivation: Although products and brands may be critically important
to marketers, choosing a brand in many categories is not a life-or-death decision for most con-
sumers. For example, despite millions of dollars spent in television advertising over the years
to persuade consumers of product differences, 40 percent of consumers surveyed believed
all brands of gasoline were about the same or did not know which brand was best. A lack of
perceived differences among brands in a category is likely to leave consumers unmotivated
about the choice process.
2. Consumer purchase ability: Consumers in some product categories just do not have
the necessary knowledge or experience to judge product quality even if they so desired.
The obvious examples are products with a high degree of technical sophistication, like
telecommunications equipment with state-of-the-art features. However, consumers may
be unable to judge quality even in low-tech categories. Consider the college student who
has not really had to cook or clean before, shopping the supermarket aisles in earnest
for the first time, or a new manager forced to make an expensive capital purchase for the
first time. The reality is that product quality is often highly ambiguous and difficult to
judge without a great deal of prior experience and expertise. In such cases, consumers
will use whichever shortcut or heuristic they can come up with to make their decisions
in the best manner possible. Sometimes, they simply choose the brand with which they
are most familiar and aware.
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74 PART II • DEVELOPING A BRAND STRATEGY
3. Consumer purchase opportunity: Even if consumers want to make a good brand choice and
know enough to be able to do so, they still may not be able to make a highly involved decision
because they lack the time, energy, or some other factor necessary to do so. The marketplace
itself may present certain barriers to prevent detailed decision-making. For whatever reason, if
consumers do not have the opportunity to engage in deliberate, thoughtful evaluation of brand
offerings, they may rely on heuristics such as brand awareness to arrive at a brand choice.
Establishing Brand Awareness. How do you create brand awareness? In the abstract, creat-
ing brand awareness means increasing the familiarity of the brand through repeated exposure,
although this is generally more effective for brand recognition than for brand recall. That is, the
more a consumer experiences the brand by seeing it, hearing it, or thinking about it, the more
likely he or she is to strongly register the brand in memory.
Thus, anything that causes consumers to experience one of a brand’s element—its name,
symbol, logo, character, packaging, or slogan, including advertising and promotion, spon-
sorship and event marketing, publicity and public relations, and outdoor advertising—can
increase familiarity and awareness of that brand element. And the more elements marketers
can reinforce, usually the better. For instance, in addition to its name, Intel has used the “Intel
E*TRADE
In re-branding E*TRADE, the firm initially ran campaigns featuring the wisecracking E*Trade baby and
was known for cheeky marketing. The ads were showcased in high profile media spots during Super Bowl
broadcasts between 2008 and 2013. As the brand became more established, E*Trade shifted its strategy
and redefined its advertising goals from just developing brand recognition to focusing more on lead genera-
tion and on reinforcing loyalty of existing customers.22 While the baby provided the brand with desirable
attributes such as fun, approachability, and likability, it was important to change the advertising to signal the
evolution of the brand. They branded themselves as a sober, wiser adviser. E*TRADE was seeking a competi-
tive advantage by building old-fashioned “high touch” relationships, which was ironic as it rose to fame
as a technology-driven disruptor. The advertising campaign began to focus on a new type of investor, one
who was confident, self-directed and independent or what the brand called a “Type-E” customer.23 Today,
E*TRADE’s advertisements began to downplay the jokes and depicted its customers as cautious planners
who leave nothing to chance. As the CEO of E*TRADE puts it: “We want to grow with investors and educate
them, help them get smarter. As long as that happens, it’s good for the bottom line.”24
The wisecracking E*TRADE baby featured in humorous tele-
vision commercials together with advertising placement during
Super Bowl games helped to generate a high level of brand
awareness for E*TRADE.
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 75
Inside” logo and its distinctive symbol as well as its famous four-note jingle in television ads
to enhance awareness.
Repetition increases recognizability, but improving brand recall also requires linkages in
memory to appropriate product categories or other purchase or consumption cues. A slogan or
jingle creatively pairs the brand and the appropriate cues (and, ideally, the brand positioning as
well, helping build a positive brand image). Other brand elements like logos, symbols, characters,
and packaging can also aid recall.
The way marketers pair the brand and its product category, such as with an advertising slo-
gan, helps to determine the strength of product category links. For brands with strong category
associations, like Ford cars, the distinction between brand recognition and recall may not matter
much—consumers thinking of the category are likely to think of the brand. In competitive markets
or when the brand is new to the category, it is more important to emphasize category links in the
marketing program. Strong links between the brand and the category or other relevant cues may
become especially important over time if the product meaning of the brand changes through brand
extensions, mergers, or acquisitions.
ANNIE’S HOMEGROWN
Annie’s Homegrown has successfully created a brand image by advertising that its food can help you live
the good life. “Choose Good” is the theme across their ads which concludes with “Good can be hard,
but Good can also be easy.” Annie’s stated mission is to make the world healthier and happier through
nourishing and healthy foods and by a healthy code of conduct in all that they do and how they treat
people and the planet.
Annie’s has the second largest market share in the boxed pasta market next only to Kraft. It also has
made inroads into various categories such as frozen pizza, crackers, salad dressing, and the condiment
market. So, how did Annie’s Homegrown carve out a unique position in a market dominated by large cor-
porations such as Kraft? Annie’s Homegrown’s focus on corporate social responsibility was the right focus
at the right time, and it resonated with the shifting consumers’ interest in sustainability and corporate
social responsibility. Its packaging consisted of faux-handwritten letters from founder Annie Withey and
was made of recycled paper.25 Annie’s flavors such as “Organic Peace Pasta & Parmesan,” in a tie-dye box,
had a unique feel to them. The signature brand character ‘Bernie the Bunny’ made the brand seem warm
and lovable.26 Their Web site featured 3-minute videos dedicated to American family farms. Thus, in many
different ways, Annie’s Homegrown married comfort foods with ethical values, which resonated with its
consumers, including themes such as supporting small, family farmers and social commitments like college
scholarships for students studying sustainable agriculture.
In 2014, Annie’s Homegrown was acquired by General Mills for $820 million. Despite its acquisition,
Annie’s has maintained its positioning and values and has branched out into other product categories (e.g.,
cereal). Of note is that this acquisition by General Mills is part of a general trend by big food manufacturers—
such as Coca-Cola, Kellogg’s, and General Mills—of acquiring small brands with healthy, environmentally
aware positioning. Following the acquisition, Annie’s Homegrown has retained its small but stable market
share in the increasingly popular segment of clean, environmentally aware, and healthy foods.27
Annie’s Homegrown has crafted a special brand image by
focusing its positioning on nourishing and healthy foods that
can help customers live the good life.
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76 PART II • DEVELOPING A BRAND STRATEGY
Many marketers have attempted to create brand awareness through so-called shock advertis-
ing, using bizarre themes. For example, online retailer Outpost.com used ads featuring gerbils
shot from cannons, wolverines attacking marching bands, and preschoolers having the brand name
tattooed on their foreheads. The problem with such approaches is that they invariably fail to create
strong category links because the product is just not prominent enough in the ad. They also can
generate a fair amount of ill will. Often coming across as desperate measures, they rarely provide
a foundation for long-term brand equity. In the case of Outpost.com, most potential customers
did not have a clue what the company represented.
Brand Image Creating brand awareness by increasing the familiarity of the brand through repeated exposure
(for brand recognition) and forging strong associations with the appropriate product category or
other relevant purchase or consumption cues (for brand recall) is an important first step in build-
ing brand equity. Once a sufficient level of brand awareness is created, marketers can put more
emphasis on crafting a brand image.
Creating a positive brand image takes marketing programs that link strong, favorable, and
unique associations to the brand in memory. Brand associations may be either brand attributes
or benefits. Brand attributes are those descriptive features that characterize a product or ser-
vice. Brand benefits are the personal value and meaning that consumers attach to the product
or service attributes.
Consumers form beliefs about brand attributes and benefits in different ways. The definition of
customer-based brand equity, however, does not distinguish between the source of brand associa-
tions and the manner in which they are formed; all that matters is their strength, favorability, and
uniqueness. This means that consumers can form brand associations in a variety of ways other than
marketing activities: from direct experience; from online social media; through information from
other commercial or nonpartisan sources, such as Consumer Reports or other media vehicles; from
word of mouth; and by assumptions or inferences consumers make about the brand itself, its name,
logo, or identification with a company, country, channel of distribution, or person, place, or event.
Marketers should recognize the influence of these other sources of information by both man-
aging them as well as possible and by adequately accounting for them in designing communication
strategies. Consider how Annie’s Homegrown originally built its brand equity.
In short, to create the differential response that leads to customer-based brand equity, marketers
need to make sure that some strongly held brand associations are not only favorable but also unique
and distinct from competing brands. Unique associations help consumers choose the brand. To choose
which favorable and unique associations to strongly link to the brand, marketers carefully analyze
the consumer and the competition to determine the best positioning for the brand. Let’s consider some
factors that, in general, affect the strength, favorability, and uniqueness of brand associations.
Strength of Brand Associations. The more deeply a person thinks about product information
and relates it to existing brand knowledge, the stronger the resulting brand associations will be.
Two factors that strengthen association to any piece of information are its personal relevance and
the consistency with which it is presented over time. The particular associations we recall and their
salience will depend not only on the strength of association but also on the retrieval cues present
and the context in which we consider the brand.
In general, direct experiences create the strongest brand attribute and benefit associations and
are particularly influential in consumers’ decisions when they accurately interpret them. Word-of-
mouth is likely to be especially important for restaurants, entertainment, banking, and personal
services. Starbucks, Google, Red Bull, and Amazon are all classic examples of companies that
created amazingly rich brand images without the benefit of intensive advertising programs. Mike’s
Hard Lemonade sold its first 10 million cases without any advertising because it was a discovery
brand fueled by word-of-mouth.28
On the other hand, company-influenced sources of information, such as advertising, are often
likely to create the weakest associations and, thus, may be the most easily changed. To overcome
this hurdle, marketing communication programs use creative communications that cause consum-
ers to elaborate on brand-related information and relate it appropriately to existing knowledge.
They expose consumers to communications repeatedly over time and ensure that many retrieval
cues are present as reminders.
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 77
Favorability of Brand Associations. Marketers create favorable brand associations by con-
vincing consumers that the brand possesses relevant attributes and benefits that satisfy their
needs and wants, such that they form positive overall brand judgments. Consumers will not
hold all brand associations to be equally important, nor will they view them all favorably or
value them all equally across different purchase or consumption situations. Brand associations
may be situation- or context-dependent and vary according to what consumers want to achieve
in that purchase or consumption decision.29 An association may thus be valued in one situation
but not another.30
For example, the associations that come to mind when consumers think of FedEx may be
fast, reliable, and convenient, with purple and orange packages. The color of the packaging may
matter little to most consumers when choosing an overnight delivery service, although it may
perhaps play an important brand awareness function. Fast, reliable, and convenient service may
be more important, but even then, only in certain situations. A consumer who needs delivery only
may consider less expensive options, like USPS Priority Mail, which may take one to two days.
Uniqueness of Brand Associations. The essence of brand positioning is that the brand has a
sustainable competitive advantage or unique selling proposition that gives consumers a compel-
ling reason why they should buy it.31 Marketers can make this unique difference explicit through
direct comparisons with competitors, or they may highlight it implicitly. They may base it on
performance-related or nonperformance-related attributes or benefits.
Although unique associations are critical to a brand’s success, unless the brand faces no
competition, it will most likely share some associations with other brands. One function of shared
associations is to establish category membership and define the scope of competition with other
products and services.32
A product or service category can also share a set of associations that include specific beliefs
about any member in the category, as well as overall attitudes toward all members of the category.
These beliefs might include many of the relevant performance-related attributes for brands in the
category, as well as more descriptive attributes that do not necessarily relate to product or service
performance, like the color of a product, such as red for ketchup.
Consumers may consider certain attributes or benefits prototypical and essential to all
brands in the category, and a specific brand an exemplar and most representative.33 For exam-
ple, they might expect a running shoe to provide support and comfort and to be built well
enough to withstand repeated wearing, and they may believe that Asics, New Balance, or
some other leading brand best represents a running shoe. Similarly, consumers might expect
an online retailer to offer easy navigation, a variety of offerings, reasonable shipping options,
secure purchase procedures, responsive customer service, and strict privacy guidelines, and
they may consider Amazon, Wayfair, or some other market leader to be the best example of
an online retailer.
Because the brand is linked to the product category, some category associations may
also become linked to the brand, either specific beliefs or overall attitudes. Product category
attitudes can be a particularly important determinant of consumer response. For example, if a
consumer thinks that all brokerage houses are basically greedy, and that brokers are in it for
themselves, then he or she probably will have similarly unfavorable beliefs about and nega-
tive attitudes toward any particular brokerage house, simply by virtue of its membership in
the category.
Thus, in almost all cases, some product category associations will be shared with all brands
in the category. Note that the strength of the brand associations to the product category is an
important determinant of brand awareness.34
IDENTIFYING AND ESTABLISHING BRAND POSITIONING Having developed the CBBE concept in some detail as background, we next outline how market-
ers should approach brand positioning.
Basic Concepts Brand positioning is at the heart of marketing strategy. It is the “act of designing the company’s
offer and image so that it occupies a distinct and valued place in the target customer’s mind.”35
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78 PART II • DEVELOPING A BRAND STRATEGY
As the name implies, positioning means finding the proper location in the minds of a group of
consumers or market segment, so that they think about a product or service in the right or desired
way to maximize potential benefit to the firm. Good brand positioning helps guide marketing
strategy by clarifying what a brand is all about, how it is unique, and how it is similar to competi-
tive brands, and why consumers should purchase and use it.
Deciding on a positioning requires determining a frame of reference (by identifying the target
market and the nature of competition) and the optimal points-of-parity and points-of-difference
brand associations. In other words, marketers need to know (1) who the target consumer is, (2)
who the main competitors are, (3) how the brand is similar to these competitors, and (4) how the
brand is different from them. We will talk about each of these.
Target Market Identifying the consumer target is important because different consumers may have different
brand knowledge structures and different perceptions and preferences for the brand. Without this
understanding, it may be difficult for marketers to say which brand associations should be strongly
held, favorable, and unique. Let’s look at defining and segmenting a market and choosing target
market segments.
A market is the set of all actual and potential buyers who have sufficient interest in, income
for, and access to a product. Market segmentation divides the market into distinct groups of
homogeneous consumers who have similar needs and consumer behavior, and who thus require
similar marketing programs and tactics. Market segmentation requires making trade-offs between
costs and benefits. The more finely segmented the market, the more likely that the firm will be
able to implement marketing programs that meet the needs of consumers in any one segment. That
advantage, however, can be offset by the greater costs of reduced standardization.
Segmentation Bases. Figures 2-3 and 2-4 display some possible segmentation bases for
consumer and business-to-business markets, respectively. We can classify these bases as
descriptive or customer-oriented (related to what kind of person or organization the customer is)
or as behavioral or product-oriented (related to how the customer thinks of or uses the brand
or product).
Behavioral segmentation bases are often most valuable in understanding branding issues
because they have clearer strategic implications. For example, defining a benefit segment
FIGURE 2-4
Business-to-Business
Segmentation Bases
Nature of Good Kind Where used Type of buy
Buying Condition Purchase location Who buys Type of buy
Demographic SIC code Number of employees Number of production workers Annual sales volume Number of establishments
FIGURE 2-3
Consumer Segmentation
Bases
Behavioral User status Usage rate Usage occasion Brand loyalty Benefits sought
Demographic Income Age Sex Race Family
Psychographic Values, opinions, and attitudes Activities and lifestyle
Geographic International Regional
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 79
makes it clear what should be the ideal point-of-difference or desired benefit with which to
establish the positioning. Take the toothpaste market. One research study uncovered four main
segments:36
1. The Sensory segment: Seeking flavor and product appearance
2. The Sociables: Seeking brightness of teeth
3. The Worriers: Seeking decay prevention
4. The Independent segment: Seeking low prices.
Given this market segmentation scheme, marketing programs could be put into place
to attract one or more segments. For example, Close-Up initially targeted the first two seg-
ments, whereas Crest primarily concentrated on the third. Taking no chances, Aquafresh was
introduced to go after all three segments, designing its toothpaste with three stripes to dra-
matize each of the three product benefits. With the success of multipurpose toothpastes such
as Colgate Total, virtually all toothpaste brands now offer products that emphasize multiple
performance benefits.
Other segmentation approaches build on brand loyalty in some way. The classic funnel model
traces consumer behavior in terms of initial awareness through brand-most-often-used. Figure 2-5
shows a hypothetical pattern of results. For the purposes of brand building, marketers want to
understand both (1) the percentage of target market that is present at each stage and (2) factors
facilitating or inhibiting the transition from one stage to the next. In the hypothetical example, a
key bottleneck appears to be converting those consumers who have never tried the brand to those
who recently tried, as less than half (46 percent) “convert.” To convince more consumers to con-
sider trying the brand again, marketers may need to raise brand salience or make the brand more
acceptable in the target consumer’s repertoire.
Marketers often segment consumers by their behavior. For example, a firm may target a
certain age group, but the underlying reason is that they are particularly heavy users of the
product, are unusually brand loyal, or are most likely to seek the benefit the product is best
able to deliver. For example, many credit card companies target specific groups—students,
seniors—with particular benefits. Discover credit cards for students offers cash back on pur-
chases made in product categories that will appeal to students such as gas stations, grocery
stores, restaurants, and so on. They also offer Good Grades rewards for those who maintain a
GPA of 3.0 or higher. Similarly, Barclaycard Arrival Plus is a credit card aimed at seniors who
like to travel. Cardholders earn double miles with every purchase made, which can then be
applied toward travel expenses.37
In some cases, however, broad demographic descriptors may mask important underlying
differences.38 A fairly specific target market of women aged 40 to 54 may contain a number
of very different segments who require totally different marketing mixes (think Celine Dion
versus Courtney Love). Millennials consist of a variety of different subsegments which can be
distinguished based on their attitudes and lifestyles. For example, one study contrasted Pro-
Millenials (those aged 22–34) who lived in the New Heartland (midwestern, southwestern,
southeastern parts of the United States) and found that there are stark differences between
this group and the Coastal Pro-Millenials who live on the east or west coasts of the United
States. They have different values and interests and, as such, can be treated as different
segments altogether.39
The main advantage of demographic segmentation bases is that the demographics of tradi-
tional media vehicles are generally well-known from consumer research; as a result, it has been
easier to buy media on that basis. Newer ways of profiling customers on behavioral or media usage
bases have merged, reducing the emphasis on pure demographic segmentation. Increasingly, it is
FIGURE 2-5
Hypothetical Examples
of Funnel Stages and
Transitions
95 72% 46% 58% 50% 56%
68 31
18 9 5
Aware Ever Tried Recent Trial Occasional Use Regular Use Most Often Use
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80 PART II • DEVELOPING A BRAND STRATEGY
possible to target consumers based on which stage of the purchase decision they are currently in.
This is illustrated in Figure 2-5.
For example, Facebook advertising can be used to hypertarget highly specific targets that are
distinguished based on their lifestyles, political orientation, their support of various social causes
(e.g., Black Lives Matter), and so on. It was this capability that Facebook provided that allowed
Russian bots to target various groups of individuals during the 2016 U.S. presidential election,
with various news stories (some of which were considered “fake news”) that would be aligned
with their stated interests, potentially with a view to influencing their thoughts and perceptions
regarding various social issues.
Criteria. A number of criteria have been offered to guide segmentation and target market deci-
sions, such as the following:40
• Identifiability: Can we easily identify the segment?
• Size: Is there adequate sales potential in the segment?
• Accessibility: Are specialized distribution outlets and communication media available to
reach the segment?
• Responsiveness: How favorably will the segment respond to a tailored marketing program?
The obvious overriding consideration in defining market segments is profitability. In many
cases, profitability can be related to behavioral considerations. Developing a segmentation scheme
with direct customer lifetime value perspectives can be highly advantageous. To improve the
long-term profitability of their customer base, drugstore chain CVS considered the role of beauty
products for its customers at three distinct stages of life, producing the following hypothetical
profiles or personas:41
• Caroline, a single 20-something, is relatively new to her career and still has an active social
life. She is an extremely important beauty customer who visits the chain once a week. Her
favorite part of shopping is getting new beauty products, and she looks to CVS to help her
cultivate her look at a price she can afford.
• Caroline will grow into Vanessa, the soccer mom with three children; she may not be as con-
sumed with fashion as she once was, but preserving her youthful appearance is still a major
priority. She squeezes in trips to the store en route to or from work or school, and convenient
features such as drive-through pharmacies are paramount for Vanessa.
• Vanessa becomes Sophie. Sophie isn’t much of a beauty customer, but she is CVS’s most
profitable demographic—a regular pharmacy customer who actively shops the front of the
store for key OTC items.
CVS Pharmacy may sell different products to multiple
segments of customers, and these segments may represent
customers who are in varying stages of life.
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 81
Nature of Competition At least implicitly, deciding to target a certain type of consumer often defines the nature of
competition, because other firms have also decided to target that segment in the past or plan to
do so in the future, or because consumers in that segment already may look to other brands in
their purchase decisions. Competition takes place on other bases, of course, such as channels of
distribution. Competitive analysis considers a whole host of factors—including the resources,
capabilities, and likely intentions of various other firms—in order for marketers to choose markets
where consumers can be profitably served.42
Indirect Competition. One lesson stressed by many marketing strategists is not to define
competition too narrowly. Research on noncomparable alternatives suggests that even if a brand
does not face direct competition in its product category, and does not share performance-related
attributes with other brands, it can still share more abstract associations and face indirect competi-
tion in a more broadly defined product category.43
Competition often occurs at the benefit level rather than the attribute level. Thus, a luxury
good with a strong hedonic benefit like stereo equipment may compete as much with a vacation
as with other durable goods like furniture. A maker of educational software products may be
implicitly competing with all other forms of education and entertainment, such as books, videos,
television, magazines, and mobile apps. For these reasons, branding principles are now being used
to market a number of different categories as a whole—for example, banks, furniture, carpets,
bowling, and trains, to name just a few.
Unfortunately, many firms narrowly define competition and fail to recognize the most com-
pelling threats and opportunities. For example, sales in the apparel industry often have been
stagnant in recent years as consumers have decided to spend on home furnishings, electronics,
and other products that better suit their lifestyle.44 Leading clothing makers may be better off
considering the points-of-differences of their offerings not so much against other clothing labels
as against other discretionary purchases.
As Chapter 3 outlines, products are often organized in consumers’ minds in a hierarchical
fashion, meaning that marketers can define competition at a number of different levels. Take
Dr. Pepper soft drink, as an example: At the product type level, it competes with flavored soft
drinks; at the product category level, it competes with all soft drinks; and at the product class
level, it competes with all beverages.
Multiple Frames of Reference. It is not uncommon for a brand to identify more than one frame
of reference. This may be the result of broader category competition or the intended future growth
of a brand, or it can occur when the same function can be performed by different types of products.
For example, Canon EOS Rebel digital cameras compete with digital cameras from Nikon, Kodak,
and others, but also with photo-taking cell phones. Their advantages against cell phones—such as
easy photo sharing on social networks like Facebook or the ability to shoot high-definition video
for sharing—would not necessarily be an advantage at all against other digital camera brands.45
As another example, Starbucks can define very distinct sets of competitors, which would
suggest very different POPs and PODs as a result:
1. Quick-serve restaurants and convenience shops (McDonald’s and Dunkin’, previously
known as Dunkin’ Donuts). Intended PODs might be quality, image, experience, and variety;
intended POPs might be convenience and value.
2. Supermarket brands for home consumption (Nescafé and Folgers). Intended PODs might
be quality, image, experience, variety, and freshness; intended POPs might be convenience
and value.
3. Local cafés. Intended PODs might be convenience and service quality; intended POPs might
be quality, variety, price, and community.
Note that some POPs and PODs are shared across competitors; others are unique to a par-
ticular competitor. Under such circumstances, marketers have to decide what to do. There are two
main options. Ideally, a robust positioning could be developed that would be effective across the
multiple frames somehow. If not, then it is necessary to prioritize and choose the most relevant
set of competitors to serve as the competitive frame. One thing that is crucial though is to be
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82 PART II • DEVELOPING A BRAND STRATEGY
careful to not try to be all things to all people—that typically leads to ineffective lowest common
denominator positioning.
Finally, note that if there are many competitors in different categories or subcategories, it
may be useful to either develop the positioning at the categorical level for all relevant categories
(quick-serve restaurants or supermarket take-home coffee for Starbucks) or with an exemplar from
each category (Dunkin’ or Nescafé for Starbucks).
Points-of-Parity and Points-of-Difference The target and competitive frame of reference chosen will dictate the breadth of brand awareness
and the situations and types of cues that should become closely related to the brand. Once mar-
keters have fixed the appropriate competitive frame of reference for positioning by defining the
customer target market and the nature of competition, they can define the basis of the positioning
itself. Arriving at the proper positioning requires establishing the correct points-of-difference and
points-of-parity associations.
Points-of-Difference Associations. Points-of-difference (PODs) are formally defined as
attributes or benefits that consumers strongly associate with a brand, positively evaluate, and
believe that they could not find to the same extent with a competitive brand.46 Although different
types of brand associations are possible, we can broadly classify candidates as either functional,
performance-related considerations or as abstract, imagery-related considerations.
Consumers’ actual brand choices often depend on the perceived uniqueness of brand associa-
tions. Swedish retailer IKEA took a luxury product—home furnishings and furniture—and made
it a reasonably priced alternative for the mass market. IKEA supports its low prices by having
customers serve themselves and deliver and assemble their own purchases. IKEA also gains a
point-of-difference through its product offerings. As one commentator noted, “IKEA built their
reputation on the notion that Sweden produces good, safe, well-built things for the masses. They
have some of the most innovative designs at the lowest cost out there.”47 As another example,
consider Subaru, discussed in Branding Brief 2-1 below.
Points-of-difference may rely on performance attributes (Tesla’s autopilot can change lanes
without driver assistance) or performance benefits (Apple products have unique retina display that
By 1993, Subaru was selling only 104,000 cars annually in the
United States, down 60 percent from its earlier peak. Cumula-
tive U.S. losses approached $1 billion. Advertised as “Inexpen-
sive and Built to Stay That Way,” Subaru was seen as a me-too
car that was undifferentiated from Toyota, Honda, and all their
followers. To provide a clear, distinct image, Subaru decided to
sell only all-wheel-drive in its passenger cars. After upgrading its
luxury image—and increasing its price—Subaru sold more than
187,000 cars by 2004. Following the updating of its brand im-
age, the company launched its “Share the Love” ad campaign,
which focused on the fun, adventure, and experiences the ve-
hicles afford and the strong passion and loyalty its customers
have for the brand. With its “Share the Love Event,” Subaru’s
unique emotional play for relatively upscale buyers who value
freedom and frugality paid off in the 2008–2010 recession,
when it bucked the industry tide to experience record sales.
More recently, in order to improve its appeal, and to reverse
its relatively flat sales, Subaru targeted four segments of custom-
ers that were shown to account for more than 50% of its sales.
These included teachers and educators, healthcare professionals,
IT professionals, and outdoorsy types. Research further uncovered
a fifth segment who liked the Subaru brand because it was good
for outdoor trips and hauling, without being as large as a truck or
an SUV. Out of this customer insight, and the realization that this
was a target market that no marketing campaign was speaking
to, Subaru developed various marketing programs that targeted
lesbian customers through specific media buys and ad campaigns
with taglines which held a special meaning for this target audi-
ence (e.g., the tagline “Get Out and Stay Out,” which could per-
tain to Subaru’s ability to help explore the outdoors, or subtly
communicate to the intended target of gays/lesbians regarding
their coming out). By identifying a unique target audience that no
one was targeting overtly, Subaru was able to attain significant
market share and ensure customer loyalty.
Sources: Jeff Green and Alan Ohnsman, “At Subaru, Sharing the Love Is
a Market Strategy,” Bloomberg Businessweek, May 24–30, 2010, 18–20;
Jean Halliday, “Subaru of America: An America’s Hottest Brands Case
Study,” Advertising Age, November 16, 2009; “Love Guru: How Tim
Mahoney Got Subaru Back on Track,” Brandweek, September 13, 2010;
“Subaru Announces Third Annual Share the Love Event,” PR Newswire,
November 8, 2010; Alex Mayyasi, “How Subarus Came to Be Seen as
Cars for Lesbians,” The Atlantic, June 22, 2016.
BRANDING BRIEF 2-1
Subaru Finds Its Groove
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 83
ensures picture clarity). In other cases, PODs come from imagery associations (e.g., the luxury
and status imagery of Louis Vuitton) or may pertain to both performance and imagery (e.g., Sin-
gapore Airlines advertising itself as a “A Great Way to Fly”). Many top brands attempt to create a
point-of-difference on overall superior quality, whereas other firms become the low-cost provider
of a product or service.
Thus, a host of different types of PODs are possible. PODs are generally defined in terms
of consumer benefits. These benefits often have important underlying proof points or reasons
to believe (RTBs). These proof points can come in many forms: functional design concerns
(a unique shaving system technology, leading to the benefit of a closer electric shave); key attributes
(a unique tread design, leading to the benefit of safer tires); key ingredients (contains fluoride,
leading to the benefit of prevents dental cavities); or key endorsements (recommended by more
audio engineers, leading to the benefit of superior music fidelity).48 Having compelling proof
points and RTBs are often critical to the deliverability aspect of a POD.
Points-of-Parity Associations. Points-of-parity associations (POPs), on the other hand, are
not necessarily unique to the brand but may, in fact, be shared with other brands. There are three
types: category, competitive, and correlational.
Category points-of-parity represent necessary—but not necessarily sufficient—conditions
for brand choice. They exist minimally at the generic product level and are most likely at the
expected product level. Thus, consumers might not consider a bank truly a bank unless it offered
a range of checking and savings plans; provided safety deposit boxes, traveler’s checks, and
other such services; and had convenient hours, automated teller machines, and online banking
capabilities. Category POPs may change over time because of technological advances, legal
developments, and consumer trends, but these attributes and benefits are like “greens fees” to
play the marketing game.
Competitive points-of-parity are those associations designed to negate competitors’ points-
of-difference. In other words, if a brand can break even in those areas where its competitors are
trying to find an advantage and can achieve its own advantages in some other areas, the brand
should be in a strong—and perhaps unbeatable—competitive position.
Correlational points-of-parity are those potentially negative associations that arise from the
existence of other, more positive associations for the brand. One challenge for marketers is that
many of the attributes or benefits that make up their POPs or PODs are inversely related. In other
words, in the minds of consumers, if your brand is good at one thing, it can’t be seen as also good
on something else. For example, consumers might find it hard to believe a brand is inexpensive
and at the same time of the highest quality. Figure 2-6 displays some other examples of negatively
correlated attributes and benefits.
Moreover, individual attributes and benefits often have both positive and negative aspects.
A long heritage could be seen as a positive attribute because it can suggest experience, wisdom,
and expertise. On the other hand, it could be a negative attribute because it might imply being
old-fashioned and not contemporary and up-to-date. Below, we consider strategies to address
these trade-offs.
Points-of-Parity versus Points-of-Difference. POPs are important because they can
undermine PODs; unless certain POPs can be achieved to overcome potential weaknesses,
PODs may not even matter. For the brand to achieve a point-of-parity on a particular attribute
or benefit, a sufficient number of consumers must believe that the brand is good enough on
that dimension.
FIGURE 2-6
Examples of Negatively
Correlated Attributes
and Benefits
Low price versus high quality
Taste versus low calories
Nutritious versus good tasting
Efficacious versus mild Powerful versus safe
Strong versus refined Ubiquitous versus exclusive
Varied versus simple
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84 PART II • DEVELOPING A BRAND STRATEGY
There is a zone or range of tolerance or acceptance with POPs. The brand does not have to
be seen as literally equal to competitors, but consumers must feel that it does sufficiently well
on that particular attribute or benefit so that they do not consider it to be a negative or a problem.
Assuming consumers feel that way, they may then be willing to base their evaluations and deci-
sions on other factors potentially more favorable to the brand.
Points-of-parity are easier to achieve than points-of-difference, where the brand must demon-
strate clear superiority. Often, the key to positioning is not so much achieving a POD as achieving
necessary, competitive, and correlational POPs.
POSITIONING GUIDELINES The concepts of points-of-difference and points-of-parity can be invaluable tools to guide posi-
tioning. Two key issues in arriving at the optimal competitive brand positioning are (1) defining
and communicating the competitive frame of reference and (2) choosing and establishing points-
of-parity and points-of-difference.49
Defining and Communicating the Competitive Frame of Reference A starting point in defining a competitive frame of reference for a brand positioning is to deter-
mine category membership. With which products or sets of products does the brand compete? As
noted earlier, choosing to compete in different categories often results in different competitive
frames of reference and different POPs and PODs.
The product’s category membership tells consumers about the goals they might achieve by
using a product or service. For highly established products and services, category membership is
not a focal issue. Customers are aware that Coca-Cola is a leading brand of soft drink, Kellogg
offers a leading brand of cereal (e.g., Kellogg’s Corn Flakes), McKinsey is a leading strategy
consulting firm, and so on.
There are many situations, however, in which it is important to inform consumers of a brand’s
category membership. Perhaps the most obvious is the introduction of new products, where the
category membership is not always apparent.
Sometimes consumers know a brand’s category membership but may not be convinced the
brand is a true, valid member of the category. For example, when Chobani first introduced its Greek
Yogurt, consumers were not convinced that it legitimately belonged with other yogurts on the mar-
ket. Similarly, when Yuengling introduced its light lager, it was of a noticeably darker color than
other light beers on the market. Yuengling used this darker color and taste to set itself apart from
other light beers, a fact that allowed the brand to stake out a unique position in the market. Still,
these types of brands may need to work hard to convince customers of its category membership.
Brands are sometimes affiliated with categories in which they do not hold membership rather
than with the one in which they do. This approach is a viable way to highlight a brand’s point-of-
difference from competitors, provided that consumers know the brand’s actual membership. For
example, Bristol-Myers Squibb ran commercials at one time for its Excedrin aspirin acknowl-
edging Tylenol’s perceived consumer acceptance for aches and pains, but touting the Excedrin
brand as “the Headache Medicine.” With this approach, however, it is important that consumers
understand what the brand is, and not just what it is not.
The preferred approach to positioning is to inform consumers of a brand’s membership before
stating its point-of-difference in relationship to other category members. Presumably, consum-
ers need to know what a product is and what function it serves before they can decide whether it
dominates the brands against which it competes. For new products, separate marketing programs
are generally needed to inform consumers of membership and to educate them about a brand’s
point-of-difference. For brands with limited resources, this implies the development of a market-
ing strategy that establishes category membership prior to one that states a point-of-difference.
Brands with greater resources can develop concurrent marketing programs, one of which features
membership and the other, the point-of-difference. Efforts to inform consumers of membership
and points-of-difference in the same ad, however, are often ineffective.
There are three main ways to convey a brand’s category membership: communicating cat-
egory benefits, comparing to exemplars, and relying on a product descriptor.
Communicating Category Benefits. To reassure consumers that a brand will deliver on the
fundamental reason for using a category, marketers frequently use benefits to announce category
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 85
membership. Thus, industrial motors might claim to have power, and analgesics might announce
their efficacy. These benefits are presented in a manner that does not imply brand superiority but
merely notes that the brand possesses them as a means to establish category POPs. Performance and
imagery associations can provide supporting evidence. A cake mix might attain membership in the
cake category by claiming the benefit of great taste and might support this benefit claim by possessing
high-quality ingredients (performance) or by showing users delighting in its consumption (imagery).
Exemplars. Well-known, noteworthy brands in a category can also be used as exemplars to
specify a brand’s category membership. When Tommy Hilfiger was an unknown designer, adver-
tising announced his membership as a great American designer by associating him with Geoffrey
Beene, Stanley Blacker, Calvin Klein, and Perry Ellis, who were recognized members of that
category at that time. The National Pork Board successfully advertised for over two decades that
pork was “the Other White Meat,” riding the coattails of the popularity of chicken in the process.50
Product Descriptor. The product descriptor that follows the brand name is often a very com-
pact means of conveying category origin. For example, USAir changed its name to US Airways,
according to CEO Stephen Wolf, as part of the airline’s attempted transformation from a regional
carrier with a poor reputation to a strong national or even international brand. The argument was
that other major airlines had the word airlines or airways in their names rather than air, which
was felt to be typically associated with smaller, regional carriers.51 Consider these two examples:
• When Campbell’s launched its V8 Splash beverage line, it deliberately avoided including the
word “carrot” in the brand name despite the fact that carrot was the main ingredient. The name
was chosen to convey healthful benefits but to avoid the negative perception of carrots.52
• California’s prune growers and marketers have attempted to establish an alternative name for
their product, “dried plums,” because prunes were seen by the target market of 35- to 50-year-
old women as “a laxative for old people.”53
Establishing a brand’s category membership is usually not sufficient for effective brand posi-
tioning. If many firms engage in category-building tactics, the result may even be consumer confu-
sion. For example, in the context of streaming television/video services, Sling, Roku, and so on,
are newcomers that are reinventing the way in which television is watched. In trying to redefine
the category, they are up against more established players such as Netflix, Amazon Prime, and
even Hulu. A sound positioning strategy requires marketers to specify not only the category but
also how the brand dominates other members of its category. Developing compelling points-of-
difference is thus critical to effective brand positioning.54
Choosing Points-of-Difference A brand must offer a compelling and credible reason for choosing it over the other options. In
determining whether an attribute or benefit for a brand can serve as point-of-difference, there are
three key considerations. The brand association must be seen as desirable, deliverable, and dif-
ferentiating. These three considerations for developing an optimal positioning align with the three
perspectives on which any brand must be evaluated, namely, the consumer, the company, and the
competition. Desirability is determined from the consumer’s point of view, deliverability is based
on a company’s inherent capabilities, and differentiation is determined relative to the competitors.
To function as a POD, consumers ideally would see the attribute or benefit as highly impor-
tant, feel confident that the firm has the capabilities to deliver it, and be convinced that no other
brand could offer it to the same extent. If these three criteria are satisfied, the brand association
should have sufficient strength, favorability, and uniqueness to be an effective POD. Each of these
three criteria has a number of considerations, which we look at next.
Desirability Criteria. Target consumers must find the POD personally relevant and important.
Brands that tap into growing trends with consumers often find compelling PODs. For example,
Apple & Eve’s pure, natural fruit juices have ridden the wave of the natural foods movement to
find success in an increasingly health-minded beverage market.55
Just being different is not enough—the differences must matter to consumers. For example,
at one time a number of brands in different product categories (colas, dishwashing soaps, beer,
deodorants, gasoline) introduced clear versions of their products to better differentiate themselves.
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86 PART II • DEVELOPING A BRAND STRATEGY
The “clear” association has not seemed to be of enduring value or to be sustainable as a point-of-dif-
ference. In most cases, these brands experienced declining market share or disappeared altogether.
Deliverability Criteria. The deliverability of an attribute or benefit brand association depends
on both a company’s actual ability to make the product or service (feasibility) as well as its effec-
tiveness in convincing consumers of its ability to do so (communicability), as follows:56
• Feasibility: Can the firm actually supply the benefit underlying the POD? The product and
marketing must be designed in a way to support the desired association. It is obviously easier
to convince consumers of some fact about the brand that they were unaware of or may have
overlooked than to make changes in the product and convince consumers of the value of
these changes. As noted above, perhaps the simplest and most effective approach is to point
to a unique attribute of the product as a proof point or reason-to-believe. Thus, Mountain
Dew may argue that it is more energizing than other soft drinks and support this claim by
noting that it has a higher level of caffeine. On the other hand, when the point-of-difference
is abstract or image based, support for the claim may reside in more general associations to
the company that have been developed over time. Thus, Chanel No. 5 perfume may claim
to be the quintessential elegant, French perfume and support this claim by noting the long
association between Chanel and haute couture.
• Communicability: The key issue in communicability is consumers’ perceptions of the brand
and the resulting brand associations. It is very difficult to create an association that is not
consistent with existing consumer knowledge, or that consumers, for whatever reason, have
trouble believing in. What factual, verifiable evidence or proof points can marketers com-
municate as support, so that consumers will actually believe in the brand and its desired
associations? These reasons-to-believe are critical for consumer acceptance of a potential
POD. Any claims must pass legal scrutiny too. The manufacturers of pomegranate-based
products, POM Wonderful and POMx supplements, were the target of FTC’s scrutiny and
a lawsuit which challenged their claim that pomegranate juice had the ability to treat, pre-
vent, or reduce the risk of heart disease and alleviate the risk of prostate cancer. Later, these
claims were judged unsubstantiated, and the courts ruled that POM Wonderful’s claims
misled consumers.57
Differentiation Criteria. Finally, target consumers must find the POD distinctive and superior.
When marketers are entering a category in which there are established brands, the challenge is to
find a viable, long-term basis for differentiation. Is the positioning preemptive, defensible, and
difficult to attack? Can the brand association be reinforced and strengthened over time? If these
are the case, the positioning is likely to last for years.
Sustainability depends on internal commitment and use of resources as well as external mar-
ket forces. In order to establish itself as a market leader in cloud computing and analytics solu-
tions, IBM targeted small and medium sized businesses, particularly in overseas markets.58 The
strategy of exploring new markets with few competitors has been termed “Blue Ocean Strategy.”59
Establishing Points-of-Parity and Points-of-Difference The key to branding success is to establish both points-of-parity and points-of-difference. Brand-
ing Brief 2-2 describes how the two major U.S. political parties have applied basic branding and
positioning principles in their pursuit of elected office.
In creating both POPs and PODs, one of the challenges in positioning is the inverse relation-
ships that may exist in the minds of many consumers. Unfortunately, as noted above, consumers
typically want to maximize both the negatively correlated attributes and benefits. To make things
worse, competitors often are trying to achieve their point-of-difference on an attribute that is
negatively correlated with the point-of-difference of the target brand.
Much of the art and science of marketing is knowing how to deal with trade-offs, and posi-
tioning is no different. The best approach, clearly, is to develop a product or service that performs
well on both dimensions. Gore-Tex, for example, was able to overcome the seemingly conflicting
product image of breathable and waterproof through technological advances.
Several additional ways exist to address the problem of negatively correlated POPs and PODs.
The following three approaches are listed in increasing order of effectiveness—but also increasing
order of difficulty.
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 87
Separate the Attributes. An expensive but sometimes effective approach is to launch two
different marketing campaigns, each devoted to a different brand attribute or benefit. These
campaigns may run concurrently or sequentially. For example, Head & Shoulders met success
in Europe with a dual campaign in which one ad emphasized its dandruff removal efficacy
while another ad emphasized the appearance and beauty of hair after its use. The hope is that
consumers will be less critical when judging the POP and POD benefits in isolation, because the
negative correlation might be less apparent. The downside is that two strong campaigns have to
be developed—not just one. Moreover, if the marketer does not address the negative correlation
head-on, consumers may not develop as positive an association as desired.
The importance of marketing has not been lost on politicians,
and, although there are a number of different ways to interpret
their words and actions, one way to interpret campaign strate-
gies is from a branding perspective. For example, consultants to
political candidates stress the importance of having “high name
ID” or, in other words, a high level of brand awareness. In ma-
jor races, at least 90 percent awareness is desired. Consultants
also emphasize “positives–negatives”—voters’ responses when
asked whether they think positively or negatively of a candidate.
A 3:1 ratio is desired (and 4:1 is even better). This measure cor-
responds to brand attitude in marketing terms.
The last three decades of presidential campaigns are revealing
about the importance of properly positioning a politician. George
H. W. Bush ran a textbook presidential campaign in 1988. The
objective was to move the candidate to the center of the political
spectrum and make him a safe choice, and to move his Demo-
cratic opponent, Massachusetts governor Michael Dukakis, to the
left and make him seem more liberal and a risky choice.
In 1992, the new Democratic candidate, Bill Clinton, was
a fierce campaigner who ran a focused effort to create a key
point-of-difference on one main issue—the economy. Rather
than attempting to achieve a point-of-parity on this issue, Bush,
who was running for reelection, campaigned on other issues such
as family values. By conceding a key point-of-difference to the
Democrats and failing to create a compelling one of their own,
Bush and the Republicans were defeated handily.
Failing to learn from their mistakes, the Republicans ran a
meandering campaign in 1996 and their presidential candidate,
Bob Dole, lost decisively to the incumbent Bill Clinton. The close-
ness of the 2000 election between Al Gore and George W. Bush
reflected the failure of either candidate to create a strong point-
of-difference with the electorate. There was a similarly tight elec-
tion in 2004 because neither George W. Bush nor John Kerry
was successful at carving out a strong position in voters’ minds.
The 2008 presidential election, however, was another text-
book application of branding as Barack Obama ran a very sophis-
ticated and modern marketing campaign. Republican candidate
John McCain attempted to create a point-of-difference on experi-
ence and traditional Republican values; Obama sought to create
a point-of-difference on new ideas and hope. The Obama cam-
paign team effectively hammered his message home. Multimedia
tactics combined offline and online media as well as free and paid
media. In addition to traditional print, broadcast, and outdoor
ads, social media like Facebook, Meetup, YouTube, and Twitter
and long-form videos were employed so people could learn more
about Obama and the passion others had about the candidate.
Even Obama’s slogans (“Yes We Can” and “Change We Can
Believe In”) and campaign posters (the popular stencil portrait of
Obama in solid red, white, and pastel and dark shades of blue
with the word “PROGRESS,” “HOPE,” or “CHANGE” prominently
below) became iconic symbols, and Obama breezed to victory.
The 2016 presidential campaign ushered in a new era of
politics. President Donald J. Trump was elected in a surprise win
against Hillary Clinton, in an election that caught many pundits and
pollsters by surprise. As a presidential candidate, Donald Trump
focused his points-of-differentiation on his being an outsider, and
his platform was to end the status quo in Washington, DC. Further,
Trump’s message and style of delivery were highly effective among
his target audience, specifically middle income, white, blue-collar
voters living in Rust Belt states, who felt that Trump understood
their pain. This can be contrasted with his opponent, candidate
Hillary Clinton, whose campaign points of differentiation rested
on her prior experience in politics. Many of Trump’s supporters
were unable to connect with candidate Hillary Clinton both at
the message level as well as on an emotional level. Trump’s cam-
paign promise “Make America Great Again” (the Twitter hashtag
#MAGA) was a simple positioning statement, and interpreted by
many as a rallying cry for a return to the days of economic prosper-
ity for the intended target groups. The slogan was used multiple
times, and it was often presented alongside emotion-laden rallies
that played to what the audience wanted to hear. The use of social
media (primarily Twitter) and campaign rallies afforded candidate
Trump a free platform for the spread of his ideas. In this sense,
Donald Trump’s campaign may be seen as a great example of the
importance of understanding your customer, emphasizing a par-
ticular set of PODs (which were viewed favorably by the intended
target audience), and building a brand around it. Hillary Clinton
won the popular vote across the United States; however, Trump’s
election win was made possible due to his winning a larger number
of votes in the electoral college.
Sources: “Gore and Bush Are Like Classic Brands,” The New York Times,
July 25, 2000, B8; Michael Learmonth, “Social Media Paves Way to White
House,” Advertising Age, March 30, 2009, 16; Noreen O’Leary, “GMBB,”
AdweekMedia, June 15, 2009, 2; John Quelch, “The Marketing of a Presi-
dent,” Harvard Business School Working Knowledge, November 12, 2008;
Steven Ma, “Lessons from Donald Trump’s Marketing Campaign Success,”
https://sparkflow.co/7-lessons-donald-trumps-marketing-campaign-success/,
accessed February 28, 2018; Gil Press, “6 Trump Marketing Lessons,”
November 11, 2016, www.forbes.com/sites/gilpress/2016/11/11/6-trump-
marketing-lessons/#322bbeef68e1, accessed February 28, 2018.
BRANDING BRIEF 2-2
Positioning Politicians
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88 PART II • DEVELOPING A BRAND STRATEGY
Leverage Equity of Another Entity. Brands can link themselves to any kind of entity that
possesses the right kind of equity—a person, other brand, event, and so forth—as a means to
establish an attribute or benefit as a POP or POD. Self-branded ingredients may also lend some
credibility to a questionable attribute in consumers’ minds.
SK-II
SK-II, a high-quality skincare brand, was launched in 1980 by Proctor & Gamble (P&G) following its
acquisition of Max Factor. Sales then grew organically to exceed $1 billion per annum. SK-II sells strongly
in Asia in particular, but the brand has a global appeal. The SK in SK-II stands for a “secret key” to clear
skin. That key is Pitera, a substance that forms naturally in the yeast fermentation process, comprising
vitamins, amino acids, minerals, and organic acids that stimulate the skin’s renewal cycle. SK-II products
have a strong yeasty odor; coupled with the ingredients and the story of how it was discovered, it adds
to the brand’s authenticity.
SK-II advertises through testimonials from high-profile celebrities, and the global brand appeal is
reflected in the international ambassador lineup: Hollywood actress Cate Blanchett, Malaysian artist
Lee Sinje, Japanese director Kaori Momoi, Hong Kong model Qiqi, and Singaporean model Sheila Sim,
to name a few. SK-II has successfully changed a negative attribute—poor skin quality—into something
that high-profile local celebrities are willing to discuss, as they have found a secret key that they can
all share.60
Redefine the Relationship. Finally, another potentially powerful but often difficult way to
address the negative relationship between attributes and benefits in the minds of consumers is to
convince them that, in fact, the relationship is positive. Marketers can achieve this by providing
consumers with a different perspective and suggesting that they may be overlooking or ignoring
certain factors or other considerations. Apple offers another classic example.
Although difficult to achieve, such a strategy can be powerful because the two associations
can become mutually reinforcing. The challenge is to develop a credible story with which con-
sumers can agree.
Straddle Positions Occasionally, a company will be able to straddle two frames of reference with one set of
points-of-difference and points-of-parity. In these cases, the points-of-difference in one cat-
egory become points-of-parity in the other and vice versa. For example, Accenture defines
itself as the company that combines (1) strategic insight, vision, and thought leadership and
(2) information technology expertise in developing client solutions. This strategy permits
points-of-parity with its two main competitors, McKinsey and IBM, while simultaneously
achieving points-of-difference. Specifically, Accenture has a point-of-difference on technol-
ogy and execution with respect to McKinsey and a point-of-parity on strategy and vision. The
reverse is true with respect to IBM: technology and execution are points-of-parity, but strategy
and vision are points-of-difference.
While a straddle positioning often is attractive as a means of reconciling potentially con-
flicting consumer goals and creating a best-of-both-worlds solution, it also carries an extra
burden. If the points-of-parity and points-of-difference with respect to both categories are not
credible, consumers may not view the brand as a legitimate player in either category. Many
of the new tablet brands (e.g., iPad, Kindle) introduced smaller versions that ended up look-
ing like larger phones (or were called “phablets”). These products that unsuccessfully tried to
straddle categories ranging from smartphones to laptop computers provide a vivid illustration
of this risk.
Updating Positioning over Time The previous section described some positioning guidelines that are especially useful for
launching a new brand. With an established brand, an important question is how often to
update its positioning. As a general rule, positioning should be fundamentally changed very
infrequently, and only when circumstances significantly reduce the effectiveness of existing
POPs and PODs.
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 89
NEWCASTLE, AUSTRALIA
Newcastle is the seventh largest city in Australia, approximately two hours north of Sydney NSW, and has a
population of almost half a million people. In its early history, Newcastle had strong industrial roots and was
known as “the steel city.” However, since the early 1980s it has increasingly focused more on engineering,
education, tourism, and health services and less on heavy industry. Unfortunately, even in 2010 many internal
and external stakeholders still held the misperception of Newcastle as being solely an industrial city, and this
has impeded its regional economic development. The “Brand Newcastle” project developed a new strategy
reflecting the reality of the modern Newcastle, overcoming outdated perceptions. Research revealed that
Newcastle was a diverse, cosmopolitan, and relaxed city, home to numerous world-class organizations, all of
which frequently surprised people who had never been to the city. These attributes were woven into a new
brand, “NEWCASTLE,” with multiple colors embedded in the lettering. The phrase “See Change” was used
to directly ask people to rethink their perceptions of the city, and leading local organizations were leveraged.
The new branding identified Newcastle as a vibrant and multifaceted world-class city, encouraging people
to reconsider their perceptions.61
APPLE
When Apple launched the Macintosh computer in the 1980s—back in the early days of personal computing—
its key point-of-difference was that it was user friendly. Many consumers valued ease of use—especially those
who bought personal computers for the home—because in a pre-Windows world, the DOS PC operating
system was complex and clumsy. One drawback with that association for Apple, however, was that customers
who bought personal computers for business applications inferred that if a personal computer was easy to
use, then it also must not be very powerful—and power was a key choice consideration in the business mar-
ket. Recognizing this potential problem, Apple ran a clever ad campaign with the tag line “The Power to Be
Your Best,” in an attempt to redefine what being a powerful computer meant. The message behind the ads
was that because Apple was easy to use, people in fact did just that—they used them!—a simple but impor-
tant indication of power. In other words, the most powerful computers were ones that people actually used.
Apple has worked hard through the years to convince consumers that its computer
products are powerful and easy to use.
Source: Piero Cruciatti/Alamy Stock Photo
Positioning, however, will evolve over time to better reflect market opportunities or chal-
lenges. A point-of-difference or point-of-parity may be refined, added, or dropped as situations
dictate. One common market opportunity that often arises is the need to deepen the meaning
of the brand to permit further expansion—laddering. One common market challenge is how to
respond to competitive actions that threaten an existing positioning—reacting. We consider the
positioning implications of each in turn.
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90 PART II • DEVELOPING A BRAND STRATEGY
Laddering. Although identifying PODs to dominate competition on benefits that are important
to consumers provides a sound way to build an initial position, once the target market attains a basic
understanding of how the brand relates to alternatives in the same category, it may be necessary to
deepen the meanings associated with the brand positioning. It is often useful to explore underlying
consumer motivations in a product category to uncover the relevant associations. For example,
Maslow’s hierarchy maintains that consumers have different priorities and levels of needs.62
From lowest to highest priority, they are as follows:
1. Physiological needs (food, water, air, shelter, sex)
2. Safety and security needs (protection, order, stability)
3. Social needs (affection, friendship, belonging)
4. Ego needs (prestige, status, self-respect)
5. Self-actualization (self-fulfillment).
According to Maslow, higher-level needs become relevant once lower-level needs have been
satisfied. The Science of Branding below highlights a study which links benefits associated with brand
names to a hierarchy of values which align with Maslow’s hierarchy of needs. This study points to
stark differences across brands and categories in what constitutes a brand’s appeal to its customers.
Marketers have also recognized the importance of higher-level needs. For example,
means-end chains have been devised as a way of understanding higher-level meanings of brand
characteristics. A means-end chain takes the following structure: attributes (descriptive features
that characterize a product) lead to benefits (the personal value and meaning attached to product
attributes), which, in turn, lead to values (stable and enduring personal goals or motivations).63
In other words, a consumer chooses a product that delivers an attribute (A) that provides
benefits or has certain consequences (B/C) that satisfy values (V). For example, in a study of
BMW
When BMW first made a strong competitive push into the U.S. market in the early 1980s, it positioned the
brand as being the only automobile that offered both luxury and performance. At that time, U.S. luxury cars
like Cadillac were seen by many as lacking performance, and U.S. performance cars like the Chevy Corvette
were seen as lacking luxury. By relying on the design of its cars, its German heritage, and other aspects of
a well-designed marketing program, BMW was able to simultaneously achieve (1) a point-of-difference on
performance and a point-of-parity on luxury with respect to luxury cars and (2) a point-of-difference on luxury
and a point-of-parity on performance with respect to performance cars. The clever slogan, “The Ultimate
Driving Machine,” effectively captured the newly created umbrella category—luxury performance cars.
BMW’s “Ultimate Driving Machine” slogan nicely captures the brand’s dual
features of luxury and performance.
Source: BMW AG
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 91
salty snacks, one respondent noted that a flavored chip (A) with a strong taste (A) would mean
that she would eat less (B/C), not get fat (B/C), and have a better figure (B/C), all of which would
enhance her self-esteem (V).
Laddering thus progresses from attributes to benefits to more abstract values or motivations.
In effect, laddering repeatedly asks what the implication of an attribute or benefit is for the con-
sumer. Failure to move up the ladder may reduce the strategic alternatives available to a brand.64
For example, P&G introduced low-sudsing Dash detergent to attract consumers who used front-
loading washing machines. Many years of advertising Dash in this manner made this position
impenetrable by other brands. Dash was so associated with front-loaders, however, that when this
type of machine went out of fashion, so did Dash, despite the fact that it was among P&G’s most
effective detergents, and despite significant efforts to reposition the brand.
Some attributes and benefits may lend themselves to laddering more easily than others. For
example, the Betty Crocker brand appears on a number of different baking products and is char-
acterized by the physical warmth associated with baking. Such an association makes it relatively
easy to talk about emotional warmth and the joy of baking or the good feelings that might arise
from baking for others across a wide range of baking-related products.
A recent study by authors Almquist, Senior, and Bloch pro-
pose a set of brand values, which is then organized in a pyra-
mid ranging from functional at the bottom of the pyramid to
social impact at the top of the pyramid. The authors identify 30
separate elements of brand positioning, which follow Maslow’s
hierarchy of needs and can be categorized into functional, emo-
tional, life-changing, and social impact. The data collected to
support this idea suggests that companies that perform well on
more than four elements of value have more loyal customers,
and higher net promoter scores, as well as four times higher rev-
enue growth. Examples of these brands include Apple, USAA,
TOMS, and Amazon. Further, pure-play retailers such as Ama-
zon which demonstrate extraordinary growth rates are shown to
have strengths in eight different elements of value.
We next highlight the different aspects of the building blocks
of value, as described by Almquist et al., across the four levels
of the brand value pyramid, regrouped as functional, emotional
benefits, life-changing values, and social impact.
Functional: Time and money savings (e.g., reduces effort,
avoids hassles, reduces cost), providing basic benefits (quality,
variety), and generates efficiencies and convenience in daily
life (simplifies, informs, connects, integrates, organizes).
Emotional: Self-enhancement (e.g., reduces anxiety, nostal-
gia, badge value, attractiveness) and hedonic benefits and
rewards (e.g., fun/entertainment, therapeutic value, wellness).
Life-changing values: Includes motivation, investment
for the future, affiliation/belonging, provides hope, and
self-actualization.
Social impact: Includes self-transcendence.
The above elements of the value pyramid vary greatly with
respect to their importance across different categories. While qual-
ity is seen as important to influencing consumer advocacy across
the board, the authors also found that sensory appeal was impor-
tant to success in food and beverages, while providing access was
important in financial services. Brand names such as Zappos were
found to excel on saving time and avoiding hassles (functional
benefits), but also was seen as twice as good at delivering those
benefits than traditional competitors. Netflix had scores three times
higher than its competitors (i.e., traditional TV service providers) on
reduction of cost, therapeutic value, and nostalgia.
In order to improve on value delivery to customers, com-
panies may add benefits to their existing products. The authors
note that Vanguard’s addition of a low-fee automated advice
platform may have been motivated by its desire to keep its cli-
ents better informed and also to reduce risk. The addition of
Apple Pay to iPhone’s many features allows customers to make
payments a seamless part of their buying experience. Similarly,
Amazon Prime offers unlimited two-day shipping for a flat fee
during the year, which eliminates hassles and reduces costs of
paying for shipping throughout the year. Amazon’s stream-
ing services offer access to a large collection of programming,
thereby increasing the fun/entertainment value delivered by the
brand. Recently, Almquist et al. extended the idea of a value hier-
archy to a business-to-business setting as well, and they provided
a set of value drivers that could be used in marketing B2B brands.
Thus, the framework proposed by Almquist et al. is a useful way
of thinking about how value is delivered to customers across a
broad range of categories and is also firmly rooted in Maslow’s
hierarchy of needs.
Sources: Eric Almquist, John Senior, and Nicolas Bloch, “ The Ele-
ments of Value” Harvard Business Review, September 2016, https:/hbr
.org/2016/09/the-elements-of-value, accessed February 1, 2016; Mike
Owen, “How to Create Value for Customers? A New Model Gives Useful
Pointers and Adds to Existing Insights about Customer Value Market-
ing,” November 21, 2016, https://stratminder.wordpress.com/2016/11/21/
how-to-create-value-for-customers-a-new-model-gives-useful-pointers-
and-adds-to-existing-insights-about-customer-value-marketing/, accessed
March 5, 2018; Eric Almquist, Janie Cleghorn, Lori Sherer, “The B2B
Elements of Value,” Harvard Business Review, March–April 2018, https://
hbr.org/2018/03/the-b2b-elements-of-value, accessed March 5, 2018.
THE SCIENCE OF BRANDING 2-1
Brand Values Pyramid
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92 PART II • DEVELOPING A BRAND STRATEGY
Thus, some of the strongest brands deepen their points-of-difference to create benefit and
value association—for example, Volvo and Michelin (safety and peace of mind), Intel (perfor-
mance and compatibility), Marlboro (Western imagery), Coke (Americana and refreshment), Dis-
ney (fun, magic, family entertainment), Nike (innovative products and peak athletic performance),
and BMW (styling and driving performance).
As a brand becomes associated with more and more products and moves up the product
hierarchy, the brand’s meaning will become more abstract. At the same time, it is important that
the proper category membership and POPs and PODs exist in the minds of consumers for any
particular products sold under the brand name, as discussed in Chapter 11.
Reacting. Competitive actions are often directed at eliminating points-of-difference to make
them points-of-parity or to strengthen or establish new points-of-difference. Often, competitive
advantages exist for only a short period of time before competitors attempt to match them.
DISCOVER
Discover introduced an all-in-one credit card with various features that were unique for a period of time.65
For example the Discover card had a modern blue metallic finish and had various features such as $0 Fraud
Liability Guarantee, which meant that cardmembers were not responsible for unauthorized charges to their
account. Further, Discover added features such as allowing card members to choose their own due dates
and allowing them to pay until midnight of the due date. Various online management tools including mobile
apps and email reminders allowed customers to keep track of their accounts. In this way, Discover effectively
leveraged its advertising campaign “It Pays to Discover.”66 However, its differentiating features were quickly
replicated by its aggressive rivals Visa and Mastercard, and some of their once-innovative features are now
considered standard in the industry.
Discover Credit Card introduced an all-in-one credit card fea-
turing unique benefits that were later replicated by its rivals.
When a competitor challenges an existing POD or attempts to overcome a POP, there are
essentially three main options for the target brand—from no reaction to moderate to significant
reactions.
• Do nothing. If the competitive actions seem unlikely to recapture a POD or create a new
POD, then the best reaction is probably to just stay the course and continue brand-building
efforts.
• Go on the defensive. If the competitive actions appear to have the potential to disrupt the
market some, then it may be necessary to take a defensive stance. One way to defend the posi-
tioning is to add some reassurance in the product or advertising to strengthen POPs and PODs.
• Go on the offensive. If the competitive actions seem potentially quite damaging, then it might
be necessary to take a more aggressive stance and reposition the brand to address the threat.
One approach might be to launch a product extension or ad campaign that fundamentally
changes the meaning of the brand.
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 93
A brand audit can help marketers assess the severity of the competitive threat and the appro-
priate competitive stance, as described in Chapter 9.
Developing a Good Positioning A few final comments are useful to help guide positioning efforts. First, a good positioning has a
foot in the present and a foot in the future. It needs to be somewhat aspirational so that the brand
has room to grow and improve. Positioning on the basis of the current state of the market is not
forward-looking enough, but, at the same time, the positioning cannot be so removed from the
current reality that it is essentially unobtainable. The real trick in positioning is to strike just the
right balance between what the brand is and what it could be.
Second, a good positioning is careful to identify all relevant points-of-parity. Too often, mar-
keters overlook or ignore crucial areas where the brand is potentially disadvantaged to concentrate
on areas of strength. Both are obviously necessary as points-of-difference will not matter without
the requisite points-of-parity. One good way to uncover key competitive points-of-parity is to role-
play competitor’s positioning and infer their intended points-of-difference. Competitor’s PODs
will, in turn, become the brand’s POPs. Consumer research into the trade-offs in decision-making
that exist in the minds of consumers can also be informative.
Third, a good positioning should reflect a consumer point of view in terms of the benefits that
consumers derive from the brand. It is not enough to advertise that you are the “largest wireless
network”—as Verizon has claimed in its U.S. advertising. An effective POD should make clear
why that it so desirable to consumers. In other words, what benefits would a consumer get from
that unique attribute? Does that mean Verizon can be used by more customers in more places, or
does the wider coverage lead to other benefits such as the ability to charge lower prices due to
economies of scale? Those benefits, if evident, should become the basis for the positioning, with
the proof point or RTB being the attribute of the largest wireless network.
Finally, as we will develop in greater detail with the brand resonance model in the next chap-
ter, it is important that a duality exists in the positioning of a brand such that there are rational
and emotional components. In other words, a good positioning contains points-of-difference and
points-of-parity that appeal both to the head and the heart.
DEFINING A BRAND MANTRA Brand positioning describes how a brand can effectively compete against a specified set of competitors
in a particular market. In many cases, however, brands span multiple product categories, and therefore,
may have multiple distinct—yet related—positionings. As brands evolve and expand across catego-
ries, marketers will want to craft a brand mantra that reflects the essential heart and soul of the brand.
Brand Mantras To better establish what a brand represents, marketers will often define a brand mantra.67
A brand mantra is a short, three- to five-word phrase that captures the irrefutable essence or spirit
of the brand positioning. It’s similar to brand essence or core brand promise, and its purpose is to
ensure that all employees and external marketing partners understand what the brand most funda-
mentally is to represent to consumers so they can adjust their actions accordingly. For example,
McDonald’s brand mission is to be their customers’ favorite place and way to eat and drink nicely
captures its brand essence and core brand promise.
Brand mantras are powerful devices. They can provide guidance about what products to intro-
duce under the brand, what ad campaigns to run, and where and how the brand should be sold.
They may even guide the most seemingly unrelated or mundane decisions, such as the look of a
reception area and the way employees answer the phone. In effect, brand mantras create a mental
filter to screen out brand-inappropriate marketing activities or actions of any type that may have
a negative bearing on customers’ impressions of a brand.
Brand mantras help the brand present a consistent image. Any time a consumer or customer
encounters a brand—in any way, shape, or form—his or her knowledge about that brand may
change and affect the equity of the brand. Given that a vast number of employees come into con-
tact with consumers, either directly or indirectly, their words and actions should consistently rein-
force and support the brand meaning. Marketing partners like ad agency members may not even
recognize their role in influencing equity. The brand mantra signals its meaning and importance
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94 PART II • DEVELOPING A BRAND STRATEGY
to the firm, as well as the crucial role of employees and marketing partners in its management.
It also provides memorable shorthand as to what are the crucial considerations of the brand that
should be kept most salient and top-of-mind.
Designing a Brand Mantra. What makes a good brand mantra? Two high-profile and successful
examples of brand mantras come from two powerful brands, Nike and Disney, as described in Brand-
ing Briefs 2-3 and 2-4. Brand mantras must economically communicate what the brand is and what
it is not. The Nike and Disney examples show the power and utility of a well-designed brand mantra.
These examples help suggest what might characterize a good brand mantra. In the case of Nike and
Disney, the brand mantras are essentially structured the same way, with three terms, as follows:
Emotional Modifier Descriptive Modifier Brand Function
Nike Authentic Athletic Performance
Disney Fun Family Entertainment
A brand with a keen sense of what it represents to consum-
ers is Nike. Nike has a rich set of associations with consumers,
revolving around such considerations as its innovative product
designs, its sponsorships of top athletes, its award-winning
advertising, its competitive drive, and its irreverent attitude.
Internally, Nike marketers adopted a three-word brand mantra
of “authentic athletic performance” to guide their marketing
efforts. Thus, in Nike’s eyes, its entire marketing program—its
products and how they are sold—must reflect the key brand val-
ues conveyed by the brand mantra.
Nike’s brand mantra has had profound implications for
its marketing. In the words of ex-Nike marketing gurus Scott
Bedbury and Jerome Conlon, the brand mantra provided the
“intellectual guard rails” to keep the brand moving in the right
direction and to make sure it did not get off track somehow.
Nike’s brand mantra has even affected product development.
Over the years, Nike has expanded its brand meaning from
“running shoes” to “athletic shoes” to “athletic shoes and
apparel” to “all things associated with athletics (including
equipment).”
Each step of the way, however, it has been guided by its
“authentic athletic performance” brand mantra. For example, as
Nike rolled out its successful apparel line, one important hurdle
for the products was that they should be innovative enough
through material, cut, or design to truly benefit top athletes. The
revolutionary moisture-wicking technology of their Dri-Fit apparel
line left athletes drier and more comfortable as they perspired.
At the same time, the company has been careful to avoid using
the Nike name to brand products that did not fit with the brand
mantra, like casual “brown” shoes.
When Nike has experienced problems with its marketing pro-
gram, they have often been a result of its failure to figure out how
to translate its brand mantra to the marketing challenge at hand.
For example, in going to Europe, Nike experienced several false
starts until realizing that “authentic athletic performance” has
a different meaning over there and, in particular, has to involve
soccer in a major way. Similarly, Nike stumbled in developing its
All Conditions Gear (ACG) outdoors shoes and clothing sub-
brand, which attempted to translate its brand mantra into a less
competitive arena.
Nike Brand Mantra
BRANDING BRIEF 2-3
Nike’s brand mantra of “authentic athletic performance” is
exemplified by athletes such as Roger Federer.
Source: Jean Catuffe, PacificCoastNews/Newscom
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 95
Disney developed its brand mantra in response to its incred-
ible growth through licensing and product development during
the mid-1980s. In the late 1980s, Disney became concerned
that some of its characters, like Mickey Mouse and Donald
Duck, were being used inappropriately and becoming overex-
posed. To investigate the severity of the problem, Disney under-
took an extensive brand audit. As part of a brand inventory, it
first compiled a list of all Disney products that were available
(licensed and company manufactured) and all third-party pro-
motions (complete with point-of-purchase displays and relevant
merchandising) from stores across the country and all over the
world. At the same time, Disney launched a major consumer re-
search study—a brand exploratory—to investigate how consum-
ers felt about the Disney brand.
The results of the brand inventory revealed some potentially
serious problems: the Disney characters were on so many prod-
ucts and marketed in so many ways that in some cases it was
difficult to discern the original rationale behind the deal. The
consumer study only heightened Disney’s concerns. Because of
the broad exposure of the characters in the marketplace, many
consumers had begun to feel that Disney was exploiting its name.
In some cases, consumers felt that the characters added little
value to products and, worse yet, involved children in purchase
decisions that they would typically ignore.
Because of its aggressive marketing efforts, Disney had writ-
ten contracts with many of the park participants for copromotions
or licensing arrangements. Disney characters were selling every-
thing from diapers to cars to McDonald’s hamburgers. Disney
learned in the consumer study, however, that consumers did not
differentiate between all the product endorsements. “Disney was
Disney” to consumers, whether they saw the characters in films,
records, theme parks, or consumer products. Consequently, all
products and services that used the Disney name or characters
had an impact on Disney’s brand equity. Consumers reported that
they resented some of these endorsements because they felt that
they had a special, personal relationship with the characters and
with Disney that should not be handled so carelessly.
As a result of the brand audit, Disney moved quickly to estab-
lish a brand equity team to better manage the brand franchise
and more carefully evaluate licensing and other third-party pro-
motional opportunities. One of the mandates of this team was
to ensure that a consistent image for Disney—reinforcing its key
brand associations—was conveyed by all third-party products and
services. To facilitate this supervision, Disney adopted an internal
brand mantra of “fun family entertainment” to serve as a screen-
ing device for proposed ventures.
Opportunities that were not consistent with the brand
mantra—no matter how appealing—were rejected. For
example, Disney was approached to cobrand a mutual fund
in Europe that was designed as a way for parents to save for
the college expenses of their children. The opportunity was
declined despite the consistent family association, because Dis-
ney believed that a connection with the financial community
or banking suggested other associations that were inconsistent
with its brand image (mutual funds are rarely intended to be
entertaining!).
BRANDING BRIEF 2-4
Disney Brand Mantra
Disney’s brand mantra of “fun family entertainment” gave marketers “guard
rails” to help avoid brand-inconsistent actions.
Source: Todd Anderson/Handout/Getty Images
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96 PART II • DEVELOPING A BRAND STRATEGY
The brand functions term describes the nature of the product or service or the type of experi-
ences or benefits the brand provides. It can range from concrete language that reflects the product
category itself, to more abstract notions (such as Nike’s and Disney’s), where the term relates
to higher-order experiences or benefits that a variety of different products could deliver. The
descriptive modifier further clarifies its nature. Thus, Nike’s performance is not just any kind
(not artistic performance, for instance) but only athletic performance; Disney’s entertainment is
not just any kind (not adult-oriented) but only family entertainment (and arguably an additional
modifier, “magical,” could add even more distinctiveness). Combined, the brand function term
and descriptive modifier help to delineate the brand boundaries. Finally, the emotional modifier
provides another qualifier—how exactly does the brand provide benefits and in what ways?
Brand mantras don’t necessarily have to follow this exact structure, but they should clearly
delineate what the brand is supposed to represent and therefore, at least implicitly, what it is not.
Several additional points are worth noting.
1. Brand mantras derive their power and usefulness from their collective meaning. Other brands
may be strong on one, or perhaps even a few, of the brand associations making up the brand
mantra. For the brand mantra to be effective, no other brand should singularly excel on all
dimensions. Part of the key to both Nike’s and Disney’s success is that for years, no other
competitor could really deliver on the promise suggested by their brand mantras as well as
they did.
2. Brand mantras typically are designed to capture the brand’s points-of-difference, that is, what
is unique about the brand. Other aspects of the brand positioning—especially the brand’s
points-of-parity—may also be important and may need to be reinforced in other ways.
3. For brands facing rapid growth, a brand functions term can provide critical guidance as to
appropriate and inappropriate categories into which to extend. For brands in more stable
categories, the brand mantra may focus more on points-of-difference as expressed by the
functional and emotional modifiers, perhaps not even including a brand functions term.
Implementing a Brand Mantra. Brand mantras should be developed at the same time as
the brand positioning. As we’ve seen, brand positioning typically is a result of an in-depth
examination of the brand through some form of brand audit or other activities. Brand mantras
may benefit from the learning gained from those activities, but, at the same time, require more
internal examination and involve input from a wider range of company employees and marketing
staff. Part of this internal exercise is actually to determine the different means by which each
and every employee currently affects brand equity, and how he or she can contribute in a posi-
tive way to a brand’s destiny. The importance of internal branding is reinforced in The Science
of Branding 2-2.
Marketers can often summarize the brand positioning in a few sentences or a short paragraph
that suggests the ideal core brand associations consumers should hold. Based on these core brand
associations, a brainstorming session can attempt to identify PODs, POPs, and different brand
mantra candidates. In the final brand mantra, the following considerations should come into play:
• Communicate: A good brand mantra should both define the category (or categories) of the
business to set the brand boundaries and clarify what is unique about the brand.
• Simplify: An effective brand mantra should be memorable. That means it should be short,
crisp, and vivid. A three-word mantra is ideal because it is the most economical way to convey
the brand positioning.
• Inspire: Ideally, the brand mantra should also stake out ground that is personally meaningful
and relevant to as many employees as possible. Brand mantras can do more than inform and
guide; they can also inspire, if the brand values tap into higher-level meaning with employees
as well as consumers.
Regardless of how many words make up the mantra, however, there will always be a level
of meaning beneath the brand mantra itself that will need to be articulated. Virtually any word
may have many interpretations. For example, the words “fun,” “family,” and “entertainment” in
Disney’s brand mantra can each take on multiple meanings, leading Disney to drill deeper to pro-
vide a stronger foundation for the mantra. Two or three short phrases were therefore added later
to clarify each of the three words.
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 97
Brand mantras point out the importance of internal brand-
ing—making sure that members of the organization are prop-
erly aligned with the brand and what it represents. Much of the
branding literature has taken an external perspective, focusing
on strategies and tactics that firms should take to build or man-
age brand equity with customers. Without question, at the heart
of all marketing activity is the positioning of a brand and the
essence of its meaning with consumers.
Equally important, however, is positioning the brand inter-
nally.68 For service companies especially, it’s critical that all
employees have an up-to-date and deep understanding of the
brand. Recently, a number of companies have put forth initiatives
to improve their internal branding.
One of the fastest growing and most successful restaurant
chains in the United States, Panda Express, devotes significant
resources to internal training and development for employees.
Besides services training, privately owned Panda Express supports
the personal improvement efforts of its staff—controlling weight,
working on communications skills, jogging, and attending
seminars—in the belief that healthier, happier employees increase
sales and profitability.
Singapore Airlines also invests heavily in employee training: new
recruits receive four months of training, twice as long as the indus-
try average. The company also spends about $70 million a year on
retraining each of its 14,500 existing employees. Training focuses
on deportment, etiquette, wine appreciation, and cultural sensi-
tivity. Cabin crew learn how to interact differently with Japanese,
Chinese, and U.S. passengers as well as the importance of com-
municating at eye level and not “looking down” at passengers.
Companies need to engage in continual open dialogue with
their employees. Branding should be perceived as participatory.
Some firms have pushed B2E (business-to-employee) programs
through corporate intranets and other means. Disney is seen as
so successful at internal branding that its Disney Institute holds
seminars on the “Disney Style” of creativity, service, and loyalty
for employees from other companies.
In short, for both motivating employees and attracting
external customers, internal branding is a critical management
priority.
Sources: Karl Taro Greenfeld, “The Sharin’ Huggin’ Lovin’
Carin’ Chinese Food Money Machine,” Bloomberg Businessweek,
November 28, 2010, 98–103; Loizos Heracleous and Joachen Wirtz,
“Singapore Airlines’ Balancing Act,” Harvard Business Review, July–
August 2010, 145–149; James Wallace, “Singapore Airlines Raises the
Bar for Luxury Flying,” www.seattlepi.com, January 16, 2007. For
some seminal writings in the area, see Hamish Pringle and William Gor-
don, Brand Manners: How to Create the Self-Confident Organization
to Live the Brand (New York: John Wiley & Sons, 2001); Thomas Gad,
4-D Branding: Cracking the Corporate Code of the Network Economy
(London: Financial Times Prentice Hall, 2000); Nicholas Ind, Living
the Brand: How to Transform Every Member of Your Organization into
a Brand Champion, 2nd ed. (London, UK: Kogan Page, 2004); Scott
M. Davis and Kenneth Dunn, Building the Brand-Driven Business:
Operationalize Your Brand to Drive Profitable Growth (San Francisco:
Jossey-Bass, 2002); Mary Jo Hatch and Make Schultz, Taking Brand
Initiative: How Companies Can Align Strategy, Culture, and Identity
Through Corporate Branding (San Francisco, CA: Jossey-Bass, 2008);
Andy Bird and Mhairi McEwan, The Growth Drivers: The Definitive
Guide to Transforming Marketing Capabilities (West Sussex, UK: John
Wiley & Sons, 2012).
THE SCIENCE OF BRANDING 2-2
Branding Inside the Organization
REVIEW
Customer-based brand equity is the differential effect that brand knowledge has on consumer
response to the marketing of that brand. A brand has positive customer-based brand equity when
customers react more favorably to a product and the way it is marketed when the brand is identi-
fied than when it is not.
We can define brand knowledge in terms of an associative network memory model, as a
network of nodes and links wherein the brand node in memory has a variety of associations
linked to it. We can characterize brand knowledge in terms of two components: brand aware-
ness and brand image. Brand awareness is related to the strength of the brand node or trace
in memory, as reflected by consumers’ ability to recall or recognize the brand under different
conditions. It has both depth and breadth. The depth of brand awareness measures the likeli-
hood that consumers can recognize or recall the brand. The breadth of brand awareness mea-
sures the variety of purchase and consumption situations in which the brand comes to mind.
Brand image is consumer perceptions of a brand as reflected by the brand associations held
in consumers’ memory.
Customer-based brand equity occurs when the consumer has a high level of awareness and famil-
iarity with the brand and holds some strong, favorable, and unique brand associations in memory. In
some cases, brand awareness alone is sufficient to result in more favorable consumer response—for
example, in low-involvement decision settings where consumers are willing to base their choices
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98 PART II • DEVELOPING A BRAND STRATEGY
DISCUSSION QUESTIONS
1. Apply the categorization model to a product category other than beverages. How do consum-
ers make decisions whether or not to buy the product, and how do they arrive at their final
brand decision? What are the implications for brand equity management for the brands in the
category? How does it affect positioning, for example?
2. Pick a brand of breakfast cereals. Who are its target markets? Identify the possible market
segmentation bases.
3. Consider some educational institutions that are relevant to you. What are their main points-
of-parity and points-of-difference?
4. Can you think of any negatively correlated attributes and benefits other than those listed in
Figure 2-6? Can you think of any other strategies to deal with negatively correlated attributes
and benefits?
5. What do you think of the brand values pyramid suggested by Bain & Company consultants in
The Science of Branding 2-1? How would you apply the framework to a particular brand? Do
you think this set of elements yields any unique insights relative to the traditional Maslow’s
hierarchy of needs?
Customer-based brand equity occurs when consumer re-
sponse to marketing activity differs when consumers know the
brand and when they do not. How that response differs will de-
pend on the level of brand awareness and how favorably and
uniquely consumers evaluate brand associations, as well as the
particular marketing activity under consideration.
The Marketing Advantages of Strong Brands
BRAND FOCUS 2.0
A number of benefits can result from a strong brand, both
in terms of greater revenue and lower costs.69 For example, one
marketing expert categorizes the factors creating financial value
for strong brands into two categories: factors related to growth (a
brand’s ability to attract new customers, resist competitive activ-
ity, introduce line extensions, and cross international borders) and
factors related to profitability (brand loyalty, premium pricing,
merely on familiar brands. In other cases, the strength, favorability, and uniqueness of the brand
associations play a critical role in determining the differential response making up the brand equity.
Deciding on a positioning requires determining a frame of reference (by identifying the target
market and the nature of competition), the optimal points-of-parity and points-of-difference brand
associations, and an overall brand mantra as a summary. First, marketers need to understand con-
sumer behavior and the consideration sets that consumers adopt in making brand choices. After
establishing this frame of reference, they can then turn to identifying the best possible points-of-
parity and points-of-difference.
Points-of-difference are those associations that are unique to the brand, strongly held, and
favorably evaluated by consumers. Marketers should find points-of-difference associations that
are strong, favorable, and unique based on desirability, deliverability, and differentiation consid-
erations, as well as the resulting anticipated levels of sales and costs that might be expected with
achieving those points-of-difference.
Points-of-parity, on the other hand, are those associations that are not necessarily unique
to the brand but may, in fact, be shared with other brands. Category points-of-parity associa-
tions are necessary to be a legitimate and credible product offering within a certain category.
Competitive points-of-parity associations negate competitors’ points-of-differences. Correla-
tional points-of-parity negate any possible disadvantages or negatives that might also arise from
a point-of-difference.
Finally, a brand mantra is an articulation of the heart and soul of the brand, a three- to five-
word phrase that captures the irrefutable essence or spirit of the brand positioning and brand
values. Its purpose is to ensure that all employees and all external marketing partners understand
what the brand is, most fundamentally, in order to represent it with consumers.
The choice of these four ingredients determines the brand positioning and the desired brand
knowledge structures.
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 99
lower price elasticity, lower advertising/sales ratios, and trade
leverage).70
This brand focus feature considers in detail some of the ben-
efits to the firm of having brands with a high level of awareness
and a positive brand image.71
Greater Loyalty and Less Vulnerability to Competitive Marketing Actions and Crises
Research shows that different types of brand associations—if
favorable—can affect consumer product evaluations, percep-
tions of quality, and purchase rates.72 This influence may be
especially apparent with difficult-to-assess experience goods73
and as the uniqueness of brand associations increases.74 In
addition, familiarity with a brand has been shown to increase
consumer confidence, attitude toward the brand, and purchase
intention,75 and to mitigate the negative impact of a poor trial
experience.76
For these and other reasons, one characteristic of brands
with a great deal of equity is that consumers feel great loyalty
to them. Some top brands have been market leaders for years
despite significant changes in both consumer attitudes and com-
petitive activity over time. Through it all, consumers have valued
these brands enough to stick with them and reject the overtures
of competitors, creating a steady stream of revenues for the firm.
Research also shows that brands with large market shares are
more likely to have more loyal customers than brands with small
market shares, a phenomenon called double jeopardy.77 One
study found that brand equity was strongly correlated (.75) with
subsequent market share and profitability.78
A brand with a positive brand image also is more likely to
successfully weather a brand crisis or downturn in the brand’s
fortunes.79 Perhaps the most compelling example is Johnson &
Johnson’s (J&J) Tylenol brand. The brand focus feature describes
how J&J contended with a tragic product-tampering episode in
the early 1980s. Despite seeing its market share drop from 37
percent to almost zero overnight and fearing Tylenol would be
written off as a brand with no future, J&J was able to regain
virtually all lost market share for the brand through its skillful
handling of the crisis and a good deal of brand equity. More
recently, two automobile brands—that is, Toyota, and perhaps to
a lesser extent, Volkswagen—have successfully weathered crises
that posed significant threats to their brand equity.
The lesson is that effective handling of a marketing crisis
requires swift and sincere action, an immediate admission that
something has gone wrong, and assurance that an effective rem-
edy will be put in place. The greater the brand equity, the more
likely that these statements will be credible enough to keep cus-
tomers understanding and patient as the firm sets out to solve
the crisis. Without some underlying brand equity, however, even
the best-laid plans for recovery may fall short with a suspicious or
uninformed public.80 Finally, even absent a crisis, a strong brand
offers protection in a marketing downturn or when the brand’s
fortunes fall.
Larger Margins
Brands with positive customer-based brand equity can command
a price premium.81 Moreover, consumers should also have a fairly
inelastic response to price increases and elastic responses to price
decreases or discounts for the brand over time.82 Consistent
with this reasoning, research has shown that consumers loyal to
a brand are less likely to switch in the face of price increases and
more likely to increase the quantity of the brand purchased in
the face of price decreases.83 In a competitive sense, brand leaders
draw a disproportionate amount of share from smaller-share com-
petitors.84 At the same time, market leaders are relatively immune
to price competition from these small-share brands.85
In a classic early study, Intelliquest explored the role of brand
name and price in the decision purchase of business computer buy-
ers.86 Survey respondents were asked, “What is the incremental
dollar value you would be willing to pay over a ‘no-name’ clone
computer brand?” IBM commanded the greatest price premium,
followed by Compaq and Hewlett-Packard. Some brands had
negative brand equity; they actually received negative numbers.
Clearly, according to this study, brands had specific meaning in
the personal computer market that consumers valued and were
willing to pay for.
It is noteworthy that there is a contradictory trend that is cur-
rently taking hold in that a brand’s loyal customers often have
higher leverage and, therefore, expect to enjoy lower prices than
those with less loyal status. One published study examined this
phenomenon of willingness to pay less among a firm’s most loyal
customers.87 This is particularly true in larger purchases and in
business-to-business transactions in which salespeople are often
willing to provide greater discounts in price negotiations to their
more loyal customers. One way to ensure that loyal customers are
rewarded in ways other than price discounts may be to offer differ-
ent rewards—for example, free gifts or customer service, to ensure
loyal customers don’t receive steep discounts. Salespeople can be
trained not to give away large discounts, and higher quality brands
can afford to maintain price by emphasizing the quality difference
accompanying choice of their brand.
Greater Trade Cooperation and Support
Wholesalers, retailers, and other middlemen in the distribution
channel play an important role in the selling of many products.
Their activities can thus facilitate or inhibit the success of the brand.
If a brand has a positive image, retailers and other middlemen are
more likely to respond to the wishes of consumers and actively
promote and sell the brand.88 Channel members are also less likely
to require any marketing push from the manufacturer and will be
more receptive to manufacturers’ suggestions to stock, reorder,
and display the brand,89 as well as to pass through trade promo-
tions, demand smaller slotting allowances, give more favorable
shelf space or position, and so on. Given that many consumer deci-
sions are made in the store, the possibility of additional marketing
push by retailers is important.
Increased Marketing Communication Effectiveness
A host of advertising and communication benefits may result from
creating awareness of and a positive image for a brand. One well-
established view of consumer response to marketing communica-
tions is the hierarchy of effects models. These models assume that
consumers move through a series of stages or mental states on
the basis of marketing communications—for example, exposure
to, attention to, comprehension of, yielding to, retention of, and
behaving on the basis of a marketing communication.
A brand with a great deal of equity already has created some
knowledge structures in consumers’ minds, increasing the likelihood
that consumers will pass through various stages of the hierarchy. For
example, consider the effects of a positive brand image on the per-
suasive ability of advertising: Consumers may be more likely to notice
an ad, may more easily learn about the brand and form favorable
opinions, and may retain and act on these beliefs over time.
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100 PART II • DEVELOPING A BRAND STRATEGY
Familiar, well-liked brands are less susceptible to interference and
confusion from competitive ads,90 are more responsive to creative
strategies such as humor appeals,91 and are less vulnerable to nega-
tive reactions due to concentrated repetition schedules.92 In addition,
panel diary members who were highly loyal to a brand increased
purchases when advertising for the brand increased.93 Other advan-
tages associated with more advertising include increased likelihood
of being the focus of attention and increased brand interest.94
Because strong brand associations exist, lower levels of rep-
etition may be necessary. For example, in a classic study of adver-
tising weights, Anheuser-Busch ran a carefully conducted field
experiment in which it varied the amount of Budweiser advertis-
ing shown to consumers in different matched test markets.95
Seven different advertising expenditure levels were tested,
representing increases and decreases from the previous adver-
tising expenditure levels: minus 100 percent (no advertising),
minus 50 percent, 0 percent (same level), plus 50 percent, plus
100 percent (double the level of advertising), plus 150 percent,
and plus 200 percent. These expenditure levels were run for
one year and revealed that the “no advertising” level resulted
in the same amount of sales as the current program. In fact,
the 50 percent cut in advertising expenditures actually resulted
in an increase in sales, consistent with the notion that strong
brands such as Budweiser do not require the same advertising
levels, at least over a short period of time, as a less well-known
or well-liked brand.96
Similarly, because of existing brand knowledge structures,
consumers may be more likely to notice sales promotions, direct
mail offerings, or other sales-oriented marketing communications
and respond favorably. For example, several studies have shown
that promotion effectiveness is asymmetric in favor of a higher-
quality brand.97
Possible Licensing and Brand Extension Opportunities
A strong brand often has associations that may be desirable in
other product categories. To capitalize on this value, as discussed
in Chapter 8, a firm may choose to license its name, logo, or other
trademark item to another company for use on its products and
merchandise, in return for a royalty fee. The rationale for the
licensee (the company obtaining the rights to use the trademark)
is that consumers will pay more for a product because of the
recognition and image lent by the trademark. As we outline in
Chapter 11, one leading valuation firm (i.e., Brand Finance) uses
royalty rates as a way of measuring the value of a brand.
As will be outlined in Chapter 12, a brand extension occurs
when a firm uses an established brand name to enter a new
market. A line extension uses a current brand name to enter a
new market segment in the existing product class, say, with new
varieties, new flavors, or new sizes.
Academic research has shown that well-known and well-
regarded brands can extend more successfully and into more
diverse categories than other brands.98 In addition, the amount of
brand equity has been shown to be correlated with the highest-
or lowest-quality member in the product line for vertical product
extensions.99 Research has also shown that positive symbolic
associations may be the basis of these evaluations, even if overall
brand attitude itself is not necessarily high.100
Brands with varied product category associations through
past extensions have been shown to be especially extendable.101
As a result, introductory marketing programs for extensions from
an established brand may be more efficient than others.102 Sev-
eral studies have indicated that extension activity has aided (or
at least did not dilute) brand equity for the parent brand. For
instance, brand extensions strengthened parent brand associa-
tions, and “flagship brands” were highly resistant to dilution or
other potential negative effects caused by negative experiences
with an extension.103 Research has also found evidence of an
ownership effect, whereby current owners generally had more
favorable responses to brand line extensions.104 Finally, exten-
sions of brands that have both high familiarity and positive atti-
tudes have been shown to receive higher initial stock market
reactions than other brands.105
Other Benefits
Brands with positive customer-based brand equity may provide
other advantages to the firm not directly related to the products
themselves, such as helping the firm to attract or motivate better
employees, generate greater interest from investors, and garner
more support from shareholders.106 In terms of the latter, several
research studies have shown that brand equity can be directly
related to corporate stock price.107
NOTES
1. Kevin Lane Keller, “Conceptualizing, Measuring, and Managing Customer-Based Brand Equity,” Journal of Marketing 57, no. 1 (January 1993): 1–29.
2. Much of this chapter is based on Kevin Lane Keller, Brian Sternthal, and Alice Tybout, “Three Questions You Need to Ask About Your Brand,” Harvard Busi- ness Review 80, no. 9 (September 2002): 80–89.
3. Danya Sargen, “Marketing Takeaways from Net- flix’s Content Strategy,” American Marketing Asso- ciation, www.ama.org/publications/MarketingNews/ Pages/netflix-content-strategy.aspx; Dennis Williams, “4 Content Marketing Lessons to Learn from Netflix,” Entrepreneur, May 22, 2017, www.entrepreneur.com/ article/294050.
4. Kevin Lane Keller, “Discovery Channel Looks to Bring New Energy, Focus to Brand Identity,” Art & Business in Motion, August 26, 2011, www.dennytu.wordpress .com; Dan Butcher, “Discovery Channel Launches Cross-Network Ad Campaign with Microsoft,” Mobile Marketer, April 26, 2009; www.dsc.discovery.com.
5. Rick Kissell, “Ratings: Discovery Channel Deliv- ers Biggest May Ever,” Variety, June 5, 2015, http://variety.com/2015/tv/ratings/ratings-discovery- channel-best-ever-1201513568/.
6. US News.com, “Discovery Channel Asks Shark Week Viewers to Be Donors, Too,” U.S. News & World Report, June 19, 2017,
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CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 101
7. Broadcastingcable.com, “Cable Network Coverage Area Household Universe Estimates: January 2016,” Broadcasting & Cable, 2016, www.broadcastingcable. com/content/cable-network-coverage-area-household- universe-estimates-january-2016/153590.
8. “Business & Brands,” Discovery, accessed February 2, 2018, https://corporate.discovery.com/businesses- and-brands/.
9. Richard Jones, “Finding Sources of Brand Value: Devel- oping a Stakeholder Model of Brand Equity,” Journal of Brand Management 13, no. 1 (October 2005): 10–32.
10. John R. Anderson, The Architecture of Cognition ( Cambridge, MA: Harvard University Press, 1983); Robert S. Wyer Jr. and Thomas K. Srull, “Person Memory and Judgment,” Psychological Review 96, no. 1 (1989): 58–83.
11. John R. Rossiter and Larry Percy, Advertising and Pro- motion Management (New York: McGraw-Hill, 1987).
12. Burleigh B. Gardner and Sidney J. Levy, “The Prod- uct and the Brand,” Harvard Business Review 33, no. 2 (March–April 1955): 33–39.
13. H. Herzog, “Behavioral Science Concepts for Analyz- ing the Consumer,” in Marketing and the Behavioral Sciences, ed. Perry Bliss (Boston: Allyn & Bacon, 1963), 76–86; Joseph W. Newman, “New Insight, New Progress for Marketing,” Harvard Business Review 35, no. 6 (November–December 1957): 95–102.
14. Jim Joseph, “How Do I Love Thee, Apple? Let Me Count the Ways,” Brandweek, May 24, 2010; Michael Learmonth, “Can the Apple Brand Survive With- out Steve Jobs?,” Advertising Age, January 14, 2009; Miguel Helft and Ashlee Vance, “Apple Passes Micro- soft as No. 1 in Tech,” The New York Times, May 26, 2010; Sarah Vizard, “Why Apple is looking to shift brand perceptions to become more than just ‘the iPhone maker’,” Marketing Week, January 27, 2016, www .marketingweek.com/2016/01/27/why-apple-is-looking- to-shift-brand-perceptions-to-become-more-than-just- the-iphone-maker/; Hyoryung Nam, Yogesh V. Joshi, and P. K. Kannan, “Harvesting Brand Information from Social Tags,” Journal of Marketing 81, no. 4 (2017): 88–108.
15. James R. Bettman, An Information Processing Theory of Consumer Choice (Reading, MA: Addison-Wesley, 1979); John R. Rossiter and Larry Percy, Advertising and Promotion Management (New York: McGraw-Hill, 1987).
16. William Baker, J. Wesley Hutchinson, Danny Moore, and Prakash Nedungadi, “Brand Familiarity and Advertising: Effects on the Evoked Set and Brand Pref- erence,” in Advances in Consumer Research, Vol. 13, ed. Richard J. Lutz (Provo, UT: Association for Con- sumer Research, 1986), 637–642; Prakash Nedungadi, “Recall and Consumer Consideration Sets: Influencing Choice without Altering Brand Evaluations,” Journal of Consumer Research 17, no. 3 (December 1990): 263–276.
17. For seminal supporting memory research, see Henry L. Roediger, “Inhibition in Recall from Cuing with Recall Targets,” Journal of Verbal Learning and Verbal Behavior 12, no. 6 (1973): 644–657; and Raymond S. Nickerson, “Retrieval Inhibition from Part-Set Cuing: A Persisting Enigma in Memory Research,” Memory and Cognition 12, no. 6 (November 1984): 531–552.
18. Rashmi Adaval, “How Good Gets Better and Bad Gets Worse: Understanding the Impact of Affect on Evalua- tions of Known Brands,” Journal of Consumer Research 30, no. 3 (December 2003): 352–367.
19. Jacob Jacoby, George J. Syzabillo, and Jacqeline Busato-Schach, “Information Acquisition Behavior in Brand Choice Situations,” Journal of Consumer Research 3, no. 4 (1977): 209–216; Ted Roselius, “Con- sumer Ranking of Risk Reduction Methods,” Journal of Marketing 35, no. 1 (January 1977): 56–61.
20. James R. Bettman and C. Whan Park, “Effects of Prior Knowledge and Experience and Phase of the Choice Process on Consumer Decision Processes: A Proto- col Analysis,” Journal of Consumer Research 7, no. 3 (December 1980): 234–248; Wayne D. Hoyer and Ste- ven P. Brown, “Effects of Brand Awareness on Choice for a Common, Repeat-Purchase Product,” Journal of Consumer Research 17, no. 2 (September 1990): 141–148; C. W. Park and V. Parker Lessig, “Familiar- ity and Its Impact on Consumer Biases and Heuristics,” Journal of Consumer Research 8, no. 2 (September 1981): 223–230.
21. Richard E. Petty and John T. Cacioppo, Attitudes and Persuasion: Classic and Contemporary Approaches. (Boulder, CO: Westview, 1996).
22. Shareen Pathak, “It’s Official: E-Trade Is Ending Its Super Bowl Streak,” Ad Age, December 11, 2013, http:// adage.com/article/special-report-super-bowl/e-trade- ends-super-bowl-streak/245630/.
23. Jeff Beer, After The Baby: E-Trade Trades Its Long-Running Campaign For “Type-E” Person- alities, Kevin Spacey,” Fast Company, April 3, 2014, www.fastcompany.com/3028672/after-the-baby-e- trade-trades-its-long-running-campaign-for-type-e- personalities-kevin-space.
24. Matthew Heimer, “How E*Trade Came Back from a Wipeout,” Fortune, May 20, 2016, http://fortune .com/2016/05/20/etrade-online-investing/.
25. Jesse Dorris, “The Cheese Stands Alone,” Slate, October 21, 2013, www.slate.com/articles/business/ when_big_businesses_were_small/2013/10/annie_s_ homegrown_profits_how_the_company_recast_ selling_out_as_buying_in.html.
26. Ted Mininni, “Annie’s Hops into Consumers’ Hearts, Minds and Hands,” Design Force, June 18, 2012, www .designforceinc.com/annies-homegrown-packaging- as-advertising.
27. David Gianatasio, “Annie’s Homegrown Says Its Food Can Help You Live the ‘Good’ Life,” Adweek, October 14, 2015, www.adweek.com/brand-marketing/annies- homegrown-says-its-food-can-help-you-live-good- life-167553/.
28. Heather Landi, “When Life Gives You Lemons,” Bever- age World, November 2010, 18–22.
29. George S. Day, Allan D. Shocker, and Rajendra K. Sriv- astava, “Customer-Oriented Approaches to Identifying Products-Markets,” Journal of Marketing 43, no. 4 (Fall 1979): 8–19.
30. K. E. Miller and J. L. Ginter, “An Investigation of Situational Variation in Brand Choice Behavior and Attitude,” Journal of Marketing Research 16, no. 1 (February 1979): 111–123.
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102 PART II • DEVELOPING A BRAND STRATEGY
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32. Dipankar Chakravarti, Deborah J. MacInnis, and Kent Nakamoto, “Product Category Perceptions, Elaborative Processing and Brand Name Extension Strategies,” in Advances in Consumer Research 17, eds. M. Goldberg, G. Gorn, and R. Pollay (Ann Arbor, MI: Association for Consumer Research, 1990): 910–916; Mita Sujan and James R. Bettman, “The Effects of Brand Positioning Strategies on Consumers’ Brand and Category Percep- tions: Some Insights from Schema Research,” Journal of Marketing Research 26, no. 4 (November 1989): 454–467.
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34. Prakash Nedungadi and J. Wesley Hutchinson, “The Prototypicality of Brands”; Ward and Loken, “The Quintessential Snack Food.”
35. Phillip Kotler and Kevin Lane Keller, Marketing Man- agement, 14th ed. (Upper Saddle River, NJ: Prentice Hall, 2012).
36. Russell I. Haley, “Benefit Segmentation: A Decision- Oriented Research Tool,” Journal of Marketing 32, no. 3 (July 1968): 30–35.
37. Maryalene LaPonsie, “3 Best Rewards Credit Cards for Seniors,” U.S. News, August 13, 2015, https://money .usnews.com/money/retirement/articles/2015/08/13/3- best-rewards-credit-cards-for-seniors.
38. Also, it may be the case that the actual demographic spec- ifications given do not fully reflect consumers’ underly- ing perceptions. For example, when the Ford Mustang was introduced, the intended market segment was much younger than the ages of the customers who actually bought the car. Evidently, these consumers felt or wanted to feel younger psychologically than they really were.
39. Paul Jankowski, “Which Group of Millenials Are You Targeting,” https://www.forbes.com/sites/ pauljankowski/2018/05/09/which-group-of-millennials- are-you-targeting/, accessed August 21, 2018.
40. Ronald Frank, William Massey, and Yoram Wind, Mar- ket Segmentation (Englewood Cliffs, NJ: Prentice Hall, 1972); Malcolm McDonald and Ian Dunbar, Market Segmentation: How to Do It, How to Profit from It (Oxford, UK: Elsevier Butterworth-Heinemann, 2004).
41. Kevin Lane Keller. “CVS’ Goal: Attract Customers for Life,” DSN Retailing Today, May 23, 2005; Kevin Lane Keller. “Women Making a Difference at CVS,” Chain Drug Review, April 18, 2005.
42. A complete treatment of this material is beyond the scope of this chapter. Useful reviews can be found in any good marketing strategy text. For example, see David A. Aaker, Strategic Market Management, 9th ed. (New York: John Wiley & Sons, 2011) or Donald R. Lehmann and Russell S. Winer, Product Management, 4th ed. (New York: McGraw-Hill/Irwin, 2005).
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44. Teri Agins, “As Consumers Find Other Ways to Splurge, Apparel Hits a Snag,” The Wall Street Journal, February 4, 2005, A1, A6.
45. Isaac Arnsdorf, “The Best Shot: Cell or Camera?,” The Wall Street Journal, June 23, 2010.
46. Patrick Barwise and Sean Meehan, Simply Better: Win- ning and Keeping Customers by Delivering What Mat- ters Most (Cambridge, MA: Harvard Business School Press, 2004).
47. Richard Heller, “Folk Fortune,” Forbes, September 4, 2000, 66–69; Lauren Collins, “House Perfect,” New Yorker, October 3, 2011.
48. Leonora Polansky, Personal correspondence, June 16, 2011.
49. Interestingly, when Miller Lite was first introduced, the assumption was that the relevant motivation underlying the benefit of “less filling” for consumers was that they could drink more beer. Consequently, Miller targeted heavy users of beer with a sizable introductory ad cam- paign concentrated on mass-market sports programs. As it turned out, the initial research showed that the market segment they attracted was more the moderate user—older and upscale. Why? The brand promise of “less filling” is actually fairly ambiguous. To this group of consumers, “less filling” meant that they could drink beer and stay mentally and physically agile (sin with no penalty!). From Miller’s standpoint, attracting this target market was an unexpected but happy outcome because it meant that there would be less cannibaliza- tion with their more mass-market High Life brand. To better match the motivations of this group, there were some changes in the types of athletes in the ads, such as using ex-bullfighters to better represent mental and physical agility.
50. Robert Klara, “‘The Other White Meat’ Finally Cedes Its Place in the Pen,” Brandweek, March 4, 2011.
51. Richard A. Melcher, “Why Zima Faded So Fast,” Busi- ness Week, March 10, 1997, 110–114.
52. Keith Naughton, “Ford’s ‘Perfect Storm,’” Newsweek, September 17, 2001, 48–50.
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54. David A. Aaker, Brand Relevance: Making Competitors Irrelevant (San Francisco: John Wiley & Sons, 2011).
55. Heather Landi, “Good to the Core,” Beverage World, August 2010, 35–42.
56. For a thorough examination of how an organization can improve its marketing capabilities, see Andy Bird and Mhairi McEwan, The Growth Drivers: The Definitive Guide to Transforming Marketing Capabilities (West Sussex, UK: John Wiley & Sons, 2012).
57. Chloe Sorvino, “The Verdict: POM Wonderful Mis- led Its Customers, A Blow to Its Billionaire Own- ers,” Forbes, May 2, 2016, www.forbes.com/sites/ chloesorvino/2016/05/02/the-verdict-pom-wonderful- misled-its-customers-a-blow-to-its-billionaire- owners/#56ae05024b94; Goeffrey Mohan, “Pom Won- derful case not wonderful enough, Supreme Court says” L.A. Times, May 4, 2016, www.latimes.com/business/ la-fi-pom-wonderful-20160503-snap-story.html.
58. Lalatendu Mehra, “IBM Cloud Eyes ‘Small Business,’” The Hindu, May 12, 2017, www.thehindu.com/todays- paper/tp-business/ibm-cloud-eyes-small-business/ article18587190.ece.
59. W. Chan Kim and Renee Mauborgne. “How to create uncontested market space and make the competition irrel- evant.” Harvard Business Review 4, no. 13 (2005): 1–2.
60. P&G Corporate Newsroom, www.news.pg.com; “Proctor & Gamble to Move Beauty Unit to Singapore,” www.reuters.com, May 2012.
61. The case is based on primary research undertaken for the Newcastle City Council by the authors with The Grass- roots Group (strategic marketing services) in 2011.
62. Abraham Maslow, Motivation and Personality, 2nd ed. (New York: Harper & Row, 1970).
63. Thomas J. Reynolds and Jonathan Gutman, “Laddering Theory: Method, Analysis, and Interpretation,” Jour- nal of Advertising Research (February/March 1988): 11–31; Thomas J. Reynolds and David B. Whitlark, “Applying Laddering Data to Communications Strat- egy and Advertising Practice,” Journal of Advertising Research (July/August 1995): 9–17.
64. Brian Wansink, “Using Laddering to Understand and Leverage a Brand’s Equity,” Qualitative Market Research 6, no. 2 (2003): 111–118.
65. Lance Cothern, “Bold Move by Discover—The Dis- cover it™ Credit Card,” Money Manifesto, January 9, 2014, www.moneymanifesto.com/bold-move-by- discover-the-discover-it-credit-card-2793/.
66. Business Wire, “Discover Launches Game-Changing New “it” Credit Card,” January 2, 2013, accessed Feb- ruary 1, 2018.
67. Marco Vriens and Frenkel Ter Hofstede, “Linking Attributes, Benefits, and Consumer Values,” Marketing Research 12, no. 3 (Fall 2000): 3–8.
68. Kevin Lane Keller, “Brand Mantras: Rationale, Criteria, and Examples,” Journal of Marketing Management 15, no. 1-3 (1999): 43–51.
69. Brand Focus 2.0 is based in part on Steven Hoeffler and Kevin Lane Keller, “The Marketing Advantages of Strong Brands,” Journal of Brand Management 10, no. 6 (August 2003): 421–445.
70. Ian M. Lewis, “Brand Equity or Why the Board of Directors Needs Marketing Research,” paper presented at the ARF Fifth Annual Advertising and Promotion Workshop, February 1, 1993.
71. The following sections review seminal research in each of the areas. For more recent research on these topics, see Philip Kotler and Kevin Lane Keller, Marketing Management, 15th ed. (Upper Saddle River, NJ: Pren- tice Hall, 2016).
72. Peter A. Dacin and Daniel C. Smith, “The Effect of Brand Portfolio Characteristics on Consumer Evalu- ations of Brand Extensions,” Journal of Marketing Research 31, no. 2 (May 1994): 229–242; George S. Day and Terry Deutscher, “Attitudinal Predictions of Choices of Major Appliance Brands,” Journal of Marketing Research 19, no. 2 (May 1982), 192–198; W. B. Dodds, K. B. Monroe, and D. Grewal, “Effects of Price, Brand, and Store Information on Buyers’ Prod- uct Evaluations,” Journal of Marketing Research 28, no. 3 (August 1991): 307–319; France Leclerc, Bernd H. Schmitt, and Laurette Dube, “Foreign Branding and Its Effects on Product Perceptions and Attitudes,” Jour- nal of Marketing Research 31, no. 5 (1994): 263–270; Akshay R. Rao and K. B. Monroe, “The Effects of Price, Brand Name, and Store Name on Buyers’ Perceptions of Product Quality: An Integrative Review,” Journal of Marketing Research 26, no. 3 (August 1989): 351–357.
73. B. Wernerfelt, “Umbrella Branding as a Signal of New Product Quality: An Example of Signaling by Posting a Bond,” Rand Journal of Economics 19, no. 3 (1988): 458–466; Tullin Erdem, “An Empirical Analysis of Umbrella Branding,” Journal of Marketing Research 35, no. 8 (1998): 339–351.
74. Fred M. Feinberg, Barbara E. Kahn, and Leigh McAl- lister, “Market Share Response When Consumers Seek Variety,” Journal of Marketing Research 29, no. 2 (May 1992): 227–237.
75. Michel Laroche, Chankon Kim, and Lianxi Zhou, “Brand Familiarity and Confidence as Determinants of Purchase Intention: An Empirical Test in a Multiple Brand Context,” Journal of Business Research 37, no. 2 (1996): 115–120.
76. Robert E. Smith, “Integrating Information from Adver- tising and Trial,” Journal of Marketing Research 30, no. 2 (May 1993): 204–219.
77. Andrew S. C. Ehrenberg, Gerard J. Goodhardt, and Pat- rick T. Barwise, “Double Jeopardy Revisited,” Journal of Marketing 54, no. 3 (July 1990): 82–91.
78. Ipsos-ASI, January 30, 2003. 79. Rohini Ahluwalia, Robert E. Burnkrant, and H. Rao
Unnava, “Consumer Response to Negative Publicity: The Moderating Role of Commitment,” Journal of Mar- keting Research 37, no. 2 (May 2000): 203–214; Narij Dawar and Madam M. Pillutla, “Impact of Product- Harm Crises on Brand Equity: The Moderating Role of Consumer Expectations,” Journal of Marketing Research 37, no. 2 (May 2000): 215–226.
80. Susan Caminit, “The Payoff from a Good Corporate Reputation,” Fortune, February 10, 1992, 74–77.
81. Deepak Agrawal, “Effects of Brand Loyalty on Advertis- ing and Trade Promotions: A Game Theoretic Analysis with Empirical Evidence,” Marketing Science 15, no.
CHAPTER 2 • CUSTOMER-BASED BRAND EqUITY AND BRAND POSITIONING 103
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104 PART II • DEVELOPING A BRAND STRATEGY
1 (1996): 86–108; Chan Su Park and V. Srinivasan, “A Survey-Based Method for Measuring and Understanding Brand Equity and Its Extendability,” Journal of Marketing Research 31, no. 2 (May 1994): 271–288; Raj Sethura- man, “A Model of How Discounting High-Priced Brands Affects the Sales of Low-Priced Brands,” Journal of Mar- keting Research 33, no. 4 (November 1996): 399–409.
82. Hermann Simon, “Dynamics of Price Elasticity and Brand Life Cycles: An Empirical Study,” Journal of Marketing Research 16, no. 4 (November 1979): 439–452; K. Sivakumar and S. P. Raj, “Quality Tier Competition: How Price Change Influences Brand Choice and Category Choice,” Journal of Marketing 61, no. 3 (July 1997): 71–84.
83. Lakshman Krishnamurthi and S. P. Raj, “An Empirical Analysis of the Relationship Between Brand Loyalty and Consumer Price Elasticity,” Marketing Science 10, no. 2 (Spring 1991): 172–183. See also, Garrett Sonnier and Andrew Ainsle, “Estimating the Value of Brand-Image Associations: The Role of General and Specific Brand Image,” Journal of Marketing Research 48, no. 3 (June 2011): 518–531; William Boulding, Eunkyu Lee, and Richard Staelin, “Mastering the Mix: Do Advertising, Promotion, and Sales Force Activities Lead to Differen- tiation?” Journal of Marketing Research 31, no. 2 (May 1994): 159–172. See also Vinay Kanetkar, Charles B. Weinberg, and Doyle L. Weiss, “Price Sensitivity and Television Advertising Exposures: Some Empirical Find- ings,” Marketing Science 11, no. 4 (Fall 1992): 359–371.
84. Greg M. Allenby and Peter E. Rossi, “Quality Percep- tions and Asymmetric Switching Between Brands,” Marketing Science 10, no. 3 (Summer 1991): 185–204; Rajiv Grover and V. Srinivasan, “Evaluating the Multiple Effects of Retail Promotions on Brand Loyal and Brand Switching Segments,” Journal of Marketing Research 29, no. 1 (February 1992): 76–89; Gary J. Russell and Wagner A. Kamakura, “Understanding Brand Competi- tion Using Micro and Macro Scanner Data,” Journal of Marketing Research 31, no. 2 (May 1994): 289–303.
85. Albert C. Bemmaor and Dominique Mouchoux, “Mea- suring the Short-Term Effect of In-Store Promotion and Retail Advertising on Brand Sales: A Factorial Experi- ment,” Journal of Marketing Research 28, no. 2 (May 1991): 202–214; Robert C. Blattberg and Kenneth J. Wisniewski, “Price-Induced Patterns of Competition,” Marketing Science 8, no. 4 (Fall 1989): 291–309; Ran- dolph E. Bucklin, Sunil Gupta, and Sangman Han, “A Brand’s Eye View of Response Segmentation in Con- sumer Brand Choice Behavior,” Journal of Marketing Research 32, no. 1 (February 1995): 66–74; K. Siva- kumar and S. P. Raj, “Quality Tier Competition: How Price Change Influences Brand Choice and Category Choice,” Journal of Marketing (1997): 71–84.
86. Kyle Pope, “Computers: They’re No Commodity,” The Wall Street Journal, October 15, 1993, B1.
87. Jan Wieseke, Sascha Alavi and Johannes Habel,” Willing to Pay More, Eager to Pay Less, The Role of Customer Loyalty in Price Negotiations.” Journal of Marketing 78, no. 6 (2014): 17–27.
88. Peter S. Fader and David C. Schmittlein, “Excess Behavioral Loyalty for High-Share Brands: Devia- tions from the Dirichlet Model for Repeat Purchasing,”
Journal of Marketing Research 30, no. 11 (1993): 478–493; Rajiv Lal and Chakravarthi Narasimhan, “The Inverse Relationship Between Manufacturer and Retailer Margins: A Theory,” Marketing Science 15, no. 2 (1996): 132–151; Mark S. Glynn, “The Moderat- ing Effect of Brand Strength in Manufacturer-Reseller Relationships,” Industrial Marketing Management 39, no. 8 (2010): 1226–1233.
89. David B. Montgomery, “New Product Distribution: An Analysis of Supermarket Buyer Decisions,” Journal of Marketing Research 12, no. 3 (1978): 255–264.
90. Robert J. Kent and Chris T. Allen, “Competitive Inter- ference Effects in Consumer Memory for Advertising: The Role of Brand Familiarity,” Journal of Marketing 58, no. 3 (July 1994): 97–105.
91. Amitava Chattopadyay and Kunal Basu, “Humor in Advertising: The Moderating Role of Prior Brand Evalua- tion,” Journal of Marketing Research 27, no. 4 (November 1990): 466–476; D. W. Stewart and David H. Furse, Effec- tive Television Advertising: A Study of 1000 Commercials (Lexington, MA: D.C. Heath, 1986); M. G. Weinburger and C. Gulas, “The Impact of Humor in Advertising: A Review,” Journal of Advertising 21, no. 4 (1992): 35–60.
92. Margaret Campbell and Kevin Lane Keller, “Brand Familiarity and Ad Repetition Effects,” Journal of Con- sumer Research 30, no. 2 (September 2003), 292–304.
93. S. P. Raj, “The Effects of Advertising on High and Low Loyalty Consumer Segments,” Journal of Consumer Research 9, no. 1 (June 1982): 77–89.
94. Ravi Dhar and Itamar Simonson, “The Effect of the Focus of Comparison on Consumer Preferences,” Journal of Marketing Research 29, no. 4 (November 1992): 430–440; Karen A. Machleit, Chris T. Allen, and Thomas J. Madden, “The Mature Brand and Brand Interest: An Alternative Consequence of Ad-Evoked Affect,” Journal of Marketing 57, no. 4 (October 1993): 72–82; Itamar Simonson, Joel Huber, and John Payne, “The Relationship between Prior Brand Knowledge and Information Acquisition Order,” Journal of Consumer Research 14, no. 4 (March 1988): 566–578.
95. Russell L. Ackoff and James R. Emshoff, “Advertising Research at Anheuser-Busch, Inc. (1963–1968),” Sloan Management Review 16, no.2 (Winter 1975): 1–15.
96. These results should be interpreted carefully, however, as they do not suggest that large advertising expendi- tures did not play an important role in creating equity for the brand in the past, or that advertising expenditures could be cut severely without some adverse sales con- sequences at some point in the future.
97. See Robert C. Blattberg, Richard Briesch, and Edward J. Fox, “How Promotions Work,” Marketing Science 14, no. 3 (1995): G122–G132. See also Bart J. Bron- nenberg and Luc Wathieu, “Asymmetric Promotion Effects and Brand Positioning,” Marketing Science 15, no. 4 (1996): 379–394. This study shows how the rela- tive promotion effectiveness of high- and low-quality brands depends on their positioning along both price and quality dimensions.
98. David A. Aaker and Kevin Lane Keller, “Consumer Evaluations of Brand Extensions,” Journal of Market- ing 54, no. 1 (1990): 27–41; Kevin Lane Keller and David A. Aaker, “The Effects of Sequential Introduction
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of Brand Extensions,” Journal of Marketing Research 29, no. 1 (February 1992): 35–50; A. Rangaswamy, R. R. Burke, and T. A. Oliva, “Brand Equity and the Extendibility of Brand Names,” International Journal of Research in Marketing 10, no. 3 (1993): 61–75.
99. Taylor Randall, Karl Ulrich, and David Reibstein, “Brand Equity and Vertical Product Line Extent,” Mar- keting Science 17, no. 4 (1998): 356–379.
100. Srinivas K. Reddy, Susan Holak, and Subodh Bhat, “To Extend or Not to Extend: Success Determinants of Line Extensions,” Journal of Marketing Research 31, no. 5 (1994): 243–262; C. Whan Park, Sandra Milberg, and Robert Lawson, “Evaluation of Brand Extensions: The Role of Product Feature Similarity and Brand Concept Consistency,” Journal of Consumer Research 18, no. 9 (1991): 185–193; Susan M. Broniarcysyk and Joseph W. Alba, “The Importance of the Brand in Brand Exten- sion,” Journal of Marketing Research 31, no. 5 (1994): 214–228.
101. Peter A. Dacin and Daniel C. Smith, “The Effect of Brand Portfolio Characteristics on Consumer Evalu- ations of Brand Extensions,” Journal of Marketing Research 31, no. 2 (May 1994): 229–242; Keller and Aaker, “The Effects of Sequential Introduction of Brand Extensions”; Daniel A. Sheinin and Bernd H. Schmitt, “Extending Brands with New Product Concepts: The Role of Category Attribute Congruity, Brand Affect, and Brand Breadth,” Journal of Business Research 31, no. 1 (1994): 1–10.
102. Roger A. Kerin, Gurumurthy Kalyanaram, and Dan- iel J. Howard, “Product Hierarchy and Brand Strategy Influences on the Order of Entry Effect for Consumer Packaged Goods,” Journal of Product Innovation Man- agement 13, no. 1 (1996): 21–34.
103. Maureen Morrin, “The Impact of Brand Extensions on Parent Brand Memory Structures and Retrieval Processes,” Journal of Marketing Research 36, no. 4 (November 1999): 517–525; John Roedder, Barbara Loken, and Christopher Joiner, “The Negative Impact of Extensions: Can Flagship Products Be Diluted?” Journal of Marketing 62, no. 1 (January 1998): 19–32; Daniel A. Sheinin, “The Effects of Experience with Brand Extensions on Parent Brand Knowledge,” Jour- nal of Business Research 49, no. 1 (2000): 47–55.
104. Amna Kirmani, Sanjay Sood, and Sheri Bridges, “The Ownership Effect in Consumer Responses to Brand Line Stretches,” Journal of Marketing 63, no. 1 (January 1999): 88–101.
105. Vicki R. Lane and Robert Jacobson, “Stock Market Reactions to Brand Extension Announcements: The Effects of Brand Attitude and Familiarity,” Journal of Marketing 59, no. 1 (1995): 63–77.
106. Douglas E. Hughes and Michael Ahearne, “Energizing the Reseller’s Sales Force: The Power of Brand Identi- fication,” Journal of Marketing 74, no. 4 (July 2010): 81–96; V. Kumar and Denish Shah, “Can Marketing Lift Stock Prices?,” MIT Sloan Management Review 52, no. 4 (Summer 2011): 24–26.
107. David A. Aaker and Robert Jacobson, “The Financial Information Content of Perceived Quality,” Journal of Marketing Research 31, no. 5 (1994): 191–201; David A. Aaker and Robert Jacobson, “The Value Relevance of Brand Attitude in High-Technology Markets,” Journal of Marketing Research 38, no. 4 (November 2001): 485–493; M. E. Barth, M. Clem- ent, G. Foster, and R. Kasznik, “Brand Values and Capital Market Valuation,” Review of Accounting Studies 3, no. 1–2 (1998): 41–68.
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106
Corona used its strong
brand imagery of “beach
in a bottle” to become
the leading U.S. import
beer.
Source: AP Photo/Amy Sancetta
Learning Objectives
After reading this chapter, you should be able to
1. Define brand resonance.
2. Describe the steps in building brand resonance.
3. Define the brand value chain.
4. Identify the stages in the brand value chain.
5. Contrast brand equity and customer equity.
Brand Resonance and the Brand Value Chain3
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 107
Chapter 2 outlined in detail the concept of customer-based brand equity and introduced a brand
positioning model based on the concepts of points-of-parity and points-of-difference. We next
broaden our discussion to consider the two other interlinking models, which all together make up
the brand planning system.
We first present the brand resonance model, which describes how to create intense, active
loyalty relationships with customers. The model considers how brand positioning affects what
consumers think, feel, and do and the degree to which they resonate or connect with a brand. After
discussing some of the main implications of that model, we consider how brand resonance and
these loyalty relationships, in turn, create brand equity or value.
The brand value chain model is a means by which marketers can trace the value creation
process for their brands to better understand the financial impact of their marketing expenditures
and investments. Based in part on the customer-based brand equity (CBBE) concept developed
in Chapter 2, it offers a holistic, integrated approach to understanding how brands create value.
Brand Focus 3.0 at the end of the chapter provides a detailed overview of the topic of
customer equity.
PREVIEW
BUILDING A STRONG BRAND: THE FOUR STEPS OF BRAND BUILDING The brand resonance model looks at building a brand as a sequence of steps, each of which is
contingent on successfully achieving the objectives of the previous one. The steps are as follows:
1. Ensure identification of the brand with customers and an association of the brand in custom-
ers’ minds with a specific product class, product benefit, or customer need.
2. Firmly establish the totality of brand meaning in the minds of customers by strategically
linking a host of tangible and intangible brand associations.
3. Elicit the proper customer responses to the brand.
4. Convert brand responses to create brand resonance and an intense, active loyalty relationship
between customers and the brand.
These four steps represent a set of fundamental questions that customers invariably ask about
brands—at least implicitly. The four questions (with corresponding brand steps in parentheses) are:
1. Who are you? (brand identity)
2. What are you? (brand meaning)
3. What about you? What do I think or feel about you? (brand responses)
4. What about you and me? What kind of association and how much of a connection would
I like to have with you? (brand relationships)
Notice the ordering of the steps in this branding ladder, from identity to meaning to responses to
relationships. That is, we cannot establish meaning unless we have created an identity; responses
cannot occur unless we have developed the right meaning; and we cannot forge a relationship
unless we have elicited the proper responses.
To provide some structure, let us think of establishing six brand building blocks with custom-
ers that we can assemble in a pyramid, with significant brand equity only resulting if brands reach
the top of the pyramid. This brand-building process is illustrated in Figures 3-1 and 3-2. We will
look at each of these steps and corresponding brand building blocks and their subdimensions in the
following sections. As will become apparent, building blocks up the left side of the pyramid represent
a more rational route to the brand-building, whereas building blocks up the right side of the pyramid
represent a more emotional route. Most strong brands are built by going up both sides of the pyramid.
Brand Salience Achieving the right brand identity means creating brand salience with customers. Brand salience
measures various aspects of the awareness of the brand and how easily and often the brand is
evoked under various situations or circumstances. To what extent is the brand top-of-mind and
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108 PART II • DEVELOPING A BRAND STRATEGY
easily recalled or recognized? What types of cues or reminders are necessary? How pervasive is
this brand awareness?
We have said that brand awareness refers to customers’ ability to recall and recognize the
brand under different conditions and to link the brand name, logo, symbol, and so forth, to certain
associations in memory. In particular, building brand awareness helps customers understand the
product or service category in which the brand competes and what products or services are sold
under the brand name. It also ensures that customers know which of their “needs” the brand—
through these products—is designed to satisfy. In other words, what basic functions does the
brand provide to customers?
Breadth and Depth of Awareness. Brand awareness thus gives the product identity by link-
ing brand elements to a product category and associated purchase and consumption or usage
situations. The depth of brand awareness measures how likely it is for a brand element to come
to mind and the ease with which it does so. A brand we easily recall has a deeper level of brand
awareness than one that we recognize only when we see it. The breadth of brand awareness mea-
sures the range of purchase and usage situations in which the brand element comes to mind and
depends to a large extent on the organization of brand and product knowledge in memory.1 To see
how this works, consider the breadth and depth of brand awareness for Tropicana orange juice.
FIGURE 3-1
Brand Resonance
Pyramid
1. Identity Who are you?
Intense, active loyalty
Positive, accessible reactions
Points-of-parity and -difference
Deep, broad brand awareness
4. Relationships What about you and me?
Branding Objective at Each Stage
Stages of Brand Development
3. Response What about you?
2. Meaning What are you?
Resonance
Judgments Feelings
Performance Imagery
Salience
FIGURE 3-2
Subdimensions of Brand
Building Blocks
Resonance Loyalty
Attachment Community Engagement
Judgments Quality
Credibility Consideration
Superiority
Feelings Warmth
Fun Excitement
Security Social Approval
Self-Respect
Performance Primary Characteristics and
Secondary Features Product Reliability,
Durability, and Serviceability Service Effectiveness,
Efficiency, and Empathy Style and Design
Price
Imagery User Profiles
Purchase and Usage Situations
Personality and Values
History, Heritage, and Experiences
Salience Category Identification
Needs Satisfied
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 109
Product Category Structure. As the Tropicana example suggests, to fully understand brand
recall, we need to appreciate product category structure, or how product categories are organized in
memory. Typically, marketers assume that products are grouped at varying levels of specificity and
can be organized in a hierarchical fashion.2 Thus, in consumers’ minds, a product hierarchy often
exists, with product class information at the highest level, product category information at the second-
highest level, product type information at the next level, and brand information at the lowest level.
The beverage market provides a good setting to examine issues in category structure and the effects
of brand awareness on brand equity. Figure 3-3 illustrates one hierarchy that might exist in consumers’
minds. According to this representation, consumers first distinguish between flavored and nonflavored
beverages (water). Next, they distinguish between nonalcoholic and alcoholic flavored beverages. They
further distinguish nonalcoholic beverages into hot drinks like coffee or tea, and cold drinks like milk,
juices, and soft drinks. Alcoholic beverages are distinguished by whether they are wine, beer, or dis-
tilled spirits. We can make even further distinctions. For example, we can divide the beer category into
no-alcohol, low-alcohol (or “light”), and full-strength beers, and divide full-strength beers by variety
(ale or lager), brewing method (ice or dry), serving style (draft or bottle), price and quality (discount,
premium, or super-premium), source or origin (imported versus domestic), and so on.
The organization of the product category hierarchy that generally prevails in memory will play
an important role in brand awareness, brand consideration, and consumer decision-making. For
example, consumers often make decisions in a top-down fashion, first deciding whether to have
For Tropicana, it is important that consumers think of the brand in other
consumption situations beyond breakfast.
Source: Keri Miksza
TROPICANA
Consumers should at least recognize the Tropicana brand when it is presented to them. Beyond that,
consumers should think of Tropicana whenever they think of orange juice, particularly when they are consid-
ering buying orange juice. Ideally, consumers would think of Tropicana whenever they were deciding which
type of beverage to drink, especially when seeking a “tasty but healthy” beverage. Thus, consumers must
think of Tropicana as satisfying a certain set of needs whenever those needs arise. One of the challenges
for any provider of orange juice is to link the product to usage situations beyond the traditional one of
breakfast—hence, the industry campaign to boost consumption of Florida orange juice that used the slogan
“It’s Not Just for Breakfast Anymore.”
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110 PART II • DEVELOPING A BRAND STRATEGY
water or some type of flavored beverage. If the consumer chooses a flavored drink, the next decision
would be whether to have an alcoholic or a nonalcoholic drink. Finally, consumers might then choose
a particular brand within the product category in which they are interested.
The depth of brand awareness will influence the likelihood that the brand comes to mind,
whereas the breadth of brand awareness describes the different types of situations in which
the brand might come to mind. In general, soft drinks have great breadth of awareness in that
they come to mind in a variety of different consumption situations. A consumer may consider
drinking one of the different varieties of Coke virtually any time, anywhere. Other beverages,
such as alcoholic beverages, milk, and juices, have much more limited perceived consumption
situations.
Strategic Implications. The product hierarchy shows us that not only the depth of awareness
matters, but also the breadth. In other words, the brand must not only be top-of-mind and have
sufficient mindshare, but it must also do so at the right times and places.
Breadth is an oft-neglected consideration, even for brands that are category leaders. For many
brands, the key question is not whether consumers can recall the brand but where they think of it,
when they think of it, and how easily and how often they think of it. Many brands and products are
ignored or forgotten during possible usage situations. For those brands, the best route for improv-
ing sales may be not to try to improve consumer attitudes but, instead, increasing brand salience
and the breadth of brand awareness and situations in which consumers would consider using the
brand to drive consumption and increase sales volume.
Tax preparer H&R Block makes a concerted effort to make sure its brand is top-of-mind at all
times, reminding consumers that tax-pertinent events happen all year round, such as when taking
FIGURE 3-3
Beverage Category
Hierarchy
Distilled spirits
Beer
Wine
Nonalcoholic Alcoholic
FlavoredWater
Hot beverages
Soft drinks
JuicesMilk
Beverages
CAMPBELL’S SOUP
Ads for Campbell’s soup through the years have sometimes emphasized taste, with its longtime advertis-
ing slogan “Mmm, Mmm, Good,” or nutrition, with “Never Underestimate the Power of Soup.” Part
of Campbell’s challenge in increasing sales may lie not so much in the consumer attitudes these slogans
address as with memory considerations and the fact that people do not think of using or eating soup as
often as they should for certain meal occasions. In 2010, Campbell launched a new ad campaign, “It’s
Amazing What Soup Can Do,” showcasing the soup as an indispensable food for any occasion—paired
with a variety of foods; poured over meat, pasta, or rice as a sauce; or used as an ingredient in a recipe.
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 111
clients out to dinner, buying a new laptop computer or looking for a new job.3 Consider the brand
salience challenges for Campbell’s soup.
In other words, it may be harder to try to change existing brand attitudes than to remind
people of their existing attitudes toward a brand in additional, but appropriate, consumption
situations.
A highly salient brand is one that has both depth and breadth of brand awareness, such
that customers always make sufficient purchases as well as always think of the brand across
a variety of settings in which it could be employed or consumed. Brand salience is an impor-
tant first step in building brand equity but is usually not sufficient. For many customers in
many situations, other considerations, such as the meaning or image of the brand, also come
into play.
Creating brand meaning includes establishing a brand image—what the brand is
characterized by and should stand for in the minds of customers. Brand meaning is made
up of two major categories of brand associations related to performance and imagery. These
Campbell Soup’s best growth prospect might be just to
remind consumers of more situations in which they could
eat soup.
Source: Campbell Soup Company
Creating a communication program for those consumers who already have a favorable attitude toward
the brand that will help them remember it in more varied consumption settings may be the most profit-
able way to grow the Campbell’s soup franchise.4 Campbell’s has continued to evolve this theme in its
advertising campaigns. Recently, Campbell’s Soup has depicted real families as well as real weather pat-
terns to tie in soup consumption with various events in consumers’ lives. For example, one ad depicts a
mom in a grocery store with her kids when she hears the weather forecast about an impending storm.
Upon hearing this, she gets extra cans of soup so that she can add to her stock at home. In this way, the
new tagline “Made for Real, Real Life,” aligns well with the company’s corporate purpose of “real food
that matters for life’s moments.”5 Expanding the range of occasions that Campbell’s is consumed helps
reinforce how Campbell’s Soup is viewed by consumers and allows the company to increase the breadth
of brand awareness.
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112 PART II • DEVELOPING A BRAND STRATEGY
associations can be formed directly, from a customer’s own experiences and contact with the
brand, or indirectly, through advertising or by some other source of information, such as word
of mouth.
The next section describes the two main types of brand meaning—brand performance and
brand imagery—and the subcategories within each of those two building blocks.
Brand Performance The product itself is at the heart of brand equity because it is the primary influence on what
consumers experience with a brand, what they hear about a brand from others, and what the
firm can tell customers about the brand in their communications. Designing and delivering a
product that fully satisfies consumer needs and wants is a prerequisite for successful marketing,
regardless of whether the product is a tangible good, service, organization, or person. To cre-
ate brand loyalty and resonance, marketers must ensure that consumers’ experiences with the
product at least meet, if not surpass, their expectations. As Chapter 1 noted, numerous studies
have shown that high quality brands tend to perform better financially and yield higher returns
on investment.
SUBWAY
Subway zoomed to the top as the biggest-selling quick-serve restaurant through a clever positioning of
offering healthy, good-tasting sandwiches. This straddle positioning allowed the brand to create a POP on
taste and a POD on health concerning quick-serve restaurants such as McDonald’s and Burger King, but, at
the same time, a POP on health and a POD on taste with respect to health food restaurants and cafés. One
of Subway’s highly successful product launches was the $5 footlong sandwich. Dreamed up by a franchise
operator in Miami, the idea quickly took hold and was the perfect solution for hungry, cash-starved consum-
ers during the recession. This strong performance and value message has allowed Subway to significantly
expand its market coverage and potential customer base.6
Brand performance describes how well the product or service meets customers’ more func-
tional needs. How well does the brand rate on objective assessments of quality? To what extent
does the brand satisfy utilitarian, aesthetic, and economic customer needs and wants in the product
or service category?
Brand performance transcends the product’s ingredients and features to include dimen-
sions that differentiate the brand. Often, the strongest brand positioning relies on performance
advantages of some kind, and it is rare that a brand can overcome severe performance defi-
ciencies. Five important types of attributes and benefits often underlie brand performance, as
follows:7
1. Primary ingredients and supplementary features. Customers often have beliefs about
the levels at which the primary ingredients of the product operate (low, medium, high, or
very high), and about special, perhaps even patented, features or secondary elements that
complement these primary ingredients. Some attributes are essential ingredients necessary
for a product to work, whereas others are supplementary features that allow for customiza-
tion and more versatile, personalized usage. Of course, these vary by product or service
category.
2. Product reliability, durability, and serviceability. Reliability measures the consistency
of performance over time and from purchase to purchase. Durability is the expected eco-
nomic life of the product, and serviceability, the ease of repairing the product if needed.
Thus, perceptions of product performance are affected by factors such as the speed, accu-
racy, and care of product delivery and installation; the promptness, courtesy, and help-
fulness of customer service and training; and the quality of repair service and the time
involved.
3. Service effectiveness, efficiency, and empathy. Customers often have performance-related
associations with service. Service effectiveness measures how well the brand satisfies
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 113
customers’ service requirements. Service efficiency describes the speed and responsiveness
of service. Finally, service empathy is the extent to which service providers are seen as trust-
ing, caring, and having the customer’s interests in mind.
4. Style and design. The design has a functional aspect regarding how a product works
that affects performance associations. Consumers also may have associations with the
product that goes beyond its functional aspects to more aesthetic considerations such
as its size, shape, materials, and color involved. Thus, performance may also depend on
sensory aspects such as how a product looks and feels, and perhaps even what it sounds
or smells like.
5. Price. The pricing policy for the brand can create associations in consumers’ minds about
how relatively expensive (or inexpensive) the brand is, and whether it is frequently or
substantially discounted. Price is a particularly important performance association because
consumers may organize their product category knowledge in terms of the price tiers of
different brands.8
Brand Imagery The other main type of brand meaning is brand imagery. Brand imagery depends on the
extrinsic properties of the product or service, including how the brand attempts to meet cus-
tomers’ psychological or social needs. It is the way people think about a brand abstractly,
rather than what they think the brand actually does. Thus, imagery refers to more intangible
aspects of the brand, and consumers can form imagery associations directly from their
own experience or indirectly through advertising or by some other source of information,
such as word of mouth. Many kinds of intangibles can be linked to a brand, but four main
ones are:
1. User profiles
2. Purchase and usage situations
3. Personality and values
4. History, heritage, and user experiences.
For example, take a brand with rich brand imagery such as Nivea in Europe, makers of many
different skin care and personal care products. Some of its more notable intangible associa-
tions include: (1) family/shared experiences/maternal, (2) multipurpose, (3) classic/timeless, and
(4) childhood memories.
User Imagery. One set of brand imagery associations is about the type of person or organization
who uses the brand. This imagery may result in customers’ mental image of actual users or more
aspirational, idealized users. Consumers may base associations of a typical or idealized brand user
on descriptive demographic factors or more abstract psychographic factors. Demographic factors
might include the following:
• Gender. Venus razors and Secret deodorant have feminine associations, whereas Gillette
razors and Axe deodorant have more masculine associations.9
• Age. Pepsi and Under Armour shoes have tried to position themselves as fresher and younger
in spirit than Coca-Cola and Nike, respectively.
• Race. Goya foods and the Univision television network have a strong identification with the
Hispanic market.
• Income. Sperry’s shoes, Polo shirts, and BMW automobiles became associated with
“yuppies”—young, affluent, urban professionals.
Psychographic factors might include attitudes toward life, careers, possessions, social issues, or
political institutions; for example, a brand user might be seen as iconoclastic or as more traditional
and conservative.
In a business-to-business setting, user imagery might relate to the size or type of organization.
For example, buyers might see Microsoft as an aggressive company and Cisco as a technology
leader. User imagery may focus on more than characteristics of just one type of individual and
center on broader issues regarding perceptions of a group as a whole. For example, customers
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114 PART II • DEVELOPING A BRAND STRATEGY
may believe that a brand is used by many people and therefore view the brand as popular or a
market leader.
Purchase and Usage Imagery. A second set of associations tells consumers under what
conditions or situations they can or should buy and use the brand. Associations can relate to
type of channel, such as department stores, specialty stores, or the Internet; to specific stores,
such as Macy’s, Foot Locker, or Nordstrom; and to ease of purchase and associated rewards
(if any).
Associations to a typical usage situation can relate to the time of day, week, month, or year
to use the brand; location—for instance, inside or outside the home; and type of activity during
which to use the brand—formal or informal. For a long time, pizza chain restaurants had strong
associations to their channels of distribution and the manner by which customers would purchase
and eat the pizza—Domino’s was known for delivery, Little Caesar for takeout, and Pizza Hut
for dine-in service—although in recent years, each of these major competitors has made inroads
in the traditional markets of the others.
Brand Personality and Values. Through consumer experience or marketing activi-
ties, brands may take on personality traits or human values and, like a person, appear to
be modern, old-fashioned, lively, or exotic.10 Five dimensions of brand personality (with
corresponding subdimensions) are sincerity (down-to-earth, honest, wholesome, and cheer-
ful), excitement (daring, spirited, imaginative, and up-to-date), competence (reliable, intel-
ligent, successful), sophistication (upper class and charming), and ruggedness (outdoorsy
and tough).11
How does brand personality get formed? Any aspect of a brand may be used by consumers to
infer brand personality. One research study found that consumers perceived nonprofit companies
as being warmer than for-profit companies, but less competent. Further, consumers were less will-
ing to buy a product made by a nonprofit than a for-profit company because of their perception
that the firm lacked competence, but those purchasing misgivings disappeared when perceptions
of the competency of the nonprofit were improved, for example, by a credible endorsement such
as from The Wall Street Journal.12
Although any aspect of the marketing program may affect brand personality, marketing
communications and advertising may be especially influential because of the inferences con-
sumers make about the underlying user or usage situation depicted or reflected in an ad. For
example, advertisers may imbue a brand with personality traits through anthropomorphization
and product animation techniques; through personification and the use of brand characters;
and through user imagery, such as the preppy look of Abercrombie & Fitch models.13 More
generally, the actors in an ad, the tone or style of the creative strategy, and the emotions or
feelings evoked by the ad can affect brand personality. Once brands develop a personality,
it can be difficult for consumers to accept information they see as inconsistent with that
personality.14
Still, user imagery and brand personality may not always be in agreement. When
performance-related attributes are central to consumer decisions, as they are for food products,
for example, brand personality and user imagery may be less closely related. Differences between
personality and imagery may arise for other reasons, too. For example, early in its U.S. brand
development, Perrier’s brand personality was sophisticated and stylish, whereas its actual user
imagery was not as flattering or subdued but flashy and trendy.
When user and usage imagery are important to consumer decisions, however, brand
personality and imagery are more likely to be related, as they are for cars, beer, liquor, cigarettes,
and cosmetics. Thus, consumers often choose and use brands that have a brand personality con-
sistent with their self-concept, although in some cases, the match may be based on consumers’
desired, rather than their actual, image.15 These effects may also be more pronounced for publicly
consumed products than for privately consumed goods because the signaling aspect of a brand
may be more important under those conditions.16 Consumers who are high self-monitors and
sensitive to how others view them are more likely to choose brands whose personalities fit the
consumption situation.17
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 115
User and usage imagery is often an issue in these highly competitive categories. One company
looking to sharpen its brand personality and user imagery is Hyatt Hotels.
Brand History, Heritage, and Experiences. Finally, brands may take on associations to
their past and certain noteworthy events in the brand’s history. These types of associations may
recall distinctly personal experiences and episodes or past behaviors and experiences of friends,
family, or others. They can be highly personal and individual, or more well-known and shared
by many people. For example, there may be associations to aspects of the brand’s marketing
program, the color of the product or look of its package, the company or person that makes the
product and the country in which it is made, the type of store in which it is sold, the events for
which the brand is a sponsor, and the people who endorse the brand. Retro-themed packaging
and retro advertising have become an often-used strategy by brands who want to appeal to older
audiences, particularly baby boomers.
HYATT
Hyatt Hotels has built an emotional connection with its customers through branding itself in unique ways
across a portfolio of different offerings. Hyatt’s strategy for building strong customer relationships is by special-
izing each hotel within its portfolio to focus on a specific customer segment, and by ensuring that the hotel
stay is tailored to meet the needs of that segment. For example, Park Hyatt is one of the high-end hotels
within the Hyatt portfolio which focuses on providing rare and intimate experiences to the luxury traveler,
while at the same time, doing it in an understated way. Grand Hyatt, by contrast, is a more traditional luxury
hotel offering larger-than-life experiences at its various locations. Hyatt Place and Hyatt House are targeting
the ambitious customer, who is a multitasker. The advertising for Hyatt Place and Hyatt House leverages the
idea of ambition and focuses on consumers who do not want to settle. The ad campaign features real people
who do not want to settle in their lives, such as a former college football player turned professional opera
singer. By moving beyond features and functionality, the Hyatt Place and Hyatt House advertising is hoping
to improve its appeal to its customers. In these ways, each of the hotels within the Hyatt lineup has a unique
mission and delivery that capitalizes on its knowledge of what a particular subsegment is looking for and
delivers exceptional experiences to that particular segment in hopes of building an emotional connection
with its customers.18
Grand Hyatt is a more traditional luxury hotel offering larger-
than-life experiences at its various locations, and occupies an
important place in the Hyatt portfolio of hotels.
Source: EqRoy/Shutterstock.
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116 PART II • DEVELOPING A BRAND STRATEGY
These types of associations can help create strong points-of-difference. In the midst of the
recent major recession, Northern Trust used the fact that it was more than 130 years old and
had weathered many financial downturns through the years to reinforce trust and stability to its
wealthy clientele.19 In any case, associations to history, heritage, and experiences draw upon more
specific, concrete examples that transcend the generalizations that make up the usage imagery. In
the extreme case, brands become iconic by combining all these types of associations into what
is, in effect, a myth, tapping into enduring consumer hopes and dreams.20 The overall service or
customer experience associated with a brand can also become integral to its overall brand image.
The Science of Branding 3-1 outlines some examples of great customer experiences becoming
integral to a brand’s image.
Some different types of associations related to either performance or imagery may
become linked to the brand. We can characterize the brand associations making up the brand
image and meaning according to three important dimensions—strength, favorability, and
uniqueness—that provide the key to building brand equity. Successful results on these three
Amazon is ranked as among the most relevant brands according
to one consulting firm’s Brand Relevance Index. It also has been
known for its ability to deliver exceptional customer experiences in
the retail sector. Amazon’s customer experience has been carefully
developed through attention to detail regarding all aspects of the
customer journey, which translates into a focus on various aspects
of order placement, product delivery, product returns, and so on.
One key facet of its customer experience is investing in technolo-
gies, such as cheap tablets and smart speakers that it can install in
customers’ homes, which becomes a way for Amazon to develop
a richer understanding of customer needs and behaviors.
Alexa is Amazon’s voice service which powers Amazon’s Echo
smart speakers. The advent of digital voice services such as Alexa
represents the slow ramping up of the customer experience by
large technology firms. Amazon’s Alexa uses machine learning and
artificial intelligence to know customers’ needs, preferences, and
behaviors which allows them to guide the customer experience
as they shop on Amazon or interact with Apple devices. Another
investment in a seamless customer experience is Amazon’s Prime
service, which, for a low price of $79, allows customers to enjoy
free two-day shipping throughout the year. Prime customers out-
spend regular customers of Amazon by more than $700 per year,
which makes them extremely valuable customers, accounting for
almost 50 percent of Amazon’s customer base. Thus, Amazon
Prime is yet another weapon in Amazon’s ever-growing arsenal of
ways to make the customer experience seamless and friction-free.
This phenomenon is by no means unique to Amazon and
Apple. Companies such as Uber, Lyft, Spotify, Dropbox, Grubhub,
TripAdvisor, and Zappos are examples of other digital-only brands
that have redefined the customer experience and transformed it
into a seamless, one-of-a-kind experience. This type of customer
experience is integral to the essence of these digital brands. While
technology is a key enabler of what the customer experiences
when interacting with these brands, a second key ingredient is
also empathy. One story captures the essence of how Zappos’
customer experience is seen as exceptional.
It is said that a Zappos customer accidentally packaged his
wife’s jewelry in a spare Zappos box during a move; the wife,
unaware that the jewelry was in the box, shipped the box to
Zappos. The Zappos employee, upon receiving the box, imme-
diately recognized the error and, rather than mail the contents
back, made a flight booking and hand-delivered the contents
of the box to the couple, ensuring a happy ending to what
otherwise could have been a disastrous situation for the couple.
In doing so, and by empowering their employees to act on
their behalf and to keep customers’ needs at the center of all
that they do, Zappos has been successful in gaining a loyal
customer base.
THE SCIENCE OF BRANDING 3-1
How Customer Experiences Define a Brand
Alexa is a digital voice service that has enabled Amazon to
gain unique insights into customers’ needs, preferences, and
behaviors.
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 117
dimensions produce the most positive brand responses, the underpinning of intense and active
brand loyalty.
Creating strong, favorable, and unique associations is a real challenge to marketers, but
essential to building customer-based brand equity. Strong brands typically have firmly established
favorable and unique brand associations with consumers. Brand meaning is what helps produce
brand responses, or what customers think or feel about the brand. We can distinguish brand
responses as either brand judgments or brand feelings, that is, regarding whether they arise from
the head or the heart, as the following sections describe.
Brand Judgments Brand judgments are customers’ personal opinions about and evaluations of the brand, which
consumers form by putting together all the different brand performance and imagery associations.
Customers may make all types of judgments concerning a brand, but four types are particularly
important: judgments about quality, credibility, consideration, and superiority.
Brand Quality. Brand attitudes are consumers’ overall evaluations of a brand and often form
the basis for brand choice.21 Brand attitudes generally depend on specific attributes and benefits
of the brand. For example, consider Hilton Hotels. A consumer’s attitude toward Hilton depends
on how much he or she believes the brand is characterized by certain associations that matter to
the consumer for a hotel chain, such as location; room comfort, design, and appearance; service
quality of staff; recreational facilities; food service; security; prices; and so on.
Consumers can hold a host of attitudes toward a brand, but the most important relate to its
perceived quality and to customer value and satisfaction. Perceived quality measures are inher-
ent in many approaches to brand equity. In the annual EquiTrend study by Harris Interactive,
100,000 consumers in the U.S. rate more than 4,000 brands in more than 450 categories ranging
from automobiles to technology to news media. The EquiTrend Brand Equity Index is comprised of
three key factors— familiarity, quality and consideration—that result in a Brand Equity rating for
each brand. Brands that rank highest in equity receive the Harris Poll EquiTrend “Brand of the Year”
award in their category.22
Brand Credibility. Customers may also form judgments about the company or organization
behind the brand. Brand credibility describes the extent to which customers see the brand as
credible in terms of three dimensions: perceived expertise, trustworthiness, and likability. Is the
brand seen as (1) competent, innovative, and a market leader (brand expertise); (2) dependable
and keeping customer interests in mind (brand trustworthiness); and (3) fun, interesting, and worth
spending time with (brand likability)? In other words, credibility measures whether consumers
see the company or organization behind the brand as good at what it does, concerned about its
customers, and just plain likable.23
Southwest Airlines is another company that is often lauded for
its exceptional dedication to improving the customer experience.
One key is its systems and processes for customer service combined
with employee empowerment. For example, one passenger on a
Southwest Airlines flight found that her suitcase (which had been
checked in during a flight) arrived with a damaged handle. The
passenger was expecting the usual mountain of paperwork that
accompanies a typical claim that accompanies damages to bag-
gage. Instead, imagine her surprise when she was escorted into a
room with new baggage, was able to choose a replacement bag,
and transfer all her contents into the new bag, and walk out of the
airport with a new bag to replace the one that broke. By empower-
ing its employees to address customer complaints by investing in
systems and processes that could handle typical problem situations,
Southwest has redefined the customer experience in the airline
industry. In this way, exceptional user experience has become a key
component of brand image.
Sources: Megan Webb-Morgan, “Southwest Airlines: A Case Study in
Great Customer Service,” February 22, 2017, accessed February 1, 2018;
Southwest Airlines Co. (2018) “Southwest Airlines Again Among For-
tune’s Top10 World’s Most Admired Companies,” January 19, 2018, PR
Newswire, accessed February 1, 2018; Shep Hyken, “Southwest Airlines
Customer Experience Leads to Loyalty,” January 9, 2016, Forbes.com,
accessed February 1, 2018. Scott Davis, “How Amazon’s Brand and Cus-
tomer Experience Became Synonymous,” July 14, 2016, Forbes.com,
accessed February 1, 2018; Eric Feinberg, “How Amazon Is Investing
In Customer Experience By Reimagining Retail Delivery,” January 4,
2018, www.forbes.com/sites/forbescommunicationscouncil/2018/01/
04/how-amazon-is-investing-in-customer-experience-by-reimagining-
retail-delivery/#3164b3d42c2e, accessed April 5, 2018; Micah
Solomon, “Three Wow Customer Service Stories From Zappos, South-
west Airlines and Nordstrom,” August 1, 2017, www.forbes.com/
sites/micahsolomon/2017/08/01/three-wow-customer-service-stories-
from-zappos-southwest-airlines-and-nordstrom/#355076582aba,
accessed April 5, 2018.
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118 PART II • DEVELOPING A BRAND STRATEGY
Brand Consideration. Favorable brand attitudes and perceptions of credibility are important,
but not important enough if customers do not consider the brand for possible purchase or use. As
Chapter 2 introduced, consideration depends in part on how personally relevant customers find
the brand and is a crucial filter regarding building brand equity. No matter how highly they regard
the brand or how credible they find it, unless they also give it serious consideration and deem it
relevant, customers will keep a brand at a distance and never closely embrace it. Brand consider-
ation depends in large part on the extent to which strong and favorable brand associations can be
created as part of the brand image.
Brand Superiority. Superiority measures the extent to which customers view the brand as
unique and better than other brands. Do customers believe it offers advantages that other brands
cannot? Superiority is critical to building intense and active relationships with customers and
depends to a great degree on the number and nature of unique brand associations that make up
the brand image.
FEDEX
From its earliest advertising, “When It Absolutely, Positively Has to Be There Overnight,” FedEx has stressed
its speed, skill, and dependability in shipping and delivery. Its brand campaign, “Solutions That Matter”
launched in 2011, offers the perfect platform to enable FedEx to tell stories about the various ways in
which the company solves problems for customers ranging from delivering cargo to printing documents or
shipping unusual or special items.24 The company wants customers to think of it as a trusted partner, with
a commitment to reliable but cost-effective shipping all over the world. Its advertising, however, often uses
humor and high production values. FedEx ads that run during the Super Bowl are often rated among the
most enjoyable by consumers. Recently, FedEx has expanded its customer engagement and service delivery
through the use of social media channels such as Facebook and Twitter, thus providing a variety of different
ways in which FedEx customers receive service from the company.25 Also, FedEx uses content marketing
via online channels which involve developing and sharing content to build stronger connections with its
customers.26 FedEx’s “In the Wild” content marketing campaign encourages its followers on Instagram
to take pictures of FedEx vehicles in various locations, and carefully curates the most engaging photos to
post them on its Instagram. This approach allowed FedEx to gain a large following on Instagram, and as
a result of the campaign the follower-ship grew nearly 400 percent.27 Through its flawless service delivery
and creative marketing communications, FedEx can establish all three dimensions of credibility: expertise,
trustworthiness, and likability.28
A brand like FedEx is seen as highly credible due to its expertise, trustworthiness,
and likability.
Source: Adam Slinger/Alamy
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 119
Brand Feelings Brand feelings are customers’ emotional responses and reactions to the brand. Brand feelings
also relate to the social currency evoked by the brand. What feelings are evoked by the marketing
program for the brand or by other means? How does the brand affect customers’ feelings about
themselves and their relationship with others? These feelings can be mild or intense and can be
positive or negative.
For example, Kevin Roberts of Saatchi & Saatchi argues that companies must transcend
brands to create “trustmarks”—a name or symbol that emotionally binds a company with the
desires and aspirations of its customers—and ultimately “lovemarks.” He argues that it is not
enough for a brand to be just respected.
Pretty much everything today can be seen in relation to a love-respect axis. You can plot
any relationship—with a person, with a brand—by whether it’s based on love or based
on respect. It used to be that a high respect rating would win. But these days, a high love
rating wins. If I don’t love what you’re offering me, I’m not even interested.29
A passionate believer in the concept, Roberts reinforces the point that trustmarks truly belong to
the people who offer the love to the brand, and that an emotional connection is critical.30
The emotions evoked by a brand can become so strongly associated that they are
accessible during product consumption or use. Researchers have defined transformational
advertising as advertising designed to change consumers’ perceptions of the actual usage
experience with the product.31 Corona Extra overtook Heineken as the leading imported beer
in the United States via its “beach in a bottle” advertising. With a tagline “Miles Away from
Ordinary,” the campaign was designed to transport drinkers—at least mentally—to sunny,
tranquil beaches.32
More and more firms are attempting to tap into more consumer emotions with their brands.
The following are six important types of brand-building feelings:33
1. Warmth: The brand evokes soothing types of feelings and makes consumers feel a sense of
calm or peacefulness. Consumers may feel sentimental, warmhearted, or affectionate about
the brand. Many heritage brands such as Welch’s jelly, Quaker oatmeal, and Aunt Jemima
pancake mix and syrup tap into feelings of warmth.
2. Fun: Upbeat types of feelings make consumers feel amused, lighthearted, joyous, playful,
cheerful, and so on. With its iconic characters and theme park rides, Disney is a brand often
associated with fun. Microsoft’s Xbox and YouTube also evoke brand associations linked to
fun and entertainment.
3. Excitement: The brand makes consumers feel energized and that they are experiencing some-
thing special. Brands that evoke excitement may generate a sense of elation, of being alive,
or being cool, sexy, and so on. Red Bull is a brand seen by many teens and young adults as
exciting.
4. Security: The brand produces a feeling of safety, comfort, and self-assurance. As a result of
the brand, consumers do not experience worry or concerns that they might have otherwise felt.
Allstate Insurance with “You’re in Good Hands,” State Farm with “Like a Good Neighbor,”
and Nationwide with “On Your Side” are all insurance brands that have slogans to commu-
nicate safety, security and trust to consumers.
5. Social approval: The brand gives consumers a belief that others look favorably on their
appearance, behavior, and so on. This approval may be a result of direct acknowledgment
of the consumer’s use of the brand by others or may be less overt and a result of attribution
of product use to consumers. To an older generation of consumers, Cadillac is a brand that
historically has been a signal of social approval.
6. Self-respect: The brand makes consumers feel better about themselves; consumers feel a
sense of pride, accomplishment, or fulfillment. A brand like Tide laundry detergent can link
its brand to “doing the best things for the family” to many homemakers.
These six feelings can be divided into two broad categories: The first three types of feelings are
experiential and immediate, increasing in level of intensity; the latter three types of feelings are
private and enduring, increasing in level of gravity.
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120 PART II • DEVELOPING A BRAND STRATEGY
Although all types of customer responses are possible—driven from both the head and
heart—ultimately, what matters is how positive they are. Responses must also be accessible
and come to mind when consumers think of the brand. Brand judgments and feelings can
favorably affect consumer behavior only if consumers internalize or think of positive
responses in their various encounters with the brand.
Brand Resonance The final step of the model focuses on the ultimate relationship and level of identification that the
customer has with the brand.34 Brand resonance describes the nature of this relationship and the
extent to which customers feel that they are in sync with the brand. Examples of brands with
historically high resonance include Harley-Davidson, Apple, and Amazon.
Resonance is characterized in terms of intensity, or the depth of the psychological bond
that customers have with the brand, as well as the level of activity engendered by this loyalty
(repeat purchase rates and the extent to which customers seek out brand information, events, and
other loyal customers). We can break down these two dimensions of brand resonance into four
categories:
1. Behavioral loyalty
2. Attitudinal attachment
3. Sense of community
4. Active engagement
Behavioral Loyalty. We can gauge behavioral loyalty in terms of repeat purchases and the
amount or share of category volume attributed to the brand—that is, the share of category require-
ments. In other words, how often do customers purchase a brand and how much do they pur-
chase? For bottom-line profit results, the brand must generate sufficient purchase frequencies
and volumes.
The lifetime value of behaviorally loyal consumers can be enormous.35 For example, a
loyal General Motors customer could be worth $276,000 over his or her lifetime (assuming
11 or more vehicles bought and word-of-mouth endorsement that makes friends and relatives
more likely to consider GM products). Or consider new parents. By spending $100 a month
on diapers and wipes for 24 to 30 months, they can create lifetime value of as much as $3,000
for just one baby.
Attitudinal Attachment. Behavioral loyalty is necessary but not sufficient for resonance to
occur.36 Some customers may buy out of necessity—because the brand is the only product stocked
or readily accessible, the only one they can afford, or other reasons. Resonance, however, requires
a strong personal attachment. Customers should go beyond having a positive attitude to viewing
the brand as something special in a broader context. For example, customers with a great deal
of attitudinal attachment to a brand may state that they love the brand, describe it as one of their
favorite possessions, or view it as a little pleasure that they look forward to.
Prior research has shown that mere satisfaction may not be enough.37 Xerox found that
when customer satisfaction was ranked on a scale of 1 (completely dissatisfied) to 5 (com-
pletely satisfied), customers who rated Xerox products and services as “4”—and thus, were
satisfied—were six times more likely to defect to competitors than those customers who pro-
vided ratings of “5.”38 Creating greater loyalty requires creating deeper attitudinal attachment,
through marketing programs and products and services that fully satisfy consumer needs. Atti-
tudinally loyal customers also become brand evangelists, which also helps solidify a brand’s
equity.39
Sense of Community. The brand may also take on a broader meaning to the customer by con-
veying a sense of community.40 Identification with a brand community may reflect an important
social phenomenon in which customers feel a kinship or affiliation with other people associated
with the brand, whether fellow brand users or customers, or employees or representatives of the
company. A brand community can exist online or off-line.41 Branding Brief 3-1 profiles three
company-initiated programs to help build brand communities. A stronger sense of community
among loyal users can engender favorable brand attitudes and intentions.42
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 121
BMW
BMW’s lifestyle business was started 15 years ago as a marketing initiative whose objectives were to broaden
the brand’s presence and strengthen loyalty. The lifestyle division focuses primarily on selling mobility products,
including bicycles and skateboards for kids, and aims for a profit margin (7%) similar to what BMW generates
from sales of its automobiles. More than 2,000 products are sold, from €39 ($52) Mini rain boots to the highly
regarded €2750 ($3,620) lightweight M Carbon Racer bike from BMW’s M performance unit. These are not
your run-of-the-mill products, however. BMW’s €79 ($105) Snow Racer sled has replaceable metal runners, a
suspension-system in the red steering ski, and a horn to warn inattentive passersby. The battery-powered Baby
Racer, designed internally by BMW Designworks, comes in three different models and costs €79 ($106). Winner
of several design prizes and featured in the Museum of Modern Art in New York, it sells 60,000 units a year.
In China, which is now its third-largest market for car sales, BMW opened a store selling merchandise a year
before it began assembling cars in the country and had more than 50 BMW stores there by the end of 2012.44
Active Engagement Finally, perhaps the strongest affirmation of brand loyalty occurs when cus-
tomers are engaged, or willing to invest time, energy, money, or other resources in the brand beyond
those expended during purchase or consumption of the brand.43 For example, customers may choose
to join a club centered on a brand, receive updates, and exchange correspondence with other brand
users or formal or informal representatives of the brand itself. Companies are making it increasingly
easy for customers to buy a range of branded merchandise so they can literally express their loyalty.
With 1.2 million members, Harley Owners Group is the quintessential example of
a brand community.
Harley-Davidson
The world-famous motorcycle company spon-
sors the Harley Owners Group (H.O.G.), which
has members in chapter groups all over the
world sharing a very simple mission, “To Ride
and Have Fun.” By 2017, the H.O.G. commu-
nity had grown to include more than 1 million
members at a cost of approximately $49 per
year. There are many benefits of belonging to
a H.O.G. including Harley-Davidson Custom-
ization, subscription to the H.O.G. magazine,
roadside assistance, safe rider programs, and
access to a Fly & Ride program enabling mem-
bers to rent Harleys while on vacation.
Over and above these benefits, H.O.G.
owners contribute to the Wounded War-
riors Project, and can gain access to special
(e.g., Iron Elite) communities through the
H.O.G. Web site. More important, the com-
munity facilitates sharing of Harley experi-
ences among owners of the bike, thereby
fostering a greater sense of community and
deeper engagement with the brand. The company also maintains
an extensive Web site devoted to H.O.G., which includes infor-
mation about club chapters and events and features a special
members-only section.
Sephora
Sephora has sponsored an online brand community and embed-
ded various features that make this a vibrant community. For
example, the brand community for Sephora allows users to
BRANDING BRIEF 3-1
Building Brand Communities
Customers may choose to visit brand-related Web sites, participate in chat rooms, or post
to discussion forums. In this case, customers themselves became brand evangelists and ambas-
sadors and helped communicate about the brand and strengthen the brand ties of others. Strong
attitudinal attachment or social identity or both are typically necessary, however, for active
engagement with the brand to occur.
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122 PART II • DEVELOPING A BRAND STRATEGY
create customer accounts linked to their social presences and
loyalty cards, which allows the company to learn about cus-
tomers’ shopping habits and media consumption behaviors.
Sephora’s brand community (called BeautyTalk) encourages its
customers to actively engage with each other off-line as well.
Further, Sephora launched a new digital community platform
called “Beauty Insiders” which asks participants of the page
(which is on the Sephora.com Web site) to design their own
personal makeup profile, join groups, participate in Q&A ses-
sions with other Beauty Insiders, and get beauty and makeup
advice from experts.
Participants of the Beauty Insider community can trade
beauty tips with other users, thereby fostering the network of
people with similar interests. There is also an interactive “Beauty
Board” in which members can post looks and videos along with
product recommendations that can be accessed by others. Com-
munity members can also allow others to provide real-time input
on purchases as they are being made, and the community is also
accessible via the Sephora App. Through these various innovative
features, Sephora has built a community of beauty enthusiasts
and deepened customer engagement with the brand.
Jeep
In addition to joining the hundreds of local Jeep enthusiast clubs
throughout the world, Jeep owners can convene with their
vehicles in wilderness areas across the United States as part of
the company’s official Jeep Jamborees. A tradition since 1953,
Jeep Jamborees bring Jeep owners and their families together for
two-day off-road adventures in 34 different locations throughout
the United States from spring through autumn each year. Trails
and obstacles are rated on a 1–10 scale in terms of difficulty. In
a new twist, Jeep owners can participate in the “My Jeep Story”
digital and social campaign. This campaign allowed Jeep’s cus-
tomers to celebrate the company’s seventy-fifth anniversary. This
campaign was an example of its broader theme used in its adver-
tising in which it implores its customers to engage with the brand
using the tagline, “We Don’t Make Jeep, You Do.”
The advantage of the “My Jeep Story” campaign was its abil-
ity to draw the customer into a conversation with the company
about what the brand meant to them. The campaign was acti-
vated through various social media channels including Instagram,
Facebook, and Twitter. Fans were told to go to the Web site www
.jeep.com/myjeepstory to post videos of their stories. This cam-
paign also featured “Story Sessions” in which the brand featured
summer fun, military appreciation, etc. By encouraging loyal users
to share their brand stories on social media, Jeep increased its
engagement with its customers.
Taken together, the case studies of brand community por-
trayed here have a common theme—they allow their existing
customer base to act as brand ambassadors and evangelists for
the brand. One firm has developed a metric called “Participation
Brand Index” (PBI) to measure how much a brand community is
able to harness its members to get involved in the brand. Accord-
ing to their analysis, brands such as Apple score very high on PBI,
as do brands such as Amazon, Google, Netflix, and BMW. Jeep is
the second-highest rated brand in terms of PBI or the ability of a
brand to make customers feel part of a community.
Sources: Mailys Reslinger, “How Does Harley Davidson Gather Its Rid-
ers,” May 26, 2015, https://potion.social/en/blog/the-phenomenon-of-
harley-davidsons-online-community-study-case, accessed February 1,
2018; Jonathan Salem Baskin, “Harley-Davidson Will Be a Case History
in Social Branding,” July 12, 2013, Forbes.com, accessed February 1,
2018; FCA US LLC (2016), “Jeep Brand Launches Global “My Jeep
Story” Digital and Social Campaign,” PR Newswire, March 28, 2016,
accessed February 1, 2018; Julian Thumm, “Sephora Learns the Impor-
tance of Online Brand Communities,” October 12, 2015, PowerRetail,
accessed February 1, 2018; BusinessWire (2017), “Sephora’s New Beauty
Insider Community Is Poised to Be the World’s Most Trusted and Beauty-
Obsessed Social Platform,” August 17, 2017, accessed February 1, 2018;
PR Newswire, Luttner, Kathryn (2017), “How Brands Like Jeep and
Airbnb Get Their Fans to Do Their Marketing for Them,” February 15,
2017, www.campaignlive.com/article/brands-jeep-airbnb-fans-marketing/
1424286#vQJQpqGS8rUPfFLT.99, accessed February 1, 2018.
Sephora’s online brand community encourages its customers
to engage with the brand in various ways.
In short, brand resonance and the relationships consumers have with brands have two dimen-
sions: intensity and activity. Intensity measures the strength of the attitudinal attachment and sense
of community. Activity tells us how frequently the consumer buys and uses the brand, as well as
engages in other activities not related to purchase and consumption.
Brand-Building Implications The brand resonance model provides a roadmap and guidance for brand building, a yardstick by
which brands can assess their progress in their brand-building efforts as well as a guide for mar-
keting research initiatives. With respect to the latter, one model application aids in brand tracking
and providing quantitative measures of the success of brand-building efforts (see Chapter 9).
Figure 3-4 contains a set of candidate measures for the six brand-building blocks.
The brand resonance model also reinforces some important branding tenets, six of which are
particularly noteworthy. We discuss them in the following sections.
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 123
FIGURE 3-4
Possible Measures of
Brand Building Blocks
I. Salience
What brands of product or service category can you think of? (using increasingly specific product category cues) Have you ever heard of these brands? Which brands might you be likely to use under the following
situations . . . ? How frequently do you think of this brand?
II. Performance Compared with other brands in the category, how well does this brand
provide the basic functions of the product or service category? Compared with other brands in the category, how well does this brand
satisfy the basic needs of the product or service category? To what extent does this brand have special features? How reliable is this brand? How durable is this brand? How easily serviced is this brand? How effective is this brand’s service? Does it completely satisfy your
requirements? How efficient is this brand’s service in terms of speed, responsiveness, and
so forth? How courteous and helpful are the providers of this brand’s service? How stylish do you find this brand? How much do you like the look, feel, and other design aspects of
this brand? Compared with other brands in the category with which it competes, are
this brand’s prices generally higher, lower, or about the same? Compared with other brands in the category with which it competes, do
this brand’s prices change more frequently, less frequently, or about the same amount?
III. Imagery
To what extent do people you admire and respect use this brand? How much do you like people who use this brand? How well do the following words describe this brand: down-to-earth,
honest, daring, up-to-date, reliable, successful, upper class, charming, outdoorsy?
What places are appropriate to buy this brand? How appropriate are the following situations to use this brand? Can you buy this brand in a lot of places? Is this a brand that you can use in a lot of different situations? To what extent does thinking of the brand bring back pleasant memories? To what extent do you feel you grew up with the brand?
IV. Judgments
Quality What is your overall opinion of this brand? What is your assessment of the product quality of this brand? To what extent does this brand fully satisfy your product needs? How good a value is this brand?
Credibility How knowledgeable are the makers of this brand? How innovative are the makers of this brand? How much do you trust the makers of this brand? To what extent do the makers of this brand understand your needs? To what extent do the makers of this brand care about your opinions? To what extent do the makers of this brand have your interests in mind?
(Continued)
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124 PART II • DEVELOPING A BRAND STRATEGY
Customers Own the Brands. The basic premise of the brand resonance model is that the true
measure of the strength of a brand is the way consumers think, feel, and act with respect to that brand.
Credibility (cont.)
How much do you like this brand?
How much do you admire this brand?
How much do you respect this brand?
Consideration
How likely would you be to recommend this brand to others?
Which are your favorite products in this brand category?
How personally relevant is this brand to you?
Superiority
How unique is this brand?
To what extent does this brand offer advantages that other brands
cannot?
How superior is this brand to others in the category?
V. Feelings
Does this brand give you a feeling of warmth?
Does this brand give you a feeling of fun?
Does this brand give you a feeling of excitement?
Does this brand give you a feeling of security?
Does this brand give you a feeling of social approval?
Does this brand give you a feeling of self-respect?
VI. Resonance
Loyalty
I consider myself loyal to this brand.
I buy this brand whenever I can.
I buy as much of this brand as I can.
I feel this is the only brand of this product I need.
This is the one brand I would prefer to buy/use.
If this brand were not available, it would make little difference to me if
I had to use another brand.
I would go out of my way to use this brand.
Attachment
I really love this brand.
I would really miss this brand if it went away.
This brand is special to me.
This brand is more than a product to me.
Community
I really identify with people who use this brand.
I feel as if I almost belong to a club with other users of this brand.
This is a brand used by people like me.
I feel a deep connection with others who use this brand.
Engagement
I really like to talk about this brand to others.
I am always interested in learning more about this brand.
I would be interested in merchandise with this brand’s name on it.
I am proud to have others know I use this brand.
I really like to post comments about this brand on social media.
I visit the brand's Facebook page regularly.
I like to visit the Web site for this brand.
Compared with other people, I follow news about this brand closely.
It should be recognized that the core brand values at the bottom two levels of the pyramid—brand salience, performance, and imagery—are typically more idiosyncratic and unique to a product and service category than other brand values.
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 125
The strongest brands will be those to which consumers become so attached and passionate that they,
in effect, become evangelists or missionaries and attempt to share their beliefs and spread the word
about the brand. The power of the brand and its ultimate value to the firm reside with customers.
It is through learning about and experiencing a brand that customers end up thinking, feeling,
and acting in a way that allows the firm to reap the benefits of brand equity. Although marketers
must take responsibility for designing and implementing the most effective and efficient brand-
building marketing programs possible, the success of those marketing efforts ultimately depends
on how consumers respond and the actions they take. This response, in turn, depends on the
knowledge that has been created in their minds and hearts for those brands.
Don’t Take Shortcuts with Brands. The brand resonance model reinforces the fact that there
are no shortcuts in building a brand. A great brand is not built by accident but is the product of
carefully accomplishing—either explicitly or implicitly—a series of logically linked steps with
consumers. The more explicitly marketers recognize the steps and define them as concrete goals,
the more likely they will give them the proper attention and fully realize them so they can pro-
vide the greatest contribution to brand-building. The length of time to build a strong brand will
therefore be directly proportional to the amount of time it takes to create sufficient awareness and
understanding so that firmly held and felt beliefs and attitudes about the brand are formed that
can serve as the foundation for brand equity.
The brand-building steps may not be equally difficult. Creating brand awareness is a step that
an effectively designed marketing program often can accomplish in a relatively short period of
time. Unfortunately, this step is the one that many brand marketers tend to skip in their mistaken
haste to quickly establish an image for the brand. It is difficult for consumers to appreciate the
advantages and uniqueness of a brand unless they have some sort of frame of reference for what
the brand is supposed to do and with whom or what it is supposed to compete. Similarly, consum-
ers cannot have highly positive responses without a reasonably complete understanding of the
brand’s dimensions and characteristics.
Even if, due to circumstances in the marketplace, consumers actually start a repeated- purchase
or behavioral loyalty relationship with a brand without much underlying feeling, judgment, or
associations, these other brand-building blocks will have to come into place at some point to cre-
ate true resonance. That is, although the start point may differ, the same steps in brand-building
eventually must occur to create a truly strong brand.
Brands Should Have a Duality. One important point reinforced by the model is that a strong
brand has a duality—it appeals to both the head and the heart. Thus, although there may be two
different ways to build loyalty and resonance—going up the left-hand and right-hand sides of the
pyramid—strong brands often do both. Strong brands blend product performance and imagery to
create a rich, varied, but complementary set of consumer responses to the brand.
By appealing to both rational and emotional concerns, a strong brand provides consumers
with multiple access points while reducing competitive vulnerability. Rational concerns can satisfy
utilitarian needs, whereas emotional concerns can satisfy psychological or emotional needs. Com-
bining the two allows brands to create a formidable brand position. Consistent with this reasoning,
a McKinsey study of 51 corporate brands found that having distinctive physical and emotional
benefits drove greater shareholder value, especially when the two were linked.45
MASTERCARD
MasterCard is an example of a brand with much duality, because it emphasizes both the rational
advantages of the credit card—its acceptance at establishments worldwide—as well as the emotional
advantages—expressed in the award-winning “Priceless” advertising campaign. Ads depict people
buying items to achieve both a very practical goal and a more important emotional goal. The first
ad, for example, showed a father taking his son to a baseball game. As they made purchases on
the way to their seats, superimposed on the screen and in a voiceover were highlighted the differ-
ent items they bought—tickets, hot dogs, and an autographed baseball—and how much each cost.
But, the last item highlighted was not a product but “real conversation with 11-year-old son” and, in
this case, the cost was stated as “priceless.” The ad ended with the tagline, “There Are Some Things
Money Can’t Buy; For Everything Else There’s MasterCard” and “Accepted at Ballparks Coast-to-Coast.”
The campaign has been so successful that it has run around the world, with appropriate cultural
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126 PART II • DEVELOPING A BRAND STRATEGY
adaptation. The baseball spot, for example, was redone as a cricket ad for Australia. The campaign
has received many awards, including multiple EFFIES from the American Marketing Association for
effectiveness.46 MasterCard has continued to use the Priceless campaign and has brought it into the
digital and social media space. In doing so, it has allowed MasterCard to devise interesting promotions
using the Priceless themes (e.g., Priceless cities), and to leverage digital channels to strengthen brand
engagement.47
Brands Should Have Richness. The level of detail in the brand resonance model highlights
the number of possible ways to create meaning with consumers and the range of possible
avenues to elicit consumer responses. Collectively, these various aspects of brand meaning and
the resulting responses produce strong consumer bonds to the brand. The various associations
making up the brand image may be reinforcing, helping strengthen or increase the favorability
of other brand associations, or they may be unique, helping add distinctiveness or offset some
potential deficiencies. Strong brands thus have both breadth (in terms of duality) and depth (in
terms of richness).
At the same time, brands should not necessarily be expected to score highly on all the vari-
ous dimensions and categories making up each core brand value. Building blocks can have hier-
archies in their own right. For example, with respect to brand awareness, typically marketers
should first establish category identification in some way before considering strategies to expand
brand breadth via needs satisfied or benefits offered. With brand performance, they may wish to
first link primary characteristics and related features before attempting to link additional, more
peripheral associations.
Similarly, brand imagery often begins with a fairly concrete initial articulation of user and
usage imagery that, over time, leads to broader, more abstract brand associations of personality,
value, history, heritage, and experience. Brand judgments usually begin with positive quality and
credibility perceptions that can lead to brand consideration and then perhaps ultimately to assess-
ments of brand superiority. Brand feelings usually start with either experiential ones (warmth, fun,
and excitement) or inward ones (security, social approval, and self-respect.) Finally, resonance
again has a clear ordering, whereby behavioral loyalty is a starting point, but attitudinal attachment
or a sense of community is almost always needed for active engagement to occur.
Brand Resonance Provides Important Focus. As Figure 3-1 shows, brand resonance is the
pinnacle of the brand resonance model and provides important focus and priority for decision
making about marketing. Marketers building brands should use brand resonance as a goal and
a means to interpret their brand-related marketing activities. The question to ask is: To what
extent is marketing activity affecting the key dimensions of brand resonance—consumer loyalty,
attachment, community, or engagement with the brand? Is marketing activity creating brand per-
formance and imagery associations and consumer judgments and feelings that will support these
brand resonance dimensions?
Customer Networks Strengthen Brand Resonance. Although the digital platform (e.g., the
customer base of Dropbox’s customers) comprising networks of customers is a relatively recent
phenomenon, the idea that customer networks can be a resource for building brand resonance has
been around for a long time. For example, companies such as Amway have leveraged customer-
to-customer interactions to strengthen their brands for years.
In recent years, a number of digital native brands have relied on networks of customer rela-
tionships to generate many positive outcomes including attracting new customers and deepening
relationships with existing customers. Recruiting new customers through referrals is more effective
as customers have been shown to be more receptive to information and behaviors that are shared
by peers than those received from traditional advertising.48 Further, the platform can become a
valuable resource for companies to launch various initiatives in conjunction with customers.
For example, this could include co-creation of both products and branded content allowing
for companies to interact with users that form part of the platform at a high level. The process of
co-creation also increases the identification of customers with the brand, strengthening consumer-
brand resonance.49 Branding Brief 3-2 highlights how two platform-based digital native brands
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 127
Grubhub
Against a crowded and chaotic food delivery landscape, Grubhub
has managed to carve out a unique space for its brand, and that
space has been growing. Grubhub is a digital food delivery service
which began operating in 2004. Following its merger with Seam-
less (a competitor) in 2013, the brand is available in more than
1,000 cities within the United States and has partnered with a
network of 44,000 restaurants delivering 267,000 orders daily to
more than 7 million active users.
So, what are the keys to Grubhub’s success? The compa-
ny’s keys to success are its portfolio of diverse restaurants and
how it generates a deep understanding of its customers’ eat-
ing behaviors. To leverage these advantages, the company has
four main strategies that it uses. First, it promotes the establish-
ments that form part of Grubhub’s network, thereby generating
goodwill for the restaurants while, at the same time, balancing
the needs of diners and their food experience. The transfer
of goodwill and brand associations that comes with co-opting
customers’ favorite local restaurants ultimately benefits Grub-
hub and contributes to its brand equity. Second, it taps into
the data accumulated across multiple customer purchases and
touchpoints to create personalized experiences across the entire
customer decision journey. Third, Grubhub redefined its mission
from merely delivering food to creating quality experiences and
moments that are crucial to stronger customer–brand relation-
ships. This focus on high quality delivery, in addition to being
a takeout service, enables Grubhub to maintain high standards
throughout the experience. Fourth, it segments users into dif-
ferent personas in ways which allow Grubhub to customize the
takeout and delivery experience to meet the diverse needs of
its audiences. These strategies have been effective in helping
Grubhub communicate with potential new customers and in
retaining existing customers.
TripAdvisor
TripAdvisor is the world’s largest travel site and boasts upward
of $1.2 billion in revenue with a large roster of participants.
TripAdvisor has four main strategies that it uses. First, the com-
pany believes in developing a deep understanding of custom-
ers, their motivations, and pain points. In doing so, the company
tries to go beyond the data and develops an empathetic view
of what the customer is looking for as they interact with the
travel site, whether it’s booking a business trip or buying tickets
for a honeymoon. Second, TripAdvisor includes the customer in
brand conversations by asking community participants to provide
insights into why they use TripAdvisor, and encourages them to
offer their opinions online. TripAdvisor also encourage its travel
partners to promote TripAdvisor as part of their own market-
ing activities, thereby maximizing the brand’s exposure. Third,
TripAdvisor has learned to leverage technology to maximize
return-on-investment (ROI). Its marketing department consists of
data scientists and engineers who are continuously optimizing
its online expenditures to ensure that the 350 million monthly
visitors are able to interact and engage with the brand. Fourth,
TripAdvisor also personalizes its communications after taking
into account the insights generated from its customer interac-
tions and transactions data. For example, just before a customer
embarks on a trip, TripAdvisor knows that its mobile app will be
of great value to the customer, particularly features such as “near
me now” that allow customers to find nearby restaurants to eat
at. The company has utilized information from prior searches
and introduced MyTrips—a feature which allows TripAdvisor to
personalize its service to each individual customer. By further
leveraging the power of its mobile app, TripAdvisor has been
very effective in building customer engagement. In addition to
these features, TripAdvisor also experiments with adding unique
content that will promote engagement among its travel- oriented
customers. TripAdvisor has been revising its brand strategy from
being known as the brand trusted for reviews to a brand where
a customer can find the lowest price and find the right hotel.
In these ways, TripAdvisor—a digital platform—has been able
to continuously evolve its brand, create brand value, and build
enduring consumer-brand relationships.
Sources: Zach Brooke, “Grubhub Aims to Redefine Food Delivery with
Rebrand,” Marketing News Weekly, May 24, 2016, https://www.ama
.org/publications/eNewsletters/Marketing-News-Weekly/Pages/grubhub-
aims-to-redefine-food-delivery-with-rebrand---.aspx, accessed February
1, 2018; Alison Griswold, “Grubhub Is Fending Off Copycats by Doubling
Down on Delivery,” March 14, 2016, https://qz.com/637471/grubhub-is-
chasing-silicon-valleys-delivery-success-story/, accessed February 28,
2018; Jessica Wohl, “Pho, Anyone? Grubhub Suggests People Try Some-
thing New,” November 14, 2017, http://adage.com/article/cmo-strategy/
grubhub-suggests-people/311295/, accessed February 28, 2018; Corinne
Bagish, “The Marketing Savvy Powering TripAdvisor’s Global Growth,”
December 21, 2015, Marketo.com, accessed February 2, 2018; “8 Inter-
esting Things We Learned from TripAdvisor’s Recent Brand Strategy
Update,” June 13, 2017, www.siteminder.com/r/hotel- distribution/hotel-
metasearch/8-things-learned-tripadvisor-brand-strategy- update/, accessed
February 28, 2018.
BRANDING BRIEF 3-2
How Digital Platform-Based Brands Create Customer Engagement
Digital platform-based brands—such as TripAdvisor—have
leveraged the power of technology and data-driven insights
to create value for their customers.
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128 PART II • DEVELOPING A BRAND STRATEGY
(i.e., Grubhub and TripAdvisor) leverage the strength of their platform to build consumer-brand
relationships and strong brand resonance.
It is virtually impossible, however, for consumers to experience an intense, active loyalty
relationship with all the brands they purchase and consume. Thus, some brands will be more
meaningful to consumers than others, because of the nature of their associated product or service,
the characteristics of the consumer, and so on. Some brands have more resonance potential than
others. When it is difficult to create a varied set of feelings and imagery associations, market-
ers might not be able to obtain the deeper aspects of brand resonance like active engagement.
Nevertheless, by taking a broader view of brand loyalty, they may be able to gain a more holistic
appreciation for their brand and how it connects to consumers. And by defining the proper role
for the brand, they should be able to obtain higher levels of brand resonance.
THE BRAND VALUE CHAIN Developing a strong positioning and building brand resonance are crucial marketing goals. To
better understand the ROI of marketing investments, however, another tool is necessary. The brand
value chain is a structured approach to assessing the sources and outcomes of brand equity and
the manner by which marketing activities create brand value.50 It recognizes that many different
people within an organization can affect brand equity and need to be aware of relevant branding
effects. The brand value chain thus provides insights to support brand managers, chief marketing
officers, managing directors, and chief executive officers, all of whom may need different types
of information.
The brand value chain has several basic premises. Consistent with the brand resonance model,
it assumes that the value of a brand ultimately resides with customers. Based on this insight, the
model next assumes that the brand value creation process begins when the firm invests in a market-
ing program targeting actual or potential customers (stage 1). The associated marketing activity
then affects the customer mind-set—what customers know and feel about the brand—as reflected
by the brand resonance model (stage 2). This mind-set, across a broad group of customers, produces
the brand’s performance in the marketplace—how much and when customers purchase, the price
that they pay, and so forth (stage 3). Finally, the investment community considers this market per-
formance—and other factors such as replacement cost and purchase price in acquisitions—to arrive
at an assessment of shareholder value in general and a value of the brand in particular (stage 4).
The model also assumes that a number of linking factors intervene between these stages.
These linking factors determine the extent to which value created at one stage transfers or “mul-
tiplies” to the next stage. Three sets of multipliers filter and moderate the transfer between the
marketing program and the three value stages: the program quality multiplier, the marketplace
conditions multiplier, and the investor sentiment multiplier. The brand value chain model is sum-
marized in Figure 3-5. Next, we describe the value stages and multiplying factors in more detail
and look at examples of both positive and negative multiplier effects.
FIGURE 3-5
Brand Value Chain
Program Quality
Multiplier
VALUE STAGES
Marketplace Conditions Multiplier
MULTIPLIERS Investor Sentiment Multiplier
Marketing Program Investment
Customer Mind-Set
Market Performance
Shareholder Value
- Product - Communications - Trade - Employee - Other
- Awareness - Associations - Attitudes - Attachment - Activity
- Price premiums - Price elasticities - Market share - Expansion success - Cost structure - Profitability
- Stock price - P/E ratio - Market capitalization
- Distinctiveness - Relevance - Integrated - Value - Excellence
- Competitive reactions - Channel support - Customer size and profile
- Market dynamics - Growth potential - Risk profile - Brand contribution
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 129
Value Stages Brand value creation begins with marketing activity by the firm.
Marketing Program Investment. Any marketing program investment that can contribute
to brand value development, intentionally or not, falls into this first value stage. Chapters 4–8
outline many such marketing activities, like product research, development, and design; trade or
intermediary support; marketing communications including advertising, promotion, sponsorship,
direct and digital marketing, personal selling, publicity, and public relations; and employee train-
ing. Of course, a big investment does not guarantee success. The ability of a marketing program
investment to transfer or multiply farther down the chain depends on qualitative aspects of the
marketing program and the program quality multiplier.
Program Quality Multiplier. The ability of the marketing program to affect the customer
mind-set will depend on its quality. Throughout the book, we review a number of different means
to judge the quality of a marketing program. One handy way to remember some key considerations
is through the acronym DRIVE, as follows:
1. Distinctiveness: How unique is the marketing program? How creative or differentiating
is it?
2. Relevance: How meaningful is the marketing program to customers? Do consumers feel the
brand is one they should seriously consider?
3. Integrated: How well integrated is the marketing program at one point in time and over
time? Do all aspects combine to create the biggest impact with customers as possible? Does
the marketing program relate effectively to past marketing programs and properly balance
continuity and change, evolving the brand in the right direction?
4. Value: How much short-run and long-run value does the marketing program create? Will it
profitably drive sales in the short run? Will it build brand equity in the long run?
5. Excellence: Is the individual marketing activity designed to satisfy the highest standards?
Does it reflect state-of-the art thinking and corporate wisdom as success factors for that par-
ticular type of marketing activity?
Not surprisingly, a well-integrated marketing program, carefully designed and implemented
to be highly relevant and unique, is likely to achieve a greater return on investment from market-
ing program expenditures. For example, despite being outspent by such beverage brand giants
as Coca-Cola, Pepsi, and Budweiser, the California Milk Processor Board was able to reverse a
decades-long decline in consumption of milk in California through the well-designed and executed
“Got Milk?” campaign.
On the other hand, numerous marketers have found that expensive marketing programs
do not necessarily produce sales unless they are well conceived. For example, through the
years, brands such as Michelob, Minute Maid, 7 Up, and others have seen their sales slide
despite sizable marketing expenditures because of poorly targeted and delivered marketing
campaigns.
Customer Mind-Set. In what ways have customers been changed as a result of the marketing
program? How have those changes manifested themselves in the customer mind-set?
Remember, the customer mind-set includes everything that exists in the minds of customers
with respect to a brand: thoughts, feelings, experiences, images, perceptions, beliefs, and attitudes.
In its totality, the brand resonance model captures a wide range of aspects of the customer mind-
set. To provide a concise summary, a shorter “5 As” list can highlight important measures of the
customer mind-set as suggested by the resonance model:
1. Brand Awareness: The extent and ease with which customers recall and recognize the brand
and can identify the products and services with which it is associated.
2. Brand Associations: The strength, favorability, and uniqueness of perceived attributes and
benefits for the brand. Brand associations often represent key sources of brand value, because
they are the means by which consumers feel brands satisfy their needs.
3. Brand Attitudes: Overall evaluations of the brand in terms of its quality and the satisfaction
it generates.
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130 PART II • DEVELOPING A BRAND STRATEGY
4. Brand Attachment: The degree of loyalty the customer feels toward the brand. A strong
form of attachment, adherence, is the consumer’s resistance to change and the ability of a
brand to withstand bad news like a product or service failure. In the extreme, attachment can
even become addiction.
5. Brand Activity: The extent to which customers use the brand; talk to others about the brand;
seek out brand information, promotions, and events, and so on.
These five dimensions can be easily related to the brand resonance model (awareness relates
to salience, associations relate to performance and imagery, attitudes relate to judgments and
feelings, and attachment and activity relate to resonance). As in the resonance model, an obvious
hierarchy exists in the dimensions of value: awareness supports associations, which drive attitudes
that lead to attachment and activity. Brand value is created at this stage when customers have
(1) deep, broad brand awareness; (2) appropriately strong, favorable, and unique points-of-parity
and points-of-difference; (3) positive brand judgments and feelings; (4) intense brand attachment
and loyalty; and (5) a high degree of brand activity.
Creating the right customer mind-set can be critical in terms of building brand equity and
value. For example, AMD and Cyrix found that achieving performance parity with Intel’s micro-
processors did not return benefits in 1998, when original equipment manufacturers were reluctant
to adopt the new chips because of their lack of a strong brand image with consumers. Moreover,
success with consumers may not translate to success in the marketplace unless other conditions
also prevail. The ability of this customer mind-set to create value at the next stage depends on
external factors we call the marketplace conditions multiplier, as follows.
Marketplace Conditions Multiplier. The extent to which value created in the minds of cus-
tomers affects market performance depends on factors beyond the individual customer. Three
such factors are:
1. Competitive superiority: How effective are the marketing investments of competing brands?
2. Channel and other intermediary support: How much brand reinforcement and selling
effort is being put forth by various marketing partners?
3. Customer size and profile: How many and what types of customers are attracted to the
brand? Are they profitable?
The value created in the minds of customers will translate to favorable market performance when
competitors fail to provide a significant threat, when channel members and other intermediar-
ies provide strong support, and when a sizable number of profitable customers are attracted to
the brand.
The competitive context faced by a brand can have a profound effect on its fortunes. For
example, Nike and McDonald’s have benefited in the past from the prolonged marketing woes of
their main rivals, Reebok and Burger King, which both have suffered from numerous reposition-
ings and management changes. On the other hand, MasterCard has had to contend for the past
decade with two strong, well-marketed brands in Visa and American Express, and consequently,
has faced an uphill battle gaining market share despite its well-received “Priceless” ad campaign,
as described earlier in this chapter.
Market Performance. We saw in Chapter 2 that the customer mind-set affects how custom-
ers react in the marketplace in six main ways. The first two relate to price premiums and price
elasticities. How much extra are customers willing to pay for a comparable product because of
its brand? And how much does their demand increase or decrease when the price rises or falls? A
third outcome is market share, which measures the success of the marketing program in driving
brand sales. Collectively, the first three outcomes determine the direct revenue stream attributable
to the brand over time. Brand value is created with higher market shares, greater price premiums,
and more elastic responses to price decreases and inelastic responses to price increases.
The fourth outcome is brand expansion, the success of the brand in supporting line and cat-
egory extensions and new product launches into related categories. This dimension captures the
brand’s ability to add enhancements to the revenue stream. The fifth outcome is cost structure
or, more specifically, reduced marketing program expenditures thanks to the prevailing customer
mind-set. When customers already have favorable opinions and knowledge about a brand, any
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 131
aspect of the marketing program is likely to be more effective for the same expenditure level;
alternatively, the same level of effectiveness can be achieved at a lower cost because ads are more
memorable, sales calls more productive, and so on. When combined, these five outcomes lead to
brand profitability, the sixth outcome.
The ability of the brand value created at this stage to reach the final stage in terms of stock
market valuation again depends on external factors, this time according to the investor sentiment
multiplier.
Investor Sentiment Multiplier. Financial analysts and investors consider a host of factors in
arriving at their brand valuations and investment decisions. Among them are the following:
• Market dynamics: What are the dynamics of the financial markets as a whole (interest rates,
investor sentiment, supply of capital)?
• Growth potential: What is the growth potential or prospects for the brand and the industry
in which it operates? For example, how helpful are the facilitating factors and how inhibiting
are the hindering external factors that make up the firm’s economic, social, physical, and
legal environment?
• Risk profile: What is the risk profile for the brand? How vulnerable is the brand to those
facilitating and inhibiting factors?
• Brand contribution: How important is the brand to the firm’s brand portfolio?
The value the brand creates in the marketplace is most likely fully reflected in shareholder value
when the firm is operating in a healthy industry without serious environmental hindrances or bar-
riers, and when the brand contributes a significant portion of the firm’s revenues and appears to
have bright prospects.
The obvious examples of brands that benefited from a strong market multiplier—at least for
a while—were the numerous dot-com brands at the turn of the century, such as Pets.com, eToys,
Boo.com, and Webvan. The huge premium placed on their (actually negative) market performance,
however, quickly disappeared—and in some cases, so did the whole company! Sometimes, the
entry of strong competitors could threaten the existence of a business. For example, Dropbox
was a pioneer in offering online storage solutions, but advances in cloud computing have created
numerous strong rivals, including Google, Apple, and Microsoft, all of which now offer file stor-
age applications and the ability to sync with other apps within their portfolio.51
On the other hand, many firms have lamented what they perceive as undervaluation by the
market. For example, repositioned companies such as Corning have found it difficult to realize
what they viewed as their true market value due to lingering investor perceptions from their past.
Corning’s heritage was in dishes and cookware; its more recent emphasis is on telecommunica-
tions, flat panel displays, and the environmental, life sciences, and semiconductor industries.
Shareholder Value. Based on all available current and forecasted information about a brand,
as well as many other considerations, the financial marketplace formulates opinions and assess-
ments that have very direct financial implications for the brand value. Three particularly important
indicators are the stock price, the price/earnings multiple, and overall market capitalization for the
firm. Research has shown that not only can strong brands deliver greater returns to stockholders,
they can do so with less risk.52
Implications According to the brand value chain, marketers create value first by making shrewd investments
in their marketing program and then by maximizing, as much as possible, the program, customer,
and market multipliers that translate that investment into bottom-line financial benefits. The brand
value chain thus provides a structured means for managers to understand where and how value
is created and where to look to improve that process. Certain stages will be of greater interest to
different members of the organization.
Brand and category marketing managers are likely to be interested in the customer mind-set
and the impact of the marketing program on customers. Chief marketing officers (CMOs), on the
other hand, are likely to be more interested in market performance and the impact of customer
mind-set on actual market behaviors. Finally, a managing director or CEO is likely to focus on
shareholder value and the impact of market performance on investment decisions.
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132 PART II • DEVELOPING A BRAND STRATEGY
The brand value chain has a number of implications. First, value creation begins with the
marketing program investment. Therefore, a necessary—but not sufficient—condition for value
creation is a well-funded, well-designed, and well-implemented marketing program. It is rare that
marketers can get something for nothing.
Second, value creation requires more than the initial marketing investment. Each of the three
multipliers can increase or decrease market value as it moves from stage to stage. In other words,
value creation also means ensuring that value transfers from stage to stage. Unfortunately, many
factors that can inhibit value creation may be largely out of the marketer’s hands, like investors’
industry sentiment. Recognizing the uncontrollable nature of these factors is important to help put
in perspective the relative success or failure of a marketing program to create brand value. Just as
sports coaches cannot be held accountable for unforeseen circumstances such as injuries to key
players and financial constraints that make it difficult to attract top talent, so marketers cannot
necessarily be held accountable for certain market forces and dynamics.
Third, as we outline in Chapters 9–11, the brand value chain provides a detailed roadmap
for tracking value creation that can make marketing research and intelligence efforts easier.
Each of the stages and multipliers has a set of measures by which we can assess it. In general,
there are three main sources of information, and each taps into one value stage and one mul-
tiplier. The first stage, the marketing program investment, is straightforward and can come
from the marketing plan and budget. We can assess both customer mind-set and the program
quality multiplier with quantitative and qualitative customer research. Market performance and
the marketplace conditions multiplier appear in market scans and internal accounting records.
Finally, we can estimate shareholder value and the investor sentiment multiplier through inves-
tor analysis and interviews.
Modifications to the brand value chain can expand its relevance and applicability. First,
there are a number of feedback loops. For example, stock prices can have an important effect on
employee morale and motivation. Second, in some cases, the value creation may not occur sequen-
tially. For example, stock analysts may react to an ad campaign for the brand—either personally
or in recognition of public acceptance—and factor those reactions directly into their investment
assessments. Third, some marketing activities may have only very diffuse effects that manifest
over the long term. For example, cause-related or social responsibility marketing activity might
affect customer or investor sentiment slowly over time. Fourth, both the mean and the variance
of some brand value chain measures could matter. For example, a niche brand may receive very
high marks but only across a very narrow range of customers.
REVIEW
Brand planning is aided by three interlocking models that can both qualitatively guide and
interpret possible marketing actions as well as quantitatively measure marketing effects (see
Figure 3-6). Chapter 2 introduced the brand positioning model. This chapter described in
detail the second and third brand-planning tools—the brand resonance and brand value chain
models.
The brand resonance model lists a series of steps for building a strong brand: (1) establish-
ing the proper brand identity, (2) creating the appropriate brand meaning, (3) eliciting the right
brand responses, and (4) forging appropriate brand relationships with customers. Specifically,
according to this model, building a strong brand requires establishing breadth and depth of brand
awareness; creating strong, favorable, and unique brand associations; eliciting positive, accessible
brand responses; and forging intense, active brand relationships. Achieving these four steps, in
turn, means establishing six brand-building blocks: brand salience, brand performance, brand
imagery, brand judgments, brand feelings, and brand resonance.
The strongest brands excel on all six of these dimensions and thus fully execute all four
steps of building a brand. In the brand resonance model, the most valuable brand-building
block, brand resonance, occurs when all the other core brand values are completely “in sync”
with respect to customers’ needs, wants, and desires. In other words, brand resonance reflects
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 133
a completely harmonious relationship between customers and the brand. With true brand reso-
nance, customers have a high degree of loyalty marked by a close relationship with the brand
and actively seek means to interact with the brand and share their experiences with others.
Firms that are able to achieve resonance and affinity with their customers should reap a host of
valuable benefits, such as greater price premiums and more efficient and effective marketing
programs.
Thus, the basic premise of the brand resonance model is that the true measure of the strength
of a brand depends on how consumers think, feel, and act with respect to that brand. Achieving
brand resonance requires eliciting the proper cognitive appraisals and emotional reactions to
the brand from customers. That, in turn, necessitates establishing brand identity and creating
the right meaning in terms of brand performance and brand imagery associations. A brand with the
right identity and meaning can make a customer believe it is relevant and “my kind of prod-
uct.” The strongest brands will be those to which consumers become so attached and passionate
that they, in effect, become evangelists or missionaries and attempt to share their beliefs and spread
the word about the brand.
The brand value chain is a means to trace the value creation process for brands to better
understand the financial impact of brand marketing expenditures and investments. Taking the
customers’ perspective of the value of a brand, the brand value chain assumes that the brand value
creation process begins when the firm invests in a marketing program targeting actual or potential
customers. Any marketing program investment that potentially can be attributed to brand value
development falls into this category, for example, product research, development, and design;
trade or intermediary support; and marketing communications.
The marketing activity associated with the program then affects the customer mind-set with
respect to the brand—what customers know and feel about the brand. The customer mind-set
includes everything that exists in the minds of customers with respect to a brand: thoughts, feel-
ings, experiences, images, perceptions, beliefs, and attitudes. Consistent with the brand resonance
model, five key dimensions that are particularly important measures of the customer mind-set
are brand awareness, brand associations, brand attitudes, brand attachment, and brand activity
or experience.
FIGURE 3-6
The Brand Planning
Models
Shareholder Value
Market Performance
Marketing Activity
Points-of- Parity
3. Brand Value Chain Model
A Comprehensive Set of Brand Metrics
1. Brand Positioning Model
2. Brand Resonance Model
Resonance
Judgments Feelings
Performance Imagery
Salience
Points-of- Difference
Customer Mind-Set
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134 PART II • DEVELOPING A BRAND STRATEGY
The customer mind-set affects how customers react or respond in the marketplace in a variety
of ways. Six key outcomes of that response are price premiums, price elasticities, market share,
brand expansion, cost structure, and brand profitability. Based on a thorough understanding of
the brand’s past, current, and future prospects, as well as other factors, the financial marketplace
then formulates opinions and makes various assessments that have direct financial implications
for the value of the brand. Three particularly important indicators are the stock price, the price/
earnings multiple, and overall market capitalization for the firm.
The model also assumes that a number of linking factors intervene between these stages.
These linking factors determine the extent to which value created at one stage transfers or multi-
plies to the next stage. Thus, there are three sets of multipliers that moderate the transfer between
the marketing program and the subsequent three value stages: the program multiplier, the customer
multiplier, and the market multiplier.
Once marketers have determined the brand planning, they can put into place the actual mar-
keting program to create, strengthen, or maintain brand associations. Chapters 4–8 in Part III of
the text describe some of the important marketing issues in designing brand-building marketing
programs.
DISCUSSION QUESTIONS
1. Pick a brand. Attempt to identify its sources of brand equity. Assess its level of brand aware-
ness and the strength, favorability, and uniqueness of its associations.
2. Pick a celebrity. Based on the four categories of brand resonance, how does this celebrity
resonate with their fans?
3. Pick your favorite footwear brand and identify the different types of brand-building feelings
that you associate with it.
4. Pick a brand. Assess the extent to which the brand is achieving the various benefits of brand
equity.
5. Which companies do you think do a good job managing their customers? Why?
6. Can you think of digital platforms (such as TripAdvisor, Airbnb) that have built a strong brand
presence? Can you identify key factors contributing to their success?
Many firms are now more carefully defining the financial
value of prospective and actual customers and devising market-
ing programs to optimize that value. Customer–brand relation-
ships are the foundation of brand resonance and building a
strong brand. Marketers have long recognized the importance
of adopting a strong consumer and customer orientation. The
customer-based brand equity concept certainly puts that notion
front and center, making it clear that the power of a brand
resides in the minds and hearts of consumers and customers.
Too many firms, however, still find themselves paying the
price for lacking a customer focus. Even the biggest firms can
stumble. For example, companies such as Apple, Samsung, and
GE have been consistent in their efforts to focus on custom-
ers. Others have not been as successful in maintaining a cus-
tomer focus. For instance, at one time Hewlett Packard (HP)
had a track record of success. After the year 2000, the innova-
tive market leader became more of a market follower, which
focused on efficiencies and cost-cutting. Successive changes
of CEOs at HP did not alleviate its problems, and the lack of
customer-focused innovation really hurt the company’s fortunes
significantly.53
HP is not alone in recognizing the financial value of customer
experiences. Many firms are now more carefully defining the
financial value of prospective and actual customers and devising
marketing programs to optimize that value.
Customer Equity
Many firms have introduced customer relationship marketing pro-
grams to improve customer interactions. Some marketing observ-
ers encourage firms to formally define and manage the value of
their customers. The concept of customer equity can be useful in
that regard. Although we can define customer equity in different
ways, one definition calls it “the sum of lifetime values of all cus-
tomers.”54 Customer lifetime value (CLV) is affected by revenue
and by the cost of customer acquisition, retention, and cross-
selling. What are these concepts and approaches? See next page.
Creating Customer Value
BRAND FOCUS 3.0
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 135
Blattberg and Deighton. Blattberg and Deighton have
defined customer equity as the optimal balance between what
marketers spend on customer acquisition and what they spend
on customer retention.55 They calculated customer equity as
follows:
We first measure each customer’s expected con-
tribution toward offsetting the company’s fixed
costs over the expected life of that customer. Then,
we discount the expected contributions to a net
present value at the company’s target rate of return
for marketing investments. Finally, we add together
the discounted, expected contributions of all current
contributions.
The authors observe that a focus on either customer acquisition
or on customer retention alone may be misplaced. Instead they
argue that a focus on maximizing customer equity may offer more
direction to managers. Maximizing customer equity would require
a judicious balance of acquisition and retention efforts.
Blattberg and Deighton offer eight guidelines as a means of
maximizing customer equity:
1. Invest in highest-value customers first.
2. Transform product management into customer management.
3. Consider how add-on sales and cross-selling can increase
customer equity.
4. Look for ways to reduce acquisition costs.
5. Track customer equity gains and losses against marketing
programs.
6. Relate branding to customer equity.
7. Monitor the intrinsic retainability of your customers.
8. Consider writing separate marketing plans—or even building
two marketing organizations—for acquisition and retention
efforts.
Rust, Zeithaml, and Lemon. Rust, Zeithaml, and Lemon
define customer equity as the discounted lifetime values of a
firm’s customer base.56 According to their view, customer equity
is made up of three components and key drivers:
• Value equity: Customers’ objective assessment of the utility
of a brand based on perceptions of what is given up for what
is received. Three drivers of value equity are quality, price, and
convenience.
• Brand equity: Customers’ subjective and intangible assess-
ment of the brand, above and beyond its objectively perceived
value. Three key drivers of brand equity are customer brand
awareness, customer brand attitudes, and customer percep-
tion of brand ethics.
• Relationship equity: Customers’ tendency to stick with the
brand, above and beyond objective and subjective assess-
ments of the brand. Four key drivers of relationship equity are
loyalty programs, special recognition and treatment programs,
community-building programs, and knowledge- building
programs.
Note that this definition of brand equity differs from the
customer-based brand equity definition proposed in this text,
which puts the focus on the beneficial differential response to
marketing activity that strong brands produce.
These authors propose that the three components of
customer equity vary in importance by company and industry.
For example, they suggest that brand equity will matter more
with low-involvement purchases involving simple decision pro-
cesses (like facial tissues), when the product is highly visible to
others, when experiences associated with the product can be
passed from one individual or generation to the next, or when
it is difficult to evaluate the quality of a product or service prior
to consumption. On the other hand, value equity will be more
important in business-to-business settings, whereas retention
equity will be more important for companies that sell a variety of
products and services to the same customer.
Rust and colleagues advocate customer-centered brand man-
agement to firms with the following directives that, they main-
tain, go against current management convention:
1. Make brand decisions subservient to decisions about cus-
tomer relationships.
2. Build brands around customer segments, not the other way
around.
3. Make your brands as narrow as possible.
4. Plan brand extensions based on customer needs, not com-
ponent similarities.
5. Develop the capability and the mind-set to hand off custom-
ers to other brands in the company.
6. Take no heroic measures to try to save ineffective brands.
7. Change how you measure brand equity to make individual-
level calculations.
Kumar and Colleagues. In a series of studies, Kumar
and his colleagues explore a number of questions concerning
customer lifetime value and how firms should allocate their mar-
keting spending to customer acquisition and retention efforts.57
The authors show that marketing contacts across various chan-
nels influence CLV nonlinearly. Customers who are selected on
the basis of their lifetime value provide higher profits in future
periods than do customers selected on the basis of several other
customer-based metrics. Kumar and his colleagues show how
each customer varies in his or her lifetime value to a firm, and
how customer lifetime value computations require different
approaches depending on the business application. They also
demonstrate how their framework, which incorporates pro-
jected profitability of customers in the computation of lifetime
duration, can be superior to traditional methods such as the
recency, frequency, and monetary value framework and past
customer value.
Linking Customer Equity to Shareholder Value. A series of studies have aimed to link the notion of customer
equity to a firm’s value on the stock market. Gupta, Lehmann,
and Stuart showed the feasibility of using a firm’s customer
equity—the sum of CLVs over all customers—to derive a firm’s
stock market capitalization. A study by Kumar and Shah also cor-
roborated the link between customer equity and firm value.58
Another study proposed that customer equity can function as
a proxy for market capitalization, demonstrating the validity of
this approach using an in-depth case study of Netflix.59 Further,
research has proposed a new metric called customer referral value
(CRV), which is born out of the notion that the value of customers
to a firm is not entirely based on the transactions of customers
alone, but also in their ability to drive word-of-mouth.60
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136 PART II • DEVELOPING A BRAND STRATEGY
FIGURE 3-8
Brand Equity versus
Customer Equity
Missing: Segmentation Analysis; Quantifiable Financial Effects
Emphasis: Prescriptive Marketing Guidelines; Growth Opportunities
Missing: Network Effects; Competition
Brand Equity
Emphasis: Bottom-Line Financial Value; Customer Relationship Management
Customer Equity
FIGURE 3-7
Brand and Customer
Management
Segment 1
Brand 1
Brand 2
Brand M
Segment 2 CUSTOMERS
B R
A N
D S
Segment N
Relationship of Customer Equity to Brand Equity. Brand equity management can be related to customer equity
management in different ways. One way to reconcile the two
points of view is to think of a matrix where all the brands and
sub-brands and variants that a company offers are rows, and all
the different customer segments or individual customers that
purchase those brands are columns (see Figure 3-7). Effective
brand and customer management would necessarily take into
account both the rows and the columns to arrive at optimal
marketing solutions. In fact, scholars have proposed that co-
managing brand equity and customer equity could lead to rich
rewards.61
Differences between the Two Points of View. As they have been developed conceptually and put into prac-
tice, however, the two perspectives tend to emphasize different
aspects (see Figure 3-8). The customer equity perspective puts
much focus on the bottom-line financial value created by cus-
tomers. Its clear benefit is the quantifiable measures of financial
performance it provides. In its calculations, however, the customer
equity perspective largely ignores some of the important advan-
tages of creating a strong brand, such as the ability of a strong
brand to attract higher quality employees, elicit stronger support
from channel and supply chain partners, create growth oppor-
tunities through line and category extensions and licensing, and
so on.
The customer equity perspective also tends to be less pre-
scriptive about specific marketing activities beyond general
recommendations toward customer acquisition, retention,
and cross-selling. The customer equity perspective does not
always fully account for competitive response and the resulting
moves and countermoves, nor does it fully account for social
network effects, word of mouth, and customer-to-customer
recommendations.
Thus, customer equity approaches can overlook the option
value of brands and their potential impact on revenues and costs
beyond the current marketing environment. Brand equity, on the
other hand, tends to put more emphasis on strategic issues in
managing brands and how marketing programs can be designed
to create and leverage brand awareness and image with custom-
ers. It provides much practical guidance for specific marketing
activities.
With a focus on brands, however, managers do not always
develop detailed customer analyses in terms of the brand equity
they achieve with specific consumers or groups of consumers
and the resulting long-term profitability that is created. Brand
equity approaches could benefit from sharper segmentation
schemes.
Reconciling the Two Points of View. There is no
question that customer equity and brand equity are related. In
theory, both approaches can be expanded to incorporate the
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 137
other point of view and they are clearly inextricably linked. Cus-
tomers drive the success of brands, but brands are the necessary
touchpoint that firms have to connect with their customers.
Customer-based brand equity maintains that brands create value
by eliciting differential customer response to marketing activi-
ties. The higher price premiums and increased levels of loyalty
engendered by brands generate incremental cash flows.
Many of the actions that will increase brand equity will
increase customer equity, and vice versa. In practice, customer
equity and brand equity are complementary notions in that they
tend to emphasize different considerations. Brand equity tends
to put more emphasis on the “front end” of marketing programs
and intangible value potentially created by marketing programs;
customer equity tends to place more emphasis on the “back
end” of marketing programs and the realized value of marketing
activities in terms of revenue.
The two concepts go hand in hand: customers need and
value brands, but a brand ultimately is only as good as the cus-
tomers it attracts. As evidence of this duality, consider the role
of the retailer as a middleman between firms and consumers.
Retailers clearly recognize the importance of both brands and
customers. A retailer chooses to sell those brands that are
the best bait for those customers it wants to attract. Retail-
ers essentially assemble brand portfolios to establish a profit-
able customer portfolio. Manufacturers make similar decisions,
developing brand portfolios and hierarchies to maximize their
customer franchises.
But effective brand management is critical, and it is a mis-
take to ignore its important role in developing long-term profit
streams for firms. Some marketing observers have perhaps mini-
mized the challenge and value of strong brands to overly empha-
size the customer equity perspective, for example, maintaining
that “our attitude should be that brands come and go—but
customers . . . must remain.”62 Yet that statement can easily
be taken to the logical, but opposite, conclusion: “Through
the years, customers may come and go, but strong brands will
endure.” Perhaps the main point is that both are really crucial,
and the two perspectives can help improve the marketing success
of a firm. The customer-based brand equity concept is an attempt
to do just that.
NOTES
1. Elizabeth Cowley and Andrew A. Mitchell, “The Mod- erating Effect of Product Knowledge on the Learning and Organization of Product Information,” Journal of Consumer Research 30 (December 2003): 443–454.
2. Mita Sujan and Christine Dekleva, “Product Catego- rization and Inference Making: Some Implications for Comparative Advertising,” Journal of Consumer Research 14, no. 3 (December 1987): 372–378.
3. Elaine Wong, “For H&R Block’s CMO, It’s Tax Time Year-Round,” Brandweek, August 23, 2009, https:// www.adweek.com/brand-marketing/hr-blocks-cmo- its-tax-time-year-round-106300/, accessed October 24, 2018.
4. Campbell Soup Company, “Campbell Launches ‘It’s Amazing What Soup Can Do’ Ad Campaign to Pro- mote Campbell’s US Soup Brands,” Business Wire, Sep- tember 7, 2010, https://www.businesswire.com/news/ home/20100907006087/en/Campbell-Launches_”It’s- Amazing-Soup-Do”-Ad; Al Lewis, “Soup’s Suffer- ing Sales,” The Wall Street Journal, September 12, 2010; Elaine Wong, “Campbell Gets Happy in 100 Mil. Push,” Brandweek, September 7, 2010.
5. Jessica Wohl, “Campbell Soup “Shows ‘Real, Real Life’ in New Brand Campaign,” Advertising Age, October 5, 2015, http://www.adageindia.in/ marketing/cmo-strat- egy/campbell-soup-shows-real-real-life-in-new-brand- campaign/articleshow/49227670.cms.
6. Chip Heath and Dan Heath, Made to Stick: Why Some Ideas Survive and Others Die (New York: Ran- dom House, 2007); Matthew Boyle, “The Acciden- tal Hero,” Businessweek, November 5, 2009, https:// www.bloomberg.com/news/articles/2009-11-05/ the-accidental-hero
7. David Garvin, “Product Quality: An Important Strate- gic Weapon,” Business Horizons 27, no. 3 (May–June 1984): 40–43; Philip Kotler and Kevin Lane Keller, Marketing Management, 14th ed. (Upper Saddle River, NJ: Prentice Hall, 2012).
8. Robert C. Blattberg and Kenneth J. Wisniewski, “Price- Induced Patterns of Competition,” Marketing Science 8, no. 4 (Fall 1989): 291–309; Raj Sethuraman and V. Srinivasan, “The Asymmetric Share Effect: An Empiri- cal Generalization on Cross-Price Effects,” Journal of Marketing Research 39, no. 3 (August 2002): 379–386.
9. Bianca Grohmann, “Gender Dimensions of Brand Personality,” Journal of Marketing Research 46, no. 1 ( February 2009): 105–119.
10. Joseph T. Plummer, “How Personality Makes a Dif- ference,” Journal of Advertising Research 24, no. 6 (December 1984/January 1985): 27–31.
11. See Jennifer Aaker, “Dimensions of Brand Personality,” Journal of Marketing Research 34, no. 3 (August 1997): 347–357.
12. Jennifer Aaker, Kathleen Vohs, and Cassie Mogilner, “Nonprofits Are Seen as Warm and For-Profits as Com- petent: Firm Stereotypes Matter,” Journal of Consumer Research 37, no. 2 (August 2010): 277–291.
13. Jennifer L. Aaker, “Dimensions of Brand Personal- ity.” Journal of Marketing Research 34, no. 3 (1997): 347–356; Susan Fournier, “Consumers and Their Brands: Developing Relationship Theory in Consumer Research,” Journal of Consumer Research 24, no. 3 (1997): 343–373.
14. Gita Venkataramani Johar, Jaideep Sengupta, and Jen- nifer L. Aaker, “Two Roads to Updating Brand Person- ality Impressions: Trait Versus Evaluative Inferencing,”
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138 PART II • DEVELOPING A BRAND STRATEGY
Journal of Marketing Research 42, no. 4 (November 2005): 458–469; see also Alokparna Basu Monga and Loraine Lau-Gesk, “Blending Cobrand Personalities: An Examination of the Complex Self,” Journal of Mar- keting Research 44, no. 3 (August 2007): 389–400.
15. M. Joseph Sirgy, “Self-Concept in Consumer Behavior: A Critical Review,” Journal of Consumer Research 9, no. 3 (December 1982): 287–300; Lan Nguyen Chap- lin and Deborah Roedder John, “The Development of Self-Brand Connections in Children and Adolescents,” Journal of Consumer Research 32, no. 1 (June 2005): 119–129; Lucia Malär, Harley Krohmer, Wayne D. Hoyer, and Bettina Nyffenegger, “Emotional Brand Attachment and Brand Personality: The Relative Importance of the Actual and the Ideal Self,” Journal of Marketing 75, no. 4 (July 2011): 35–52; Alexander Chernev, Ryan Hamilton, and David Gal, “Competing for Consumer Identity: Limits to Self-Expression and the Perils of Lifestyle Branding,” Journal of Marketing 75, no. 3 (May 2011): 66–82.
16. Timothy R. Graeff, “Consumption Situations and the Effects of Brand Image on Consumers’ Brand Evalu- ations,” Psychology & Marketing 14, no. 1 (1997): 49–70; Timothy R. Graeff, “Image Congruence Effects on Product Evaluations: The Role of Self- Monitoring and Public/Private Consumption,” Psychology & Mar- keting 13, no. 5 (1996): 481–499. See also, Ji Kyung Park and Deborah Roedder John, “Got to Get You into My Life: Do Brand Personalities Rub Off on Consum- ers?,” Journal of Consumer Research 37, no. 4 (Decem- ber 2010): 655–669.
17. Jennifer L. Aaker, “The Malleable Self: The Role of Self-Expression in Persuasion,” Journal of Marketing Research 36, no. 2 (1999): 45–57. See also, Vanitha Swaminathan, Karen Stilley, and Rohini Ahluwalia, “When Brand Personality Matters: The Moderating Role of Attachment Styles,” Journal of Consumer Research 35, no. 6 (April 2009): 985–1002.
18. Sarah Steimer, “Recap: Why Hyatt Is Making an Emo- tional Connection with Customers and Differentiating Its Properties,” October 6, 2016, Marketing News Weekly, accessed February 1, 2018; Katie Richards, “Hyatt Cel- ebrates All the Business Travelers Who Never Settle in New Integrated Campaign,” www.adweek.com/brand- marketing/hyatt-celebrates-all- businesstravelers-who- never-set2016), tle-new-integrated-campaign-173323/, accessed February 27, 2018; Tanya Gazdik, “Hyatt Launches First Dual-Branded Effort,” September 12, 2016, www.mediapost.com/publications/article/284368/ hyatt-launches-first-dual-brandedeffort.html, accessed February 28, 2018.
19. Northern Trust, “Top Performers: World’s Most Admired Companies,” Fortune, August 16, 2010, 16.
20. Douglas B. Holt, How Brands Become Icons (Cam- bridge, MA: Harvard Business School Press, 2004). Holt has a number of other thought-provoking pieces, including “Why Do Brands Cause Trouble? A Dia- lectical Theory of Consumer Culture and Branding,” Journal of Consumer Research 29, no. 1 (June 2002): 70–90; Douglas B. Holt and Craig J. Thompson, “Man- of-Action Heroes: The Pursuit of Heroic Masculinity
in Everyday Consumption,” Journal of Consumer Research 31, no. 2 (September 2004): 425–440.
21. William L. Wilkie, Consumer Behavior, 3rd ed. (New York: John Wiley & Sons, 1994).
22. “Equitrend,” The Harris Poll, www.theharrispoll.com/ equitrend/#.
23. For an insightful examination of credibility and the related concept of truth, see Lynn Upshaw, Truth: The New Rules for Marketing in a Skeptical World (New York: AMACOM, 2007).
24. Stuart Elliott, “Delivered Just in Time for Kickoff,” The New York Times, September 7, 2011, www.nytimes .com/2011/09/08/business/media/fedex-to-introduce- new-campaign.html.
25. Ekaterina Walter, “The Big Brand Theory: How FedEx Achieves Social Customer Service Success,” Social Media Today, May 28, 2013, www.socialmediatoday .com/content/big-brand-theory-how-fedex-achieves- social-customer-service-success.
26. Andrea Fryrear, “A Content Success Story: How FedEx Operations Now Delivers a Better Customer Experience,” Content Marketing Institute, August 16, 2017, http://contentmarketinginstitute.com/2017/08/ fedex-content-operations/.
27. Izea, “15 Top B2C Content Marketing Examples,” IZEA, August 28, 2017, https://izea.com/2017/08/28/ b2c-content-marketing-examples/.
28. Elaine Wong, “FedEx Rolls with Changes in Global Campaign,” Brandweek, October 29, https://www .adweek.com/brand-marketing/fedex-rolls-changes- global-campaign-106604/; Elaine Wong, “CPG Brands Top Most Trusted List,” Brandweek, February 22, 2010, https://www.adweek.com/brand-marketing/cpg- brands-top-most-trusted-list-107079/, accessed October 23, 2018.
29. Alan M. Webber, “Trust in the Future,” Fast Company, September 2000, 210–220.
30. Kevin Roberts, Lovemarks: The Future Beyond Brands (New York: Powerhouse Books, 2004).
31. For seminal research, see William D. Wells, “How Advertising Works,” unpublished paper, 1980; Christopher P. Puto and William D. Wells, “ Informational and Transformational Advertising: The Differential Effects of Time,” in Advances in Consumer Research 11, ed. Thomas C. Kinnear (Ann Arbor, MI: Association for Consumer Research, 1983), 638–643; Stephen J. Hoch and John Deighton, “Managing What Consumers Learn from Experience,” Journal of Marketing 53, no. 2 (April 1989): 1–20; for a cur- rent application, see also Gillian Naylor, Susan Bardi Kleiser, Julie Baker, and Eric Yorkston, “Using Trans- formational Appeals to Enhance the Retail Experience,” Journal of Retailing 84, no. 1 (April 2008): 49–57.
32. Elizabeth Olson, “Corona Light Sets Sights on a Younger Party Crowd,” The New York Times, August 1, 2010, https://www.nytimes.com/2010/08/02/business/ media/02adco.html.
33. Lynn R. Kahle, Basil Poulos, and Ajay Sukhdial, “Changes in Social Values in the United States Dur- ing the Past Decade,” Journal of Advertising Research (February/March 1988): 35–41.
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CHAPTER 3 • BRAND RESONANCE AND THE BRAND VALUE CHAIN 139
34. For a stimulating and comprehensive set of readings, see Deborah J. MacInnis, C. Whan Park, and Joseph R. Priester, eds. Handbook of Brand Relationships (Armonk, NY: M. E. Sharpe, 2009).
35. Greg Farrell, “Marketers Put a Price on Your Life,” USA Today, July 7, 1999, 3B.
36. Arjun Chaudhuri and Morris B. Holbrook, “The Chain of Effects from Brand Trust and Brand Affect to Brand Performance: The Role of Brand Loyalty,” Journal of Marketing 65, no. 2 (April 2001): 81–93.
37. Thomas A. Stewart, “A Satisfied Customer Is Not Enough,” Fortune, July 12, 1997, 112–113.
38. Thomas O. Jones and W. Earl Sasser Jr. “Why Satis- fied Customers Defect,” Harvard Business Review ( November–December 1995): 88–99.
39. Faith Logan, “Are Your Customers ‘Attitudinally-Loyal’ and Why Should You Care?,” CBC, September 28, 2017, www.cbcads.com/attitudinal-loyalty/.
40. James H. McAlexander, John W. Schouten, and Harold F. Koenig, “Building Brand Community,” Journal of Mar- keting 66, no. 1 (January 2002): 38–54; Albert Muniz and Thomas O’Guinn, “Brand Community,” Journal of Consumer Research 27, no. 4 (March 2001): 412–432.
41. Gil McWilliam, “Building Stronger Brands Through Online Communities,” MIT Sloan Management Review 41, no. 3 (Spring 2000): 43–54.
42. Rene Algesheimer, Utpal M. Dholakia, and Andreas Hermann, “The Social Influence of Brand Community: Evidence from European Car Clubs,” Journal of Mar- keting 69, no. 3 (July 2005): 19–34.
43. Rob Walker, Buying In (New York: Random House, 2008).
44. Chris Reiter, “For Luxury Automakers, Selling Toys Is No Game,” Bloomberg Businessweek, November 29– December 5, 2010, 26–28; Markus Seidel, “BMW Uses Lifestyle Products as a Strategic Differentiating Factor in the Automotive Industry,” PDMA Visions, July 2004, 24–25; BMW, www.shopbmwusa.com.
45. Nikki Hopewell, “Generating Brand Passion,” Market- ing News, May 15, 2005, 10.
46. “Creative: Inside Priceless MasterCard Moments,” Adweek, April 12, 1999; Marc De Swaan Arons, “Mas- terCard—Finding a Compelling Global Positioning,” All About Branding, August 6, 2005; www.effie.org.
47. Giselle Abramovich, “Three Lessons from Master- Card’s ‘Priceless’ Campaign,” CMO, August 21, 2013, www.cmo.com/features/articles/2013/8/19/three_ lessons_from_m.html#gs.jICbWtI.
48. The Nielsen Company, “Under the Influence: Consumer Trust in Advertising.” Nielson, September 17, 2013, www.nielsen.com/us/en/insights/news/2013/under-the- influence-consumer-trust-in-advertising.html.
49. Darren W. Dahl, Christoph Fuchs, and Martin Sch- reier. “Why and When Consumers Prefer Products of User-Driven Firms: A Social Identification Account,” Management Science 61, no. 8 (2014): 1978–1988; Roderick J. Brodie, Linda D. Hollebeek, Biljana Jurić, and Ana Ilić, “Customer Engagement: Conceptual Domain, Fundamental Prepositions, and Implications For Research,” Journal of Service Research 14, no. 3 (2011): 252–271.
50. Kevin Lane Keller and Don Lehmann, “How Do Brands Create Value?” Marketing Management 12, no. 3 (May/ June 2003): 26–31. See also R. K. Srivastava, T. A. Sher- vani, and L. Fahey, “Market-Based Assets and Share- holder Value,” Journal of Marketing 62, no. 1 (1998): 2–18; and M. J. Epstein and R. A. Westbrook, “Link- ing Actions to Profits in Strategic Decision Making,” MIT Sloan Management Review (Spring 2001): 39–49. In terms of related empirical insights, see Manoj K. Agrawal and Vithala Rao, “An Empirical Comparison of Consumer-Based Measures of Brand Equity,” Mar- keting Letters 7, no. 3 (1996): 237–247; and Walfried Lassar, Banwari Mittal, and Arun Sharma, “Measuring Customer-Based Brand Equity,” Journal of Consumer Marketing 12, no. 4 (1995): 11–19.
51. Miguel Helft, “Dropbox Under Siege—But It’s Not Slowing Down,” July 29, 2015, Forbes.com, https:// www.forbes.com/sites/miguelhelft/2015/07/29/ dropbox-is-under-s iege-but- i t s -not-s lowing- down/#51ea99d9141b
52. Thomas J. Madden, Frank Fehle, and Susan Fournier, “Brands Matter: An Empirical Demonstration of the Creation of Shareholder Value Through Branding” Journal of the Academy of Marketing Science, 34(2): 224–235.
53. Ira Kalb, “Everything at Hewlett-Packard Started to Go Wrong When Cost-Cutting Replaced Innovation,” Business Insider, May 27, 2012, www.businessin- sider.com/heres-where-everything-at-hewlett-packard- started-to-go-wrong-2012-5.
54. Roland T. Rust, Valarie A. Zeithamal, and Katherine N. Lemon, “Customer-Centered Brand Management,” Harvard Business Review (September 2004), 110–118.
55. Robert C. Blattberg and John Deighton, “Manage Marketing by the Customer Equity Test,” Harvard Business Review (July–August 1996). See also Robert C. Blattberg, Gary Getz, and Jacquelyn S. Thomas, Cus- tomer Equity: Building and Managing Relationships as Valuable Assets (Boston, MA: Harvard Business School Press, 2001); Robert Blattberg and Jacquelyn Thomas, “Valuing, Analyzing, and Managing the Marketing Func- tion Using Customer Equity Principles,” in Kellogg on Marketing, ed. Dawn Iacobucci (New York: John Wiley & Sons, 2001).
56. Roland T. Rust, Valarie A. Zeithaml, and Katherine N. Lemon, Driving Customer Equity (New York: Free Press, 2000); Roland T. Rust, Valarie A. Zeithaml, and Katherine N. Lemon, “Customer-Centered Brand Man- agement,” Harvard Business Review (September 2004), 110–118.
57. W. Reinartz, J. Thomas, and V. Kumar, “Balancing Acqui- sition and Retention Resources to Maximize Profitability,” Journal of Marketing 69, no. 1 (January 2005): 63–79; R. Venkatesan and V. Kumar, “A Customer Lifetime Value Framework for Customer Selections and Resource Allo- cation Strategy,” Journal of Marketing 68, no. 4 (October 2004): 106–125; V. Kumar, G. Ramani, and T. Bohling, “Customer Lifetime Value Approaches and Best Practice Applications,” Journal of Interactive Marketing 18, no. 3 (Summer 2004): 60–72; J. Thomas, W. Reinartz, and V. Kumar, “Getting the Most Out of All Your Customers,”
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140 PART II • DEVELOPING A BRAND STRATEGY
Harvard Business Review (July–August 2004): 116–123; W. Reinartz and V. Kumar, “The Impact of Customer Relationship Characteristics on Profitable Lifetime Dura- tion,” Journal of Marketing 67, no. 1 (2003): 77–99.
58. Sunil Gupta, Donald R. Lehmann, and Jennifer Ames Stuart, “Valuing Customers,” Journal of Marketing Research 41, no. 1 (2004): 7-18; V. Kumar and Den- ish Shah, “Expanding the Role of Marketing: From Customer Equity to Market Capitalization,” Journal of Marketing 73, no. 6 (2009): 119–136.
59. Thomas Shoutong Zhang,“Firm Valuation from Cus- tomer Equity: When Does It Work and When Does It Fail?,” International Journal of Research in Marketing 33, no. 4 (2016): 966–970.
60. J. Viswanathan Kumar, Andrew Petersen, and Robert P. Leone. “How Valuable Is Word of Mouth?” Harvard
Business Review 85, no. 10 (2007): 139; J. Viswanathan Kumar, Andrew Petersen, and Robert P. Leone. “Driv- ing Profitability by Encouraging Customer Referrals: Who, When, and How,” Journal of Marketing 74, no. 5 (2010): 1–17.
61. Anita Luo, Donald R. Lehmann, and Scott A. Nes- lin, “Co-managing Brand Equity and Customer Equity,” In V. Kumar and Denish Shah (Eds.), Hand- book of Research on Customer Equity in Marketing (pp. 363–381). Cheltenham, UK: Edward Elgar Pub- lishing, 2015.
62. Roland T. Rust, Valarie A. Zeithamal, and Kather- ine N. Lemon, “Customer-Centered Brand Manage- ment,” Harvard Business Review (September 2004): 110–118.
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141
Learning Objectives
After reading this chapter, you should be able to
1. Identify the different types of brand elements.
2. List the general criteria for choosing brand elements.
3. Describe key tactics in choosing different brand elements.
4. Explain the rationale for “mixing and matching” brand elements.
5. Highlight some of the legal issues surrounding brand elements.
Choosing Brand Elements to Build Brand Equity
PART I I I D E S I G N I N G A N D I M P L E M E N T I N G B R A N D M A R K E T I N G P R O G R A M S
4
A brand symbol like
the Energizer Bunny
can reinforce key brand
associations and be
used in a variety of
different communication
applications.
Source: Paul Martinka/ Polaris/Newscom
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142 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
CRITERIA FOR CHOOSING BRAND ELEMENTS In general, there are six criteria for brand elements (with more specific subchoices for each, as shown in Figure 4-1):
1. Memorability 2. Meaningfulness 3. Likability 4. Transferability 5. Adaptability 6. Protectability
Brand elements, sometimes called brand identities, are those trademarkable devices that serve to identify and differentiate the brand. The main ones are brand names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages, and signage. The customer-based brand equity model suggests that marketers should choose brand elements to enhance brand awareness; facilitate the formation of strong, favorable, and unique brand associations; or elicit positive brand judgments and feelings. The test of the brand-building ability of a brand element is what consumers would think or feel about the product if they knew only that particular brand element and not anything else about the product and how else it would be branded or marketed. A brand element that provides a positive contribution to brand equity conveys or implies certain valued associations or responses.
This chapter considers how marketers choose brand elements to build brand equity. After describing the general criteria for choosing brand elements, we consider specific tactical issues for each of the different types of brand elements and finish by discussing how to choose the best brand elements to build brand equity. Brand Focus 4.0 at the end of the chapter highlights some legal issues for branding.
PREVIEW
FIGURE 4-1
Criteria for Choosing
Brand Elements
1. Memorability Easily recognized Easily recalled
2. Meaningfulness Descriptive Persuasive
3. Likability Fun and interesting Rich visual and verbal imagery Aesthetically pleasing
4. Transferability Within and across product categories Across geographic boundaries and cultures
5. Adaptability Flexible Updatable
6. Protectability Legally Competitively
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 143
The first three criteria—memorability, meaningfulness, and likability—are the marketer’s offensive strategy and build brand equity. The latter three—transferability, adaptability, and pro- tectability—however, play a defensive role for leveraging and maintaining brand equity in the face of different opportunities and constraints. Let’s consider each of these general criteria.
Memorability A necessary condition for building brand equity is achieving a high level of brand awareness. Brand elements that promote that goal are inherently memorable and attention-getting and there- fore facilitate recall or recognition in purchase or consumption settings. For example, a brand of propane gas cylinders named Blue Rhino featuring a powder-blue animal mascot with a distinctive yellow flame is likely to stick in the minds of consumers.
Meaningfulness Brand elements may take on all kinds of meaning, with either descriptive or persuasive content. We saw in Chapter 1 that brand names could be based on people, places, animals or birds, or other things or objects. Two particularly important criteria are how well the brand element conveys the following:
• General information about the function of the product or service: Does the brand element have descriptive meaning and suggest something about the product category, the needs satis- fied or benefits supplied? How likely is it that a consumer could correctly identify the product category for the brand based on any one brand element? Does the brand element seem cred- ible in the product category?
• Specific information about particular attributes and benefits of the brand: Does the brand element have persuasive meaning and suggest something about the particular kind of product, or its key points-of-difference attributes or benefits? Does it suggest something about some aspect of the product performance or the type of person who might use the brand?
The first dimension is an important determinant of brand awareness and salience; the second, of brand image and positioning.
Likability Independent of its memorability and meaningfulness, do customers find the brand element aesthetically appealing?1 Is it likable visually, verbally, and in other ways? Brand elements can be rich in imagery and inherently fun and interesting, even if not always directly related to the product.
A memorable, meaningful, and likable set of brand elements offers many advantages because consumers often do not examine much information in making product decisions. Descriptive and persuasive elements reduce the burden on marketing communications to build awareness and link brand associations and equity, especially when few other product-related associations exist. Often, the less concrete the possible product benefits are, the more impor- tant is the creative potential of the brand name and other brand elements to capture intangible characteristics of a brand.
Transferability Transferability measures the extent to which the brand element adds to the brand equity for new products or in new markets for the brand. There are several aspects to this criterion.
First, how useful is the brand element for line or category extensions? In general, the less specific the name, the more easily it can be transferred across categories. For example, Amazon was chosen as a brand name because it refers to a massive South American river and, as a name, can be appropriate for a large retail store. Books “R” Us obviously would not have afforded the same flexibility if Amazon had chosen that name to describe its original line of business.
Second, to what extent does the brand element add to brand equity across geographic bound- aries and market segments? To a large extent, this depends on the cultural content and linguistic
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144 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
FIGURE 4-2
Global Branding Mishaps
Although it can be difficult to judge the accuracy of some reports of past marketing failures, here are some of the more widely cited global branding failures reported over the years.
1. When Braniff translated a slogan touting its upholstery, “Fly in leather,” it came out in Spanish as “Fly naked.”
2. Coors put its slogan, “Turn it loose,” into Spanish, where it was read as “Suffer from diarrhea.”
3. Chicken magnate Frank Perdue’s line, “It takes a tough man to make a tender chicken,” sounds much more interesting in Spanish: “It takes a sexually stimulated man to make a chicken affectionate.”
4. When Pepsi started marketing its products in China, it translated the slogan “Pepsi Brings You Back to Life” pretty literally. In Chinese it really meant, “Pepsi Brings Your Ancestors Back from the Grave.”
5. Clairol introduced the “Mist Stick,” a curling iron, into Germany only to find out that mist is slang for manure in German.
6. Japan’s Mitsubishi Motors had to rename its Pajero model in Spanish-speaking countries because the term related to masturbation.
7. Toyota Motor’s MR2 model dropped the number in France because the combination sounded like a French swearword.
qualities of the brand element. One of the main advantages of nonmeaningful, synthetic names like Exxon is that they transfer well into other languages.
The difficulties or mistakes that even top marketers have encountered in translating their brand names, slogans, and packages into other languages and cultures over the years have become legendary. As an example, Microsoft was challenged when launching its Vista operating sys- tem in Latvia, because the name means “chicken” or “frumpy woman” in the local language.2 Figure 4-2 includes some of the more notorious mishaps.3 To avoid such complications, compa- nies must review all their brand elements for cultural meaning before introducing the brand into a new market.
Adaptability The fifth consideration for brand elements is their adaptability over time. Because of changes in consumer values and opinions, or simply because of a need to remain contemporary, most brand elements must be updated. The more adaptable and flexible the brand element, the easier it is to update it. For example, logos and characters can be given a new look or a new design to make them appear more modern and relevant.
MICHELIN MAN
Michelin recently launched a newer, slimmer version of its famous Michelin Man (whose real
name is Bibendum). A company press release notes, “thinner and smiling, Michelin Man will look like
the leader he is, with an open and reassuring manner.” Michelin has used the character to promote
its brand values of research, safety, and environmentalism for more than 100 years. In 2000, Michelin
Man was voted the “greatest logo in history” in a competition sponsored by the Financial Times. In a
2009 global campaign that features the character as a hero, the Michelin Man—which has been the
exclusive focus of Michelin advertising since 2001—moved from a “more passive endorser to a more
active problem solver.” Reinforced by the slogan “The Right Tire Changes Everything,” the new ad
campaign emphasized the role tires play in people’s everyday lives.4 Michelin ads have since evolved to
focus on real-world scenarios5 in which the Michelin Man’s presence is large and meaningful, invoking
emotion with a positive influence on the scene to express a benefit for the customer.6
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 145
The Michelin Man—whose actual name is
Bibendum—has served as the centerpiece of the
tire brand’s advertising for years.
Source: Michelin, North America
From Calloway golf clubs to Louis Vuit-
ton handbags, counterfeit versions of well-
known brands are everywhere. The current
size of the counterfeit market is estimated
to be $600 billion, representing costs of
$460 billion annually to U.S. businesses.
The fakes are soaking up profits faster than
multinationals can squash counterfeiting
operations, and they’re getting tougher and
tougher to distinguish from the real thing.
The difference can be as subtle as lesser-
quality leather in a purse or fake batteries
inside a cell phone. And counterfeiters can
produce fakes cheaply by cutting corners
on safety and quality, as well as by avoiding
paying for marketing, R&D, or advertising.
It’s not just luxury items and consumer
electronics that are being copied. The
World Health Organization has raised con-
cerns about instances of life-saving drugs
such as antimalaria drugs to everyday anti-
biotics or birth control medicines that are
counterfeited. Those drugs not only purloin
pharmaceutical industry profits, but they also present a danger to
anyone who takes them because they are manufactured under
inadequate safety controls.
Counterfeiting has become increasingly sophisticated and
pervasive, with many counterfeits being sold online. The unregu-
lated nature of Internet retailing has exacerbated this problem.
THE SCIENCE OF BRANDING 4-1
Counterfeit Business Is Booming
A popular target for counterfeiters who turn out fakes like these, Louis Vuitton
uses legal means to vigorously defend its trademarks.
Source: Iain Masterton/Alamy Stock Photo
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146 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
To avoid being detected, counterfeiters are knocking off smaller
brands that do not have the resources to fight back, focusing on
fewer high-end brands, and increasing prices on fake goods sold
over the Web to counter consumer suspicions.
The U.S. Trade Representative’s office now publishes an
annual “notorious markets” list of the worst sites—physical and
online—for piracy and counterfeiting. These days, 63 percent of
counterfeit goods in the United States come from China. Other
sources are Turkey, Singapore, Thailand, and India, and several
countries in Southeast Asia (Philippines and Indonesia) and Latin
America (Ecuador, Paraguay, and Argentina).
The operations are financed by such varied sources as busi-
nessmen who invest in facilities in Asian countries for export,
local entrepreneurs, and criminal networks. One study showed
that most of the counterfeits are bought and sold online, and
some online retailers such as Aliexpress (a Web site linked to
Alibaba.com), Facebook, Tokopedia, and Amazon have become
unintentional middlemen in the market for counterfeits. In fact,
according to the study conducted by RedPoints, a brand protec-
tion firm based in Barcelona, 18 percent of the merchandise
in AliExpress is fake, although this number is disputed by the
retailer.
The replication process has also sped up as counterfeiters
have honed their engineering skills and increased their speed.
Chinese factories can now copy a new model of a golf club in
less than a week. Producing counterfeit goods is as profitable as
trading in illegal drugs but does not carry the same risk. In many
countries, convicted counterfeiters get off with a fine of a few
thousand dollars. It is widely believed that China is the key to
stemming the counterfeit trade.
Some companies have decided to target the end users of
knockoff products, hoping manufacturers will eventually be
forced to get a license and pay royalties. And some patent hold-
ers are beginning to get creative and target anyone on the sup-
ply chain who knowingly ignores counterfeit businesses. Louis
Vuitton has partnered with New York City landlords to prevent
the sale of counterfeit Louis Vuitton goods by tenants on noto-
rious knockoff hot spot Canal Street. Because the business of
counterfeiting thrives on globalization, experts say that all many
companies can do for now is to slow, not stop, the counterfeiters.
Advances in artificial intelligence and machine learning have
both helped and hurt counterfeiting. On the one hand, counter-
feiters can use the power of technology to hasten the process of
counterfeiting products as well as digital goods (such as music or
movies). In turn, brand protection firms and agencies are employ-
ing machine learning and artificial intelligence to quickly spot
counterfeits and fakes on various online and e-commerce Web
sites. For example, Entrupy and Red Points use machine learning
to develop a classification algorithm which can help distinguish
counterfeits from real products with a great deal of accuracy, and
then issue a certificate of authenticity.
Interestingly, some provocative academic research shows
that fake products are not uniformly bad for companies.
Although some consumers may initially feel pleased at buy-
ing a fake handbag, for example, many ultimately realize the
fake cannot replace the genuine item. While some who can-
not afford to buy genuine luxury items may always buy fakes,
other consumers will find that buying a counterfeit motivates
them to later buy the real thing. Research has also shown
that the positive effect of counterfeits is most pronounced for
high-fashion products (such as women’s high-leg boots and
dress shoes), shoes tailored to young customers, and high-
end products of brands not yet well-known at the time of
counterfeiter entry.
Sources: Robert Klara, “Counterfeit Goods Are a $460 Billion Indus- try, and Most Are Bought and Sold Online,” February 3, 2017, www .adweek.com/brand-marketing/counterfeit-goods-are-a-460- billion- industry-and-most-are-bought-and-sold-online/, accessed March 16, 2018; Billy Bambrough, “World’s Largest Producers of Fake Goods Revealed as Value of Counterfeit Goods Nears Half a Trillion Dollars Per Year,” April 18, 2016, www.cityam.com/239107/worlds-largest- producers-of-fake-goods-revealed-as-value-of-counterfeit-goods- nears-half-a-trillion-dollars-per-year-, accessed March 16, 2018; Andrew Tarantola, “Counterfeiters Are Using AI and Machine Learn- ing to Make Better Fakes,” November 10, 2017, www.engadget .com/2017/11/10/counterfeit-ai-machine-learning-forgery/, accessed March 16, 2018. Julia Boorstin, “Louis Vuitton Tests a New Way to Fight the Faux,” Fortune, May 16, 2005; Robert Klara, “The Fight Against Fakes,” Brandweek, June 27, 2009; Stephanie Clifford, “ Economic Indicator: Even Cheaper Knockoffs,” The New York Times, July 31, 2010; Doug Palmer, “U.S. Calls China’s Baidu ‘Notorious Market’,” Reuters, February 28, 2011; Renée Richardson Gosline, “Rethinking Brand Contamination: How Consumers Maintain Dis- tinction When Symbolic Boundaries Are Breached,” working paper, MIT Sloan School of Management, 2009; Keith Wilcox, Hyeong Min Kim, and Sankar Sen, “Why Do Consumers Buy Counterfeit Luxury Brands?,” Journal of Marketing Research, 46 (April 2009): 247–259; Young Jee Han, Joseph C Nunes, and Xavier Drèze, “Signaling Sta- tus with Luxury Goods: The Role of Brand Prominence,” Journal of Marketing 74 (July 2010): 15–30; Katherine White and Jennifer J. Argo, “When Imitation Doesn’t Flatter: The Role of Consumer Dis- tinctiveness in Responses to Mimicry,” Journal of Consumer Research 38 (December 2011): 667–680; Yi Qian, “Counterfeiters: Foes or
Friends? How Counterfeits Affect Sales by Product Quality Tier,”
Management Science 60, no. 10 (2014): 2381–2400.
Protectability The sixth and final general consideration is the extent to which the brand element is protectable—
both in a legal and a competitive sense. Marketers should (1) choose brand elements that can be
legally protected internationally, (2) formally register them with the appropriate legal bodies, and
(3) vigorously defend trademarks from unauthorized competitive infringement. The necessity of
legally protecting the brand is dramatized by the billions of dollars in losses in the United States
alone from unauthorized use of patents, trademarks, and copyrights, as described in The Science
of Branding 4-1.
Another consideration is whether the brand is competitively protectable. If a name, package,
or other attribute is too easily copied, much of the uniqueness of the brand may disappear. For
example, consider the once red-hot ice-beer category. Although Molson Ice was one of the early
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 147
entries in the category, it quickly lost its pioneering advantage when Miller Ice and what later became Bud Ice were introduced. Marketers need to reduce the likelihood that competitors can create a derivative based on the product’s own elements.
OPTIONS AND TACTICS FOR BRAND ELEMENTS Consider the advantages of “Apple” as the name of a personal computer. Apple was a simple but well-known word that was distinctive in the product category—which helped develop brand awareness. The meaning of the name also gave the company a “friendly shine” and warm brand personality. It could also be reinforced visually with a logo that would transfer easily across geographic and cultural boundaries. Finally, the name could serve as a platform for sub-brands like the Macintosh, aiding the introduction of brand extensions. As Apple illustrates, a well-chosen brand name can make an appreciable contribution to the creation of brand equity.
What would an ideal brand element be like? Consider brand names—perhaps the most central of all brand elements. Ideally, a brand name would be easily remembered, highly suggestive of both the product class and the particular benefits that serve as the basis of its positioning, inher- ently fun or interesting, rich with creative potential, transferable to a wide variety of product and geographic settings, enduring in meaning and relevant over time, and strongly protectable both legally and competitively.
Unfortunately, it is difficult to choose a brand name—or any brand element, for that matter— that satisfies all these criteria. The more meaningful the brand name, for example, the more difficult it may be to transfer it to new product categories or translate it to other cultures. This is one reason why it is preferable to have multiple brand elements. Let’s look at the major considerations for each type of brand element.
Brand Names The brand name is a fundamentally important choice because it often captures the central theme or key associations of a product in a very compact and economical fashion. Brand names can be an extremely effective shorthand means of communication.7 Whereas an advertisement lasts half a minute, and a sales call could run to hours, customers can notice the brand name and register its meaning or activate it in memory in just a few seconds.
Because it is so closely tied to the product in the minds of consumers, however, the brand name is also the most difficult element for marketers to change. One study conducted by U.K. research firm Millward Brown suggested that replacing a brand name could result in an immedi- ate drop in sales of 5 to 20 percent and the new brand image may not be as strong as the previous one.8 So, companies systematically research names before making a choice. Still, it is possible to make serious mistakes, even if inadvertently, in brand name selection. For example, a Silicon Valley start-up called Bodega caused a significant stir when they introduced their company to the public. Bodega is a term referring to a corner store, and the company was selling a vending machine replacement that would actually replace neighborhood bodegas. This type of cultural misappropriation could be harmful to the future of a brand or a company.
Is it difficult to come up with a brand name? Ira Bachrach, a well-known branding consultant, has noted that, although there are 140,000 words in the English vocabulary, the average U.S. adult recognizes only 20,000; Bachrach’s consulting company, NameLab, sticks to the 7,000 words that make up the vocabulary of most television programs and commercials.
Although that may seem to allow many choices, each year tens of thousands of new brands are registered as legal trademarks. Arriving at a satisfactory brand name for a new product can be a painfully difficult and prolonged process. After realizing that most of the desirable brand names are already legally registered, many a frustrated executive has lamented that “all the good ones are taken.”
Naming Guidelines. Selecting a brand name for a new product is certainly an art and a science. Brand names come in many different forms. They may be descriptive of the product function (Sleep Inn), be evocative of a certain feature (Quicken Loans), convey personality (Snapple), be completely synthetic and made up (Verizon), or reflect the founder (Dyson), among other brand name strategies (see Figure 4-3). Like any brand element, brand names
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148 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
must be chosen with the six general criteria of memorability, meaningfulness, likability, transferability, adaptability, and protectability in mind.
Brand Awareness. Brand names that are simple and easy to pronounce or spell, familiar and meaningful, and different, distinctive, and unusual can obviously improve brand awareness.9
Simplicity and Ease of Pronunciation and Spelling. Simplicity reduces the effort consum- ers have to make to comprehend and process the brand name. Short names often facilitate recall because they are easy to encode and store in memory—consider Aim toothpaste, Apple computer, Raid pest spray, Bold laundry detergent, Suave shampoo, Off insect repellent, Jif peanut butter, Ban deodorant, and Bic pens. Marketers can shorten longer names to make them easier to recall. For example, over the years Chevrolet cars have also become known as “Chevy,” Budweiser beer has become “Bud,” and Coca-Cola is also “Coke.”10
To encourage word-of-mouth exposure that helps build strong memory links, marketers should also make brand names easy to pronounce. Also keep in mind that rather than risk the embarrassment of mispronouncing a difficult name like Hyundai automobiles, Shiseido cosmetics, or Façonnable clothing, consumers may avoid pronouncing it altogether.
Brands with difficult-to-pronounce names have an uphill battle because the firm has to devote so much of its initial marketing effort to teaching consumers how to pronounce the name. Polish vodka Wyborowa (pronounced VEE-ba-ro-va) was supported by a print ad to help consumers pronounce the brand name—a key factor for success in the distilled spirits category, where little self-service exists and consumers usually need to ask for the brand in the store.11
Ideally, the brand name should have a clear, understandable, and unambiguous pronunciation and meaning. However, the way a brand is pronounced can affect its meaning, so consumers may take away different perceptions if ambiguous pronunciation results in different meanings. One research study showed that certain hypothetical products with brand names that were acceptable in both English and French, such as Vaner, Randal, and Massin, were perceived as more “hedonic” (providing pleasure) and were better liked when pronounced in French than in English.12
Pronunciation problems may arise from not conforming to linguistic rules. Although Honda chose the name “Acura” because it was associated with words connoting precision in several languages, it initially had some trouble with consumer pronunciation of the name (AK-yur-a) in the U.S. market, perhaps in part because the company chose not to use the phonetically simpler English spelling of Accura (with a double c).
To improve pronounceability and recallability, many marketers seek a desirable cadence and pleasant sound in their brand names.13 For example, brand names may use alliteration (repetition of consonants, such as in Coleco), assonance (repetition of vowel sounds, such as in Ramada Inn), consonance (repetition of consonants with intervening vowel change, such as in Hamburger Helper), or rhythm (repetition of the pattern of syllable stress, such as in Better Business Bureau). Some words employ onomatopoeia—words composed of syllables that when pronounced generate a sound strongly suggestive of the word’s meaning, like Sizzler restaurants, Cap’n Crunch cereal, Ping golf clubs, and Schweppes carbonated beverages.
FIGURE 4-3
Brand Name Taxonomy
Descriptive Sleep Inn
Evocative Quicken Loans
Personality Snapple
Synthetic Verizon
Founder Dyson
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 149
Familiarity and Meaningfulness. The brand name should be familiar and meaningful so it can tap into existing knowledge structures. It can be concrete or abstract in meaning. Because the names of people, objects, birds, animals, and inanimate objects already exist in memory, con- sumers have to do less learning to understand their meanings as brand names.14 Links form more easily, increasing memorability.15 Thus, when a consumer sees an ad for the first time for a car called “Fiesta,” the fact that the consumer already has the word stored in memory should make it easier to encode the product name and thus improve its recallability.
To help create strong brand-category links and aid brand recall, the brand name may also suggest the product or service category, as do Netflix streaming service for videos, TripAdvisor travel advisory Web site, and Ticketron ticket selling service. Brand elements that are highly descriptive of the product category or its attribute and benefits can be quite restrictive, how- ever.16 For example, it may be difficult to introduce a soft drink extension for a brand called Juicy Juice.
Differentiated, Distinctive, and Unique. Although choosing a simple, easy-to-pronounce, familiar, and meaningful brand name can improve recallability, to improve brand recognition, on the other hand, brand names should be different, distinctive, and unusual. As Chapter 2 noted, recognition depends on consumers’ ability to discriminate between brands, and more complex brand names are more easily distinguished. Distinctive brand names can also make it easier for consumers to learn intrinsic product information.17
A brand name can be distinctive because it is inherently unique, or because it is unique in the context of other brands in the category.18 Distinctive words may be seldom-used or atypical words for the product category, like Apple computers; unusual combinations of real words, like Toys“R”Us; or completely made-up words, such as Cognos or Luxottica. Even made-up brand names, however, have to satisfy prevailing linguistic rules and conventions—for example, try to pronounce names without vowels such as Blfft, Xgpr, or Msdy!
Here, too, there are trade-offs. Even if a distinctive brand name is advantageous for brand recognition, it also has to be credible and desirable in the product category. A notable excep- tion is Smucker’s jelly, which has tried to turn the handicap of its distinctive—but potentially dislikable—name into a positive through its slogan, “With a Name Like Smucker’s, It Has to Be Good!”
Brand Associations. Because the brand name is a compact form of communication, the explicit and implicit meanings consumers extract from it are important. In naming a new peer-to-peer communication technology, the founders landed on the descriptive “Sky peer-to-peer” which they decided to shorten to Skyper. When the corresponding Web address Skyper.com was not available, they shortened it again to the much more user-friendly Skype.19
The brand name can be chosen to reinforce an important attribute or benefit association that makes up its product positioning (see Figure 4-4). Besides performance-related considerations, brand names can also communicate more abstract considerations, such as Joy dishwashing liquid, Caress soap, and Obsession perfume. Consider the reasoning behind the name of Colgate’s new mini toothbrush.
FIGURE 4-4
Sample Suggestive
Brand Names
ColorStay lipsticks Head & Shoulders shampoo Close-Up toothpaste SnackWell reduced fat snacks DieHard auto batteries Mop & Glo floor wax Lean Cuisine low-calorie frozen entrees Shake’n Bake chicken seasoning Sub-Zero refrigerators and freezers Cling-Free static buildup remover Facebook social network Dropbox cloud storage
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150 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
A descriptive brand name should make it easier to link the reinforced attribute or benefit.21 Consumers will find it easier to believe that a laundry detergent “adds fresh scent” to clothes if it has a name like “Blossom” than if it is called something neutral like “Circle.”22 However, brand names that reinforce the initial positioning of a brand may make it harder to link new associa- tions to the brand if it later has to be repositioned.23 For example, if a laundry detergent named Blossom is positioned as “adding fresh scent,” it may be more difficult to reposition the product later, if necessary, and add a new brand association that it “fights tough stains.” Consumers may find it more difficult to accept or just too easy to forget the new positioning when the brand name continues to remind them of other product considerations.
With sufficient time and the proper marketing programs, however, this difficulty can some- times be overcome. Southwest Airlines no longer stands for airline service just in Texas and the southwestern United States, which it once did. Such marketing maneuvers can be a long and expensive process, however. Imagine the difficulty of repositioning brands such as “I Can’t Believe It’s Not Butter!” or “Gee, Your Hair Smells Terrific!”—both are real brands! Thus, it is important when choosing a meaningful name to consider the possibility of later repositioning and the necessity of linking other associations.
Meaningful names are not restricted to real words. Consumers can extract meaning, if they so desire, even from made-up or fanciful brand names. For example, one study of com- puter-generated brand names containing random combinations of syllables found that “whum- ies” and “quax” reminded consumers of breakfast cereal and that “dehax” reminded them of laundry detergent.24 Thus, consumers were able to extract at least some product meaning from these essentially arbitrary names when instructed to do so. Nevertheless, consumers are likely to extract meaning from highly abstract names only when they are sufficiently motivated.
Marketers generally devise made-up brand names systematically, basing words on combina- tions of morphemes. A morpheme is the smallest linguistic unit having meaning. There are 7,000 morphemes in the English language, including real words like “man” and prefixes, suffixes, or roots. For example, Nissan’s Sentra automobile is a combination of two morphemes suggesting “central” and “sentry.”25 By combining carefully chosen morphemes, marketers can construct brand names that have some relatively easily inferred or implicit meaning.
Brand names raise a number of interesting linguistic issues.26 Figure 4-5 contains an over- view of different categories of linguistic characteristics, with definitions and examples. Even individual letters can contain meaning that may be useful in developing a new brand name. The letter X became popular (e.g., ESPN’s X Games and Nissan’s Xterra SUV) because X represents “extreme,” “on the edge,” and “youth.”27 Research has shown that in some instances, consumers prefer products with brand names bearing some of the letters from their own name (Jonathan may exhibit a greater-than-expected preference for a product named Jonoki).28
The sounds of letters can take on meaning as well.29 For example, some words begin with phonemic elements called plosives, like the letters b, c, d, g, k, p, and t, whereas others use sibilants, which are sounds like s and soft c. Plosives escape from the mouth more quickly than sibilants and are harsher and more direct. Consequently, they are thought to make names more specific and less abstract, and to be more easily recognized and recalled.30 On the other hand, because sibilants have a softer sound, they tend to conjure up romantic, serene images and are often found in the names of products such as perfumes—think of Chanel, Ciara (by Revlon), and Shalimar and Samsara (Guerlin).31
One study found a relationship between certain characteristics of the letters of brand names and product features: As consonant hardness and vowel pitch increased in hypothetical brand names for toilet paper and household cleansers, consumer perception of the harshness of the
COLGATE WISP
Famed brand-identity firm Lexicon has developed some successful brand names, such as BlackBerry, Dasani,
Febreze, OnStar, Pentium, Scion, Lucid, and Swiffer. To develop a name for a new disposable mini toothbrush
from Colgate, the firm went through a careful development process. The center of the disposable toothbrush
held a dab of special toothpaste that made rinsing unnecessary and brushing on the go possible. Deciding
to focus on the lightness, softness, and gentleness of the product, Lexicon’s global network of 70 linguists
in 50 countries brainstormed metaphors and sounds that conveyed lightness. One name—Wisp—jumped
out at company founder David Placek. Subsequent consumer research validated its positive connotations,
and a new name was born.20
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 151
product also increased.32 The actual font or logotype used to express the brand name may also change consumer impressions.33
Brands are not restricted to letters alone.34 Alphanumeric names may include a mixture of letters and digits (WD-40), a mixture of words and digits (Formula 409), or mixtures of letters or words and numbers in written form (Saks Fifth Avenue). They can also designate generations or relationships in a product line like BMW’s 3, 5, and 7 series.
Naming Procedures. A number of different procedures or systems have been suggested for naming new products. Most marketers adopt a procedure something along the following lines.35
1. Define objectives. First, define the branding objectives in terms of the six general criteria we noted earlier, and in particular, define the ideal meaning the brand should convey. Recognize the role of the brand within the corporate branding hierarchy and how it should relate to other brands and products (we will discuss this in Chapter 12). In many cases, existing brand
FIGURE 4-5
Brand Name Linguistic
Characteristics
Characteristics Definitions and/or Examples
Phonetic Devices Consonant repetition (Coca-Cola, PayPal)Alliteration Vowel repetition (Kal Kan)Assonance Consonant repetition with intervening vowel changes (Weight Watchers, Best Buy)
Consonance
Masculine rhyme Rhyme with end-of-syllable stress (Max Pax) Feminine rhyme Unaccented syllable followed by accented
syllable (American Airlines)
Onomatopoeia Use of syllable phonetics to resemble the object itself (Wisk) Product names attenuated (Chevy)Clipping Morphemic combination, usually with elision (Aspergum, Duracell, Facebook)
Blending
Initial plosives /b/, /c-hard/, /d/, /g-hard/, /k/, /p/, /q/, /t/ (Bic)
Orthographic Devices Unusual or incorrect spellings Kool-Aid, Google, Lyft Abbreviations 7 Up for Seven Up
AmocoAcronyms
Morphologic Devices Jell-OAffixation
Compounding Janitor-in-a-Drum
Semantic Devices Amazon was named after the world's largest river to symbolize scale, and to support the tagline "Earth's largest bookstore"
Metaphor
Application of one object or quality for another (Midas)
Metonymy
Substitution of a part for the whole (Red Lobster)
Synecdoche
Weak/imperfect/slant rhyme Vowels differ or consonants similar, not identical (Black & Decker)
Personification/pathetic fallacy Humanizing the nonhuman, or ascription of human emotions to the inanimate (Betty Crocker) Conjunction of opposites (Easy-Off)Oxymoron
Paranomasia Pun and word plays (Hawaiian Punch) Semantic appositeness Fit of name with object (Bufferin)
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152 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
names may serve, at least in part. Finally, understand the role of the brand within the entire marketing program and the target market.
2. Generate names. With the branding strategy in place, next, generate as many names and concepts as possible. Any potential sources of names are valid: company management and employees; existing or potential customers (including retailers or suppliers if relevant); ad agencies, professional name consultants, and specialized computer-based naming companies. Tens, hundreds, or even thousands of names may result from this step.
3. Screen initial candidates. Screen all the names against the branding objectives and market- ing considerations identified in step 1, and apply the test of common sense to produce a more manageable list. For example, General Mills starts by eliminating the following:
• Names that have unintentional double meaning • Names that are unpronounceable, already in use, or too close to an existing name • Names that have obvious legal complications • Names that represent an obvious contradiction of the positioning
Next, General Mills runs in-depth evaluation sessions with management personnel and marketing partners to narrow the list to a handful of names, often conducting a quick-and- dirty legal search to help screen out possible problems.
4. Study candidate names. Collect more extensive information about each of the final 5 to 10 names. Before spending large amounts of money on consumer research, it is usually advisable to do an extensive international legal search. Because this step is expensive, marketers often search on a sequential basis, testing in each country only those names that survived the legal screening from the previous country.
5. Research the final candidates. Next, conduct consumer research to confirm management expectations about the memorability and meaningfulness of the remaining names. Consumer testing can take all forms. Many firms attempt to simulate the actual marketing program and consumers’ likely purchase experiences as much as possible.36 Thus, they may show consum- ers the product and its packaging, price, or promotion so that they understand the rationale for the brand name and how it will be used. Other aids in this kind of research are realistic three-dimensional packages and concept boards or low-cost animatic advertising using digi- tal techniques. Marketers may survey many consumers to capture differences in regional or ethnic appeal. They should also factor in the effects of repeated exposure to the brand name and what happens when the name is spoken versus written.
6. Select the final name. Based on all the information collected from the previous step, manage- ment should choose the name that maximizes the firm’s branding and marketing objectives and then formally register it.
Some segment of consumers or another will always have at least some potentially negative associations with a new brand name. In most cases, however, assuming they are not severe, these associations will disappear after the initial marketing launch. Some consumers will dislike a new brand name because it is unfamiliar or represents a deviation from the norm. Marketers should remember to separate these temporal considerations from more enduring effects. Here is how a new airline arrived at its name.37
SCOOT
In a bid to tap the growing demand for low-cost, no-frills air travel over long distances, Singapore Airlines
launched a new budget carrier called Scoot. The carrier began operations in June 2012 and has plans to fly
to selected cities in Australia and China.
Right from the start, the airline’s objective was to adopt an upbeat, fun, and quirky approach to its
branding. After going through pitches from a number of advertising agencies, the airline appointed local ad
agencies Sparkfury and Tangoshark to capture the essence of the brand. According to CEO Campbell Wilson,
the airline’s unusual name was chosen because it was short, snappy, and stands out. He added that the new
airline will have “scootitude,” a different attitude that will guide the way the people at Scoot interact with their
customers and each other; how their product, systems, and processes are designed; and how they differenti-
ate themselves from their competitors. In line with the brand name, the bright yellow logo conveys warmth,
energy, and informality, with the “t” tilted to give a nonconformist twist. The aircraft’s exterior bears waves
of yellow color to give a sense of motion and youthfulness, and the cabin crew wear yellow tops to match.38
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 153
URLs URLs (uniform resource locators) specify locations of pages on the Web and are also com- monly referred to as domain names. Anyone wishing to own a specific URL must register and pay for the name. As companies clamored for space on the Web, the number of registered URLs increased dramatically. Every three-letter combination and virtually all words in a typical English dictionary have been registered. The sheer volume of registered URLs often makes it necessary for companies to use coined words for new brands if they wish to have a Web site for the brand. For example, when Andersen Consulting selected its new name, it chose the coined word “Accenture” in part because the URL www.accenture.com had not been registered.
Another issue facing companies with regard to URLs is protecting their brands from unau- thorized use in other domain names.39 A company can sue the current owner of the URL for copyright infringement, buy the name from the current owner, or register all conceivable variations of its brand as domain names ahead of time.
In 2010, cybersquatting cases reached record levels. Cybersquatting or domain squat- ting, as defined by government law, is registering, trafficking in, or using a domain name with bad-faith intent to profit from the goodwill of a trademark belonging to someone else. The cybersquatter then offers to sell the domain to the person or company who owns a trademark contained within the name at an inflated price. Under such cases, trademark holders sue for infringement of their domain names through the World Intellectual Property Organization (an agency of the UN).40A number of companies—such as Panasonic, Avon, and Hertz—were targets of cybersquatting, and in certain cases, even had to eventually pay large sums of money to buy back the domain names.
In 2010, the Academy Awards filed a lawsuit against GoDaddy alleging that 57 domains which had cybersquatting issues were sold by GoDaddy. Domain names such as 2011 Oscars.com had confusingly similar names to the Academy Awards’ own domain name, and allowed GoDaddy to profit from individuals who parked on these domains and collected revenue. Ulti- mately, the courts ruled in favor of GoDaddy since it did not “possess the requisite bad faith intent to profit” from their sales. Many regarded this as a landmark ruling in the cybersquatting space because it suggests that brands may not be able to reasonably expect a third-party to “police” a brand’s trademark.41 Another example of trademark infringement of Louis Vuitton follows.
Scoot has used evocative brand imagery and a strong
customer focus to build its brand.
Source: Markus Mainka/Alamy Stock Photo
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154 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
LOUIS VUITTON VERSUS LOUIS VUITON DAK
A South Korean fried chicken restaurant recently lost a trademark battle with designer Louis Vuitton, after
the restaurant’s name of Louis Vuiton Dak was judged to be too similar to Louis Vuitton. The restaurant’s
logo and packaging closely mirrored the designer’s iconic imagery. Initially, after Louis Vuitton filed a lawsuit
against the restaurant, the courts ordered the restaurant to desist and threatened a 500,000 won-per-day
fine for noncompliance.42 The restaurant was ultimately hit with another 14.5 million won (which translates
to about $12,500) fine for noncompliance, after changing their name immediately after the first ruling to
LOUISVUI TONDAK. Many brands can avoid similarly expensive legal battles by avoiding mirroring their brand
closely after another, even if the products and purchase channels have nothing in common.
Cybersquatting has recently morphed into another type of deceptive practice called spoofing—a practice in which scam artists set up fraudulent Web sites which use variants of a brand’s name to set up a series of URLs in order to attract unsuspecting actors and encourage them to spend money. These sorts of fraudulent Web sites are said to be worth $460 billion annually, which is much larger than the stated size of the personal $264 billion that eMarketer estimated is the value of the online personal luxury goods market in 2016. A related study conducted by cybersecurity research firms suggested that the names of eight luxury brands (i.e., Chanel, Gucci, Cartier, Prada, Givenchy, Hermès, Burberry, and Louis Vuitton) appeared in various forms in 538 different domains, many of which were deemed fraudulent.43
The practice of spoofing relies on consumers’ inattention to minor variations in domain names including misspellings or additional letters included (e.g., Hermes-bag.us, Givvenchy. com, or Chamel.us). The preponderance of these Web sites also suggests a variety of ways in which these sites can defraud customers including stealing credit card information or sell- ing knockoffs.44 From a brand marketer’s perspective, the instances of cybersquatting and spoofing seem to be growing over time. For instance, in 2016, the World Intellectual Property Organization (WIPO) reported a 16 percent increase in cybersquatting disputes, of which 9 percent involved fashion brand names. As an example, Hugo Boss alone filed 42 domain name disputes in 2016.
Another version of spoofing that occurs is fraudulent e-mails that are sent on behalf of the brand to unsuspecting customers to obtain credit card information. These phishing attempts can be extremely harmful to a brand’s reputation, as they can destroy consumer trust and harm a brand’s reputation. Brand names such as eBay, Paypal, and Amazon have been targeted in phish- ing attempts by online scammers and thieves.45
How can a brand name guard against these types of Internet hoaxes and scams which threaten to dilute a brand’s equity? A phased approach may be worth considering, beginning with a “cease and desist letter” to request counterfeiters to stop infringing on their trademark. Failure to comply could result in litigation under existing laws such as the Anticybersquatting Consumer Protection Act (ACPA), Uniform Domain-Name Dispute-Resolution Policy (UDRP), and so on. Regardless, continuous vigilance to prevent counterfeiters from destroying a brand’s trust and reputation is needed against the backdrop of the increasing prevalence of counterfeiting.46
Logos and Symbols Although the brand name typically is the central element of the brand, visual elements also play a critical role in building brand equity and especially brand awareness. Logos have a long his- tory as a means to indicate origin, ownership, or association. For example, families and countries have used logos for centuries to visually represent their names (think of the Hapsburg eagle of the Austro-Hungarian Empire).
Logos range from corporate names or trademarks (word marks with text only) written in a distinctive form, to entirely abstract designs that may be completely unrelated to the word mark, corporate name, or corporate activities.47 Examples of brands with strong word marks and no accompanying logo separate from the name include Coca-Cola, Dunhill, and Kit Kat. Examples of abstract logos include the Mercedes star, Rolex crown, CBS eye, Nike swoosh, and Olympic rings. These nonword mark logos are also often called symbols.
Many logos fall between these two extremes. Some are literal representations of the brand name, enhancing brand meaning and awareness, such as the Arm and Hammer, American Red
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Cross, and Apple logos. Logos can be quite concrete or pictorial like the American Express centurion, the Land O’Lakes Native American, the Morton salt girl with umbrella, and Ralph Lauren’s polo player. Certain physical elements of the product or company can become a sym- bol, as did the Goodyear blimp, McDonald’s golden arches, and the Playboy bunny ears. Many technology brands use logos to convey information about brand benefits, such as the WhatsApp logo featuring a landline phone in a speech bubble or the Amazon logo featuring a smile under the wordmark to convey service and to highlight its ability to supply a broad range of goods from A to Z.
Like names, abstract logos can be quite distinctive and thus recognizable. Nevertheless, because abstract logos may lack the inherent meaning present with a more concrete logo, one danger is that consumers may not understand what the logo is intended to represent without a significant marketing initiative to explain its meaning. Consumers can evaluate even fairly abstract logos differently depending on the shape.
Benefits. Logos and symbols are often easily recognized and can be a valuable way to identify products, although consumers may recognize them but be unable to link them to any specific prod- uct or brand. Many insurance firms use symbols of strength (the Rock of Gibraltar for Prudential and the stag for Hartford) or security (the “good hands” of Allstate, the hard hat of Fireman’s Fund, and the red umbrella of Travelers).
Another branding advantage of logos is their versatility: Because they are often nonverbal, logos transfer well across cultures and over a range of product categories. For example, corporate brands often develop logos in order to confer their identity on a wide range of products and to endorse different sub-brands. Marketers must think carefully, however, as to how prominent the brand name and logo should be on any product, especially more luxury ones.48
Abstract logos offer advantages when the full brand name is difficult to use for any reason. In the United Kingdom, for example, National Westminster Bank created a triangular device as a logo because the name itself was long and cumbersome and the logo could more easily appear as an identification device on checkbooks, literature, signage, and promotional material. The logo also uses the shortened version of the company name, NatWest.49
Finally, unlike brand names, logos can be easily adapted over time to achieve a more contem- porary look. For example, in 2000, John Deere revamped its deer trademark for the first time in 32 years, making the animal appear to be leaping up rather than landing. The change was intended to “convey a message of strength and agility with a technology edge.”50
One study of logos associated with top 100 brand names aimed to uncover some common themes.51 Findings of this study revealed some interesting patterns. Nearly half of all logos used a single color, and a third used either red or blue; additionally, 23 percent used black and white, and more than half of all logos featured a horizontal aspect ratio. To enhance their appeal to customers, some brands have changed their logos in recent years. For instance, Instagram, Uber and Google have all attempted to change their logos.
One logo research study also analyzed the impact of the change in logos on “branding sec- onds” for each logo.52 A branding second was defined as the percentage of people who saw the logotype multiplied by the average time spent on it. Uber, Paypal, and Google demonstrated the highest lift in branding seconds of nearly 50 percent between the old and the new logos. In con- trast, Airbnb’s logo change registered only a 9 percent lift in branding seconds.
Regardless of the reason for doing it, changing a logo is not cheap. According to branding experts, engaging a firm for four to six months to create a symbol or remaking an old one for a big brand “usually costs $1 million.”53
Characters Characters represent a special type of brand symbol—one that takes on human or real-life charac- teristics. Brand characters typically are introduced through advertising and can play a central role in ad campaigns and package designs. Some are animated characters like the Pillsbury Dough- boy, Peter Pan peanut butter, and numerous cereal characters, such as Tony the Tiger and Snap, Crackle, and Pop. Others are live-action figures like Juan Valdez (Colombian coffee) and Ronald McDonald. In the Branding Brief 4-1, we highlight the role of SoftBank’s Otosan, the Talking Dog, in helping further enhance the brand’s presence.
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156 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
SoftBank is a telecom giant in Japan, the world’s third largest
telecom market. It sells mobile devices and provides mobile com-
munications, broadband, and telephone services. SoftBank is the
newest player in the industry, but in 2007, about a year after the
launch of SoftBank’s mobile phone business, it debuted an iconic
mascot that grabbed the attention of consumers as well as their
rivals: the snow-white talking dog Otosan.
A brief overview of trends in the industry will illustrate how the
SoftBank brand has grown and changed over the years. In 2006,
SoftBank was an absolute newcomer in a shrinking market long
dominated by mobile phone carrier NTT DoCoMo. In 2007, NTT
DoCoMo remained the market leader, followed by KDDI Corp, but
Softbank gained 204,800 new users, lifting its total number to 16.4
million users; by contrast, NTT DoCoMo’s new users numbered only
88,000. The story of SoftBank’s success, from an absolute new-
comer in the industry to a telecom giant, cannot be told without
mention of Otosan.
Otosan (which means “father” in Japanese) features in com-
mercials for SoftBank as an old-fashioned and endearing father
in a dog’s body with an otherwise normal human family. The ad
agency wanted to capture the viewer’s attention by doing some-
thing quirky and eccentric. SoftBank teamed up with veteran cre-
ative director Hiroshi Sasaki, and the first TV commercial to feature
Otosan immediately won the hearts of the public. To reinforce the
character’s fatherly attributes, 69-year-old Kinya Kitaouji, Japan’s
most well-known actor of authority figures, provided the dog’s
voice.
Otosan played a significant role in making SoftBank’s new
subscription plan in 2007, called the White Family Plan, a huge
success. Sasaki suggested calling the plan “White” for the same
reason he chose a talking dog as the central character of the new
campaign; as most companies categorize their plans as “Gold” or
“Platinum,” the White Family Plan would stand out. The White
Family Plan allows users to make domestic calls to immediate
members of the same family for free, 24 hours a day. This family
discount service became the basis of the “Shirato Family” story.
Although new characters have been added over the years, the
Shirato Family has largely been depicted as a nuclear family con-
sisting of Otosan himself; his wife, played by the Japanese actor
Kanako Higuchi; daughter Aya, played by the Japanese actor Aya
Ueto; and black Western son Kojiro, played by the American actor
Dante Carver.
Since his first TV commercial appearance, Otosan has appeared
in more than a hundred TV commercials for SoftBank. Otosan has
gone on many adventures with the support of his ethnically diverse
family, exploring everything from space to politics. A survey con-
ducted by the CM Research Center, an advertising analysis firm
based in Tokyo, found that SoftBank’s Otosan ads were the most
liked ads by the public, leading SoftBank to win brand of the year
awards from 2007 through 2011.
SoftBank’s dynamic spirit and Otosan’s eccentric character
can be traced back to the company’s founder, Masayoshi Son.
Of Korean descent, born and raised in Japan, and educated in
America, Son founded SoftBank based on one of 40 new business
ideas he had come up with. The company began as a distributor
of packaged software in 1981. In 1996, it established Yahoo Japan
in a joint venture with Yahoo! Inc. In 2006, it acquired Vodafone
Japan and rebranded it as SoftBank Mobile Corp. (Son successfully
made a deal with Apple to become the exclusive distributor of the
iPhone even before owning a mobile carrier.) Today, SoftBank has
become a giant global conglomerate, with a major stake in global
corporations and huge plans for the renewable energy and robot-
ics industries.
Over the years of SoftBank’s evolution, Otosan has been a
faithful companion. When the iPhone was introduced in 2008, an
ad showed Otosan’s daughter and son finding him secretly playing
a mobile game on his newly purchased iPhone. When SoftBank
ventured into renewable energy, Otosan scolded a team of engi-
neers who had built a giant sculpture of him out of light bulbs
for wasting energy. Otosan’s unique character and commanding
presence have made him one of the most liked and recognized
brand characters in Japan. As SoftBank’s brand ambassador, Oto-
san follows SoftBank everywhere. You can find him in SoftBank’s
stores; on stickers, key chains, and posters; in ads running for public
office and even flying to outer space, reminding consumers how
revolutionary the company is.
Sources: Mark Millan, “How Steve Jobs Got the iPhone Into Japan,” March 13, 2014, https://www.bloomberg.com/news/2014-03-12/how- steve-jobs-got-the-iphone-into-japan.html, accessed January 29, 2019; “SoftBank Mobile, KDDI Add More Users Than DoCoMo in June.” July 6, 2007, https://www.telegeography.com/products/commsupdate/ articles/2007/07/06/softbank-mobile-kddi-add-more-users-than-docomo- in-june/, accessed January 29, 2019; Edan Corkill, “Otosan, Japan’s Top Dog,” The Japan Times, April 29, 2012, https://www.japantimes.co.jp/ life/2012/04/29/general/otosan-japans-top-dog/#.XE1AilxKhPZ, accessed January 29, 2019; Allan Webber, “Japanese-Style Entrepreneurship: An Interview with Softbank’S CEO, Masayoshi Son,” Harvard Business Review, January–February 1992; SoftBank Group Corp, “History,” https:// group.softbank/en/corp/about/history/, accessed January 29, 2019.
BRANDING BRIEF 4-1
SoftBank’s Otosan, the Talking Dog
Otosan is a legendary mascot for the SoftBank Group and
among the most recognized Japanese brand characters.
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 157
Benefits. Because they are often colorful and rich in imagery, brand characters tend to be attention getting and quite useful for creating brand awareness. Brand characters can help brands break through marketplace clutter as well as help communicate a key product benefit. For example, Maytag’s Lonely Repairman helped reinforce the company’s key “reliability” product association for decades.
The human element of brand characters can enhance likeability and help create perceptions of the brand as fun and interesting.54 A consumer may more easily form a relationship with a brand when the brand has a human or other character presence. Characters avoid many of the problems that plague human spokespeople—they do not grow old or demand pay raises. An interesting exception occurred, however, when Aflac fired the human voice to its famed duck character, comedian Gilbert Gottfried, after he posted some controversial remarks on Twitter that made light of the fallout from the earthquake and tsunami in Japan.55
Finally, because brand characters do not typically have direct product meaning, they may also be transferred relatively easily across product categories. For example, Aaker notes that “the Keebler’s elf identity (which combines a sense of home-style baking with a touch of magic and fun) gives the brand latitude to extend into other baked goods—and perhaps even into other types of food where homemade magic and fun might be perceived as a benefit.”56 Popular characters also often become valuable licensing properties, providing direct revenue and additional brand exposure.
Cautions. There are some cautions and drawbacks to using brand characters. Brand characters can be so attention-getting and well-liked that they dominate other brand elements and actually dampen brand awareness.
EVEREADY
When Ralston Purina introduced its
drumming pink bunny that “kept
going . . . and going . . . and going”
in ads for the Eveready Energizer
battery, many consumers were so
captivated by the character that they
paid little attention to the name of
the advertised brand. As a result,
they often mistakenly believed that
the ad was for Eveready’s chief com-
petitor, Duracell. Eveready had to
add the pink bunny to its packages,
promotions, and other marketing
communications to create stronger
brand links. Through its concerted
marketing efforts through the years,
however, the Energizer Bunny has
now achieved iconic status. Many
marketing experts view the charac-
ter as the “ultimate product demo”
because of how effectively it showcases the product’s unique selling proposition—long-lived batteries—in an
inventive, fresh way. As the company’s CEO noted, “The message of the Energizer Bunny has remained consistent
over the last two decades; he speaks to longevity, determination and perseverance.” The bunny celebrated its
27th anniversary in 2016, having achieved several milestones, including 95 percent awareness among consumers
and an entry in the Oxford English Dictionary. Perhaps the greatest compliment, however, is how often everyone
from politicians to sport stars have used the Energizer Bunny to describe their own staying power.57
Characters often must be updated over time so that their image and personality remain rel- evant to the target market. Japan’s famous Hello Kitty character, which became a multibillion dollar product and license powerhouse, was able to maintain its appeal and revive its brand image through a broad set of licensing agreements ranging from paper towels to airplanes, and through a marketing strategy which is focused around niche markets.58
In general, the more realistic the brand character, the more important it is to keep it up-to- date. One advantage of fictitious or animated characters is that their appeal can be more enduring
The Energizer Bunny has become a symbol of longevity
and determination, and has helped showcase key brand at-
tributes, i.e., long-lived batteries, in an inventive, fresh way.
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158 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
In 1921, Washburn Crosby Company, makers
of Gold Medal flour, launched a picture puzzle
contest. The contest was a huge success—the
company received 30,000 entries—and several
hundred contestants sent along requests for
recipes and advice about baking. To handle
those requests, the company decided to create
a spokesperson. Managers chose the name
Betty Crocker because “Betty” was a popu-
lar, friendly sounding name and “Crocker”
was a reference to William G. Crocker, a
well-liked, recently retired executive. The
company merged with General Mills in 1928,
and the newly merged company introduced
the Betty Crocker Cooking School of the Air
as a national radio program. During this time,
Betty was given a voice and her signature
began to appear on nearly every product the
company produced.
In 1936, the Betty Crocker portrait was
drawn by artist Neysa McMein as a composite
of some of the home economists at the com-
pany. Prim and proper, Betty was shown with
pursed lips, a hard stare, and graying hair.
Her appearance has been updated a number
of times over the years (see the accompany-
ing figure) and has become more friendly,
although she has never lost her reserved look.
Prior to a makeover in 1986, Betty
Crocker was seen as honest and depend-
able, friendly and concerned about
BRANDING BRIEF 4-2
Updating Betty Crocker
One advantage of characters—they can be timeless. Although Betty Crocker is
over 75 years old, she still looks 35!
Source: The Advertising Archives/Alamy Stock Photo
and timeless than that of real people. Branding Brief 4-2 describes the efforts by General Mills to evolve the Betty Crocker character over time. Finally, some characters are so culturally specific that they do not travel well to other countries.
Slogans Slogans are short phrases that communicate descriptive or persuasive information about the brand. They often appear in advertising but can play an important role in packaging and in other aspects of the marketing program. When Snickers advertised, “Hungry? Grab a Snickers,” the slogan also appeared on the candy bar wrapper itself.
Slogans are powerful branding devices because, like brand names, they are an extremely efficient, shorthand means to build brand equity. They can function as useful “hooks” or “handles” to help consumers grasp the meaning of a brand—what it is and what makes it special.59 They are an indispensable means of summarizing and translating the intent of a marketing program in a few short words or phrases. For example, State Farm Insurance’s “Like a Good Neighbor, State Farm Is There” has been used for decades to represent the brand’s dependability and aura of friendship.
Benefits. Some slogans help build brand awareness by playing off the brand name in some way, as in “The Citi Never Sleeps.” Others build brand awareness even more explicitly by mak- ing strong links between the brand and the corresponding product category, like when Lifetime would advertise that it was “Television for Women.” Most important, slogans can help reinforce the brand positioning as in “Staples. That Was Easy.” The Singapore Tourist Board came up with an interesting Chinese slogan with a double meaning to appeal to Chinese tourists.
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 159
customers, and a specialist in baked goods, but also out-of-
date, old and traditional, a manufacturer of “old standby prod-
ucts,” and not particularly contemporary or innovative. The
challenge was to give Betty a look that would attract younger
consumers but not alienate older ones who remembered her as
the stern homemaker of the past. There needed to be a certain
fashionableness about her—not too dowdy and not too trendy,
since the new look would need to last for 5 to 10 years. Her
look also needed to be relevant to working women. Finally,
for the first time, Betty Crocker’s look was also designed to
appeal to men, given the results of a General Mills study that
showed that 30 percent of U.S. men at the time sometimes
cooked for themselves.
A few years later, Betty Crocker received another update. This
ultramodern model, the current one, was the work of a commit-
tee that selected images of 75 women of many different races to
create a computerized composite. This seventh makeover seemed
to have taken—although Betty Crocker was now close to 75, she
didn’t look a day over 35! Although the Betty Crocker name is
on 200 or so products, her visual image has been largely replaced
by the red spoon symbol and signature on package fronts, and
she appears only on cookbooks, advertising, and online via her
Facebook and Twitter accounts and a mobile app downloaded
by millions. By 2017, Betty Crocker had over 5 million followers
on Facebook and an impressive YouTube presence with over 23
million views for her baking and cooking instructional videos.
Betty has remained among the most recognized brand names
even among younger millennial audiences. In many ways, Betty
Crocker may be thought of as one of the earliest examples of
exceptional content marketing, as she continues to evolve and
engage with her consumer base, thereby forging a stronger con-
nection with her customer base.
Sources: Charles Panati, Panati’s Extraordinary Origins of Everyday Things (New York: Harper & Row, 1989); Milton Moskowitz, Robert Levering, and Michael Katz, Everybody’s Business: A Field Guide to the 400 Leading Companies in America (New York: Doubleday/Currency, 1990); “FYI Have You Seen This Person?,” Minneapolis–St. Paul Star Tri- bune, October 11, 2000; Susan Marks, Finding Betty Crocker: The Secret Life of America’s First Lady of Food (New York: Simon & Schuster, 2005); General Mills, “Betty Crocker Celebrates 90th Birthday,” November 18, 2011, https://www.businesswire.com/news/home/20111118005153/en/ Betty-Crocker-Celebrates-90th-Birthday, accessed October 26, 2018; Nyla Smith, “The Brand Story of Betty Crocker (and What We Can Learn from It),” November 24, 2017, www.nvision-that.com/design-from-all- angles/the-brand-story-of-betty-crocker, accessed April 25, 2018.
SINGAPORE TOURIST BOARD
In recent years, Chinese tourists have been the biggest spenders across the globe, and the Singapore
Tourist Board seems to have designed their tourism slogan to appeal to them in particular. In English, the
slogan is “Passion made possible.” Translated loosely, the matching slogan in Chinese should have been
心想事成 (xìn xiǎng shì chéng). However, the Singapore Tourist Board changed the last two characters
from “事成shì chéng” to “狮城 shì chéng.” This added a nice touch, because it created a double mean-
ing which only Chinese speakers will appreciate; shi cheng also means Lion City, which is another name
for Singapore. Thus, Chinese tourists can poetically interpret the slogan as “one’s heart is thinking of the
Lion City.60
Slogans often become closely tied to advertising campaigns and serve as taglines to summarize the descriptive or persuasive information conveyed in the ads. DeBeers’s “A Diamond Is Forever” tagline communicates that diamonds bring eternal love and romance and never lose value. Dollar Shave Club’s slogan “Shave Time. Shave Money” is closely linked to its positioning as a cost-effective solution to meet consumers’ shaving needs. Slogans can be more expansive and more enduring than just ad taglines, though campaign-specific taglines may help reinforce the message of a particular campaign instead of the brand slogan for a certain period.
For example, through the years, Nike has used taglines specific to ad campaigns for events or sports such as “Prepare for Battle” and “Quick Can’t Be Caught” (basketball); “Write the Future” (World Cup); “My Better Is Better” (multisport); and “Here I Am” (women) instead of the well-known brand slogan, “Just Do It.” Such substitutions can emphasize that the ad campaign represents a departure of some kind from the message conveyed by the brand slogan, or just a means to give the brand slogan a rest so that it remains fresh.
Designing Slogans. Some of the most powerful slogans contribute to brand equity in multiple ways.61 They can play off the brand name to build both awareness and image, such as “Maybe She’s Born with It, Maybe It’s Maybelline” for Maybelline cosmetics; or “The Big Q Stands for Quality” for Quaker State motor oil.
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160 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Slogans also can contain product-related messages and other meanings. Consider the historical Champion sportswear slogan, “It Takes a Little More to Make a Champion.” The slogan could be interpreted regarding product performance, meaning that Champion sports- wear is made with a little extra care or with extra-special materials, but it could mean that Champion sportswear is associated with top athletes. This combination of superior product performance and aspirational user imagery is a powerful platform on which to build brand image and equity. Benetton has had an equally strong slogan on which to build brand equity (“United Colors of Benetton”).
Updating Slogans. Some slogans become so strongly linked to the brand that it becomes difficult to introduce new ones (take the famous slogan quiz in Figure 4-7 and check the accompanying footnote to see how many slogans you can correctly identify). Marketers of 7UP tried a number of different successors to the popular “Uncola” slogan—including “Free- dom of Choice,” “Crisp and Clean and No Caffeine,” “Don’t You Feel Good About 7UP,” and “Feels So Good Coming Down,” and for more than five years, the somewhat edgy “Make 7UP Yours.” The slogan changed again when 7UP asked consumers to “Mix It Up a Little” featuring 7UP as an essential ingredient for a variety of different uses, including baking, cooking, use in drinks, and so on.63
A slogan that becomes so strongly identified with a brand can box it in. Or successful slo- gans can take on lives of their own and become public catch phrases (like Wendy’s “Where’s the Beef?” in the 1980s, “Got Milk?” spoofs in the 2000s), but there can also be a downside to this kind of success: the slogan can quickly become overexposed and lose specific brand or product meaning.
Once a slogan achieves such a high level of recognition and acceptance, it may still contribute to brand equity, but probably as more of a reminder of the brand. Consumers are unlikely to con- sider what the slogan means thoughtfully after seeing or hearing it too many times. At the same time, a potential difficulty arises if the slogan continues to convey some product meaning that the brand no longer needs to reinforce. In this case, by not facilitating the linkage of new, desired brand associations, the slogan can become restrictive and fail to allow the brand to be updated as much as desired or necessary.
Because slogans are perhaps the easiest brand element to change over time, marketers have more flexibility in managing them. In changing slogans, however, they must do the following:
1. Recognize how the slogan is contributing to brand equity, if at all, through enhanced aware- ness or image.
2. Decide how much of this equity enhancement, if any, is still needed. 3. Retain the needed or desired equities still residing in the slogan as much as possible while
providing whatever new twists of meaning are necessary to contribute to equity in other ways.
Sometimes modifying an existing slogan is more fruitful than introducing a new slogan with a completely new set of meanings. However, there are times when the slogan change is part of a broader repositioning, in which case a dramatic change in slogan can help signal a shift in the positioning of the brand. For example, Cover Girl abandoned its slogan from the well- received “Easy, Breezy, Beautiful Cover Girl” to “I Am What I Make Up,” as part of a larger repositioning strategy based on the realization that there are no set standards for beauty, and that makeup can be viewed as a tool for self-expression and personal transformation.64
BROWHAUS
Browhaus, a brow- and lash-grooming salon chain founded in 2004 in Singapore, currently has multiple
outlets in cities such as Bangkok, Beijing, Davao, Hong Kong, Jakarta, Singapore, London, Manilla, New
York, and Shanghai. In one of their marketing campaigns, the company employed a clever play on words
to promote their waterproof make-up. The campaign was called Eye Eye Captain, after “aye aye, captain,”
a common naval phrase, which added an element of fun. In the ads, models dressed in sailors’ uniforms
dunked their faces in water, demonstrating the quality of the company’s waterproof make-up.62
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 161
Dockers switched its slogan from the well-received “Nice Pants” to “One Leg at a Time” in the late 1990s before reverting to the previous slogan when recognizing it had given up too much built-up equity.
Jingles Jingles are musical messages written around the brand. Typically composed by professional songwriters, they often have enough catchy hooks and choruses to become almost permanently registered in the minds of listeners—sometimes whether they want them to or not! During the first half of the twentieth century, when broadcast advertising was confined primarily to the radio, jingles were important branding devices.
We can think of jingles as extended musical slogans, and in that sense, classify them as a brand element. Because of their musical nature, however, jingles are not nearly as transferable as other brand elements. They can communicate brand benefits, but they often convey product meaning in a nondirect and fairly abstract fashion. Thus, the potential associations they might create for the brand are most likely to relate to feelings and personality and other intangibles.
FIGURE 4-7
Famous Slogans Quiz
1._______________________ Reach Out and Touch Someone
2._______________________ Have It Your Way
3._______________________ Just Do It
4._______________________ When It Absolutely, Positively Has to Be
There Overnight
5._______________________ Drivers Wanted
6._______________________ Don’t Leave Home Without It
7._______________________ Like a Rock
8._______________________ Because I’m Worth It
9._______________________ The Ultimate Driving Machine
10._______________________ When You Care Enough to Send the Very Best
11._______________________ Capitalist Tool
12._______________________ The Wonder Drug That Works Wonders
13._______________________ No More Tears
14._______________________ Melts in Your Mouth, Not in Your Hands
15._______________________ We Try Harder
16._______________________ The Antidote for Civilization
17._______________________ Where Do You Want to Go Today?
18._______________________ Let Your Fingers Do the Walking
19._______________________ Breakfast of Champions
20._______________________ Fly the Friendly Skies
Answers: (1) Bell Telephone; (2) Burger King; (3) Nike; (4) Federal Express; (5) Volkswagen; (6) American Express; (7) Chevrolet; (8) L’Oreal; (9) BMW; (10) Hallmark; (11) Forbes magazine; (12) Bayer aspirin; (13) Johnson’s Baby Shampoo; (14) M&M’s (15) Avis; (16) Club Med; (17) Microsoft; (18) Yellow Pages; (19) Wheaties; and (20) United Airlines.
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162 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Jingles are perhaps most valuable in enhancing brand awareness. Often, they repeat the brand name in clever and amusing ways that allow consumers multiple encoding opportunities. Consum- ers are also likely to mentally rehearse or repeat catchy jingles after the ad is over, providing even more encoding opportunities and increasing memorability.
A well-known jingle can serve as an advertising foundation for years. The familiar “Give Me a Break” jingle for Kit Kat candy bars has been sung in ads since 1988 and has helped make the brand the sixth best-selling chocolate candy bar in the United States.65 There was an uproar when, after two decades, the U.S. Army switched from its familiar “Be All That You Can Be” to “Army of One.” Finally, the distinctive four-note signature to Intel’s ads echoes the company’s slogan “In-tel In-side.” Although the jingle seems simple, the first note alone is a mix of 16 sounds, including a tambourine and a hammer striking a brass pipe.66
Packaging Packaging is the activities of designing and producing containers or wrappers for a product. Like other brand elements, packages have a long history. Early humans used leaves and animal skin to cover and carry food and water. Glass containers first appeared in Egypt as early as 2000 B.C. Later, the French emperor Napoleon awarded 12,000 francs to the winner of a contest to find a better way to preserve food, leading to the first crude method of vacuum packing.67
From the perspective of both the firm and consumers, packaging must achieve several objectives:68
• Identify the brand. • Convey descriptive and persuasive information. • Facilitate product transportation and protection. • Assist in at-home storage. • Aid product consumption.
Marketers must choose the aesthetic and functional components of packaging correctly to achieve marketing objectives and meet consumers’ needs. Aesthetic considerations govern a pack- age’s size and shape, material, color, text, and graphics. Innovations in printing processes now permit eye-catching and appealing graphics that convey elaborate and colorful messages on the package at the “moment of truth”—the point of purchase.69
Functionally, structural design is crucial. For example, innovations over the years have resulted in food packages that are resealable, tamperproof, and more convenient to use—easy to hold, easy to open, or squeezable. Consider these General Mills packaging innovations: Yoplait Go-Gurt’s yogurt in a tube packaging concept was a huge hit with kids and their parents; pack- aging for Betty Crocker Warm Delights showcased a microwavable (two minutes), convenient, single-serve dessert treat; and Green Giant Valley Fresh Steamers uses materials that withstand microwave cooking temperatures to offer steamable vegetables with sauce.70
Benefits. Often, one of the strongest associations consumers have with a brand is inspired by the look of its packaging. For example, if you ask the average consumer what comes to mind when he or she thinks of Heineken beer, a common response is a “green bottle.” The package can become an important means of brand recognition and convey or imply information to build or reinforce valuable brand associations. Molson’s beer sales increased by 40 percent in the United States after the company modified the bottle’s back labels to include cheeky “ice-breakers” for bar patrons such as “On the Rebound,” “Sure, You Can Have My Number,” and “Fairly Intimidated by Your Beauty.” Buoyed by that success, they later introduced “Answer Honestly” bottle back labels that gave drinkers challenging choices to mull over.71
Structural packaging innovations can create a point-of-difference that permits a higher margin. New packages can also expand a market and capture new market segments. Packaging changes can have an immediate impact on customer shopping behavior and sales: a redesign of Häagen-Dazs ice cream packaging increased flavor shoppability by 21 percent; General Mills saw an increase in sales of 80 percent after redesigning Bisquick Shake n’ Pour package to improve its ergonomics and by creating a “smooth, curvy form that reinforces the brand equity”; and a redesign on the packaging for Jimmy Dean’s Biscuit Sandwiches led to an increase of 13 percent in household penetration.72
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 163
One of the major packaging trends of recent years is to make both bigger and smaller packaged versions of products (as well as portions) to appeal to new market segments.73 Jumbo sizes have been successfully introduced for hot dogs, pizzas, English muffins, frozen dinners, and beer. Also, certain lighter versions of packaging are being introduced, and sustainable packaging is being used, both of which mirror changing consumers’ priorities with regard to packaging.74
Packaging the Right Content. Innovations in packaging have always been important to brand management. One particular innovation has been the integration of content marketing or advertising themes into the packaging. A key reason for this trend is that the 75 million millennial population has begun tuning out traditional advertising. Brands which can incorporate thematic content into their packaging are therefore better able to communicate their message to consumers, which then becomes the basis for stronger consumer-brand relationships. Examples of brands that successfully incorporated thematic content on their packaging are provided next.
Kashi Kashi’s new look for its cereal boxes, featuring stories from behind the brand to foster a more personal connection and to highlight its commitment to healthy food that makes a positive impact on the world.75 In addition to featuring a new design with cleaner lines and more vivid colors, Kashi incorporated stories about how the food was made and where it came from. As an example, the Kashi Organic Promise Sprouted Grains Cereal featured a story of Peggy Sutton, whose sprouted flours are used to create the product. Further, Kashi also directs readers of its packaging story to visit the Web site to watch a video version of the same story.76 In another example of storytelling, Kashi Dark Cocoa Karma Shredded Wheat Biscuits features the story of Wyoming-based farmer Newton Russell, who was one of the first farmers to pilot the Certified Transitional protocol (an initiative to help farmers transition fields from conventional to organic). In this way, Kashi is reinventing the role of packaging as a key touchpoint that can showcase the brand’s own story.
Chipotle Chipotle has also incorporated content into its packaging through a partnership with author Jonathan Safran. This partnership involved a “Cultivating Thought” series in which written content was featured on cups and bags that their meals were served on. Various celebrities such as Sarah Silverman and Toni Morrison were responsible for contributing content.77
This approach helped showcase Chipotle as a brand which cared to maintain high ethical standards for where it sourced its ingredients and how it delivered from farm to table. Chipotle has thus elevated its brand in consumers’ eyes by upholding high standards for ingredient and food quality, and has also strengthened its appeal by utilizing its packaging to deliver engaging content to its customers.
Snickers Snickers chocolate bars have had a successful advertising campaign based on the idea that people are transformed in undesirable ways when they are hungry. Symptoms of hunger include being cranky, irritable, forgetful, and dramatic. While taglines from this ad campaign— “You’re Not You When You’re Hungry” and “Who Are You When You’re Hungry?”—have been
Kashi’s packaging serves as an
opportunity for the brand to
engage in brand storytelling.
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164 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
closely linked to the brand, Snickers took this concept to the next level by creating twenty-one customized bar packages, which feature these symptoms. Although swapping out the brand name for these symptoms may be viewed as risky by some, it helped make this brand appear cool and edgy.
These innovations in packaging highlight a key to successful brand management—ensuring that every touchpoint with consumers is used to reinforce a key brand message in such a way as to ensure consistency and coherence in all marketing efforts.
Packaging at the Point of Purchase. The right packaging can create strong appeal on the store shelf and help products stand out from the clutter. This is critical when you realize that the average supermarket shopper can be exposed to 20,000 or more products in a shopping visit that may last less than 30 minutes and include many unplanned purchases. Many consumers may first encounter a new brand on the supermarket shelf or in the store. Because few product differences exist in some categories, packaging innovations can provide at least a temporary edge on the competition.
For these reasons, packaging is a particularly cost-effective way to build brand equity.78 It is sometimes called the “last five seconds of marketing” as well as “permanent media” or “the last salesman.” Walmart looks at packaging critically and tests whether consumers understand the brand promise behind the package within three seconds and up to 15 feet from the shelf. Note that consumer exposure to packaging is not restricted to the point of purchase and moments of consumption, because brand packages often can play a starring role in advertising.
Packaging Innovations. Packaging innovations can both lower costs and improve demand. One important supply-side goal for many firms is to redesign packages and employ more recy- clable materials to lower the use of paper and plastic. Toward that goal, U.S. food, beverage, and consumer product manufacturers reported that they had eliminated 1.5 billion pounds of packag- ing between 2005 and 2011, with another 2.5 billion pounds expected to be avoided by 2020, representing an overall reduction of 19 percent in total average U.S. packaging weight.79 Likewise, many consumer-packaged goods are being marketed in flexible packaging (as opposed to rigid packaging), again reflecting changing consumer trends.80
On the demand side, in mature markets especially, package innovations can provide a short- term sales boost. The beverage industry, in general, has been characterized by some packaging innovations. For example, following the lead of Snapple’s wide-mouth glass bottle, Arizona iced teas and fruit drinks in oversize (24-ounce), pastel-colored cans with a southwestern motif became a $300 million brand in a few years with no marketing support beyond point-of-purchase and rudimentary outdoor ads, designed in-house.81
Package Design. An integral part of product development and launch, package design has become a more sophisticated process. In the past, it was often an afterthought, and colors, materi- als, and so forth were often chosen fairly arbitrarily. For example, legend has it that Campbell’s famous soup is red and white because one executive at the company liked the uniforms of Cornell University’s football team!
These days, specialized package designers bring artistic techniques and scientific skills to package design in an attempt to meet the marketing objectives of a brand. These consultants con- duct detailed analyses to break down the package into several different elements.82 They decide on the optimal look and content of each element and choose which elements should be dominant in any one package—whether the brand name, illustration, or some other graphical element—and how the elements should relate to each other. Designers can also decide which elements should be shared across packages and which should differ (and how).
Designers often refer to the “shelf impact” of a package—the visual effect the package has at the point of the purchase when consumers see it in the context of other packages in the category. For example, “bigger and brighter” packages are not always better when competi- tors’ packages are also factored in.83 Given enough shelf space, however, manufacturers can create billboard effects with their brand to raise their prominence and impact. General Mills deliberately “tiled” graphical elements of their packaging so that some of their mega-brands
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 165
with multiple varieties such as Cheerios, Nature Valley Granola Bars, and Progresso Soup would stand out.84
Although packaging is subject to some legal requirements, such as nutrition information on food products, there is plenty of scope for improving brand awareness and forming brand associa- tions. Perhaps one of the most important visual design elements for a package is its color.85 Some package designers believe that consumers have a “color vocabulary” when it comes to products and expect certain types of products to have a particular look.
For example, it would be difficult to sell milk in anything but a white carton, club soda in anything but a blue package, and so forth. At the same time, certain brands are thought to have “color ownership” such that it would be difficult for other brands to use a similar look. Here is how some experts see the brand color palette:86
• Red: Ritz crackers, Folgers coffee, Colgate toothpaste, Target retailer, and Coca-Cola soft drinks.
• Orange: Tide laundry detergent, Wheaties cereal, Home Depot retailer, and Stouffer’s frozen dinners.
• Yellow: Kodak film, Juicy Fruit chewing gum, McDonald’s restaurants, IKEA retailers, Cheerios cereal, Lipton tea, and Bisquick biscuit mix.
• Green: Del Monte canned vegetables, Green Giant frozen vegetables, Walmart retailers, Starbucks coffee, BP retail gasoline, and 7 Up lemon-lime soft drink.
• Blue: IBM technology and services, Ford automobiles, Windex cleaner, Downy fabric soft- ener, and Pepsi soft drinks.
Packaging color can affect consumers’ perceptions of the product itself.87 For example, the darker the orange shade of a can or bottle, the sweeter consumers believe the drink inside to be. Color is thus a critical element of packaging. Like other packaging design elements, the color should be consistent with information conveyed by other aspects of the marketing program.
Packaging Changes. Although packaging changes can be expensive, they can be cost-effective compared with other marketing communication costs. Firms change their packaging for a number of reasons:88
• To signal a higher price, or to more effectively sell products through new or shifting distri- bution channels. For instance, Kendall Oil redid its package to make it more appealing to do-it-yourselfers when it found more of its sales coming from supermarkets and hardware stores rather than service stations.
• When a significant product line expansion would benefit from a common look. For example, Planters nuts, Weight Watchers foods, and Stouffer’s frozen foods.
• To accompany a new product innovation to signal changes to consumers. To emphasize the brand’s “green” heritage, Stevia redesigned the packaging on its SweetLeaf product, changing the look and the size and promoting the 100 percent recycled materials used in its manufacture.89
• When the old package just looks outdated. Kraft updated its macaroni and cheese packaging in 2010—the first time in more than 10 years—to better underscore the brand’s core equities (happi- ness, smiles, and joy) through a “noodle smile” symbol as well as to unify its three sub-brands.90
Packaging changes have accelerated in recent years as marketers have sought to gain an advantage wherever possible. Greater competition has led companies to change their boxes more frequently, both on a short-term promotional basis and longer-term look to put forth a more dynamic image.
In making a packaging change, marketers need to recognize its effect on the original or cur- rent customer franchise for the brand.91 Under these circumstances, marketers must not lose the key package equities that have been built up. Branding Brief 4-3 describes some setbacks market- ers have faced updating packaging and other brand elements in recent years.
To identify or confirm key package equities, consumer research is usually helpful (see Brand- ing Brief 4-3). If packaging recognition is a critical consumer success factor for the brand, how- ever, marketers must be especially careful. It would be a mistake to change the packaging so
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166 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
significantly that consumers do not recognize it in the store. Retailers’ opinions can also be important too.
Some marketing observers consider packaging important enough to be the “fifth P” of the marketing mix. Packaging can play an important role in building brand equity directly, through points-of-difference created by functional or aesthetic elements of the packaging, or indirectly through the reinforcement of brand awareness and image.92
PUTTING IT ALL TOGETHER Each brand element can play a different role in building brand equity, so marketers “mix and match” to maximize brand equity.93 For example, meaningful brand names that are visually rep- resented through logos are easier to remember with than without such reinforcement.94
With more markets characterized by intense competition,
rapidly changing products, and increasingly fickle customers,
many marketers are looking at makeovers to breathe new life
into their brands. Logos, symbols, packaging, and even brand
names are being updated to create greater meaning, relevance,
and differentiation. Unfortunately, in an increasingly networked
world, consumer reaction to changes to any brand element—
both pro and con—can be quickly spread. Here are some high-
profile examples and the challenges and difficulties their brand
makeovers encountered.
Tropicana. In February 2009, Pepsi introduced a dramatic
overhaul to its category-leading orange juice. Gone was the
visual image of an orange with a straw protruding from it
(designed to evoke freshness); in its place was a close-up
image of a glass of orange juice and the phrase “100%
Orange.” Consumer reaction was swift and largely negative.
Customers complained about being unable to differenti-
ate between the company’s pulp-free, traditional, and other
juice varieties. Even worse, customers also felt the look was
too generic. Facing online fury, and with the words “ugly,”
“ stupid,” and “bargain brand” ringing in their ears, Pepsi
capitulated. Announcing that it had “underestimated the
deep emotional bond” consumers had with the original
packaging, the company reverted to the old versions after
only six weeks.
The Gap. Another brand walking into a digital brand-
makeover firestorm, The Gap actually asked for it. After
unexpectedly unveiling a new logo (the word Gap in a
basic black Helvetica font with a small blue square over
the upper-right hand portion of the p), the company asked
consumers on its Facebook page for comments and further
logo ideas. Feedback was far from kind, and after enduring
a long week of criticism, Gap management announced that
“We’ve heard loud and clear that you don’t like the new
logo” and reverted to its iconic white text logo and unique
brand font.
Gatorade and Pepsi. Around the same time as the Tropi-
cana makeover, Pepsi also completely overhauled its Gatorade
brand as well as its classic Pepsi product lineup. Gatorade’s
makeover included introducing a whole new system of thirst
quenchers and fluid restoration for before (Prime 01), during
(Perform 02), and after (Recover 03) exercise. The new brand
goal was to reach athletes in a wide range of sports and expe-
rience levels while positioning itself as the one-stop source
for hydration and other needs before, during, and after their
workouts. Pepsi’s makeover included a new logo—a white band
in the middle of the Pepsi circle that appeared to loosely form
a smile. Both brand makeovers received some negative feed-
back and the products experienced sluggish sales afterwards,
although several factors may have contributed, including the
severe recession.
Lessons. When changing a well-received or even iconic brand
element—a character, logo, or packaging—two issues are key.
BRANDING BRIEF 4-3
Do-Overs with Brand Makeovers
Starbucks has evolved its logo to keep up with changes in its
positioning over time.
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 167
One, the new brand element must be inherently highly regarded.
Part of the problems some brands have run into is that their new
logos or packaging are just not that appealing to consumers, lead-
ing the consumer to wonder why a change needed to be made.
Two, regardless of the inherent appeal of a new brand element,
changes are hard for consumers and should be handled carefully
and patiently.
No wonder Starbucks went to great pains in 2010 to care-
fully explain the rationale of its logo makeover, its fourth since
the brand was created in 1971. The change was prompted by the
company’s fortieth anniversary and the new directions it was con-
sidering, which would take the brand outside the coffee category.
Founder Howard Schultz explained that the iconic green Siren in
the center of the logo was made more prominent—by dropping
the words “Starbucks Coffee”—to reflect new business lines and
new international markets. Like many brand makeovers, it initially
met mixed public reaction.
The bold decision to move away from coffee in its logo
seems appropriate. Currently, Starbucks is associated with a
wide variety of different products including coffee, tea, pas-
tries, ready-to-drink beverages, and coffee brewing equip-
ment. Starbucks defines its mission as nurturing and inspiring
the human spirit, and it proposes to achieve its mission by
delivering coffee to its customers across many different
neighborhoods.
Sources: Linda Tischler, “Never Mind!” Pepsi Pulls Much-Loathed Tropicana Packaging,” Fast Company, February 23, 2009; Stuart Elliott, “Tropicana Discovers Some Buyers Are Passionate About Packaging,” The New York Times, February 23, 2009; Patrick Conlon, “Tropicana to Abandon Much-Maligned Juice Carton,” The Wall Street Journal, Feb- ruary 24, 2009, https://www.wsj.com/articles/SB123544345146655887; Tim Nudd, “People Not Falling in Love with New Gap Logo,” Adweek, October 6, 2010, https://www.adweek.com/creativity/people-not- falling-love-new-gap-logo-12126/, accessed October 26, 2018; Christine Birkner, “Minding the Gap: Retailer Caught in Logo Fiasco,” Marketing News, October 21, 2010; Natalie Zmuda, “What Went Into the Update Pepsi Logo,” Advertising Age, October 27, 2008; Jeremiah Williams, “PepsiCo Revamps Formidable Gatorade Franchise After Rocky 2009,” Atlanta Journal-Constitution, March 23, 2010; Valarie Bauerlein, “ Gatorade’s ‘Mission’: Sell More Drinks,” The Wall Street Journal, Sep- tember 13, 2010; Julie Jargon, “Starbucks Drops Coffee from Logo,” The Wall Street Journal, January 6, 2011; Sarah Skidmore, “Starbucks Gives Logo a New Look,” Associated Press, January 5, 2011; Matt Cannon, “Brand Stories: The Evolution of Starbucks,” February 24, 2015, www .worksdesigngroup.com/brand-redesign-evolution-starbucks/, accessed October 26, 2018; Starbucks, 2016. Company information available at: www.starbucks.com/about-us/company- information, accessed April 22, 2018.
The entire set of brand elements makes up the brand identity, the contribution of all brand elements to awareness and image. The cohesiveness of the brand identity depends on the extent to which the brand elements are consistent. Ideally, marketers choose each element to support the others, and all can be easily incorporated into other aspects of the brand and the marketing program.
Some strong brands have a number of valuable brand elements that directly reinforce each other. For example, consider Charmin toilet tissue. Phonetically, the name itself conveys softness. The brand character, Mr. Whipple, and the brand slogan, “Please Don’t Squeeze the Charmin,” also help reinforce the key point-of-difference for the brand of “softness.”
Brand names characterized by rich, concrete visual imagery often can yield powerful logos or symbols. Wells Fargo, a large California-based bank, has a brand name rich in Western heritage that can be exploited throughout its marketing program. Wells Fargo has adopted a stagecoach as a symbol and has named individual services to be thematically consistent, for example, creating investment funds under the Stagecoach Funds brand umbrella.
Although the actual product or service itself is critical in building a strong brand, the right brand elements can be invaluable in developing brand equity. Method Products is a prime example of the payoffs from getting both correct.
METHOD
Celebrating its tenth anniversary in 2011 and still one of the fastest-growing companies in the United
States, Method Products is the brainchild of former high school buddies Eric Ryan and Adam Lowry.
The company took a big supermarket category—cleaning and household products—and literally and
figuratively turned things upside down by taking a completely fresh approach. Ryan and Lowry designed
a sleek, uncluttered dish soap container that also had a functional advantage—the bottle, shaped like
a chess piece, was built to let soap flow out the bottom, so users would never have to turn it upside
down. This signature product, with its pleasant fragrance, was designed by award-winning industrial
designer Karim Rashid. By creating a line of nontoxic, biodegradable household cleaning products with
bright colors and sleek designs totally unique to the category, Method has surpassed $100 million
in annual revenues. Although it is available in such desirable retail outlets as Target and Lowe’s, the
company believes its marketing must work harder to express the brand positioning given its limited
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168 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Method built a highly successful line of cleaning products by paying attention to
what was inside the bottle as well as outside.
Source: Sheila Fitzgerald/Shutterstock
REVIEW
Brand elements are those trademarkable devices that identify and differentiate the brand. The main ones are brand names, URLs, logos, symbols, characters, slogans, jingles, and packages. Brand elements can both enhance brand awareness and facilitate the formation of strong, favorable, and unique brand associations.
Six criteria are particularly important. First, brand elements should be inherently memorable, easy to recognize, and easy to recall. Second, they should be inherently meaningful to convey information about the nature of the product category, the particular attributes and benefits of a brand, or both. The brand element may even reflect the brand personality, user or usage imagery, or feelings for the brand. Third, the information conveyed by brand elements does not necessar- ily have to relate to the product alone and may simply be inherently appealing or likable. Fourth, brand elements can be transferable within and across product categories to support line and brand extensions, and across geographic and cultural boundaries and market segments. Fifth, brand ele- ments should be adaptable and flexible over time. Finally, they should be legally protectable and, as much as possible, competitively defensible. Brand Focus 4.0 outlines some of the key legal considerations in protecting the brand.
Because different brand elements have different strengths and weaknesses, marketers “mix and match” to maximize their collective contribution to brand equity. Figure 4-8 offers a critique of different brand elements according to the six key criteria.
advertising budget. In addition to its attractive packaging, the company is capitalizing on growing
interest in green products by emphasizing its nontoxic, nonpolluting ingredients. It is also developing a
strong brand personality as hip, modern, and somewhat irreverent as reflected by its slogan, “People
Against Dirty.”95
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 169
DISCUSSION QUESTIONS
1. Pick two of your favorite brands. Which brand elements do you immediately associate with them? In your opinion, how do these fulfill the criteria for good brand elements as mentioned in this chapter?
2. What are your favorite brand jingles? Why? Do you think they contribute to brand equity in any way? How? Relate their effects to the customer-based brand equity model.
3. What are some other examples of slogans not listed in the chapter that make strong contri- butions to brand equity? Why? Can you think of any “bad” slogans? Why do you consider them to be so?
4. Choose a package of any supermarket product. Assess its contribution to brand equity. Justify your decisions.
5. Can you think of some general guidelines to help marketers mix and match brand elements? Can you ever have “too many” brand elements? Which brand do you think does the best job of mixing and matching brand elements? How do online channels and offline channels differ in their use of brand elements?
According to the U.S. Patents and Trademarks Office, a trade-
mark is a word, phrase, symbol, or design that effectively distin-
guishes one party’s goods from another.96 These could pertain to
services as well and are typically defined based on usage. Based
on this definition, firms should carefully manage their trade-
marks to ensure that their brand assets are adequately protected.
According to Dorothy Cohen, a trademark strategy could include
all the following aspects:97
• Trademark planning: requires selecting a valid trademark,
adopting and using the trademark, and engaging in search
and clearance processes.
• Trademark implementation: requires effectively using the
trademark in enacting marketing decisions, especially with
respect to promotional and distributional strategies.
• Trademark control: requires a program of aggressive polic-
ing of a trademark to ensure its efficient usage in marketing
Legal Branding Considerations
BRAND FOCUS 4.0
FIGURE 4-8
Critique of Brand
Element Options
Brand Element
Brand Names Logos and Slogans and Packaging and Criterion and URLs Symbols Characters Jingles Signage
Memorability Can be chosen Generally more Generally more Can be chosen Generally more to enhance useful for brand useful for brand to enhance useful for brand brand recall recognition recognition brand recall and recognition and recognition recognition
Meaningfulness Can reinforce Can reinforce Generally more Can convey Can convey almost any type almost any type useful for non- almost any almost any type of association, of association, product-related type of of association although although imagery association explicitly sometimes sometimes only and brand explicitly only indirectly indirectly personality
Likability Can evoke Can provoke Can generate Can evoke much Can combine much verbal visual appeal human qualities verbal imagery visual and imagery verbal appeal
Transferability Can be Excellent Can be Can be Good somewhat somewhat somewhat limited limited limited
Adaptability Difficult Can typically be Can sometimes Can be modified Can typically be redesigned be redesigned redesigned
Protectability Generally good, Excellent Excellent Excellent Can be closely but with limits copied
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170 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
activities, including efforts to reduce trademark counterfeiting
and to prevent the trademark from becoming generic, as well
as instituting suits for infringement of the trademark.
This Brand Focus highlights a few key legal branding consider-
ations. For more comprehensive treatments, it is necessary to
consider other sources.98
Counterfeit and Imitator Brands
Why is trademark protection of brand elements such as brand
names, logos, and symbols such an important brand manage-
ment priority? Virtually any product is fair game for illegal coun-
terfeiting or questionable copycat mimicking—from Nike apparel
to Windows software, and from Similac baby formula to ACDelco
auto parts.99
Also, some products attempt to gain market share by imitat-
ing successful brands. These copycat brands may mimic any one
of the possible brand elements, such as brand names or pack-
aging. For example, Calvin Klein’s popular Obsession perfume
and cologne has had to withstand imitators such as Compulsion,
Enamoured, and Confess, whose package slogan proclaimed, “If
you like Obsession, you’ll love Confess.”
Many copycat brands are put forth by retailers as store
brands, putting national brands in the dilemma of protecting their
trade dress by cracking down on some of their best customers.
Complicating matters is the fact that if challenged, many private
labels contend, with some justification, that they should be per-
mitted to continue labeling and packaging practices that have
come to identify entire categories of products rather than a single
national brand.100 In other words, certain packaging looks may
become a necessary point-of-parity in a product category. A com-
mon victim of brand cloning, Contac cold medication underwent
its first packaging overhaul in 33 years to better prevent knockoffs
as well as update its image.
In recent years, and as noted earlier, Chinese manufactur-
ers of branded goods may use some of their excess capacity to
manufacture branded goods that bear a strong resemblance to
the products they already make for their Western clients.101 As an
example, a manufacturer of accessories and branded goods for
Marc Jacobs, Prada, and Coach can have its own manufactured
products, which bear a striking similarity to the luxury brands that
they manufacture. Whether these are derivative designs or bla-
tant knockoffs, there is a spectrum of imitation, which poses sig-
nificant challenges from a trademark standpoint. Many national
brand manufacturers are also responding through legal action.
For national brands, the key is proving that brand clones are mis-
leading consumers, who may think that they are buying national
brands. The burden of proof is to establish that an appreciable
number of reasonably acting consumers are confused and mis-
taken in their purchases.102 In such cases, many factors might be
considered by courts in determining the likelihood of confusion,
such as the strength of the national brand’s mark, the relatedness
of the national brand and brand clone products, the similarity of
the marks, evidence of actual confusion, the similarity of market-
ing channels used, the likely degree of buyer care, the brand
clone’s intent in selecting the mark, and the likelihood of expan-
sion of the product lines.
Simonson provides an in-depth discussion of these issues and
methods to assess the likelihood of confusion and “genericness”
of a trademark. He stresses the importance of recognizing that
consumers may vary in their level or degree of confusion, and
that it is difficult, as a result, to identify a precise threshold level
above which confusion occurs. He also notes how survey research
methods must accurately reflect the consumers’ state of mind
when engaged in marketplace activities.103
Historical and Legal Precedence
Simonson and Holbrook have made some provocative observa-
tions about and connections between appropriation and dilution,
making the following points.104 They begin by noting that legally,
a brand name is a “conditional-type property”—protected only
after it has been used in commerce to identify products (goods
or services) and only in relation to those products or to closely
related offerings. To preserve a brand name’s role in identifying
products, the authors note, federal law protects brands from
actions of others that may tend to cause confusion concerning
proper source identification.
By contrast with the case of confusion, Simonson and Hol-
brook identify trademark appropriation as a developing area
of state law that can severely curtail even those brand strate-
gies that do not “confuse” consumers. They define appropria-
tion in terms of enhancing the image of a new offering via
the use of some property aspect of an existing brand. That is,
appropriation resembles theft of an intangible property right.
They note that the typical argument to prevent imitations is
that, even in the absence of confusion, a weaker brand will
tend to benefit by imitating an existing brand name. Jerre
Swann similarly argues that “the owner of a strong, unique
brand should thus be entitled, incipiently, to prevent impair-
ment of the brand’s communicative clarity by its substantial
association with another brand, particularly where there is an
element of misappropriation.”105
Simonson and Holbrook also summarize the legal concept of
trademark dilution:
Protection from “dilution”—a weakening or reduction
in the ability of a mark to clearly and unmistakably dis-
tinguish the source—arose in 1927 when a legal ruling
declared that “once a mark has come to indicate to the
public a constant and uniform source of satisfaction, its
owner should be allowed the broadest scope possible
for the ‘natural expansion of his trade’ to other lines or
fields of enterprise.”
They observe that two brand-related rights followed: (1) the
right to preempt and preserve areas for brand extensions and
(2) the right to stop the introduction of similar or identical brand
names, even in the absence of consumer confusion, to protect a
brand’s image and distinctiveness from being diluted.
Dilution can occur in three ways: blurring, tarnishment, and
cybersquatting.106 Blurring happens when the use of an exist-
ing mark by a different company in a different category alters
the “unique and distinctive significance” of that mark. Tarnish-
ment is when a different company employs the mark in order to
degrade its quality, such as in the context of a parody or satire.
Cybersquatting occurs when an unaffiliated party purchases
an Internet “domain name consisting of the mark or name of a
company for the purpose of relinquishing the right to that domain
name to the legitimate owner for a price.”107
New American laws register trademarks for only 10 years
(instead of 20); to renew trademarks, firms must prove they are
using the name and not just holding it in reserve. The Trademark
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 171
Law Revision Act of 1988 allowed entities to apply for a trade-
mark based on their “intent to use” it within 36 months, eliminat-
ing the need to have an actual product in the works. To determine
legal status, marketers must search trademark registrations, brand
name directories, phone books, trade journals and advertise-
ments, and so forth. As a result, the pool of potentially available
trademarks have shrunk.108
The remainder of this Brand Focus describes some of the
particular issues involved with two important brand elements:
brand names and packaging.
Trademark Issues Concerning Names
Without adequate trademark protection, brand names can
become legally declared generic, as was the case with vaseline,
victrola, cellophane, escalator, and thermos. For example, when
Bayer set out to trademark the “wonder drug” acetylsalicylic acid,
they failed to provide a “generic” term or common descriptor for
the product and provided only a trademark, Aspirin. Without any
other option available in the language, the trademark became the
common name for the product. In 1921, a U.S. district court ruled
that Bayer had lost all its rights in the trademark. Other brand
names have struggled to retain their legal trademark status—for
example, Band-Aids, Kleenex, Scotch Tape, Q-Tips, and Jell-O.
Xerox spends $100,000 a year explaining that you don’t “Xerox”
a document, you photocopy it.109
Legally, the courts have created a hierarchy for determin-
ing eligibility for registration. In descending order of protection,
these categories are as follows (with concepts and examples in
parentheses):
1. Fanciful: a made-up word with no inherent meaning (e.g.,
Kodak)
2. Arbitrary: actual word but not associated with the product
(e.g., Camel)
3. Suggestive: actual word evocative of product feature or
benefit (e.g., Eveready)
4. Descriptive: common word protected only with secondary
meaning (e.g., Ivory)
5. Generic: a word synonymous with the product category
(e.g., Aspirin)
Thus, fanciful names are the most easily protected, but at the
same time are less suggestive or descriptive of the product itself,
suggesting the type of trade-off involved in choosing brand ele-
ments. Generic terms are never protectable. Marks that are diffi-
cult to protect include those that are surnames, descriptive terms,
or geographic names or those that relate to a functional product
feature. Marks that are not inherently distinctive, and thus, are
not immediately protectable, may attain trademark protection if
they acquire secondary meaning.
Secondary meaning refers to a mark gaining a meaning
other than the older (primary) meaning. The secondary mean-
ing must be the meaning the public usually attaches to the
mark and that indicates the association between the mark and
goods from a single source. Secondary meaning is usually proven
through extensive advertising, distribution, availability, sales vol-
ume, length and manner of use, and market share.110 Second-
ary meaning is necessary to establish trademark protection for
descriptive marks, geographic terms, and personal names.
Trademark Issues Concerning Packaging
In general, names and graphic designs are more legally defen-
sible than shapes and colors. The issue of legal protection of the
color of packaging for a brand is a complicated one. One federal
appeals court in San Francisco ruled that companies cannot get
trademark protection for a product’s color alone.111 However,
a Supreme Court ruling later overturned that ruling, arguing
that the interpretation of a trademark, according to the Lanham
Act, could be broad. The court ruled against a small Chicago
manufacturer that makes the green-gold padding used by dry
cleaners and garment makers on machines that press clothes; the
manufacturer had filed suit against a competitor that had started
selling padding of the same hue. In rejecting protection for the
color alone, the court said manufacturers with distinctively col-
ored products can rely on existing law that protects “trade dress”
related to the overall appearance of the product: “Adequate pro-
tection is available when color is combined in distinctive patterns
or designs or combined in distinctive logos.”
Color is one factor, but not a determinative one, under a
trade dress analysis. This ruling differed from a landmark ruling
in 1985 arising from a suit by Owens-Corning Fiberglass Corpora-
tion, which sought to protect the pink color of its insulation. A
Washington court ruled in the corporation’s favor. Other courts
have made similar rulings, but at least two other appeals courts in
other regions of the country have subsequently ruled that colors
cannot be trademarked. Note that these trademark rulings apply
only when color is not an integral part of the product. How-
ever, when the color acquires a “secondary meaning” by being
closely linked to a product, it can be trademarked, and the trade-
mark typically pertains to a particular shade of color which can
be used and within a specific product category. John Deere has
trademarked the green and yellow colors that appears in its logo,
Target has a trademark for the red color, and Tiffany has trade-
marked its distinctive blue. At the same time, the way in which
the color is linked to a product also matters. In a landmark lawsuit
between Christian Louboutin and Yves. St. Laurent, regarding
the former’s use of the color red, the courts ruled that Christian
Louboutin could trademark the red sole (which was typical of the
shoes made by this brand), but other shoe manufacturers (includ-
ing YSL) had the right to sell a shoe that was entirely red.112
Trademark law varies in its emphasis across different areas
of the world. For example, the European Union has laid down
the following factors to consider while assessing the existence
of trademark dilution: (1) the degree of similarity between the
marks; (2) nature of goods or services for the trademarks reg-
istered; (3) the level of reputation of the earlier mark; (4) the
degree of distinctive character of the earlier mark; and (5) the
probability of the existence of a likelihood of confusion among
consumers. There are some differences in how trademark laws
in China are enforced. Unlike the United States, China observes
a first-to-file system in connection with trademark registrations.
As such, the first party to file an application for a trademark is
given priority. This contrasts with the U.S. system. In the United
States, it is not registration, but the actual use of a trademark
that creates rights and priority over others—that is, the system
favors entities that are the first to use a mark in commerce.
China’s first-to-file system poses problems for some brand own-
ers because there is no way for brand owners to block applicants
who are bad-faith trademark applicants who intend to engage
in trademark squatting.113
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172 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
NOTES
1. Bernd H. Schmitt and Alex Simonson, Marketing Aes- thetics: The Strategic Management of Brands, Identity, and Image (New York: Free Press, 1997).
2. Nick Farrell, “Latvians Laugh at Vista,” The Inquirer, September 8, 2006, https://www.theinquirer.net/inquirer/ news/1035505/latvians-laugh-vista, accessed October 21, 1018.
3. For some provocative discussion, see Matt Haig, Brand Failures (London: Kogan Page, 2003) and www.snopes .com, accessed October 26, 2018.
4. Eleftheria Parpis, “Michelin Gets Pumped Up,” Brand- week, October 6, 2009, https://www.adweek.com/ brand-marketing/michelin-gets-pumped-106498/, accessed October 26, 2018; Roger Parloff, “Michelin Man: The Inside Story,” Fortune, September 19, 2005, https://money.cnn.com/magazines/fortune/fortune_ archive/2005/09/19/8272906/, accessed October 26, 2018; Brent Marcus, “Brand Icons Get an Online Facelift,” iMe- dia Connection, May 30, 2007, www.imediaconnection .com.
5. Anna Lee, “Michelin Ad to Air During Super Bowl,” Greenville News, February 4, 2017, www .greenvilleonline.com/story/news/local/2017/02/04/ michelin-ad-air-during-super-bowl/97498280/.
6. Dale Buss, “ ‘Michelin Man’ Bibendum Slims Down in Brand Refresh,” June 19, 2017, http://www.brandchannel .com/2017/06/19/michelin-rebrand-061917/, accessed June 22, 2018; https://www.michelin.com/eng/ media-room/press-and-news/michelin-news/Passion/ Bibendum-a-new-style-to-better-communicate2.
7. For a stimulating treatment of brand naming, see Alex Frankel, Word Craft (New York: Crown, 2004).
8. Robert Klara, “11 Brand Names That Simply Couldn’t Survive the Times, “Adweek, March 18, 2015, www .adweek.com/brand-marketing/11-brand-names- simply-couldnt-survive-times-163440/.
9. An excellent overview of the topic, some of which this section draws on, can be found in Kim R. Robertson, “Strategically Desirable Brand Name Characteristics,” Journal of Consumer Marketing 6, no. 4 (1989): 61–71.
10. Interestingly, GM sent a memo to its headquarter Chevrolet employees in June 2010 telling them, for the sake of brand consistency, to stop using the Chevy nickname, a move many branding experts criticized for not reflecting consumer desires. Richard S. Chang, “Backtracking, GM Says Please, Call It a Chevy,” The New York Times, June 10, 2010, https://www .nytimes.com/2010/06/11/automobiles/11CHEVY .html, accessed October 26, 2018.
11. Later, after meeting with some success in the UK, Wyborowa launched an ad campaign based again on its name. Themed “There is No V in Wodka,” it was based on the fact that in Poland, where vodka originated, the spirit is called wodka! “Wyborowa Campaigns for No V in Wodka,” Harpers Wine & Spirits Trades Review, June 6, 2008.
12. Frances Leclerc, Bernd H. Schmitt, and Laurette Dube, “Foreign Branding and Its Effects on Product Perceptions and Attitudes,” Journal of Marketing Research 31, no. 2 (May 1994): 263–270. See also M. V. Thakor and B. G.
Pacheco, “Foreign Branding and Its Effect on Product Perceptions and Attitudes: A Replication and Extension in a Multicultural Setting,” Journal of Marketing Theory and Practice 5, no. 1 (Winter 1997): 15–30.
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14. Kim R. Robertson, “Recall and Recognition Effects of Brand Name Imagery,” Psychology and Marketing 4 (1987): 3–15.
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CHAPTER 4 • CHOOSING BRAND ELEMENTS TO BUILD BRAND EQUITY 173
Characteristics and Brand-Name Memory,” Journal of Advertising 32, no. 3 (2003): 7–17; Tina M. Lowrey and L. J. Shrum, “Phonetic Symbolism and Brand Name Preference,” Journal of Consumer Research 34, no. 3 (October 2007): 406–414.
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33. John R. Doyle and Paul A. Bottomley, “Dressed for the Occasion: Font-Product Congruity in the Perception of Logotype,” Journal of Consumer Psychology 16, no. 2, 2006: 112–123. See also Pamela W. Henderson, Joan L. Giese, and Joseph A. Cote, “Impression Management Using Typeface Design,” Journal of Marketing 68, no. 4 (October 2004): 60–72; Terry L. Childers and Jeffrey Jass, “All Dressed Up with Something to Say: Effects of Typeface Semantic Associations on Brand Perceptions and Consumer Memory,” Journal of Consumer Psychol- ogy 12, no. 2 (2002): 93–106.
34. Much of this passage is based on Teresa M. Paiva and Janeen Arnold Costa, “The Winning Number: Con- sumer Perceptions of Alpha-Numeric Brand Names,” Journal of Marketing 57 , no. 3 (July 1993): 85–98. See also, Kunter Gunasti and William T. Ross Jr., “How and When Alphanumeric Brand Names Affect Consumer Preferences,” Journal of Marketing Research 47, no. 6 (December 2010): 1177–1192.
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36. John Murphy, Brand Strategy (Upper Saddle River, NJ: Prentice Hall, 1990), 79.
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38. Elizabeth Low, “SIA Confirms Scoot, Chooses Agencies,” 2011, http://marketing-interactive.com/ news/29295, accessed May 23, 2012; William Lozito, “Long Haul Airline Brand Name Gets Scootitude,”
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40. Anticybersquatting Consumer Protection Act (ACPA), November 29, 1999; “Cybersquatting Hits Record Level, WIPO Center Rolls Out New Services,” March 31, 2011, www.wpio.int; Evan Brown and Brian Beck- ham, “Internet Law in the Courts,” Journal of Internet Law 12, no. 7 (May 2009): 24–26.
41. Trademark Infringement, “9 Nasty Trademark Trade- mark Infringement Cases — and How to Avoid Them (2016),” TrademarkNow, September 6, 2016, www.trademarknow.com/blog/9-nasty- trademark- infringement-cases-and-how-to-avoid-them; PCT Law Group, “Trademark Violation by Cybersquatter Is Not GoDaddy’s Problem,” PCT Law Group, April 29, 2015, http://pctlg.com/trademark-violation-cybersquatter- godaddys-problem-2/, accessed October 26, 2018; Philiop Corwin, “GoDaddy Hit with Another Trademark Infringement Suit—A Hint of Things to Come?” Internet Commerce, February 25, 2014, www. internetcommerce .org/godaddy_tm_infringement_lawsuits/.
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43. Robert Klara, “Luxury Brands Just Got One More Reason to Hate the Internet: Spoofing,” Adweek, September 5, 2017, http://www.adweek.com/brand-marketing/luxury-brands- just-got-one-more-reason-to-hate-the-internet-spoofing/, accessed March 17, 2018.
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174 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
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62. Browhaus website, https://www.browhaus.com/outlets/; Uniform, “Browhaus—Eye Eye Captain,” https://www. theuniform.com.sg/project/browhaus-eye-eye-captain/.
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75. Rick Lingle, “Natural Storytelling Helps Redefine Kashi Packaging,” Packaging Digest, August 8, 2016, www.packagingdigest.com/packaging-design/ natural-storytelling-redefines-kashi-packaging1608.
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76. Rachel Parker, “Stories That Sell Packaging,” BXP, September 26, 2016, www.bxpmagazine.com/article/ stories-sell-packaging.
77. Mike Whitney, “3 Brands That Are Bringing Content Marketing to Their Packaging,” Mainstreethost, December 5, 2015, www.mainstreethost.com/ blog/brands-bringing-content-marketing-to-their- packaging/.
78. Alecia Swasy, “Sales Lost Their Vim? Try Repackag- ing,” The Wall Street Journal, October 11, 1989, B1.
79. Supermarket News Staff, “CPGs Cutting 4 Billion Pounds of Packaging,” Supermarket News, March 17, 2011, https://www.supermarketnews.com/latest-news/ cpgs-cutting-4-billion-pounds-packaging, accessed October 26, 2018; Rachel Arthur, “Molson Coors Sees Changing Consumer Preferences In Beer Packaging, Cuts Packaging Weight By 21,” Beveragedaily.com, August 18, 2015, www.beveragedaily.com/Article/2015/08/18/ Molson-Coors-sees-changing- consumer-preferences-in- beer-packaging-cuts-packaging-weight-by-21.
80. Kevin Keating, “Consumer Demand and Manufac- turing Costs Drive Flexible Packaging Trends,” PKG Branding, May 30, 2017, www.pkgbranding.com/blog/ consumer-demand-and-manufacturing-costs-drive- flexible-packaging-trends.
81. Gerry Khermouch, “John Ferolito, Don Vultaggio,” Brandweek, November 14, 1994, Vol. 35 Issue 44, p. 57.
82. For some academic perspectives on package design, see Ulrich R. Orth and Keven Malkewitz, “Holistic Package Design and Consumer Brand Impressions,” Journal of Marketing 72, no. 3 (May 2008): 64–81.
83. For an interesting discussion, see Margaret C. Campbell and Ronald C. Goodstein, “The Moderating Effect of Perceived Risk on Consumers’ Evaluations of Product Incongruity: Preference for the Norm,” Journal of Con- sumer Research 28, no. 3 (December 2001): 439–449.
84. Pan Demetrakakes, “Packaging Innovator of the Decade,” Food and Beverage Packaging, April 1, 2009, https://www.packagingstrategies.com/publications/3/ editions/1113, accessed October 26, 2018.
85. For an interesting application of color to brand names, see Elizabeth G. Miller and Barbara E. Kahn, “Shades of Meaning: The Effect of Color and Flavor Names on Consumer Choice,” Journal of Consumer Research 32, no.1 (June 2005): 86–92.
86. Michael Purvis, president of Sidjakov, Berman, and Gomez, as quoted in Carla Marinucci, “Advertising on the Store Shelves,” San Francisco Examiner, Octo- ber 20, 1986, C1–C2; Angela Bright, “Why Color Matters,” Beneath the Brand, December 13, 2010, www.talentzoo.com/beneath-the-brand/blog_news .php?articleID=8810, accessed October 26, 2018.
87. Lawrence L. Garber Jr., Raymond R. Burke, and J. Mor- gan Jones, “The Role of Package Color in Consumer Purchase Consideration and Choice,” MSI-Report 00–104 (Cambridge, MA: Marketing Science Institute, 2000); Ronald Alsop, “Color Grows More Important in Catching Consumers’ Eyes,” The Wall Street Journal, November 29, 1984, 37.
88. Bill Abrams and David P. Garino, “Package Design Gains Stature as Visual Competition Grows,” The Wall Street Journal, March 14, 1979, 48.
89. Ann Marie Mohan, “Established Stevia Brand Refreshes Packaging for Greater Green Mileage,” Packaging World, October 10, 2010, https://www.packworld.com/ article/package-design/graphic/established- stevia- brand-refreshes-packaging-greater-green-mileage, accessed October 26, 2018.
90. Jim George, “Kraft Says ‘Smile’ with Updated Maca- roni & Cheese,” Packaging World, April 10, 2011, https://www.packworld.com/article/applications/food/ dairy/kraft-says-smile-updated-macaroni-cheese, accessed October 26, 2018.
91. Lawrence L. Garber Jr., Raymond R. Burke, and J. Mor- gan Jones, “The Role of Package Color in Consumer Pur- chase Consideration and Choice,” MSI-Report 00-104 (Cambridge, MA: Marketing Science Institute, 2000).
92. See also Peter H. Bloch, “Seeking the Ideal Form—Prod- uct Design and Consumer Response,” Journal of Market- ing 59, no. 3 (1995): 16–29; Peter H. Bloch, Frederick F. Brunel, and T. J. Arnold, “Individual Differences in the Centrality of Visual Product Aesthetics: Concept and Measurement,” Journal of Consumer Research 29, no. 4 (2003): 551–565; Priya Raghubir and Aradna Krishna, “Vital Dimensions in Volume Perception: Can the Eye Fool the Stomach?” Journal of Marketing Research 36, no. 3 (August 1999): 313–326; Valerie Folkes, Ingrid Martin, and Kamal Gupta, “When to Say When: Effects of Supply on Usage,” Journal of Consumer Research 20, no. 3 (December 1993): 467–477; Valerie Folkes and Shashi Matta, “The Effects of Package Shape on Con- sumers’ Judgment of Product Volume: Attention as Men- tal Containment,” Journal of Consumer Research 31, no. 2 (September 2004): 390–401.
93. Alina Wheeler, Designing Brand Identity: An Essential Guide for the Whole Branding Team, 3rd ed. (Hoboken, NJ: John Wiley & Sons, 2009).
94. Terry L. Childers and Michael J. Houston, “Conditions for a Picture Superiority Effect on Consumer Memory,” Journal of Consumer Research 11, no. 2 (September 1984): 551–563; Kathy A. Lutz and Richard J. Lutz, “Effects of Interactive Imagery on Learning: Applica- tion to Advertising,” Journal of Applied Psychology 62, no. 4 (1977): 493–498.
95. Jessica Shambora, “David vs. Goliath: Method vs. Clorox,” Fortune, November 15, 2010, Vol. 162 Issue 8, p. 55; Stuart Elliott, “A Clean Break with Staid Detergent Ads,” The New York Times, Ilana DeBare, “Cleaning Up without Dot-coms: Belittled Entrepreneurs Choose Household Products Over the High-Tech Industry and Become Highly Successful,” San Francisco Chronicle, October 8, 2006, https://www.sfgate .com/business/article/Cleaning-up-without-dot-coms- Belittled-2468573.php, accessed October 26, 2018; “Marketers of the Next Generation,” Brandweek, April 17, 2006, 30.
96. USPTO.Gov, “Trademark, Patent or Copyright,” accessed April 22, 2018, www.uspto.gov/trademarks- getting-started/trademark-basics/trademark-patent-or- copyright.
97. Dorothy Cohen, “Trademark Strategy,” Journal of Marketing 50, no. 1 (January 1986): 61–74; Dorothy Cohen, “Trademark Strategy Revisited,” Journal of Marketing 55, no. 3 (July 1991): 46–59.
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176 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
98. For example, see Judy Zaichkowsky, Defending Your Brand Against Imitation (Westpoint, CO: Quorom Books, 1995); Judy Zaichkowsky, The Psychology Behind Trademark Infringement and Counterfeiting (Mahwah, NJ: Lawrence Erlbaum Associates, 2006); Jerre B. Swann, Sr., David Aaker, and Matt Reback, “Trademarks and Marketing,” The Trademark Reporter 91 (July–August 2001): 787; and a series of articles by Ross D. Petty in the Journal of Brand Management, e.g., “Naming Names: Part Three— Safeguarding Brand Equity in the United States by Developing a Family of Trademarks,” Journal of Brand Management 17, no. 8 (2010): 561–567.
99. David Stipp, “Farewell, My Logo A Detective Story Counterfeiting Name Brands Is Shaping Up As the Crime of the 21st Century. It Costs U.S. Companies $200 Billion A Year,” Fortune, May 13, 1996, pp. 128–140, archive.fortune.com/magazines/fortune/fortune_ archive/1996/05/13/212869/index.htm, accessed October 26, 2018.
100. Paul F. Kilmer, “Tips for Protecting Brand from Private Label Lawyer,” Advertising Age, December 5, 1994, 29, https://adage.com/article/news/tips- protecting-brand-private-label-lawyer/89040/, accessed October 26, 2018.
101. Melissa Twigg, “China’s Factory Brands: Clones or Clever Business?,” Business of Fashion, June 31, 2016, www.businessoffashion.com/articles/global-currents/ chinas-factory-brands-clones-counterfeits-copycats- business.
102. Greg Erickson, “Seeing Double,” Brandweek, October 17, 1994, 31–35.
103. Itamar Simonson, “Trademark Infringement from the Buyer Perspective: Conceptual Analysis and Measure- ment Implications,” Journal of Public Policy & Market- ing 13, no. 2 (Fall 1994): 181–199.
104. Alex Simonson and Morris Holbrook, “Evaluating the Impact of Brand-Name Replications on Product Evalu- ations,” working paper, Marketing Department, Seton Hall University, 1994.
105. Jerre B. Swann, “Dilution Redefined for the Year 2000,” Houston Law Review 37 (2000): 729.
106. For a detailed discussion of dilution, see Jerre B. Swann, “Dilution Redefined for the Year 2002,” The Trademark Reporter 92 (May/June 2002): 585–613. See also Mau- reen Morrin and Jacob Jacoby, “Trademark Dilution: Empirical Measures for an Elusive Concept,” Journal of Public Policy & Marketing 19, no. 2 (Fall 2000): 265–276; Maureen Morrin, Jonathan Lee, and Greg M. Allenby, “Determinants of Trademark Dilution,” Jour- nal of Consumer Research 33, no. 2 (September 2006): 248–257; and Chris Pullig, Carolyn J. Simmons, and Richard G. Netemeyer, “Brand Dilution: When Do New Brands Hurt Existing Brands?” Journal of Marketing 70, no. 2 (April 2006): 52–66.
107. J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, 4th ed. (Deerfield, IL: Clark Boardman Callaghan, 1996).
108. Alex Frankel, “Name-o-rama,” Wired, June 1, 1997, https://www.wired.com/1997/06/es-namemachine/, accessed October 26, 2018.
109. Constance E. Bagley, Managers and the Legal Environ- ment: Strategies for the 21st Century, 2nd ed. (Minne- apolis, MN: West, 1995).
110. Garry Schuman, “Trademark Protection of Container and Package Configurations—A Primer,” Chicago Kent Law Review 59 (1982): 779–815.
111. Junda Woo, “Product’s Color Alone Can’t Get Trade- mark Protection,” The Wall Street Journal, January 5, 1994, B8.
112. Alexi Tzatsev, “10 Colors That Might Get You Sued,” Business Insider, September 29, 2012, https://www.businessinsider.com/colors-that-are- trademarked-2012-9, accessed August 19, 2018.
113. Joyce Lee, “International Report—China’s Con- tinued Trademark Reforms,” iAm-Media, February 17, 2018, www.iam-media.com/reports/Detail .aspx?g=9d87b306-085d-474c-ab54-72ed13f4ac2b.
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177
Part of John Deere’s suc-
cess is its well-conceived
and executed product,
pricing, and channel
strategies.
Source: John Crowe/Alamy Stock Photo
Designing Marketing Programs to Build Brand Equity
Learning Objectives
After reading this chapter, you should be able to
1. Identify some of the new perspectives and develop- ments in marketing.
2. Describe how marketers enhance product experience.
3. Explain the rationale for value pricing.
4. List some of the direct and indirect channel options.
5. Summarize the reasons for the growth in private labels.
5
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178 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
NEW PERSPECTIVES ON MARKETING The strategy and tactics behind marketing programs have changed dramatically in recent years as
firms have experienced enormous shifts in their external marketing environments. As outlined in
Chapter 1, changes in the economic, technological, political–legal, sociocultural, and competi-
tive environments have forced marketers to embrace new approaches and philosophies. Some of
these changes include2
• Rapid technological developments;
• Greater customer empowerment;
• Fragmentation of traditional media;
• Growth of digital and mobile marketing options;
• Channel transformation and disintermediation;
• Increased competition and industry convergence;
• Globalization and growth of developing markets;
• Heightened sustainability concerns, with an increased emphasis on corporate social respon-
sibility; and
• Greater empowerment of consumers because of their ability to influence opinions through
social media and word of mouth.
These changes, as well as others such as privatization and regulation, have combined to give
customers and companies new capabilities with important implications for the practice of brand
management (see Figure 5-1). Marketers are increasingly abandoning the mass-market strategies
that built brand powerhouses in the twentieth century to implement new approaches for a new
This chapter considers how marketing activities in general—and product, pricing, and distribution strat-
egies in particular—build brand equity. How can marketers integrate these activities to enhance brand
awareness, improve the brand image, elicit positive brand responses, and increase brand resonance?
Our focus is on designing marketing activities from a branding perspective. We will consider
how the brand itself can be effectively integrated into the marketing program to create brand
equity. Of necessity, we leave a broader perspective on marketing activities to basic marketing
management texts.1 We begin by considering some key developments in designing marketing
programs. After reviewing product, pricing, and channel strategies, we conclude by considering
private label brands in Brand Focus 5.0.
PREVIEW
FIGURE 5-1
The New Capabilities of
the New Economy
Consumers
Can wield substantially more customer power.
Can purchase a greater variety of available goods and services.
Can obtain a great amount of information about practically anything.
Can more easily interact with marketers in placing and receiving orders.
Can interact with other consumers and compare notes on products and services.
Companies
Can operate a powerful new information and sales channel with augmented geographic reach to inform and promote their company and its products.
Can collect fuller and richer information about their markets, customers, prospects, and competitors.
Can facilitate two-way communication with their customers and prospects, and facilitate transaction efficiency.
Can send ads, coupons, promotions, and information by e-mail to customers and prospects who give them permission.
Can customize their offerings and services to individual customers.
Can improve their purchasing, recruiting, training, and internal and external communication.
M05_KELL4969_05_GE_C05.indd 178 20/05/19 9:03 pm
CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 179
marketing era. Even marketers in staid, traditional categories and industries are rethinking their
practices to go beyond “business as usual.”
CLIF BAR
Started in 1990 by avid cyclist Gary Erickson and named to honor his father, CLIF Bar set out to offer a
better-tasting energy bar with wholesome ingredients. With little advertising support, the company grew in
popularity through the years via word of mouth and public relations. The Clif Bar product line also grew to
include dozens of flavors and varieties, including White Chocolate Macadamia, Peanut Toffee Buzz, Maple
Nut, and Chocolate Almond Fudge.3 Some of these flavors were formulated especially for women and chil-
dren and featured healthful ingredients, such as brown rice syrup and barley malt instead of refined white
flour. Behind Clif Bar products is a strong socially and environmentally responsible corporate message, with
many ingredients being organically grown (or certified as being organically grown) or grown sustainably.4
Clif Bar is active in its local community and known for its passionate employees, who are allowed to do
volunteer work on company time. It relies on biodiesel-powered vehicles and supports the construction of
farmer- and Native American-owned wind farms through carbon offsets. Its nontraditional marketing activi-
ties focus on athletic sponsorships and public events. To broaden its appeal, Clif Bar launched its “Meet the
Moment”™ campaign in which participants provide stories and photos of inspirational athletic adventures.
The campaign continues to this day, and the Adventure Challenge described on Clif Bar packaging urges
consumers to go on an adventure and spread the word on social media using the #MeetTheMoment.5 The
unique integrated marketing campaign features a fully interactive Web site and mobile applications for
iPhone and Android systems and touches consumers on a personal level. To further extend its base of cus-
tomers, Clif Bar also launched the Luna line of bars, which are designed for women’s nutritional and energy
needs. The Luna brand is further bolstered through its sponsorship of an annual festival called Lunafest,
which focuses on films by, about, and for women.
All these marketing efforts have paid off: by 2016, Clif Bar had a 15 percent market share of the
nutritional health bar category and far exceeded the market share of large packaged goods manufacturers
such as General Mills and Kellogg’s. In addition, it exports to more than 18 countries in Asia, Europe, and
Australia, with a growth rate of more than 20 percent annually.6
CLIF Bar uses a mix of nontraditional and social media advertising
to maintain its market share and to build customer engagement.
Source: Editorial Image, LLC/Alamy Stock Photo
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180 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
INTEGRATING MARKETING Today’s marketplace affords many different means by which products and services and their
corresponding marketing programs can build brand equity. Channel strategies, communica-
tion strategies, pricing strategies, and other marketing activities can all enhance or detract
from brand equity. The customer-based brand equity model provides some useful guidance
to interpret these effects. One implication of the conceptualization of customer-based brand
equity is that the manner in which brand associations are formed does not matter—only
the resulting awareness and strength, favorability, and uniqueness of brand associations are
important.
The bottom line is that brand equity can be built in many different ways. Unfortunately,
many firms are also attempting to build their brand equity in the marketplace. Creative and
original thinking is necessary to create fresh new marketing programs that break through the
noise in the marketplace to connect with customers. Marketers are increasingly trying a host of
unconventional means to build brand equity, as demonstrated in the Branding Brief 5-1 regarding
the brand, Yeti.
Yeti is a manufacturer of high-quality and expensive coolers
that have become status symbols for members of its core target
audience, such as hunters and fishers. The brand is known for
its authentic messaging, and its coolers range in price from a
low of $250 to thousands of dollars. Its best-selling models are
small and medium-sized hardcase coolers that fit in the back of
a truck or car. Yeti is credited with reinventing this category and
for creating an aspirational brand among its target audiences.
A key marketing challenge that the brand has had to over-
come is the high sticker price associated with a mundane prod-
uct (i.e., coolers). So, what are the keys to Yeti’s success? The
coolers actually work; they keep ice cold for days. However, Yeti
needed to convince customers of the value of the product and,
to do so, relied on professional endorsements from well-known
individuals in hunting and fishing communities. Yeti used some
traditional print advertising and placed these endorsement ads
in hunting and fishing programs on Outdoor Channel, along
with marketing on specialized networks such as Sportsman,
World Fishing Network, and so forth. Its credibility got a fur-
ther boost when the company received an endorsement from
the Interagency Grizzly Bear Committee that the coolers were
“grizzly proof.”
To build awareness among its target audiences, Yeti has
also made considerable investments in social media. To further
create excitement for the brand, Yeti invested in apparel and
merchandise, such as branded hats, T-shirts, and bottle open-
ers, and included these with every cooler purchased, ensuring
increased buzz about its products. The company has also invested
significantly in data analytics to personalize the content audiences
receive, based on historical data on prior purchase behavior,
favorite outdoor adventures, and so on. Yeti also ensures that
the varying touchpoints are well-orchestrated to provide a unified
experience. By relying on a combination of traditional and non-
traditional approaches, combining online and offline advertising,
and deploying personalized marketing approaches, Yeti has been
successful in creating an aspirational brand.
The Yeti brand grew from $5 million in 2009 to $450 million
in 2016 and is now facing a new set of challenges. Competi-
tion in the high-end cooler market has increased with the entry
of brands such as Igloo’s Sportsman, Orion 45, and Cabela’s
Polar Cap. Therefore, the company has to work extremely
hard to maintain its appeal and authenticity. To do so, Yeti has
become more deliberate in its use of social media marketing.
For example, it produces and distributes short videos that glorify
the outdoors. By depicting rugged and intrepid outdoorsy types
such as a legendary Rio Grande Valley fly fisherman or a female
Grand Canyon river guide navigating the great outdoors, these
movies (posted on its Web site) are intended to retain the inter-
est of hunters and fishers who are core targets of the brand,
even though the brand has grown beyond these audiences.
Yeti products are only featured briefly in these videos. The
brand also posts fan-submitted photos of wildlife and outdoors
BRANDING BRIEF 5-1
Yeti Is the “Cooler” Brand
The Yeti brand of coolers is seen as a status symbol, thanks
to high quality, authentic messaging and the use of nontra-
ditional/social media marketing.
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 181
Creativity must not sacrifice a brand-building goal, however, and marketers must orchestrate
programs to provide seamlessly integrated solutions and personalized experiences for customers
that create awareness, spur demand, and cultivate loyalty.
Personalizing Marketing The rapid expansion of the Internet and continued fragmentation of mass media have brought
the need for personalized marketing into sharp focus. Many pundits maintain that the modern
economy celebrates the power of the individual consumer. To adapt to the increased consumer
desire for personalization, marketers have embraced concepts such as experiential marketing and
relationship marketing. Branded experiences are playing an increasingly important role in helping
forge a personal connection with consumers, and the next section provides an overview along with
some examples of the role of experiences in building consumer–brand relationships.
Experiential Marketing. Experiential marketing promotes a product not only by commu-
nicating a product’s features and benefits but also by connecting it with unique and interesting
consumer experiences. One marketing commentator describes experiential marketing this way:
“The idea is not to sell something, but to demonstrate how a brand can enrich a customer’s life.”7
Pine and Gilmore, pioneers on the topic, argued more than a decade ago that we are on the
threshold of the “Experience Economy,” a new economic era in which all companies must orches-
trate memorable events for their customers.8 They made the following assertions:
• If you charge for stuff, then you are in the commodity business.
• If you charge for tangible things, then you are in the goods business.
• If you charge for the activities you perform, then you are in the service
business.
• If you charge for the time that customers spend with you, then and only then
are you in the experience business.
Citing a range of examples from Disney to AOL, they maintain that salable
experiences come in four forms: entertainment, education, aesthetic, and escapist.
Columbia University’s Bernd Schmitt, another pioneering expert on the sub-
ject, notes that “experiential marketing is usually broadly defined as any form
of customer-focused marketing activity, at various touchpoints, that creates a
sensory-emotional connection to customers.”9 Figure 5-2 displays a scale devel-
oped by Schmitt and his colleagues to measure experiences and its dimensions.
Their study respondents rated Lego, Victoria’s Secret, iPod, and Starbucks as the
most experiential brands.10
Meyer and Schwager describe a customer experience management (CEM)
process that involves monitoring three different patterns: past patterns (evaluat-
ing completed transactions), present patterns (tracking current relationships), and
potential patterns (conducting inquiries in the hope of unveiling future oppor-
tunities).11 Brands are investing in unique experiences that allow consumers to
enjoy memorable experiences without feeling that they are being marketed to.
For example, the U.S. drive-in restaurant Sonic used the Coachella Arts and
Music Festival to showcase its milkshakes and smoothies. Recognizing that pur-
chases made at the festival are typically posted on Instagram, Sonic created a
unique square milkshake featuring premium flavors and ingredients, expecting
on its Instagram page. Thus, using effective storytelling
allows Yeti to connect with customers at an emotional level,
which allows the brand to build enduring consumer–brand
relationships.
Sources: Ashley Rodriguez, “How Yeti Made a Cooler an Aspirational
Brand,” October 6, 2014, http://adage.com/article/cmo-strategy/high-
priced-yeti-coolers-aspirational-brand/295243/, accessed March 10,
2018; Salesforce.com, “YETI Coolers Launches New Digital Shopping
Experience on Salesforce Commerce Cloud,” January 16, 2018, www
.prnewswire.com/news-releases/yeti-coolers-launches-new-digital-
shopping-experience-on-salesforce-commerce-cloud-300582825.html,
accessed March 1, 2018; Hunter Atkins, “Why Is Yeti Coolers Pro-
ducing Really Cool Movies?,” April 20, 2016, www.forbes.com/sites/
hunteratkins/2016/04/20/why-is-yeti-coolers-producing-really-cool-
movies/#424bbc823f7e, accessed March 1, 2018; Michael Shea, “Ice-
Chest Throwdown,” March 25, 2016, www.fieldandstream.com/articles/
fishing/2016/03/ice-chest-throwdown-12-top-end-coolers-ranked-and-
reviewed, accessed March 10, 2018.
Victoria’s Secret has been praised for its
success in creating an experiential brand.
Source: Louis Johnny/SIPA/Newscom
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182 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
consumers to share the unique product on Instagram.12 The company also used geo-fencing to
allow festivalgoers to place orders using the “Shop Now” button.
Another example of branded experiences is the programs launched by Van Cleef & Arpels
into the world of jewelry and watchmaking.13 In 2012, this well-known jewelry design house
launched a program for people interested in learning more about the secret world of jewelry and
watchmaking. The program was intended to increase knowledge and help the public gain a better
understanding of the crafts behind jewelry making. The company created various four-hour classes
given in French and English around three broad themes: Savoir-Faire (know-how), Art History of
Jewels, and the Universe of Gemstones.14 In these classes, guests learn how to appreciate design
and craftsmanship and are guided through the process of creating fine works. In this way, the brand
reinforces quality perceptions and enables customers to obtain new information about the brand,
thereby making it seem more accessible.
More generally, the advantages of these experiences are threefold. First, they help expand
brand awareness among new segments of consumers (e.g., arts and music festivalgoers). Second,
they build brand buzz by encouraging participants to share their experiences on social media, thus
helping to increase social media engagement. For example, promoting its milkshakes at Coachella
increased the Sonic brand’s Instagram followers by 11,000 and generated 26,000 likes.15 Third,
these types of experiences can help reshape consumers’ perceptions of the brand. For example,
the Van Cleef & Arpels programs on jewelry making helped shape the audiences’ perception
of the value of different products within the category and reinforced the brand’s positioning as a
high-quality product.
Relationship Marketing. Marketing strategies must transcend the actual product or service to
create stronger bonds with consumers and maximize brand resonance. As we described previously,
an important distinction with brand experiences is that experiences allow brands to focus on topics
of interest to their key target audiences (rather than the brand itself), which drives engagement
and increases resonance.16 Analogously, the role of relationship marketing is to put customers’
needs front and center of everything that is done in marketing.
This broader set of activities is sometimes called relationship marketing and is based on the
premise that current customers are the key to long-term brand success.17 Relationship marketing
attempts to provide a more holistic, personalized brand experience to create stronger consumer
ties. It expands both the depth and the breadth of brand-building marketing programs.
The following are just a few of the basic benefits relationship marketing provides:18
• Acquiring new customers can cost five times as much as satisfying and retaining current
customers.
• The average company loses 10 percent of its customers each year.
FIGURE 5-2
Brand Experience Scale
Source: Based on J. Joško Brakus, Bernd H. Schmitt, and Lia Zarantonello, “Brand Experience: What Is It? How Is It Measured? Does It Affect Loyalty?,” Journal of Marketing 73 (May 2009): 52–68.
SENSORY
BEHAVIORAL
INTELLECTUAL
This brand makes a strong impression on my visual sense or other senses.
I find this brand interesting in a sensory way.
This brand does not appeal to my senses.
This brand induces feelings and sentiments.
I do not have strong emotions for this brand.
This brand is an emotional brand.
I engage in physical actions and behaviors when I use this brand.
This brand results in bodily experiences.
This brand is not action oriented.
I engage in a lot of thinking when I encounter this brand.
This brand does not make me think.
This brand stimulates my curiosity and problem solving.
AFFECTIVE
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 183
• A 5 percent reduction in the customer defection rate can increase profits by 25 to 85 percent,
depending on the industry.
• The customer profit rate tends to increase over the life of the retained customer.
We outline three concepts that can be helpful in relationship marketing: mass customization,
personalization/one-to-one marketing, and permission marketing.
Mass Customization. The concept behind mass customization—namely, making products to
fit customers’ exact specifications—is an old one, but new digital-age technology now enables
companies to offer customized products on a previously unheard-of scale. By going online,
customers can communicate their preferences directly to the manufacturer, which, by using
advanced production methods, can assemble the product for a price comparable to that of a
non-customized item.
In an age defined by the pervasiveness of mass-market goods, mass customization enables
consumers to distinguish themselves with even basic purchases. Mass customization is not
restricted to products; many service organizations, such as banks, have developed customer-
specific services, with the aim to improve the personal nature of the service experience with more
service options, more customer-contact personnel, and longer service hours.19
With the advent of social media and the availability of vast troves of customer data (e.g., click-
stream data, including Web site traffic and engagement metrics), companies are in an excellent
position to tailor offerings to individual customers, in a highly targeted way. However, companies
must also evolve their offerings to tap into real value or emotional drivers that influence customer
purchases.20 One way to do this is to involve customers in the purchase process, and customers
are now in a position to co-create their offerings with firms. For example, Nike enables custom-
ers to put their own personalized message on a pair of shoes with the NIKEiD program. At the
NIKEiD Web site, visitors can make a customized shoe by selecting the size, width, and color
scheme and affixing an eight-character personal ID to their creation. Then, they can share their
shoes with others to admire.21
Another feature that has ramped up in recent times is the emphasis on location-based market-
ing, in which companies tailor and customize their offerings depending on where customers live.
With this approach, the Spartan Race organization (which sponsors races in various locations)
was able to target its e-mail marketing to recipients’ locations and saw an increase of 50 percent
in Web site traffic, a 25 percent increase in new users, and a 13 percent improvement in conver-
sions.22 An example of a highly successful relationship marketing program comes from Tesco,
the United Kingdom’s largest grocer.
With NIKEiD, customers can customize their shoes and share their creations with
others online.
Source: Getty Images/Getty Images for Nike
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184 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Permission Marketing. Permission marketing, the practice of marketing to consumers only
after gaining their express permission, is another influential perspective on how companies can
break through the clutter and build customer loyalty. A pioneer on the topic, Seth Godin, has noted
that marketers can no longer employ “interruption marketing” or mass-media campaigns featuring
magazines, direct mail, billboards, radio and television commercials, and the like because consum-
ers have come to expect—but not necessarily appreciate—these interruptions.25 Seth defined “per-
mission marketing” as anticipated (people look forward to hearing from you), personal (messages
pertain directly to individuals), and relevant (the focus of the effort is of interest to the prospect).26
Given the large number of marketing communications that bombard consumers every day,
Godin argues that if marketers want to attract a consumer’s attention, they first need to get his or
her permission with some type of inducement—a free sample, a sales promotion or discount, a
contest, and so on. By eliciting consumer cooperation in this manner, marketers might develop
stronger relationships with consumers so that they will want to receive further communications
in the future. Those relationships will develop, however, only if marketers respect consumers’
wishes, and if consumers express a willingness to become more involved with the brand.27
E-mail is one of the main tools permission marketers employ, even though social media
is increasingly being used to send information to interested prospects. With the help of large
TESCO
Celebrating its 15th anniversary in 2010, Tesco Clubcard is one of the world’s most successful retail loyalty
schemes. Each of the 10 million members in the program has a unique “DNA profile” based on the products
he or she buys. Products themselves are classified on up to 40 dimensions—such as package size, healthy,
own label, eco-friendly, and ready-to-eat—to facilitate this customer categorization. In exchange for provid-
ing their purchase information and basic demographic information, members receive a variety of purchase
benefits across a wide range of products and services beyond what is sold in the stores. Tracking customers’
purchases in the program, in turn, helps Tesco uncover price elasticities, offer targeted promotions, and
improve marketing efficiency. By also strengthening customer loyalty, the Clubcard program has been esti-
mated to generate cumulative savings to Tesco of more than £350 million. The range of products, the nature
of merchandising, and even the location of Tesco’s convenience stores all benefit from the use of these
customer data to develop tailored solutions. Tesco has introduced several Clubcard program innovations
through the years, including key fobs and newly designed cards issued in 2008.23 Despite these innovations,
Tesco went through a period of losses, and customers lost trust in the brand. However, the company began
turning around through a relentless focus on the customer, by cutting prices, and by improving customer
service.24 Investments in digital channels and reduced emphasis on television advertising have also been
key changes to Tesco’s marketing.
Tesco’s Clubcard is the centerpiece of one of the world’s most successful retail
loyalty programs.
Source: Kevin Britland/Alamy Stock Photo
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 185
databases and advanced software, companies can store gigabytes of customer data and process
this information to send targeted, personalized marketing messages to customers. For example,
Facebook Connect is an application that allows users to interact with various Web sites through
their Facebook account. Users can also post updates to their Facebook page while using a third-
party Web site or app. These features make Facebook Connect a source of information about users
to marketers, giving advertisers more access to user information. This technology also allows
brands to establish permission-based relationships with their users on their own Web sites. When
users are comfortable with sharing information with social networking sites, they are more likely
to share information with Web sites linked through Facebook Connect.28
Godin identifies five steps to effective permission marketing:29
1. Situational permission: Prospects permit the company to access their personal information.
2. Brand trust: Prospects allow the company to provide for their needs.
3. Personal relationship: Prospects offer information based on a personal relationship with
the provider’s organization.
4. Incentive-based permission: Incentives such as points or free prizes are used to maintain
permission to access customer data.
5. Intravenous permission: Customers become dependent on the company, and the supplier
controls the supply of certain goods or services.
Across each of these stages, brands should carefully manage their relationships with customers
to ensure they are not misusing the permissions granted to them by the customer. The U.K.-based
bank Mondo was noted for its carefully worded, low-pressure marketing offer to its customers in
return for gaining their permission to market to them. The statement read “We’ll only send you an
email when we’ve got something interesting to show, or something cool for you to try.”30
Permission marketing poses significant risks to marketers. Many public interest groups
as well as the U.S. Federal Trade Commission (FTC) are penalizing companies that collect
data on customers without explicitly obtaining permission from them. For example, in 2014,
the FTC filed a lawsuit against television manufacturer Vizio, alleging that the company was
automatically tracking what consumers were watching and relaying it back to its services,
without clearly informing consumers or obtaining consent.31 Furthermore, Vizio turned all
that information into profit, by selling consumers’ viewing histories (including highly iden-
tifiable and personal information such as IP addresses) to data aggregators and advertisers.
Vizio used the term “Smart Interactivity” to describe the tracking behavior to customers.
The company eventually agreed to pay $2.2 million to settle the charges.32 These types of
instances show that establishing consumer permissions and obtaining consent should be a
high priority for brands.
According to survey data, consumers are generally aware of data privacy issues associated
with online vendors. According to one global survey, 55 percent of the consumers surveyed had
decided against buying something because of privacy concerns, while another survey of consum-
ers in specific industries, such as financial services, indi-
cates that 84 percent of respondents are concerned about the
security of their personal data.33 More ad blockers are being
downloaded today than previously, and search engines such
as DuckDuckGo (which promises not to track users) are
growing in popularity, suggesting that permission market-
ing has entered a new phase. Some critics have argued that
in this new era, brands should relinquish control over con-
sumers’ personal data and allow users to control how their
data will be used.34 Others have argued for more customer-
friendly approaches to data management in which con-
sumers opt-in to have their data shared with marketers, as
opposed to the opt-out model (in which the system defaults
to sharing information). Regarding these developments, par-
ticipation marketing or engagement marketing may replace
the permission marketing era, as marketers and consumers
increasingly try to work together to find how firms can best
satisfy consumer goals.35
Search engines such as DuckDuckGo are popular among
consumers who care about privacy because they do not track
customers’ browsing behavior.
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186 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Reconciling the Different Marketing Approaches These and other different approaches to personalization help to reinforce important marketing
concepts and techniques. From a branding standpoint, they are particularly useful means of both
eliciting positive brand responses and creating brand resonance to build customer-based brand
equity. Mass customization and one-to-one and permission marketing are all potentially effective
ways to get consumers more actively engaged with a brand.
According to the customer-based brand equity model, however, these various approaches
emphasize different aspects of brand equity. For example, mass customization and one-to-one
and permission (or participation) marketing are particularly effective at creating greater relevance,
stronger behavioral loyalty, and attitudinal attachment. Conversely, experiential marketing is par-
ticularly effective at establishing brand imagery and tapping into a variety of feelings as well
as helping build brand communities. Despite potentially different areas of emphasis, all four
approaches can build stronger consumer–brand bonds.
An implication of these new approaches is that the traditional “marketing mix” concept and
the notion of the “4 Ps” of marketing—product, price, place (or distribution), and promotion
(or marketing communications)—may not fully describe modern marketing programs or the
many activities, such as loyalty programs or pop-up stores that may not necessarily fit neatly
into one of those designations. Nevertheless, firms still need to make decisions about what
exactly they are going to sell, how (and where) they are going to sell it, and at what price. In
other words, firms must still devise product, pricing, and distribution strategies as part of their
marketing programs.
The specifics of how they set those strategies, however, have changed considerably. We turn
next to these topics and highlight a key development in each area, recognizing that there are many
other important areas beyond the scope of this text. With product strategy, we emphasize the role
of extrinsic factors; with pricing strategy, we focus on value pricing; and with channel strategy,
we concentrate on channel integration.
PRODUCT STRATEGY The product itself is the primary determinant of what consumers experience with a brand, what
they hear about a brand from others, and what the firm can tell customers about the brand. At the
heart of a great brand is invariably a great product.
Designing and delivering a product or service that fully satisfies consumer needs and wants
is a prerequisite for successful marketing, regardless of whether the product is a tangible good,
service, or organization. For brand loyalty to exist, consumers’ experiences with the product
must at least meet, if not surpass, their expectations. After considering how consumers form
their opinions of the quality and value of a product, we consider how marketers can go beyond
the actual product to enhance product experiences and add additional value before, during, and
after product use.
Perceived Quality Perceived quality is customers’ perceptions of the overall quality or superiority of a product or
service compared with alternatives and with respect to its intended purpose. Achieving a satis-
factory level of perceived quality has become more difficult for companies as continual product
improvements over the years have led to heightened consumer expectations.36
A wealth of research has tried to understand how consumers form their opinions about
quality. The specific attributes of product quality can vary from category to category. Nev-
ertheless, consistent with the brand resonance model from Chapter 3, research has identified
the following general dimensions: primary ingredients and supplementary features; product
reliability, durability, and serviceability; and style and design.37 Consumer beliefs about these
characteristics often define quality and, in turn, influence attitudes and behavior toward a brand.
Product quality depends not only on functional product performance but broader performance
considerations as well, such as speed, accuracy, and care of product delivery and installation;
the promptness, courtesy, and helpfulness of customer service and training; and the quality of
repair service.
Brand attitudes may also depend on more abstract product imagery, such as the symbolism or
personality reflected in the brand. These “augmented” aspects of a product are often crucial to its
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 187
equity. Finally, consumer evaluations may not correspond to the perceived quality of the product
and may be formed by less thoughtful decision making, such as simple heuristics and decision
rules based on brand reputation or product characteristics such as color or scent.
Managing Customers Post-Purchase To achieve the desired brand image, product strategies should focus on both purchase and con-
sumption. A great deal of marketing activity is devoted to finding ways to encourage trial and
repeat purchases by consumers. Perhaps the strongest and potentially most favorable associa-
tions, however, come from actual product experiences—what Procter & Gamble calls the “second
moment of truth” (the “first moment of truth” occurs at purchase).
Unfortunately, too little marketing attention is devoted to finding new ways for consumers
to truly appreciate the advantages and capabilities of products. Perhaps in response to this over-
sight, one notable trend in marketing is the emphasis on the post-purchase phase of the consumer
decision-making process. Marketing in this phase is sometimes referred to as aftermarketing—that
is, the marketing activities that occur after customer purchase. Innovative design, thorough test-
ing, quality production, and effective communication—through mass customization or any other
means—are without question the most important considerations in enhancing product consump-
tion experiences that build brand equity.
Post-purchase marketing or aftermarket is particularly important in the context of e-com-
merce. Companies such as Zappos have made their mark primarily through their aftermarketing
efforts, which involves integrating their support operations with an e-commerce platform, to
ensure seamless integration across the two. Also, ensuring that the company’s contact information
is accessible and support is available to customers across a multitude of channels (e.g., phone,
web, live chat) is critical to enhancing customers’ post-purchase experience.38
User Manuals. Instruction or user manuals for many products are too often an afterthought,
put together by engineers who use overly technical terms and convoluted language. As a result,
consumers’ initial product experiences may be frustrating or, even worse, unsuccessful. Even if
consumers can figure out how to use the product’s basic functions, they may not learn to appreci-
ate some of its more advanced features, which are usually highly desirable and possibly unique
to the brand.
To enhance consumers’ consumption experiences, marketers must develop user manuals or
help features that clearly and comprehensively describe both what the product or service can do
and how consumers can realize these benefits. With increasing globalization, writing easy-to-use
instructions has become even more important because they often require translation into multiple
languages.39 Manufacturers are spending more time designing and testing instructions to make
them as user-friendly as possible.
User manuals increasingly may need to appear in online and multimedia formats to most
effectively demonstrate product functions and benefits. Intuit, makers of the Quicken personal
finance management software package, routinely sends researchers home with first-time buy-
ers to check that its software is easy to install and to identify any sources of problems that
might arise. Corel software adopts a similar “Follow Me Home” strategy and also has “pizza
parties” at the company where marketing, engineering, and quality assurance teams analyze
the market research together so that marketing does not just hand down conclusions to other
departments.40
Customer Service Programs. However, aftermarketing is more than the design and com-
munication of product instructions. As one expert in the area notes, “The term ‘aftermarketing’
describes a necessary new mindset that reminds businesses of the importance of building a lasting
relationship with customers, to extend their lifetimes. It also points to the crucial need to better
balance the allocation of marketing funds between conquest activities (like advertising) and reten-
tion activities (like customer communication programs).”41 Customer service plays an important
role in the post-purchase phase. Investments in customer service offer multiple benefits, including
the ability to connect with customers and gain valuable feedback.
One study examined Twitter data on customer service interactions in the airline and wireless
carrier industry and found that when customers had interacted with a brand’s customer service
representative on Twitter, they were significantly more willing to choose the brand from a set of
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188 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
competitors and were also willing to pay more for the brand. In the airline industry, for example,
these same customers were willing to pay $9 more than those who had not interacted with a
customer service representative on social media.42 Customer service agents who added initials
or signatures to their responses were able to elicit an even better response, and customers were
willing to pay a premium of $14 after their interactions.
Bad customer service, on the other hand, can create significant negative publicity and
with the help of social media, has the potential to go viral and damage the reputation of the
company. American Airlines was subject to ridicule on the Internet when it responded to a
sarcastic customer complaint which began with the word “congratulations.” Without having
read the complaint fully, American Airlines customer service mistook this message for a
compliment and responded with a canned message thanking the customer for their support.
In fact, the message went on to complain about the company. Incidents like this can tarnish
a brand’s customer service reputation because of the speed with which they can spread on
the Internet.43
In recent years, to strengthen ties with customers, companies are turning to brand commu-
nities to help enhance the support provided to customers and quickly resolve technical issues.
Nearly half of all companies with brand communities can reduce customer support costs by
10 to 25 percent.44 A good example of this is Sephora’s community Beauty Talk, which allows
users to post questions and share ideas about Sephora products. Brand enthusiasts are fully
engaged with helping answer questions asked about Sephora beauty products by others in the
online community. In this way, Sephora has effectively used its online branded community as
a vehicle for enhancing customer service. Microsoft’s Xbox community is another example
of a brand community that helps with customer service. The community is made up of Xbox
enthusiasts who are often involved in providing support on Xbox forums, creating YouTube
videos, and providing product feedback. These enthusiasts often have achieved a minimum
game score to qualify to become a brand ambassador and are rewarded with games, branded
merchandise, and the like.
Companies can also gain significant benefits from cross-selling and up-selling following
good customer service. Post-purchase marketing can include the sale of complementary products
that help make up a system or, in any other way, enhance the value of the core product. Printer
manufacturers such as Hewlett-Packard derive much of their revenue from high-margin post-
purchase items such as ink-jet cartridges, laser toner cartridges, and paper specially designed for
PC printers. The average owner of a home PC printer spends more on consumables over the life
of the machine than on the machine itself.45
Sephora is an example of a company that uses its online community of users to
provide customer service.
Source: Patti McConville/Alamy Stock Photo
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 189
Aftermarketing can be an important determinant of profitability. According to a McKinsey
& Co. study across 30 industries, the provision of aftermarket services, such as parts, repair,
maintenance, and digital services, resulted in earnings of 25 percent, compared to 10 percent for
new equipment.46 Aftermarket sales are strongest when customers are locked into buying from
the company that sold them the primary product, due to service contracts, proprietary technol-
ogy or patents, or unique service expertise.47 The percentage of original equipment manufacturer
products sold with a service contract reflects the attach rate or the share of lifetime—that is, the
percentage of a product’s lifetime in which the manufacturer is the primary service provider.
Together, the attach rate and the share of lifetime determine the lifetime penetration, which con-
tributes to aftermarket profitability.48
Loyalty Programs. Loyalty or frequency programs have become a popular means by which
marketers can create stronger ties to customers.49 Their purpose is “identifying, maintaining, and
increasing the yield from a firm’s ‘best’ customers through long-term, interactive, value-added
relationships.”50 Firms in all kinds of industries—most notably the airlines—have established
loyalty programs through different mixtures of specialized services, newsletters, premiums, and
incentives. Often, they include extensive co-branding arrangements or brand alliances. With the
growth of mobile commerce and digital payments (e.g., PayPal and Apple Pay), loyalty programs
can be integrated into e-commerce transactions quite easily. Branded apps can be used to maintain
relationships with customers, administer loyalty programs, and allow customers to transact with
the firm. For example, in addition to helping customers make payments, the Starbucks app keeps
track of rewards for customer loyalty, thereby aiding in brand building.51
In 1981, American Airlines founded the first airline loyalty program, Advantage. This fre-
quent-flier program rewarded the airline’s top customers with free trips and upgrades based on
mileage flown. Many companies in addition to the airlines introduced loyalty programs in the
intervening years because they often yield positive results.52 Loyalty programs reduce defection
rates and increase retention, and the value created by the loyalty program creates switching costs
for consumers, reducing price competition among brands. To get discounts, however, consumers
must typically hand over personal data, raising privacy concerns.
The appeal to marketers is clear as well. Most loyalty marketers employ sophisticated
databases and software to determine which customer segments to target with a given program.
However, loyalty programs are increasingly finding it difficult and costly to maintain, given the
proliferation of such programs. Companies must constantly update the program to attract new
customers and prevent other companies in their category from developing “me-too” programs.53
Suggestions and complaints from top customers deserve careful consideration, because they can
lead to improvements in the program. Because they typically represent a large percentage of busi-
ness, top customers must also receive better service and more attention. It is also helpful if the
program is easy to use and offers immediate rewards when customers sign up. After they become
members, many companies also try to make customers “feel special” by, for example, sending
them birthday greetings, special offers, or invitations to special events.
The product is at the heart of brand equity. Product strategy entails choosing both the tangible
and intangible benefits the product will embody and marketing activities that consumers desire and
the marketing program can deliver. A range of possible associations can be linked to the brand—
some functional and performance related, and some abstract and imagery related. Perceived
quality and perceived value are particularly important brand associations that often drive consumer
decisions.
PRICING STRATEGY Price is the one revenue-generating element of the traditional marketing mix, and price premi-
ums are among the most important benefits of building a strong brand. This section considers
the different price perceptions that consumers might form and the different pricing strategies
firms might adopt to build brand equity. The increasingly competitive retail environment and
the increasing dominance of online retailing have posed significant pricing challenges for
many brands. The Science of Branding 5-1 outlines key insights generated from research on
pricing.
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190 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Economists traditionally assumed that consumers were “price
takers” who accepted prices as given. However, as Ofir and Winer
note, consumers often actively process price information, inter-
preting prices from knowledge acquired from past purchasing
experience, formal corporate communications (e.g., advertising),
informal communications with friends or family members, and
point-of-purchase or online information. Consumers’ purchase
decisions are based on perceived prices and not on the marketer’s
stated value. Understanding how consumers arrive at their per-
ceptions of prices is thus an important marketing priority.
A wealth of research has shown that surprisingly few con-
sumers can recall specific prices of products accurately, though
they may have a fairly good idea of the relevant range of prices.
When examining or considering price, however, consumers often
compare it with internal frames of reference (prices they remem-
ber) or external frames of reference (a posted “regular retail
price”). Internal reference prices occur in many forms, including
the following:
• “Fair price” (what the product should cost)
• Typical price
• Last price paid
• Upper-bound price (the most consumer would pay)
• Lower-bound price (the least consumer would pay)
• Competitive prices
• Expected future price
• Usual discounted price
When one or more of these frames of reference comes to
mind, consumers’ perceived price can vary from the stated price.
Most research on reference prices has found that “unpleasant
surprises,” such as a higher stated price than the perceived price,
have a greater impact on purchase likelihood than pleasant
surprises.
Alternative pricing strategies also affect consumers’ percep-
tions of prices. For example, research has shown that a relatively
expensive item can seem less expensive if the price is broken
down into smaller units (a $500 annual membership seems pricier
than “less than $50 a month”). One reason prices often end with
the number nine (e.g., $49.99) is that consumers process prices
in a left-to-right manner rather than holistically or by rounding.
This effect is more pronounced when competing products’ prices
are numerically and psychologically close together. Another study
shows that package size affects perceived quality, such that con-
sumers believe that the identical product in a smaller package,
by influencing perceptions of unit prices, is seen to be of higher
quality than if in a larger package.
Sources: Chezy Ofir and Russell S. Winer, “Pricing: Economic and
Behavioral Models,” in Handbook of Marketing, eds. Bart Weitz and
Robin Wensley (New York: Sage Publications, 2002): 5–86; John T. Gour-
ville, “Pennies-a-Day: The Effect of Temporal Reframing on Transaction
Evalua tion,” Journal of Consumer Research 24, no. 4 (March 1998): 395–
408; Manoj Thomas and Vicki Morwitz, “Penny Wise and Pound Foolish:
The Left-Digit Effect in Price Cognition,” Journal of Consumer Research
26 (June 2005): 54–64; Eric Anderson and Duncan Simester, “Mind Your
Pricing Cues,” Harvard Business Review 81, no. 9 (September 2003):
96–103; Tridib Mazumdar, S. P. Raj, and Indrajit Sinha, “Reference Price
Research: Review and Propositions,” Journal of Marketing 69 (October
2005): 84–102; Yan, Dengfeng, Jaideep Sengupta, and Robert S. Wyer.
“Package Size and Perceived Quality: The Intervening Role of Unit Price
Perceptions.” Journal of Consumer Psychology 24, no. 1 (2014): 4–17.
THE SCIENCE OF BRANDING 5-1
Understanding Consumer Price Perceptions
Consumer Price Perceptions and Setting Prices Choosing a pricing strategy to build brand equity means determining
• A method for setting current prices, and
• A policy for choosing the depth and duration of promotions and discounts.
There are many different approaches to setting prices, and the choice depends on various
considerations. This section highlights a few of the most important issues as they relate to brand
equity.54
Factors related to the costs of making and selling products and the relative prices of com-
petitive products are important determinants in pricing strategy. Increasingly, however, firms are
putting greater importance on consumer perceptions and preferences. Consumers perceptions of
pricing are based on price tiers in a category.55 For example, Figure 5-3 shows the price tiers that
resulted from a study of the ice cream market.56 In that market, as the figure shows, the price is
also related to quality.
Within any price tier is a range of acceptable prices, called price bands, that indicate the
flexibility and breadth marketers can adopt in pricing their brands. Some companies sell mul-
tiple brands to better compete in multiple categories. Figure 5-4 displays clothing offerings from
PVH Corp. (formerly Phillips-Van Heusen) that, at one time, covered a wide range of prices and
corresponding retail outlets.57
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 191
Consumer associations of perceived value are often an important factor in purchase deci-
sions. Thus, many marketers have adopted value-based pricing strategies in an attempt to sell the
right product at the right price to meet consumer wishes better, as described in the next section.
Consumers may have price perceptions and may infer the quality of a product by its price. An
integral component of the perceived value of a product is the cost of a product. Costs here are not
restricted to the actual monetary price but may reflect opportunity costs of time, energy, and any
psychological involvement on the part of the consumer.58
In addition to value-based pricing, consumers’ price perceptions can be shaped by other ways
pricing is implemented. Two other types of pricing strategies are described next. One pricing
approach is the razor-and-blades pricing model. For example, in this approach, the Gillette Pro-
Glide razor costs approximately $10 online, but after purchasing the razor, customers are locked
in because of the proprietary blade technology and razor-blade interface.
FIGURE 5-3
Price Tiers in the Ice
Cream Market
0 10 20
Consumer price, cents per 4-ounce serving
C o
m m
o d
it y
Sp ec
ia lt
y
30 40 50¢ Fair
Excellent
Very good
Good
Consumer Reports
rating
Generic
Lady Lee
Lucerne Deluxe
Foremost Borden
Sealtest Baskin-RobbinsBreyer’s
Howard Johnson's
Häagen- Dazs
Schrafft’s
Quality
FIGURE 5-4
Services Provided by
Channel Members
Source: Reprinted from Donald Lehmann and Russell Winer, Product Management, 2nd ed. (Burr Ridge, IL: Irwin, 1997), Figure 13-8 on p. 379. © The McGraw-Hill Companies.
Calvin Klein Collection
ck Calvin Klein
Calvin Klein
Sean John
Kenneth Cole New York
MICHAEL Michael Kors
BCBG Attitude
Kenneth Cole Reaction
Geoffrey Beene
IZOD
Bass
Chaps
Van Heusen
Arrow
BCBG Max Azria
Collection stores
Distribution Channels Brand Pricing Strategy Price Range
$10,000
$10
Specialty stores
Premier department stores
Department stores
Mid-tier department stores
Company stores
Discount stores
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192 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Even customers with a limited budget become bound to buying the product because the ini-
tial price for the durable component is very accessible.59 Several other industries have used the
razor-and-blades pricing model. For example, in the traditional printer pricing model, the printer
itself is priced at an accessible low rate, while the printer manufacturer makes a profit on selling
cartridges. The razor-and-blades pricing model has begun losing its appeal however, as consum-
ers have increasingly expressed frustration at being locked into a single system. In response,
companies are moving away from constraints imposed on customers in the post-purchase phase.
For example, Epson printer has introduced the new model Ecotank, which replaces the printer
cartridge (which is typically expensive) with a large, refillable ink tank.60
In another variation of the pricing approach is the freemium model, in which many start-up
companies first launch a free service. Companies such as Dropbox, LinkedIn, and Spotify have
all grown to prominence by using the freemium model.61 After building a large installed base,
those who use the freemium model then promote a premium tier, which has a price attached to it.
For example, Dropbox, a file-sharing and cloud storage service, provides customers with 2 GB
of free storage and then charges customers for additional storage. Customers can get additional
storage by providing referrals. Dropbox Plus offers one terabyte of space and additional features
for approximately $9.99 per month. Dropbox has more than 500 million total users, which points
to the success of the freemium model.62 A 2 to 5 percent conversion rate of free to premium
customers is considered average across companies embracing the freemium model.63 Despite its
apparent advantages, companies need to be cognizant that this model could potentially weaken the
company if the cost of servicing customers for free turns out to be too high, relative to the number
of premium customers who form part of the installed base. To ensure a healthy mix of free and
premium customers, companies should work to provide good value for their premium customers
and to clarify the value proposition relative to that for free customers. For this model to be effec-
tive, firms must ensure sufficient conversion among free customers to the premium-pricing tier.
Another pricing model that companies have used in recent years is pay-as-you-wish pricing.
For example, Panera Cares Community Cafes operate under this model.64 The pricing strategy can
dictate how consumers categorize the price of the brand (as low, medium, or high) and how firm
or flexible they think the price is, based on how deeply or frequently it is discounted.
In short, the price has complex meanings and can play multiple roles in consumers’ decision
making. As you have seen, The Science of Branding 5-1 provided insights into how consumers
perceive and process prices as part of their shopping behavior. Marketers need to understand all
price perceptions that consumers have of a brand, to uncover quality and value inferences and to
discover any price premiums that exist.
Famous athletes and celebrities, such as NBA player Tony Parker, WWE wrestler
John Cena, and TV sportscaster Erin Andrews, have promoted Gillette’s latest
Fusion ProGlide razor and its innovative performance features.
Source: The Advertising Archives/Alamy Stock Photo
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 193
Many firms are now employing a value-pricing approach to setting prices and an everyday-
low-pricing (EDLP) approach to determining their discount pricing policy over time. Let’s look
at both.
Value Pricing. The objective of value pricing is to uncover the right blend of product quality,
product costs, and product prices that fully satisfy the needs and wants of consumers and the profit
targets of the firm. Marketers have employed value pricing in various ways for years, sometimes
learning the hard way that consumers will not pay price premiums that exceed their perceptions
of the value of a brand.
In today’s challenging new climate, several firms have been successful in adopting a value-
pricing strategy. Southwest Airlines combined low fares with no-frills service to become a power-
ful force in the airline industry. The success of this and other firms has dramatized the potential
benefits of implementing a value-pricing strategy.
As you might expect, companies can select among any number of opinions when adopting
a value-based pricing approach. In general, however, a successful value-pricing strategy should
strike the proper balance among three key components:
• Product design and delivery,
• Product costs, and
• Product prices.
In other words, the right kind of product must be made the right way and sold at the right
price. We examine each of these three elements in the following section. A brand that has experi-
enced great success in recent years by balancing this formula is Hyundai.
HYUNDAI
Taking a page from the Samsung playbook, Korean upstart automaker Hyundai is trying to do to Toyota
and Honda what Samsung successfully did to Sony—provide an affordable alternative to a popular market
leader. Like Samsung, Hyundai has adopted a well-executed value-pricing strategy that combines advanced
technology, reliable performance, and attractive design with lower prices. Hyundai’s 10-year or 100,000-mile
powertrain warranty programs and positive reviews from car analysts such as J.D. Power provided additional
reassurance to potential buyers of the quality of the products and the company’s stability. Hyundai’s current
Assurance program is centered on a new Trade-In Value Guarantee that preserves the market value of a
new Hyundai by guaranteeing to customers at the time of purchase exactly how much it would be worth
two, three, or four years from purchase date.65 Hyundai has also moved to make pricing more transparent
and to streamline purchasing, in addition to allowing customers to return their cars if the mileage is under
300 miles.66 In this way, Hyundai is certainly ahead of the curve in understanding the importance of pricing
in the overall strategy of a company or brand.
Hyundai has a strong value proposition, anchored by its 10-year or 100,000-mile
warranty.
Source: Hyundai Motor America
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194 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Product Design and Delivery. The first key to a successful value-pricing strategy is the proper
design and delivery of the product. Product value can be enhanced through many types of well-
conceived and well-executed marketing programs, such as those covered in this and other chapters
of the book. Proponents of value pricing note that the concept does not mean selling stripped-down
versions of products at lower prices. Consumers are willing to pay premiums when they perceive
added value in products and services. Some companies (e.g., Apple) have been able to increase
prices by skillfully introducing new or improved “value-added” products. Still other companies (e.g.,
Gillette) have coupled well-marketed product innovations and improvements with higher prices (or
using a tiered pricing system) to strike an acceptable balance for at least some market segments.
With the advent of the Internet, many critics predicted that customers’ ability to perform
extensive, assisted online searches would result in only low-cost providers surviving. In reality,
the advantages of creating strong brand differentiation have led to price premiums for brands sold
online just as much as for those sold offline. For example, though undersold by numerous book
and music sellers online, Amazon.com was able to maintain market leadership, eventually forcing
low-priced competitors such as Books.com and others out of business.67
Product Costs. The second key to a successful value-pricing strategy is to lower costs as much
as possible. Meeting cost targets invariably requires finding additional cost savings through pro-
ductivity gains, outsourcing, material substitution (less expensive or less wasteful materials),
product reformulations, and process changes such as automation or other factory improvements.68
As one marketing executive once put it:
The customer is only going to pay you for what he perceives as real value-added. When you look
at your overhead, you’ve got to ask yourself if the customer is really willing to pay for that.
If the answer is no, you’ve got to figure out how to get rid of it or you’re not going to make
money.69
Firms must be able to develop business models and cost structures to support their pricing plans.
Product Prices. The third key to a successful value-pricing strategy is to understand exactly
how much value consumers perceive in the brand and, thus, the extent to which they will pay a
premium over product costs.70 Myriad techniques are available to estimate these consumer value
perceptions. Perhaps the most straightforward approach is to directly ask consumers their percep-
tions of price and value in different ways.
The price suggested by estimating perceived value can often be a starting point for market-
ers in determining actual marketplace prices, adjusting by cost and competitive considerations
as necessary.
Communicating Value. Combining these three components in the right way to create value is
crucial. Just delivering good value, while necessary, is not sufficient for achieving pricing success—
consumers need to understand and appreciate the value of the brand. In many cases, that value may
be obvious—the product or service benefits are clear, and comparisons with competitors are easy.
In other cases, however, the value may not be obvious, and consumers may too easily default to
purchasing from lower-priced competitors. Marketers may then need to engage in marketing com-
munications to help consumers better recognize the value. In some cases, the solution may simply
require straightforward communications that expand on the value equation for the brand, such as
stressing quality over price. For example, take a premium-priced brand such as Procter & Gamble’s
Pantene. It faces pressure from many competing brands, but especially private label and store and
discount brands that may cost much less. In tough times, even small cost savings may matter to
penny-pinching consumers. Assume a bottle of Pantene cost a $1 more than its main competitors but
could be used for up to 100 shampoos. In that case, the price difference is really only one cent per
shampoo. By framing the purchase decision in terms of cost per shampoo, P&G could then advertise,
“Isn’t it worth a penny more to get a better-looking head of hair?” In other cases, it may involve
“framing” and convincing consumers to think about their brand and product decisions differently.
Price Segmentation. At the same time, consumers may have differing value perceptions, and
therefore, could—and most likely should—receive varying prices. Price segmentation sets and
adjusts prices for appropriate market segments. Starbucks similarly has raised the prices of some
of its specialty beverages while charging less for some basic drinks.71
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 195
Partly because of wide adoption of the Internet, firms are increasingly employing yield man-
agement principles or dynamic pricing, such as those adopted by airlines to vary their prices for
distinct market segments and value perceptions. Two examples include the following:
• Allstate Insurance embarked on a yield management pricing program, assessing drivers’
credit history, demographic profile, and other factors to better match automobile policy pre-
miums to customer risk profiles.72
• To better compete with scalpers and online ticket brokers such as StubHub, concert giant
Ticketmaster has begun implementing more efficient variable pricing schemes based on
demand that charge higher prices for the most sought-after tickets and lower prices for less-
desirable seats for sporting events and concerts.73
With the advent of digital and social media channels, it is increasingly easy for brands and
companies to alter their pricing on a minute-to-minute basis, making it easier to implement yield
management practices.
Everyday Low Pricing. Everyday low pricing (EDLP) has received increased attention as a
means of determining price discounts and promotions over time. EDLP avoids the sawtooth pat-
tern of alternating price increases and decreases or discounts in favor of a more consistent set of
“everyday” base prices on products. In many cases, these EDLP prices are based on the value-
pricing considerations we noted previously.
The P&G Experience. In the early 1990s, Procter & Gamble made a well-publicized con-
version to EDLP.74 By reducing list prices on half its brands and eliminating many temporary
discounts, P&G reported that it saved $175 million in 1991, or 10 percent of its previous year’s
profits. Advocates of EDLP argue that maintaining consistently low prices on major items
every day helps build brand loyalty, fend off private-label inroads, and reduce manufacturing
and inventory costs.75
Even strict adherents of EDLP, however, see the need for some types of price discounts over
time. When P&G encountered some difficulties in the late 1990s, it altered its value-pricing
strategy in some segments and reinstated selected price promotions. More recently, P&G has
adopted a more fluid pricing strategy in reaction to market conditions.76 Management felt
confident about the strength of some of the firm’s popular premium-priced brands—such as
Fusion ProGlide, Crest 3D products, and Old Spice body wash—and did not feel the need to
discount price.
Reasons for Price Stability. Why, then, do firms seek greater price stability? Although trade
promotions are supposed to result in discounts on products only for a certain length of time and
in a certain geographic region, that is not always the case. With forward buying, retailers order
more product than they plan to sell during the promotional period so that they can later obtain a
larger margin by selling the remaining goods at the regular price after the promotional period has
expired. With diverting, retailers pass along or sell the discounted products to retailers outside
the designated selling area.
From a manufacturer’s perspective, these retailer practices can lead to excess demand during
the promotion period but result in slack capacity when the promotion period ends, costing them
millions of dollars. On the demand side, many marketers believe that the seesaw of high and low
prices on products train consumers to wait until the brand is discounted or on special to buy it,
thus eroding its perceived value.
Summary To build brand equity, marketers must determine strategies for setting prices and then adjusting
them, if at all, over the short and long run. Increasingly, these decisions will reflect consumer
perceptions of value. Value pricing strikes a balance among product design, product costs, and
product prices. From a brand equity perspective, consumers must find the price of the brand
appropriate and fair, given the benefits they receive from the product and its relative advantages
over competitive offerings, among other factors. Everyday low pricing is a complementary pric-
ing approach to determine the nature of price discounts and promotions over time that maintains
consistently low, value-based prices on major items on a day-to-day basis.
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196 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
There is always tension between lowering prices on the one hand and increasing consumer
perceptions of product quality on the other. Academic researchers Lehmann and Winer believe that,
though marketers commonly use price reductions to improve perceived value, in reality, discounts
are often a more expensive way to add value than brand-building marketing activities.77 Their
argument is that the lost revenue from a lower margin on each item sold is often much greater than
the additional cost of value-added activities, primarily because many of these costs are fixed and
spread over all the units sold, as opposed to the per unit reductions that result from lower prices.
CHANNEL STRATEGY The manner by which a product is sold or distributed can have a profound impact on the equity and
ultimate sales success of a brand. Marketing channels refer to “sets of interdependent organizations
involved in the process of making a product or service available for use or consumption.”78 Channel
strategy includes the design and management of intermediaries such as wholesalers, distributors,
brokers, and retailers. Let’s look at how channel strategy can contribute to brand equity.79
Channel Design Many possible channel types and arrangements exist, broadly classified into direct and indirect
channels. Direct channels mean selling through personal contacts from the company to prospec-
tive customers by mail, phone, electronic means, in-person visits, and so forth. Indirect channels
sell through third-party intermediaries, such as agents or broker representatives, wholesalers or
distributors, and retailers or dealers.
Increasingly, winning channel strategies will be those that can develop “integrated shopping
experiences” that combine physical stores, Internet, phone, and catalogs. For example, consider
the wide variety of direct and indirect channels by which Nike sells its shoes, apparel, and equip-
ment products.80
• Branded Nike Stores: Nike Stores, located in prime shopping avenues in metropolitan centers
around the globe, offer a complete range of Nike products and serve as showcases for the lat-
est styles. Each store consists of individual shops or pavilions that feature shoes, clothes, and
equipment for a different sport (e.g., tennis, jogging, biking, or water sports) or different lines
within a sport (e.g., three basketball shops and two tennis shops). Each shop develops its own
concepts with lights, music, temperature, and multimedia displays. Nike is also experimenting
with newer, smaller stores that target specific customers and sports (a running-only store in
Palo Alto, California, a soccer-only store in Manchester, England).
Nike uses a variety of marketing channels for different purposes. Its Niketown
stores have been very useful as a brand-building tool.
Source: AP Photo/Marcio Jose Sanchez
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 197
OMNICHANNEL INTEGRATION
Omnichannel is a multichannel sales approach that provides the customer with an integrated experience, across
all channels, whether it be shopping online from a laptop or tablet, by Smartphone, or within a store.84 Each
touchpoint turns into a direct or indirect experience of the customer with the brand. One study suggests that
omnichannel customers (or the customers who used multiple touchpoints) spend 10 percent more than other
customers, implying that companies should pay special attention to omnichannel customers.85
Some examples of how companies are integrating online and offline channels are worth noting.86 Sev-
eral brands and companies are investing in augmented reality (AR) technology to help bridge the online and
offline worlds. For example, Ikea uses an augmented reality app to help buyers visualize how their furniture
would look in their home. The virtual rendition allows Ikea to help customers select the right furniture. A
related approach involves providing consumers with apps that can help illustrate a product or service. Sher-
win-Williams has a Colorsnap visualizer that allows consumers to visualize the right color paint for a room.
Another approach is to permit customers to place orders online for easy pickup at the store. Nearly 8
in 10 large retailers has a retailer app, and retailers such as Kohl’s and Wal-Mart have been providing the
buy-online-pick-up-in-store option as a service. This option can increase retail sales; for example, a UPS study
indicates that among those who use the in-store pickup option, 44 percent end up making a new purchase
when they are picking up their purchase.87
A related approach to integrating the online and offline strategies is to use Bluetooth beacons to send
push notifications when shoppers enter a store or when they are nearby. For example, Macy’s and American
Eagle are using beacons with the Shopkick app to notify shoppers of promotions and offers available when
they enter a store. As another example, Home Depot first rolled out its app in 2014; the app automati-
cally switches to an “in-store” mode when consumers enter, allowing them to pull up features such as the
“product locator” tool. By using location-based technology, the app automatically detects which store users
are in, giving them a map to specific products located near their exact position.88
Some brands are particularly well-known for their ability to integrate online and offline marketing
strategies. One often cited example is Disney. Disney uses the My Disney Experience tool to help customers
plan their entire theme park trip, including the attractions they might want to see and the estimated wait
time. The MagicBand program acts as a hotel room key, photo storage device, and a food ordering tool.
By integrating across all customer touchpoints through the MagicBand and the My Disney Experience tool,
Disney is able to provide seamless integration across all customer experiences. Another example is Starbucks,
• NikeStore.com: Nike’s e-commerce site allows consumers to place Internet orders for a range
of products or to custom-design some products through NIKEiD.81
• Outlet stores: Nike’s outlet stores feature discounted Nike merchandise.
• Retail: Nike products are sold in retail locations such as shoe stores, sporting goods stores,
department stores, and clothing stores.
• Catalog retailers: Nike’s products appear in numerous shoe, sporting goods, and clothing
catalogs.
• Specialty stores: Nike equipment from product lines such as Nike Golf is often sold through
specialty stores such as golf pro shops.
A wealth of research has considered the pros and cons of selling through various channels.
Although the decision ultimately depends on the relative profitability of the different options,
some more specific guidelines have been proposed. For example, one study on industrial products
shows that direct channels may be preferable when product information needs are high, product
customization is high, product quality assurance is important, purchase lot size is of concern, and
logistics are paramount. Conversely, indirect channels may be preferable when a broad assortment
is essential, availability is critical, and after-sales service is of great value. Exceptions to these
generalities exist, especially depending on the market segments.82
From the standpoint of consumer shopping and purchase behaviors, channels can often blend
three key factors: information, entertainment, and experiences.
• Consumers may learn about a brand and what it does and why it is different or special.
• Consumers may also be entertained by the means through which the channel permits shop-
ping and purchases.
• Consumers may be able to participate in and experience channel activities.
Rarely will a manufacturer use only a single type of channel. More likely, the company will
choose a hybrid channel design with multiple channel types.83
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198 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
The goal is to maximize channel coverage and effectiveness while minimizing channel cost
and conflict. Because marketers use both direct and indirect channels, let’s consider the brand
equity implications of the two major channel design types.
Indirect Channels Indirect channels can consist of different types of intermediaries, but we concentrate on retailers.
Retailers tend to have the most visible and direct contact with customers and therefore have the
greatest opportunity to affect brand equity. As we outline in greater detail in Chapter 8, consumers
may have associations with any retailer based on product assortment, pricing and credit policy,
which uses its app and rewards card as a way to integrate across multiple channels. Any changes the cus-
tomer makes in one venue get updated across all channels, in real time, allowing for seamless integration
of the customer experience.
An often-repeated concern with the growing integration of online and offline is that customers are using
their mobile devices in-store to search for better prices elsewhere, a practice called showrooming. Alternatively,
customers seek information online and purchase offline, in a practice called webrooming. One study showed
that shoppers who searched online for information were also the same shoppers who spent 13 percent more
in-store than those who did not engage in online searches.89 Furthermore, with the increasing blurring of
online and offline channels, many brick-and-mortar retailers (e.g., H&M and Macy’s) are investing in beacon
technology. This technology allows for proximity-based marketing, such that customers receive a coupon tai-
lored specifically to them based on their browsing history, purchase behavior, and demographics while in the
store. While customers tend to be receptive to such targeted offers, they are also increasingly concerned about
the use of their personal data for these promotions.90 Brands should be mindful of delivering value to custom-
ers with every single interaction, particularly those touchpoints that bring the customer directly in contact with
the brand at various moments of truth. The Science of Branding 5-2 highlights findings from research on how
marketing in omnichannel environments can impact brand as well as firm outcomes.
An omnichannel differs from its counterpart, the multichannel,
in that it includes more channels and the boundaries between
channels are increasingly blurred.91 Various studies have exam-
ined the implications of this omnichannel environment on retailers
and, consequently, the brand. Researchers examined the impact
of omnichannel retail operations (buying online and picking up
in store) on profitability and argued that implementation of this
practice may not always be profitable across all product categories
because it may be less cost-effective.
It is common for brick-and-mortar stores to add an online chan-
nel or branded app to increase the number of customer touch-
points. Some digital native brands have also embraced offline
channels to build relationships with their customers. Researchers
Bell and colleagues92 studied the phenomenon by examining the
impact of WarbyParker.com (a digital-first company) introducing
showrooms. Their findings suggest that the addition of showrooms
confers branding benefits, which in turn increase credibility, result-
ing in higher profitability for both online and offline channels, by
generating positive spillover. The highest cost-to-serve customers in
online channels were the first to migrate to offline channels, and the
cost of product returns also reduced. Pauwels and Neslin93 exam-
ined the impact of adding brick-and-mortar stores to a retailer’s
already existing catalog and Internet channels and found a 20 per-
cent increase in revenue overall from the addition of physical stores.
Ailawadi and Farris94 provided a framework for manag-
ing distribution and highlighted the importance of distribution
breadth and depth in understanding the role of the supplier (or
brand) on retailers, and vice versa. They also suggested a new
set of metrics for understanding the effectiveness of online chan-
nels, including percentage of a product category’s search volume
(PCSV) and rank of a branded app in an app store, as new metrics
to consider in conjunction with traditional metrics for brick-and-
mortar stores, such as the percentage of ACV (all commodity
volume).
Sources: Fei Gao, and Xuanming Su, “Omnichannel Retail Operations
with Buy-Online-and-Pick-Up-in-Store,” Management Science 63, no.
8 (2016): 2478–2492; David R. Bell, Santiago Gallino, and Antonio
Moreno, “How to Win in an Omnichannel World,” MIT Sloan Manage-
ment Review 56, no. 1 (2014): 45; David R. Bell, Santiago Gallino, and
Antonio Moreno, “Offline Showrooms in Omnichannel Retail: Demand
and Operational Benefits,” Management Science 64, no. 4 (April 2018):
1629–1651; United Parcel Service of America, “UPS Pulse of the
Online Shopper: A Customer Experience Study,” https://pressroom.ups.
com/mobile0c9a66/assets/pdf/pressroom/white%20paper/UPS_2017_
POTOS_media%20executive%20summary_FINAL.pdf, accessed March
11, 2018; Peter C. Verhoef, P. K. Kannan, and J. Jeffrey Inman, “From
Multi-Channel Retailing to Omni-Channel Retailing: Introduction to the
Special Issue on Multi-Channel Retailing,” Journal of Retailing 91, no. 2
(2015): 174–181; Koen Pauwels, and Scott A. Neslin, “Building with
Bricks and Mortar: The Revenue Impact of Opening Physical Stores
in a Multichannel Environment,” Journal of Retailing 91, no. 2 (2015):
182–197.
THE SCIENCE OF BRANDING 5-2
Research on Omnichannel
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 199
and quality of service, among other factors. Through the products and brands they stock and the
means by which they sell, retailers strive to create their own brand equity by establishing aware-
ness and strong, favorable, and unique associations.
At the same time, retailers can have a profound influence on the equity of the brands they sell,
especially regarding the brand-related services they can support or help create. The term “Moments
of Truth,” which was introduced by P&G in 2005, describes what happens before, during, and after
a purchase.95 FMOT, or first moment of truth, reflects the first time a customer views a product
(e.g., on the retail shelf).96 The retail channel has an impact on FMOT, as it impacts how consumers
perceive their interaction with the brand. Sometimes, there are spillover effects from the retailer
to the brand itself, when consumers make assumptions such as “this store only sells good-quality,
high-value merchandise, so this particular product must also be good quality and high value.”
Push and Pull Strategies. In addition to the indirect avenue of image transfer, retailers can
directly affect the equity of the brands they sell. Their methods of stocking, displaying, and sell-
ing products can enhance or detract from brand equity, suggesting that manufacturers must take
an active role in helping retailers add value to their brands. Online retailers—notably Amazon.
com—also exerts a great deal of clout over manufacturers and consumers, by making available
information about product reviews. This creates greater pressure on marketers to ensure that their
product and service quality is consistently high. In recent years, shopper marketing has become
even more important in ensuring that customers obtain value with their purchases.
Though defined differently by various people at its core, shopper marketing emphasizes
collaboration between manufacturers and retailers on in-store marketing, such as brand-building
displays, sampling, promotions, and other in-store activities designed to capitalize on a retailer’s
capabilities. Although digital channels pose tremendous challenges to brick-and-mortar retailers,
many consumers still like to touch and feel products in the store.
Because of greater competition for shelf space among what many retailers find are increas-
ingly undifferentiated brands, retailers have gained power and are now in a better position to set
the terms of trade with manufacturers. Increased power means that retailers can command more
frequent and lucrative trade promotions. Even more dramatic, however, is the shift in power to
consumers. With the proliferation of online retailers, and the low search costs associated with
locating information about prices and availability online, consumers are increasingly shopping
via the Internet. Thus, no retailer is immune to the challenges posed to the traditional brick-and-
mortar retail from digital channels.
One way for manufacturers (and even retailers) to regain some of their lost leverage is to cre-
ate strong brands through some of the brand-building tactics described in this book—for example,
selling innovative and unique products, properly priced and advertised, that consumers demand.
In this way, consumers may ask or even pressure retailers to stock and promote manufacturers’
products.
By devoting marketing efforts to the end consumer, a manufacturer is said to employ a pull
strategy, as consumers use their buying power and influence over retailers to “pull” the product
through the channel. Alternatively, marketers can devote their selling efforts to the channel members
themselves, providing direct incentives for them to stock and sell products to end consumers. This
approach is called a push strategy, because the manufacturer is attempting to reach the consumer by
“pushing” the product through each step of the distribution chain. Although certain brands seem to
emphasize one strategy more than the other (push strategies are usually associated with more selec-
tive distribution and pull strategies with broader, more intensive distribution), the most successful
marketers—brands such as Colgate, Tide, and Folgers—skillfully blend push and pull strategies.
Channel Support. A variety of services provided by channel members can enhance the value to
consumers of purchasing and consuming a brand name product (see Figure 5-4). Although firms
are increasingly providing some of the services themselves through toll-free numbers and Web
sites, establishing a “marketing partnership” with retailers may, nevertheless, be critical to ensur-
ing proper channel support and the execution of these various services. It is important for firms
to keep up with new retailer capabilities to ensure they garner as much support as possible. For
example, one new retail trend is the growth of augmented reality and virtual reality as a feature
of retail showrooms. The Bay Area Neiman Marcus features touchscreen mirrors that provide
a 360-degree view of an outfit that a customer may be interested in. In another twist, Rebecca
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200 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Minkoff’s dressing rooms in New York’s SoHo outlet are “smart” dressing rooms that allow cus-
tomers to use a digital wall to place orders for drinks or request help from an employee.97
Manufacturers can take steps to keep retail partners happy and prevent breaks in the supply
chain. Resellers often invest significant amounts of money in maintaining their facilities and
paying sales staff. To compensate them, manufacturers can offer dealers exclusive access to new
products, or branded variants, as described later. Experts also advise that manufacturers stick to
fixed prices when they offer products directly to consumers. If they do offer large discounts, they
should offer them at outlet malls, where they will not confuse customers.
Manufacturers also can support their distributors by educating them about their products so
the retail partners can shape an effective sales force. The Branding Brief 5-2 describes how Milk-
Bone dog chew from Big Heart Pet Brands used shopper marketing to build brand awareness.
According to research conducted by Big Heart Pet Brands’
research team, although most pet owners ought to know how
to brush their dog’s teeth, few actually knew how to do it, and
those who did know how to do it thought it was an unpleasant
task. The company wanted to introduce a new dental treat called
Milk-Bone Brushing Chews. The marketing challenge was to get
people to fall in love with a task they did not know about or did
not like doing.
Big Heart Pet Brands had ambitious targets for the launch
of Milk-Bone Brushing Chews—it wanted to grow the dental
category by more than 10 percent and to increase trial for the
new product at major retailers. The key target audience was pet
owners who felt responsible for their dog’s health and would use
the treat to reinforce a bond. A key shopper marketing challenge
was that at mass merchants and grocers, the focus was more on
food, whereas at a specialty store such as PetSmart, there were
too many different product choices.
The company used a well-defined shopper marketing strat-
egy to strengthen awareness. In addition to creating awareness
through free-standing inserts, veterinary outreach, and displays
inside clinics, the company created signage and an endcap in retail
stores such as Target to support the effort. They also employed
retailer-specific programs. To build buzz, the company allowed
pre-shopping on Walmart.com. At Target, the Cartwheel app
BRANDING BRIEF 5-2
Chew on This: How Milk-Bone Brushing Chews Connected with Customers
Milk-Bone used a shopper marketing strategy to create awareness for a new type of product—a dental treat that also helps
brush your dog’s teeth.
Source: Keith Homan/Alamy Stock Photo
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 201
Ultimately, companies must share the power to make decisions with their retail distributors
and also recognize that these dealers’ success benefits them as well. In many markets, dealers have
captured a greater percentage of retail sales, so manufacturers must keep them happy and profit-
able if they want the benefits of a smooth supply chain relationship. Two important components
of partnership strategies are retail segmentation activities and cooperative advertising programs.
Retail Segmentation. Retailers are “customers” too. Because of their different marketing
capabilities and needs, retailers may need to be divided into segments or even treated individu-
ally so that they will provide the necessary brand support.98 Consider how the following pack-
aged goods companies have customized their marketing efforts to particular retailers. Frito-Lay
developed a tailored supply chain system for its corn chip and potato chip markets, making fast
and broad distribution possible, reducing stock-outs, and creating better-turning store displays
for its various retail customers. SC Johnson has leveraged customized market research insights to
develop unique category management solutions to its strategic retail customers.
Retailers may require different product mixes, special delivery systems, customized promotions,
or even their own branded version of the products. With its growth and dominance as an online
retailer, Amazon.com has many guidelines for customizing marketing efforts. With its crowded
marketplace, Amazon strives to provide accurate product information so that customers who look
for specific features can find the product. Amazon also has a “Buy Box” feature, which is a white
box on the side of its product detail page where customers can add items to their shopping carts.
This highly competitive feature is typically only available to the most competitively priced products
in a category, and it exerts a great deal of impact on customers’ buying decisions. Amazon has an
algorithm that decides which brands to feature in the Buy Box to maximize customer value.99
Branded variants are branded items in a diverse set of durable and semidurable goods catego-
ries that are not directly comparable to other items carrying the same brand name.100 Manufacturers
create branded variants in many ways, including making changes in color, design, flavor, options,
style, stain, motif, features, and layout. For example, portable
stereo “boom boxes” from brands such as Sony, Panasonic, and
Toshiba came in a broad assortment, varying in speaker size,
total weight, number of audio controls, recording features, and
SKU number.
Branded variants are a means to reduce retail price
competition because they make direct price comparisons by
consumers difficult. Thus, different retailers may be given
varying items or models of the same brand to sell. Shugan
and his colleagues show that, as the manufacturer of a prod-
uct offers more branded variants, a greater number of retail
stores carry the product, and these stores offer higher levels
of retail service for these products.101
Cooperative Advertising. One relatively neglected
means of increasing channel support is well-designed coop-
erative advertising programs. Traditionally, with co-op adver-
tising, a manufacturer pays for a portion of the advertising
that a retailer runs to promote the manufacturer’s product.
(which gives 5 to 50 percent off certain items when shopping in
store at Target) and Target’s pet prescription service were brought
into the effort. For PetSmart, the company held a Dental Day
event to educate employees so that they could serve as brand
ambassadors.
The campaign was a success, and the company met its sales
goal for the launch, with the category growing at 10 percent,
per its goal. The marketing campaign was based on the idea
that Milk-Bone Brushing Chews is the only dental treat that dogs
would love. Shoppers (and their dogs) loved the idea, and trial
and repeat for the new product met and exceeded the target. The
shopper marketing campaign won an Effie award for its effective-
ness in 2015.
Source: Shoppermarketingmag.com, “Effie Case Study: Milk-Bone Brush-
ing Chews Shopper Marketing Launch Campaign,” May 18, 2015, https://
shoppermarketingmag.com/effie-case-study-milk-bone-brushing-chews-
shopper-marketing-launch-campaign, accessed March 15, 2018; Kristina
Manllos, “Milk-Bone Gets into the Teeth Brushing Business,” April 18,
2014, www.adweek.com/brand-marketing/milk-bone-gets-teeth-brushing-
business-157067/, accessed March 15, 2018; Effie Worldwide, Inc., “Milk-
Bone Brushing Chews,” November 12, 2015, accessed March 15, 2018.
Amazon has a “Buy Box” feature on the side of its product
detail page highlighting the most competitively priced products
in a category; and this has a great deal of impact on consumers’
buying decisions.
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202 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
To be eligible to receive co-op funds, the retailer usually must follow the manufacturer’s stipulations
about the nature of brand exposure in the ad. Manufacturers generally share the cost of the advertis-
ing on a percentage basis up to a certain limit, though it is usually 50–50. The total amount of coop-
erative advertising funds the manufacturer provides to the retailer is usually based on a percentage
of dollar purchases made by the retailer from the manufacturer.102 The rationale behind cooperative
advertising for manufacturers is that it concentrates some of the communication efforts at the local
level where they may have more relevance and selling impact with consumers.
Summary. In eliciting channel support, manufacturers must be creative in the way they develop
marketing and merchandising programs aimed at channel members. They should consider how
channel activity can encourage trial purchase and communicate or demonstrate product informa-
tion, to build brand awareness and image and to elicit positive brand responses.
Direct Channels For some of the reasons we have already noted, manufacturers may choose to sell directly to
consumers. Let’s examine some of the brand equity issues of selling through direct channels.
Company-Owned Stores. To gain control over the selling process and build stronger rela-
tionships with customers, some manufacturers are introducing their own retail outlets, as well
as selling their products directly to customers through various means. These channels can take
many forms, the most complex of which, from a manufacturer’s perspective, is company-owned
stores. Hallmark, Goodyear, and others have sold their own products in their own stores for
years. They have eventually been joined by several other firms, including some of the largest
marketers around.
Brands of all kinds have created their own stores, such as Bang & Olufsen audio equipment,
OshKosh B’gosh children’s wear, and Dr. Martens boots and shoes, but not all company stores
are large structures with an extensive inventory. One recent trend is the launching of pop-up
stores—temporary stores that blend retail and event marketing.103 Pop-up shops are likely to be a
significant source of commerce and can range upwards of $8 billion in value.104 For example, in
2010, the online eyewear retailer Warby Parker opened a pop-up store that involved a big yellow
bus traveling across America and stopping in select cities to set up shop. This retail adventure was
called Class Trip. In another effort, the company created kiosks in hotels called the Readery, in
which it paired its 1960s eyewear with vintage accessories.105 Other digital native brands are also
increasingly embracing brick-and-mortar outlets to build high-touch relationships with customers.
For example, Greats, a digital native luxury sneaker company, opened retail outlets in Los Angeles
and New York, and this trend is seen in store openings of various digital native brands including
Everlane, Glossier, Bonobos, and Casper.106
Temporary pop-up stores
have given marketers a
creative way to generate
consumer interest and
involvement.
Source: Andrew H. Walker/ Getty Images for Target
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 203
Company stores provide many benefits.107 Primarily, they are a means to showcase the brand
and all its different product varieties in a manner not easily achieved through normal retail chan-
nels. For example, Nike might find its products spread all across department stores and athletic
specialty stores. These products may not be displayed in a logical, coordinated fashion, and certain
product lines may not even be stocked. By opening its own stores, Nike was able to effectively put
its best foot forward by showing the depth, breadth, and variety of its branded products. Company
stores can provide the added benefit of functioning as a test market to gauge consumer response
to alternative product designs, presentations, and prices, allowing retailers to keep their fingers
on the pulse of consumers’ shopping habits.
A disadvantage of company stores is that some companies lack the skills, resources, or
contacts to operate effectively as a retailer. For example, Disney Store, started in 1987, sells
exclusive Disney-branded merchandise, ranging from toys and videos to collectibles and cloth-
ing, priced from $3 to $3,000. Disney views the stores as an extension of the “Disney experi-
ence,” referring to customers as “guests” and employees as “cast members,” just as it does in
its theme parks. The growth of online shopping has posed challenges for Disney stores as well,
and the company has begun experimenting with redesigning its stores to seem more like its
theme park, through the addition of video screens that help showcase Disney movies, Disney
parades, and so on.108
Another issue with company stores is the potential conflict between existing retail channels
and distributors. In many cases, however, company stores can be a means of bolstering brand
image and building brand equity rather than as direct sales devices. For example, Nike views its
stores as essentially advertisements and tourist attractions. The company reports that research
studies have confirmed that Nike stores enhanced the Nike brand image by presenting the full
scope of its sports and fitness lines to customers and “educating them” on the value, quality, and
benefits of Nike products. The research also revealed that though only about 25 percent of visitors
actually made a purchase at a Niketown store, 40 percent of those who did not buy during their
visit eventually purchased Nike products from some other retailer.
These manufacturer-owned stores can also be considered a means of hedging bets with retailers
that continue to push their own labels. With one of its main distributors, JCPenney, pushing its own
Arizona brand of jeans, Levi’s can protect its brand franchise to some extent by establishing its own
distribution channel. Nevertheless, many retailers and manufacturers are dancing around the turf
issue, avoiding head-on clashes in establishing competitive distribution channels. Manufacturers, in
particular, have been careful to stress that their stores are not a competitive threat to their retailers
but rather a “showcase” that can help sell merchandise for any retailer carrying their brand.
Store-within-a-Store. In addition to creating their own stores, some marketers—such as Nike,
Polo, and Levi Strauss (with Dockers)—are attempting to create their own shops within major
department stores. More common in other parts of the world such as Asia, these approaches can
offer the dual benefits of appeasing retailers—and perhaps even allowing them to benefit from the
retailer’s brand image—while allowing the firm to retain control over the design and implementa-
tion of the product presentation at the point of purchase.109
The store-within-a-store concept can take hold through actual leasing arrangements or
less formal arrangements in which branded mini-stores are used. For retailers, these arrange-
ments help drive foot traffic and acquire new capabilities quickly. For smaller brands, such as
Murray’s Cheese Shop, which has an arrangement with the Kroger Co., they allow for quick
distribution growth.
Retailers are also combining with other retailers to gain similar benefits.110 Sears part-
nered with the much trendier retailer Forever 21 to upgrade its image and also established
in-store leases with Edwin Watts Golf Shops, uniform apparel seller Work ‘N Gear, and Whole
Foods organic foods grocer. Macy’s has partnered with Sunglass Hut, maternity apparel brand
Destination Modernity, and the U.K. toiletries brand Lush. Recently, Best Buy expanded its
store-within-a-store program to increase retail space for brands such as Sony, Samsung, and
Microsoft.111
Other Means. Finally, another channel option is to sell directly to consumers by phone, mail,
or electronic means. Retailers have sold their goods through catalogs for years. Many mass mar-
keters, especially those that also sell through their own retail stores, are increasingly using direct
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204 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
selling, a successful long-term strategy for brands such as Mary Kay and Avon. These vehicles not
only help sell products but also contribute to brand equity by increasing consumer awareness of
the range of products associated with a brand and increasing consumer understanding of the key
benefits of those products. Marketers can execute direct marketing efforts in many ways, such as
through catalogs, videos, physical sites, or the Internet, all of which are opportunities to engage
in a dialogue and establish a relationship with consumers.
Online Strategies The advantages of having both a physical brick-and-mortar channel and a virtual online retail
channel are becoming clearer to many firms. Integrated channels allow consumers to shop when
and how they want. Many consumers value the convenience of ordering from companies online
or over the phone and picking up the physical product at their local store rather than having it
shipped. They also want to be able to return merchandise at a store even if they originally bought
it and had it shipped outside the store.112
Many consumers also like the convenience of being able to access their online accounts
inside the store and use Internet kiosks to research purchase decisions in the store itself.113 The
influence of the Internet extends outside the store as well. A Forrester research report estimated
that 16 percent of all store sales were influenced by consumers initially searching on the web
outside the store.114
Integrating channels benefits manufacturers, retailers, and consumers. Figure 5-5 shows
an analysis of JCPenney’s channel mix, which reveals that its most profitable customers were
those who shopped multiple channels. Similarly, a Deloitte study reported that multichannel
shoppers spent 82 percent more in each transaction than those who shopped only in one store.115
The Boston Consulting Group concluded that multichannel retailers were able to acquire
customers at half the cost of Internet-only retailers, citing several advantages for the multichan-
nel retailers:116
• They have market clout with suppliers.
• They have established distribution and fulfillment systems (e.g., L.L.Bean and Land’s End).
• They can cross-sell between Web sites and stores (e.g., Gap and Barnes & Noble).
Multichannel product manufacturers can realize many of these same advantages. Recognizing
the power of integrated channels, many Internet-based companies are also engaging in “physical
world” activities to boost their brand. For example, Yahoo! opened a promotional store in New
York’s Rockefeller Center, and eTrade.com opened a flagship own-brand financial center on New
York’s Madison Avenue as well as mini-centers and kiosks in Target stores.
Summary Channels are the means by which companies distribute their products to consumers. Channel
strategy to build brand equity includes designing and managing direct and indirect channels to
build brand awareness and improve the brand image. Direct channels can enhance brand equity by
allowing consumers to better understand the depth, breadth, and variety of the products associated
with the brand, as well as any distinguishing characteristics. Indirect channels can influence brand
equity through the actions and support of intermediaries such as retailers, as well as the transfer
of any associations these intermediaries might have with the brand.
FIGURE 5-5
JCPenney Customer
Channel Value Analysis
Source: Customer Values Analysis, Doublecheck (2004). Courtesy of Abacus Direct, LLC.
157 195 201
446 485
608
887
A ve
ra g
e Ye
ar ly
D o
ll ar
s Sp
en t
b y
C u st
o m
er
Internet Retail Catalog Internet+ Catalog
Internet+ Retail
Catalog+ Retail
Catalog+ Retail+ Internet
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 205
REVIEW
Marketing activities and programs are the primary means through which companies build brand
equity. The brand-building of product, pricing, channel, and communication strategies must be
put into place. In terms of product strategies, both tangible and intangible aspects of the brand
will matter. Successful brands often create strong, favorable, and unique brand associations, with
both functional and symbolic benefits. Although perceived quality is often at the heart of brand
equity, consumers may have a wide range of associations with the brand.
Marketers are personalizing their consumer interactions through experiential and relationship
marketing. Experiential marketing promotes a product by not only communicating a product’s
features and benefits but also connecting it with unique and interesting consumer experiences.
Relationship marketing includes marketing activities that deepen and broaden the way consumers
think about and act toward the brand. Mass customization, one-to-one marketing, and permission
marketing are all means of getting consumers more actively engaged with the product or service.
Aftermarketing and loyalty programs are also ways to help create holistic, personalized buying
experiences.
For pricing strategies, marketers should fully understand consumer perceptions of value.
Increasingly, firms are adopting value-based pricing strategies to set prices and everyday-low-
pricing strategies to guide their discount pricing policy over time. Value-based pricing strate-
gies attempt to properly balance product design and delivery, product costs, and product prices.
Everyday-low-pricing strategies establish a stable set of “everyday” prices and introduce price
discounts very selectively.
Regarding channel strategies, marketers need to match brand and store images appropri-
ately to maximize the leverage of secondary associations, integrate push strategies and shopper
marketing activities for retailers with pull strategies, and consider a range of direct and indirect
distribution options. In the next chapter, we consider how to develop integrated marketing com-
munication programs to build brand equity.
DISCUSSION QUESTIONS
1. Have you ever voiced a complaint about a broken product or bad service to a manufacturer
or service provider? How was your complaint handled? What did you like or not like about
their response?
2. Are you part of a loyalty program, such as at a supermarket chain or a coffeehouse? If you are,
why did you opt for it? Are there other loyalty programs that you were offered but declined
to be a part of? What were the reasons for your decision?
3. Choose a product category. Profile all the brands in the category in terms of pricing strategies
and perceived value. If possible, review the brands’ pricing histories. Have these brands set
and adjusted prices properly? What would you do differently?
4. Visit a department store and evaluate the in-store marketing effort. Which categories or
brands seem to be receiving the biggest in-store push? What unique in-store merchandising
efforts do you see?
5. Take a trip to a supermarket and observe the extent of private-label brands. In which catego-
ries do you believe private labels might be successful? Why?
Direct and indirect channels offer varying advantages and disadvantages that marketers must
thoughtfully combine, both to sell products in the short run and to maintain and enhance brand
equity in the long run. As is often the case with branding, the key is to mix and match channel
options so that they collectively realize these goals. Thus, it is important to assess each possible
channel option regarding its direct effect on product sales and brand equity, as well as its indirect
effect through interactions with other channel options.
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206 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
This appendix considers the issue of private labels or store
brands. After portraying private-label branding strategies, it
describes how major manufacturers’ brands have responded to
their threat.
PRIVATE LABELS
Although different terms and definitions are possible, private
labels can be defined as products marketed by retailers and other
members of the distribution chain. Private labels can be called
store brands when they actually adopt the name of the store
itself in some way (such as Safeway Select). Private labels should
not be confused with generics, whose simple black-and-white
packaging typically provides no information about who made the
product.
Private-label brands typically cost less to make and sell than
the national or manufacturer brands with which they compete.
Thus, the appeal to consumers of buying private labels and store
brands often are the cost savings involved; the appeal to retail-
ers of selling private labels and store brands is that their gross
margin is often 25 percent to 30 percent—nearly twice that of
national brands.
The history of private labels is one of many ups and downs.
The first private-label grocery products in the United States were
sold by the Great Atlantic and Pacific Tea Company (later known
as A&P), which was founded in 1863. During the first half of the
twentieth century, several store brands were successfully intro-
duced. Under competitive pressure from the sophisticated mass-
marketing practices adopted by large packaged-goods companies
in the 1950s, private labels fell out of favor with consumers.
Because the appeal of private labels to consumers has tradi-
tionally been their lower cost, the sales of private labels generally
have been highly correlated with personal disposable income. The
recession of the 1970s saw the successful introduction of low-
cost, basic-quality, and minimally packaged generic products that
appealed to bargain-seeking consumers. During the subsequent
economic upswing, though, the lack of perceived quality eventu-
ally hampered sales of generics, and many consumers returned
to national or manufacturers’ brands.
To better compete in today’s marketplace, private-label mak-
ers have begun improving quality and expanding the variety of
their private-label offerings to include premium products. In rec-
ognition of the power of bold graphics, supermarket retailers have
been careful to design attractive, upscale packages for their own
premium branded products. Because of these and other actions,
private-label sales have recently made some major inroads in new
markets. Retailers value private labels for their profit margins and
their means of differentiation to drive customer loyalty. Retailer
Target has introduced a steady stream of exclusives through the
years, such as its stylish Mossimo apparel and Michael Graves
houseware brands.117
Private-Label Status
The major recession that began in 2008 heightened interest
once again in private labels. Given retailers’ success in improv-
ing private-label quality and developing cohesive branding and
marketing programs, many critics wondered whether this time,
things would be different, and sales would not drop after the end
of the recession.118
In the United States, private-label goods have accounted for
roughly 16 to 17 percent of total supermarket dollar volume.
In other countries, these percentages are often quite higher, on
average twice as much. For example, Western Europe dominates
the market for private labels in the supermarket, with the biggest
being Switzerland at 45 percent, Germany at 30 percent, Spain
at 26 percent, and Belgium at 25 percent.119
Private labels in the United Kingdom make up over a third
of sales at grocery stores, in part because the grocery industry
is more concentrated. Two of the largest UK grocery chains are
Tesco and Sainsbury.120
• Tesco, with the brand slogan “Every Little Helps,” has a num-
ber of its own private-label brands, ranging from Value to
Finest, and has its own lifestyle brands, such as Organic, Free
Form, and Healthy Living, positioned as “Making Life Taste
Better.”
• Sainsbury’s originally used its name to introduce a wide variety
of fruit, vegetables, grocery, and household products, later
expanding to clothing, housewares, and other nonsupermar-
ket products. Sainsbury’s own brand products are categorized
into one of three quality tiers; for example, the lasagna range
is comprised of the Basics sub-brand for “good,” the core,
Sainsbury’s label line for “better,” and the premium “Taste
the Difference” line for “best.” Sainsbury’s began a major
overhaul of these various brand lines in 2010.
The private-label appeal is widespread. In supermarkets,
private-label sales have always been strong in product categories
such as dairy goods, vegetables, and beverages. More recently,
private labels have been successful in previously “untouchable”
categories such as cigarettes, disposable diapers, and cold rem-
edies. Consumer Reports conducted a study on private labels
published in September 2010. Key findings included the facts
that 84 percent of U.S. consumers have purchased a store brand,
and 93 percent of store-brand shoppers indicated that they
would continue to purchase private labels even as the economy
recovered.121
Nevertheless, some categories have not seen a strong private-
label presence. Many shoppers, for example, still seem unwilling
to trust their hair, complexion, or dental care to store brands.
Private labels also have been relatively unsuccessful in categories
such as candy, cereal, pet foods, baby food, and beer.
One implication that can be drawn from this pattern of prod-
uct purchases is that consumers are more selective in what they
buy, no longer choosing to purchase only national brands. For less
important products in particular, consumers seem to feel “that
the very best is unnecessary, and good is good enough.” Catego-
ries that are particularly vulnerable to private-label advances are
those in which there are little perceived quality difference among
brands in the eyes of a sizable group of consumers, for example,
over-the-counter pain relievers, bottled water, plastic bags, paper
towels, and dairy products.
Private-Label Strategies and Responses
BRAND FOCUS 5.0
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 207
Private-Label Branding Strategy
Although the growth of private labels has been interpreted by
some as a sign of the decline of brands, the opposite conclusion
may, in fact, be more valid: private-label growth could be seen
in some ways as a consequence of cleverly designed branding
strategies. In terms of building brand equity, the key point-of-
difference for private labels in consumers’ eyes has always been
“good value,” a desirable and transferable association across
many product categories. As a result, private labels can be
extremely broad, and their name can be applied across many
diverse products.
As with national brands, implementing a value-pricing strat-
egy for private labels requires determining the right price and
product offering. For example, one reported rule of thumb is that
the typical “no-name” product has to sell for at least 15 percent
less than a national brand, on average, to be successful. The chal-
lenge for private labels has been to determine the appropriate
product offering.
Specifically, to achieve the necessary points-of-parity, or even
to create their own points-of-difference, private labels have been
improving quality, and, as a result, are now aggressively position-
ing against even national brands. In its September 2010 study,
Consumer Reports conducted taste tests in 21 categories com-
paring the two and found that national brands won seven times,
private labels won three times, with the rest resulting in a tie.
Consumer Reports concluded that consumers could cut their costs
by as much as half by switching to a store brand.122
Many supermarket chains have introduced their own pre-
mium store brands, such as Safeway Select, Vons’s Royal Request,
and Ralph’s Private Selection. For example, A&P positioned its
premium Master Choice brand to fill the void between the mass-
market national brands and the upscale specialty brands it sells.
It has used the brand across a wide range of products, such as
teas, pasta, sauces, and salad dressings. Trader Joe’s offers 2,000
private-label products—only 10 percent of what would be found
in a typical supermarket—but creates a fun, roomy atmosphere
for bargain seekers wanting the best in gourmet-style foods,
health food supplements, and wines.123
Sellers of private labels are also adopting more extensive
marketing communication programs to spread the word about
their brands. For example, Walgreens launched its first national
advertising campaign for Walgreens-branded health and well-
ness products in February 2011. The campaign emphasized the
durability and quality of the Walgreens-brand products, using the
store’s 26,000 pharmacists as endorsers.124 Loblaws has been a
pioneer in marketing its private-label brands.
Loblaws
Loblaws is Canada’s largest food distributor. In 1978, Loblaws was
the first store in Canada to introduce generics, reflecting a care-
fully crafted strategy to build an image of quality and high value
in six areas. By 1983, Loblaws carried more than 500 generic
products that accounted for 10 percent of store sales. This success
was due to innovative marketing, low costs, and a large network
of suppliers. In 1984, Loblaws chose to introduce a private-label
brand, President’s Choice, which was designed to offer unique
value through exceptional quality and moderate prices. These
categories ranged from basic supermarket categories such as
chocolate chip cookies, colas, and cereals to more exotic catego-
ries such as Devonshire custard from England and gourmet Rus-
sian mustard. These products also used distinctive and attractive
packaging with modern lettering and colorful labels and names
(“decadent” cookies, “ultimate” frozen pizza, and “too good
to be true” peanut butter). In terms of marketing communica-
tions, Loblaws put into place a strong promotional program with
much in-store merchandising. Loblaws also introduced its Insider’s
Report, a quarterly publication featuring its own store brands and
offering consumers shopping tips.125
Major Brand Response to Private Labels
Procter & Gamble’s value-pricing program was one strategy to
combat competitive inroads from private labels and other brands.
To compete with private labels, a number of different other tactics
also have been adopted by marketers of major national or manu-
facturer brands (see Figure 5-6).
First, marketers of major brands have attempted to decrease
costs and reduce prices to negate the primary point-of-difference
of private labels and achieve a critical point-of-parity. In many cat-
egories, prices of major brands had crept up to a point at which
price premiums over private labels were 30 to 50 percent or even
100 percent. In those categories in which consumers make fre-
quent purchases, the cost savings of “trading down” to a private
label brand were, therefore, quite substantial.
In instances in which major brands and private labels are
on an equal footing with regard to price, major brands often
compete well because of other favorable brand perceptions that
FIGURE 5-6
Major Brand Response
to Private Labels
Decrease costs.
Cut prices.
Increase R&D expenditures to improve products and identify new product innovations.
Increase advertising and promotion budgets.
Eliminate stagnant brands and extensions and concentrate efforts on a smaller number of brands.
Introduce discount “fighter” brands.
Supply private-label makers.
Track store brands’ growth and compete market-by-market.
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208 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
consumers might have. Procter & Gamble, Colgate, and Unilever
cut prices on a number of old standbys during the recent reces-
sion to help fend off private-label competition.
One problem faced by marketers of major brands is that
it can be difficult to lower prices even if they so desire. Super-
markets may not pass along the wholesale price cuts they are
given. Moreover, marketers of major brands may not want to
alienate retailers by attacking their store brands too forcefully,
especially in zero-sum categories in which their brands could be
easily replaced.
Besides these various pricing moves to achieve points-of-par-
ity, marketers of major brands have used other tactics to achieve
additional points-of-difference to combat the threat of private
labels. They have increased R&D expenditures to improve prod-
ucts and identify new product innovations, as was the case with
Kimberly-Clark and its Kleenex brand.126
Kleenex
Kleenex has dominated the facial tissue category for years, cur-
rently holding 46 percent market share. In recent years, with the
economic downturn, more consumers are switching to less-expen-
sive store brands as private labels in the category have increased
quality to provide a more viable alternative. Kimberly-Clark—
maker of Kleenex—chose to respond through product innovation.
The average home purchases facial tissues about eight times a
year and contains four boxes at any point in time. Increasingly,
those boxes are not placed inside a decorative cover. Much of
that is due to Kimberly-Clark’s innovative efforts to improve the
design aesthetics of the Kleenex box. Oval-shaped packages and
embossed wallpaper-like patterns have been introduced as well
as seasonal offerings. An oval package with a pattern of Christ-
mas lights was introduced that actually flickered when a tissue
was taken out. To boost summer sales—when revenue typically
drops by as much as 60 percent from the winter months—new
packages were launched that resembled wedges of fruit such as
watermelon, orange, and lime. Through all these packaging inno-
vations, Kimberly-Clark hopes to keep Kleenex differentiated as
the market leader.
Marketers of major brands have also increased advertising and
promotion budgets. They have also tracked store-brand growth
more closely than in the past and are competing on a market-by-
market basis. Marketers of major brands have also adjusted their
brand portfolios. They have eliminated stagnant brands and exten-
sions and concentrated their efforts on smaller numbers of brands.
They have introduced discount “fighter” brands that are specially
designed and promoted to compete with private labels.
Marketers of major brands have also been more aggressive
about legally protecting their brands. For example, Unilever filed
suit against global supermarket giant Ahold alleging trademark
and trade dress (the design and visual appearance of the product
and package) infringement across four of its European margarine
brands. Unilever also filed suit against Lipton iced tea and Bertolli
olive oil, maintaining that their packaging looked too similar to
its own brands.127
One controversial move by some marketers of major brands
is actually to supply private-label makers. For example, Sara Lee,
Del Monte, and Birds Eye have all supplied products—sometimes
lower in quality—to be used for private labels in the past. Other
marketers, however, criticize this “if you can’t beat ’em, join ’em”
strategy, maintaining that these actions, if revealed, may create
confusion or even reinforce a perception by consumers that all
brands in a category are essentially the same.
Future Developments
Many marketers feel that the brands most endangered by the
rise of private labels are second-tier brands that have not been as
successful at establishing a clear identity as market leaders have.
For example, in the laundry detergent category, the success of a
private-label brand such as Walmart’s Ultra Clean is more likely to
come at the expense of brands such as Oxydol, All, or Fab rather
than market leader Tide. Highly priced, poorly differentiated, and
undersupported brands are especially vulnerable to private-label
competition.
At the same time, if nothing else, retailers will need the qual-
ity and image that goes along with well-researched, efficiently
manufactured, and professionally marketed major brands,
because of consumer demand. The rise of private label brands
by e-commerce companies support this idea. Recent develop-
ments in private labels includes the creation of an e-commerce
brand called Uniquely J, which is a private brand owned by Jet
.com (which, in turn, is owned by Wal-Mart Stores). Another
e-commerce giant, Amazon.com, has entered the fray with
many private-label brands.128 Its brand Happy Belly has grown
significantly primarily due to its ability to promote its products
through its deals platform and Amazon’s existing loyal customer
base. Following its acquisition of Whole Foods Market, Amazon
began selling 365 on the Amazon.com Web site, which allowed
it to expand its appeal. Amazon launched its private-label brand
Wickedly Prime, and the boxes feature the Amazon “smile” in
the brand’s logo, and the product packaging says that it is “Dis-
tributed by Amazon Fulfillment Services.”129 The Wickedly Prime
brand is available to Amazon Prime members, and it targets mil-
lennials and foodies with a range of products such as popcorn,
tortilla chips, and so on.130 Amazon has made significant inroads
in terms of market share across a variety of categories including
speakers (such as Amazon Echo), baby wipes (such as Amazon
Elements), and batteries (such as AmazonBasics).131 Thanks to
its acquisitions of brands across various categories, Amazon now
has more than 70 private-label launches or acquisitions of thriv-
ing private-label brands, Amazon’s business is expected to gener-
ate added revenues of $25 billion by 2022.132 While traditional
private-label brands aimed to be cheap, utilitarian alternatives to
national brands, recent private-label brands have developed their
own identities. For example, Amazon’s Wickedly Prime popcorn
touts that it is expertly crafted in Chicago. These, along with the
strides made by private label brands in bolstering quality, sug-
gest that the lines between private label and national brands are
increasingly blurring.
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 209
NOTES
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210 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 211
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89. Emma Sopadjieva, U. Dholakia, and Beth Benjamin, “A Study of 46,000 Shoppers Shows That Omnichannel Retailing Works,” Harvard Business Review 3 (2017), https://hbr.org/2017/01/a-study-of-46000-shoppers- shows-that-omnichannel-retailing-works.
90. T. L. Stanley, “5 Trends That Are Radically Reshaping Shopper Marketing,” Adweek, June 19, 2016, www.adweek .com/brand-marketing/5-trends-are-radically-reshaping- shopper-marketing-171960/, accessed March 18, 2018.
91. Peter C. Verhoef, P. K. Kannan, and J. Jeffrey Inman, “From Multi-Channel Retailing to Omni-Channel Retail- ing Introduction to the Special Issue on Multi-Channel Retailing,” Journal of Retailing 91, no. 2 (2015), 174–181.
92. David R. Bell, Santiago Gallino, and Antonio Moreno, “Offline Showrooms in Omnichannel Retail: Demand and Operational Benefits,” Management Science 64, no. 4 (2017), 1629–1651.
93. Koen Pauwels and Scott A. Neslin, “Building with Bricks and Mortar: The Revenue Impact of Opening Physical Stores in a Multichannel Environment,” Jour- nal of Retailing 91, no. 2 (2015): 182–197.
94. Kusum L. Ailawadi and Paul W. Farris, “Managing Multi- and Omnichannel Distribution: Metrics and Research Directions,” Journal of Retailing 93, no. 1 (2017): 120–135.
95. Think with Google, “Zero Moment of Truth (ZMOT),” accessed March 18, 2018, www.thinkwithgoogle.com/ marketing-resources/micro-moments/zero-moment-truth/.
96. Ship Hyken, “The New Moment of Truth In Busi- ness,” Forbes, April 19, 2016, www.forbes.com/sites/ shephyken/2016/04/09/new-moment-of-truth-in- business/#400c203238d9, accessed October 30, 2018.
97. Edgar Elvarez, “How Rebecca Minkoff Uses Tech to Make Her Fashion Stores Stand Out,” Engadget, December 25, 2016, www.engadget.com/2016/12/25/ rebecca-minkoff-tech-stores/, accessed October 30, 2018.
98. For a discussion of CRM issues with multichannel retailers, see Jacquelyn S. Thomas and Ursula Y. Sulli- van, “Managing Marketing Communications,” Journal of Marketing 69, no. 4 (October 2005): 239–251.
99. Eyal Lanxner, “The Amazon Buy Box: How It Works for Sellers, and Why It’s So Important,” Big Commerce, www .bigcommerce.com/blog/win-amazon-buy-box/#what-is- the-amazon-buy-box, accessed October 25, 2018.
100. Steven M. Shugan, “Branded Variants,” Research in Marketing, AMA Educators’ Proceedings, Series no. 55 (Chicago: American Marketing Association, 1989), 33–38. Shugan cites alarm clocks, answering machines, appliances, baby items, binoculars, dishwashers, lug- gage, mattresses, microwaves, sports equipment, ste- reos, televisions, tools, and watches as examples.
101. Mark Bergen, Shantanu Dutta, and Steven M. Shugan, “Branded Variants: A Retail Perspective,” Journal of Marketing Research 33 (February 1995): 9–21. Chen, Yuxin, and Tony Haitao Cui, “The Benefit of Uniform Price for Branded Variants,” working paper, Kellogg School of Management, Northwestern University, 2011.
102. George E. Belch and Michael A. Belch, Introduction to Advertising and Promotion (Chicago: Irwin, 1995).
103. Matthew Townsend, “The Staying Power of Pop-Up Stores,” Bloomberg BusinessWeek, November 11, 2010, thinkwithgoogle.com/marketing-resources/micro- moments/zero-moment-truth/, accessed October 30, 2018; Keith Mulvihill, “Pop-Up Stores Become Pop- ular for New York Landlords,” The New York Times, June 22, 2010, accessed October 30, 2018.
104. Humayun Khan, “Pop-Ups & the Future of Retail,” accessed March 18, 2018, www.shopify.com/guides/ ultimate-guide-to-pop-up-shops/the-future-of-retail.
105. Ibid.
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CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EqUITY 213
106. Ann-Marie Alcántara, “Why These 2 Niche Ecom- merce Brands Are Opening Up More Brick-and-Mortar Stores,” Adweek, April 19, 2018, www.adweek .com/digital/why-these-2-niche-ecommerce-brands- are-opening-up-more-brick-and-mortar-stores/.
107. Mary Kuntz, “These Ads Have Windows and Walls,” BusinessWeek, February 27, 1995, 74.
108. Brooks Barnes, “Disney Reimagines Its Stores to Be More Like a Vacation,” The New York Times, Septem- ber 26, 2017, www.nytimes.com/2017/09/26/business/ media/disney-stores.html, accessed October 30, 2018.
109. Kinshuk Jerath and Z. John Zhang, “Store Within a Store,” Journal of Marketing Research 47, no. 4 (August 2010): 748–763.
110. Kit R. Roane, “Stores Within Stores: Retail’s Savior?,” CNN Money, January 24, 2011, http://archive.fortune .com/2011/01/24/news/companies/retail_stores_inside_ stores.fortune/index.htm, accessed October 31, 2018.
111. Daphne Howland, “Store-within-a-Store: Brick-and- Mortar’s ‘Godfather Strategy’,” Retail Dive, April 6, 2015, www.retaildive.com/news/store-within-a-store- brick-and-mortars-godfather-strategy/382275/.
112. The Economist (US), “Clicks, Bricks, and Bargains,” The Economist, December 3, 2005, 57–58, https:// www.economist.com/business/2005/12/01/clicks- bricks-and-bargains, accessed October 31, 2018.
113. eMarketer, “Catering to Multichannel Consumers,” September 8, 2008, https://www.emarketer.com/ Article/Catering-Multichannel-Consumers/1006516, accessed October 31, 2018.
114. Tamara Mendelsohn, “The Web’s Impact on In-Store Sales: U.S. Cross-Channel Sales Forecast, 2006 To 2012,” Forrester Research, May 2007, https://www .forrester.com/report/The+Webs+Impact+On+In Store+Sales+US+CrossChannel+Sales+Forecast+200 6+To+2012/-/E-RES42084#.
115. Chloe Rigby, “Multichannel Shoppers Spend 82% More,” InternetRetailing, December 14, 2010, https:// internetretailing.net/themes/themes/multichannel-shop- pers-spend-82-more-6965, accessed October 31, 2018.
116. The Economist, “The Real Internet Revolution,” August 19, 1999, https://www.economist.com/business/ 1999/08/19/the-real-internet-revolution, accessed October 31, 2018; Scott A. Neslin and Venkatesh Shankar, “Key Issues in Multichannel Customer Man- agement: Current Knowledge and Future Directions,” Journal of Interactive Marketing 23 (February 2009), 70–81, https://ssrn.com/abstract=2061792; Jie Zhang, Paul W. Farris, John W. Irvin, Tarun Kushwaha, Thomas J. Steenburgh, and Barton A. Weitz, “Crafting Inte- grated Multichannel Retailing Strategies,” Journal of Interactive Marketing, 24 no. 2 (May 2010): 168–180; Jill Avery, Thomas J. Steenburgh, John Deighton, and Mary Caravella, “Adding Bricks to Clicks: Predicting the Patterns of Cross-Channel Elasticities Over Time,” Journal of Marketing 76, no. 3 (May 2012): 96–111.
117. Lorrie Grant, “Retailers Private Label Brands See Sales Growth Boom,” USA Today, April 15, 2004.
118. Noreen O’Leary, “New & Improved Private Label Brands,” Adweek, October 22, 2007, https://www .adweek.com/brand-marketing/new-improved-private- label-brands-90737/, accessed October 31, 2018.
119. George Anderson, “Private Labels: The Global View,” www.retailwire.com, October 2010.
120. “Tesco and Sainsbury’s Expand Private Label Bev- erages,” www.storebrandsdecisions.com, August 3, 2010; J. Sainsbury plc, “Sainsbury’s Announces Its Biggest Ever Own-Label Revamp with Launch of ‘by Sainsbury’s’,” May 11, 2011, https://web.archive.org/ web/20110724182241/http://www.jsainsburys.co.uk/ index.asp?PageID=424§ion=&Year=Latest& NewsID=1535, accessed October 31, 2018.
121. Consumer Reports, “Latest Taste Tests Find Some Store Brands at Least as Good as National Brands,” September 7, 2010, https://www.consumerreports.org/ media-room/press-releases/2010/09/latest-taste-tests- find-some-store-brands-at-least-as-good-as-national- brands/, accessed October 31, 2018.
122. Ibid. 123. Irwin Speizer, “The Grocery Store That Shouldn’t Be,”
Fast Company, February 2004, 31; Beth Kowitt, “Inside the Secret World of Trader Joe’s,” Fortune, August 23, 2010, http://archive.fortune.com/2010/08/20/news/ companies/inside_trader_joes_full_version.fortune/ index.htm, accessed October 31, 2018.
124. Tanzina Vega, “Walgreens Launches Campaign to Push Store-Brand Products,” The New York Times, February 10, 2011, https://www.nytimes.com/2011/02/11/ business/media/11adco.html, accessed October 31, 2018.
125. Mary L. Shelman and Ray A. Goldberg, “Loblaw Companies Limited,” Case 9–588–039 (Boston, MA: Harvard Business School, 1994); Gordon H. G. McDougall and Douglas Snetsinger, “Loblaws,” in Marketing Challenges, 3rd ed., eds. Christopher H. Lovelock and Charles B. Weinberg (New York: McGraw-Hill, 1993), 169–185; “Loblaw Launches a New Line of Discount Store Brands,” www . storebrandsdecisions.com, February 16, 2010; Marina Strauss, “Loblaws Takes Aim at Rivals, The Globe and Mail, February 10, 2010, https://www. theglobeandmail .com/globe-investor/loblaw-takes-aim-at-rivals/ article4306384/, accessed October 31, 2018.
126. Andrew Adam Newman, “A Sharp Focus on Design When the Package Is Part of the Product,” The New York Times, July 8, 2010, https://www.theglobeandmail. com/globe-investor/loblaw-takes-aim-at-rivals/arti- cle4306384/, accessed October 31, 2018.
127. Jack Neff, “Marketers Put Down Foot on Private-Label Issue,” Advertising Age, April 4, 2005, https://www .theglobeandmail.com/globe-investor/loblaw-takes-aim- at-rivals/article4306384/, accessed October 31, 2018, 14.
128. Sarah Halzack, “Retail’s Secret Weapon Is the Private Label,” Bloomberg, October 24, 2017, www.bloomberg .com/gadfly/articles/2017-10-24/private-label-brands- retail-s-new-secret-weapon, accessed June 4, 2018.
129. Sarah Perez, “Amazon Launches Its Newest Private Label, Wickedly Prime,” Tech Crunch, December 23, 2016, https://techcrunch.com/2016/12/23/amazon- launches-its-newest-private-label-wickedly-prime/.
130. Ibid. 131. Ibid. 132. Thomas Franck, “Amazon’s Flourishing Private
Label Business to Help Stock Rally Another 20%, Analyst Says,” CNBC, June 4, 2018, www.cnbc.com/ 2018/06/04/suntrust-amazons-private-label-business- to-help-stock-rally-20-percent.html.
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214
Learning Objectives
After reading this chapter, you should be able to
1. Describe some of the changes in the new media environment.
2. Outline the major marketing communication options.
3. Describe some of the key tactical issues in evaluating different communication options.
4. Identify the choice criteria in developing an inte- grated marketing communication program.
5. Explain the rationale for mixing and matching com- munication options.
Integrating Marketing Communications to Build Brand Equity6
Ford launched its new
Fiesta model in the
United States with a
combination of events,
traditional media, and
a heavy dose of social
media.
Source: P. Cox/Alamy Stock Photo
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 215
The preceding chapter described how various marketing activities and product, price, and distribution strategies can contribute to brand equity. This chapter considers the final, and
perhaps most flexible, element of marketing programs. Marketing communications are the
means by which companies attempt to inform, persuade, and remind consumers—directly or
indirectly—about the brands they sell. In a sense, marketing communications represent the
voice of the brand and are a means by which the brand can establish a dialogue and build
relationships with consumers. Although advertising is often a central element of a marketing
communications program, it is usually not the only element—or even the most important one—
for building brand equity. Figure 6-1 displays some of the common marketing communication
options for the consumer market.
Designing marketing communication programs is a complex task. We begin by describing the
rapidly changing media landscape and the new realities in marketing communications. To provide
necessary background, we next evaluate how the major communication options contribute to
brand equity and some of their main costs and benefits. We conclude by considering how to mix
and match communication options—that is, how to employ a range of communication options in
a coordinated or integrated fashion—to build brand equity. We consider some of what we have
learned about advertising in Brand Focus 6.0. For the sake of brevity, we will not consider specific
marketing communication issues such as media scheduling, budget estimation techniques, and
research approaches or the topic of personal selling.1
PREVIEW
FIGURE 6-1
Marketing Communications
Options
Media advertising Television Radio Newspaper Magazines
Direct response advertising Mail Telephone Broadcast media Print media Computer-related Media-related
Place advertising Billboards and posters Movies, airlines, and lounges Product placement Point of purchase
Point-of-purchase advertising Shelf talkers Aisle markers Shopping cart ads In-store radio or TV
Trade promotions Trade deals and buying allowances Point-of-purchase display allowances Push money Contests and dealer incentives Training programs Trade shows Cooperative advertising
Consumer promotions Samples Coupons Premiums Refunds and rebates Contests and sweepstakes Bonus packs Price-offs
Digital marketing Search Display Social Media (Facebook, Twitter) E-mail Video Blogs
Event marketing and sponsorship Sports Arts Entertainment Fairs and festivals Cause-related
Mobile SMS & MMS messages Ads Location-based services
Publicity and public relations Word-of-mouth Personal selling
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216 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
THE NEW MEDIA ENVIRONMENT Although advertising and other communication options can play different roles in the marketing program, one important purpose they all serve is to contribute to brand equity. According to the customer-based brand equity model, marketing communications can contribute to brand equity in a number of different ways: by creating awareness of the brand; linking points-of-parity and points-of-difference associations to the brand in consumers’ memory; eliciting positive brand judgments or feelings; and facilitating a stronger consumer–brand connection and brand reso- nance. In addition to forming the desired brand knowledge structures, marketing communication programs can provide incentives eliciting the differential response that makes up customer-based brand equity.
The flexibility of marketing communications comes in part from the number of differ- ent ways they can contribute to brand equity. At the same time, brand equity helps marketers determine how to design and implement a variety of marketing communication options. In this chapter, we consider how to develop marketing communication programs to build brand equity. We will assume the other elements of the marketing program have been properly put into place. Thus, the optimal brand positioning has been defined—especially in terms of the desired target market—and product, pricing, distribution, and other marketing program deci- sions have largely been made.
Complicating the picture for marketing communications programs, however, is that fact that the media environment has changed dramatically in recent years. Traditional advertising media such as television, radio, magazines, and newspapers seem to be losing their grip on consumers due to increased competition for consumer attention. The digital revolution offers a host of new ways for consumers to learn and talk about brands with companies or with each other.
Challenges in Designing Brand-Building Communications The new media environment has further complicated marketers’ perennial challenge to build effective and efficient marketing communication programs. Skillfully designed and implemented marketing communications programs require careful planning and a creative knack. Let us first consider a few useful tools to provide some perspective.
Perhaps the simplest—but most useful—way to judge any communication option is by its ability to contribute to brand equity. For example, how well does a proposed ad campaign contrib- ute to brand awareness or to creating, maintaining, or strengthening certain brand associations? Does a sponsorship cause consumers to have more favorable brand judgments and feelings? To what extent does an online promotion encourage consumers to buy more of a product? To what extent and at what price does an online promotion encourage consumers to buy more of a product? Figure 6-2 displays a simple three-step model for judging the effectiveness of advertising or any communication option to build brand equity.
FIGURE 6-2
Simple Test for Marketing
Communication
Effectiveness
1. What is your current brand knowledge? Have you created a detailed mental map?
2. What is your desired brand knowledge? Have you defined optimal points- of-parity and points-of-difference and a brand mantra?
3. How does the communication option help the brand get from current to desired knowledge with consumers? Have you clarified the specific effects on knowledge engendered by communications?
1 3 2
Communication Current Brand
Knowledge
Desired Brand
Knowledge
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 217
Information Processing Model of Communications. To provide some perspective, let’s consider in more depth the process by which marketing communications might affect con- sumers. Several models have been put forth over the years to explain communications and the steps in the persuasion process—recall the discussion on the hierarchy of effects model from Brand Focus 2.0. For example, for a person to be persuaded by any form of commu- nication (a TV advertisement, newspaper editorial, or blog posting), the following six steps must occur:2
1. Exposure: A person must see or hear the communication. 2. Attention: A person must notice the communication. 3. Comprehension: A person must understand the intended message or arguments of the
communication. 4. Yielding: A person must respond favorably to the intended message or arguments of the
communication. 5. Intentions: A person must plan to act in the desired manner of the communication. 6. Behavior: A person must actually act in the desired manner of the communication.
You can appreciate the challenge of creating a successful marketing communications program when you realize that each of the six steps must occur for a consumer to be persuaded. If there is a breakdown or failure in any step along the way, then successful communication will not result. For example, consider the potential pitfalls in launching a new advertising campaign:
1. A consumer may not be exposed to an ad because the media plan missed the mark. 2. A consumer may not notice an ad because of a boring and uninspired creative strategy. 3. A consumer may not understand an ad because of a lack of product category knowledge or
technical sophistication, or because of a lack of awareness and familiarity about the brand itself.
4. A consumer may fail to respond favorably and form a positive attitude because of irrelevant or unconvincing product claims.
5. A consumer may fail to form a purchase intention because of a lack of an immediate per- ceived need.
6. A consumer may fail to actually buy the product because he or she does not remember any- thing from the ad when confronted with the available brands in the store.
To show how fragile the whole communication process is, assume that the probability of each of the six steps being successfully accomplished is 50 percent—most likely an extremely generous assumption. The laws of probability suggest that the likelihood of all six steps suc- cessfully occurring, assuming they are independent events, is 0.5 × 0.5 × 0.5 × 0.5 × 0.5 × 0.5, which equals 1.5625 percent. If the probability of each step’s occurring, on average, were a more pessimistic 10 percent, then the joint probability of all six events occurring is .000001. In other words, only 1 in 1,000,000! No wonder advertisers sometimes lament the limited power of advertising.
One implication of the information processing model is that, to increase the odds for a suc- cessful marketing communications campaign, marketers must attempt to increase the likelihood that each step occurs. For example, from an advertising standpoint, the ideal ad campaign would ensure that:
1. The right consumer is exposed to the right message in the right place and at the right time. 2. The creative strategy for the advertising causes the consumer to notice and attend to the ad
but does not distract from the intended message. 3. The advertisement properly reflects the consumer’s level of understanding about the product
and the brand. 4. The ad correctly positions the brand in terms of desirable and deliverable points-of-difference
and points-of-parity. 5. The ad motivates consumers to consider the purchase of the brand. 6. The ad creates strong brand associations to all these stored communication effects so that they
can have an effect when consumers are considering making a purchase.
Marketers need to design and execute marketing communication programs carefully if they are to have the desired effects on consumers.
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218 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Role of Multiple Communications How much and what kinds of marketing communications are necessary? Economic theory sug- gests placing dollars into a marketing communications budget and across communication options according to marginal revenue and cost. For example, the communication mix would be optimally distributed when the last dollar spent on each communication option generated the same return.
Because such information may be difficult to obtain, however, other models of budget alloca- tion emphasize more observable factors such as stage of brand life cycle, objectives and budget of the firm, product characteristics, size of the budget, and media strategy of competitors. These factors are typically contrasted with the different characteristics of the media.
For example, marketing communication budgets tend to be higher when there is low channel support, much change in the marketing program over time, many hard-to-reach customers, more complex customer decision making, differentiated products and nonhomogeneous customer needs, and frequent product purchases in small quantities.3
Besides these efficiency considerations, different communication options also may target various market segments. For example, advertising may attempt to bring new customers into the market or attract competitors’ customers to the brand, whereas promotions might attempt to reward loyal users of the brand.
Invariably, marketers will employ multiple communications to achieve their goals. In doing so, they must understand how each communication option works and how to assemble and inte- grate the best set of choices. The following section presents an overview and critique of four major marketing communication options from a brand-building perspective.
THREE MAJOR MARKETING COMMUNICATION OPTIONS We contend that, in the future, there will be four vital ingredients to the best brand-building com- munication programs: (1) advertising and promotion, (2) interactive marketing, and (3) events and experiences. We consider each in turn.
Advertising Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Although it is a powerful means of creating strong, favorable, and unique brand associations and eliciting positive judgments and feelings, advertising is con- troversial because its specific effects are often difficult to quantify and predict. Nevertheless, a number of studies using very different approaches have shown the potential power of advertising on brand sales. As Chapter 1 noted, the latest recession provided numerous examples of brands
benefiting from increased advertising expenditures. Some prior research studies are consistent
with that view.4
Given the complexity of designing advertising—the number of strategic roles it might play,
the sheer number of specific decisions to make, and its complicated effect on consumers—it is
difficult to provide a comprehensive set of detailed managerial guidelines. Different advertising
media clearly have different strengths, however, and therefore, are best suited to play certain
roles in a communication program. Brand Focus 6.0 provides some empirical generalizations
about advertising. Now we’ll highlight some key issues about each type of advertising medium
in turn.
Television. Television is a powerful advertising medium because it allows for sight, sound, and
motion and reaches a broad spectrum of consumers. Virtually all U.S. households have televi-
sions, and the average American watches five hours of television per day, and this includes both
live television and DVR.5 Approximately 50 percent of households within the U.S. now have
access to streaming services from Netflix, Amazon Prime, or Hulu, suggesting a big shift in how
television is being watched.6
Pros and Cons. From a brand equity perspective, television advertising has two particularly
important strengths. First, it can be an effective means of vividly demonstrating product attributes
and persuasively explaining their corresponding consumer benefits. Second, TV advertising can
be a compelling means for dramatically portraying user and usage imagery, brand personality,
emotions, and other brand intangibles.
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 219
On the other hand, television advertising has its drawbacks. Because of the fleeting nature of the message and the potentially distracting creative elements often found in a TV ad, consumers can overlook product-related messages and the brand itself. Moreover, the large number of ads and nonprogramming material on television creates clutter that makes it easy for consumers to ignore or forget ads. A large number of channels creates fragmentation, and the widespread existence of digital video recorders gives viewers the means to skip commercials.
Another important disadvantage of television ads is the high cost of production and placement. In 2016, for example, a 30-second spot to air during the popular show Walking Dead —with a viewership of 16 million—was $400,000.7 The cost of one TV spot on the NCAA Men’s Basketball Game final on CBS was a whopping $1.55 million, for viewership of 21 million. A 30-second spot on a prime- time broadcast television show typically costs over $112,000.8 Although the price of TV advertising has skyrocketed, the share of the primetime audience for the major networks has steadily declined. By any number of measures, the effectiveness of any one television ad, on average, has diminished.
Nevertheless, properly designed and executed TV ads can affect sales and profits. For example, one of the most consistently bold and successful TV advertisers has been Tourism Australia. Tour- ism Australia’s latest television and social media advertising success is highlighted in the box below.
TOURISM AUSTRALIA
In early 2018, Tourism Australia designed a multi-step, multiple-media campaign to cut through the bom-
bardment of advertising messages that people are exposed to. With a price tag of A$36 million, the mar-
keting campaign opened with teaser ads hinting at a remake of the 1980s classic, Crocodile Dundee. This
generated immense buzz from fans as well as casual viewers. The big reveal was made in an ad at the 2018
Super Bowl, opening with exciting scenes of Australia that would be in the movie—deserts, rivers, kanga-
roos, beaches, forests—and switching to scenes that wouldn’t—wines and fine dining—thereby leading to
the reveal: “Dundee. The movie that was actually a tourism ad.” The ad, which also features several Aussie
film stars, including Thor’s Chris Hemsworth, generated a huge number of online views and shares as well
as news coverage, with an estimated total exposure of over a billion. A follow-up ad, “Dundee movie: Visit
the set,” urged viewers more explicitly to visit Australia and see all the great things that would have been
on the sets of a Dundee remake. The campaign was so successful that it even generated a call for an actual
remake, with the popular hashtag #BringBackDundee.9
P&G, who has been cutting advertising budgets to minimize ineffective spending, recently shifted $100 million of its advertising funds away from digital, arguing that some hyper-targeting has not been very effective in generating reach.10 This has also coincided with a time when televi- sion networks have been making a more aggressive case that marketers have indeed been allocat- ing too much of their budgets to digital marketing.
Further clarity on the effectiveness of digital marketing to brand-building is needed to help marketers understand the optimal allocations of online and offline advertising. With increas- ing focus on creating single-source data (one which combines consumer purchase histories with data on multiple media including television, print, radio, digital, and social media), the ability to understand and evaluate the effectiveness of different media and channels will be greater. To that end, many marketers are investing in attribution modeling—which allows marketers to assess the contribution made by each advertising medium—as is discussed further in Chapter 10.
Guidelines. In designing and evaluating an advertising campaign, marketers should distinguish the message strategy or positioning of an ad (what the ad attempts to convey about the brand) from its creative strategy (the way the ad expresses the brand claims). Designing effective advertis- ing campaigns are both an art and a science: The artistic aspects relate to the creative strategy of the ad and its execution; the scientific aspects relate to the message strategy and the brand claim information the ad contains. Thus, as Figure 6-3 describes, the two main concerns in devising an advertising strategy is as follows:
• Defining the proper positioning to maximize brand equity • Identifying the best creative strategy to communicate or convey the desired positioning
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220 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Chapter 3 described some issues with respect to positioning strategies to maximize brand equity. Creative strategies tend to be either largely informational, elaborating on a specific prod-
uct-related attribute or benefit, or largely transformational, portraying a specific nonproduct-
related benefit or image.11 These two general categories each encompass several different specific
creative approaches.
Regardless of which general creative approach marketers take, however, certain motivational
or “borrowed interest” devices can attract consumers’ attention and raise their involvement with
an ad. These devices include cute babies, frisky puppies, popular music, well-known and liked
celebrities, amusing situations, provocative sex appeals, and fear-inducing threats. Many believe
such techniques are necessary for the new media environment characterized by low-involvement
consumer processing and much competing ad and programming clutter.
Unfortunately, these attention-getting tactics are often too effective and distract from the
brand or its product claims. Thus, the challenge in arriving at the best creative strategy is figuring
out how to break through the clutter to attract the attention of consumers but still deliver the
intended message.
FIGURE 6-3
Factors in Designing
Effective Advertising
Campaigns
Source: Based in part on an insightful framework put forth in John R. Rossiter and Larry Percy, Advertising and Promotion Management, 2nd ed. (New York: McGraw- Hill, 1997).
DEFINE POSITIONING TO ESTABLISH BRAND EQUITY
Competitive frame of reference
Nature of competition
Target market
Point-of-parity attributes or benefits
Category
Competitive
Correlational
Point-of-difference attributes or benefits
Desirable
Deliverable
Differentiating
IDENTIFY CREATIVE STRATEGY TO COMMUNICATE POSITIONING CONCEPT
Informational (benefit elaboration)
Problem–solution
Demonstration
Product comparison
Testimonial (celebrity or unknown consumer)
Transformational (imagery portrayal)
Typical or aspirational usage situation
Typical or aspirational user of product
Brand personality and values
Motivational (“borrowed interest” techniques)
Humor
Warmth
Sex appeal
Music
Fear
Special effects
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 221
Television advertising for brands increasingly leverages live
events (e.g., sporting events such as Super Bowl) to garner
greater attention and elevate advertising effectiveness.
What makes an effective TV ad?12 Fundamentally, a TV ad should contribute to brand equity in some demonstrable way, for example, by enhancing awareness, strengthening a key association or adding a new association, or eliciting a positive consumer response. Earlier, we identified six broad information-processing factors as affecting the success of advertising: consumer target- ing, the ad creative, consumer understanding, brand positioning, consumer motivation, and ad memorability.
Although managerial judgment using criteria such as these can and should be employed in evaluating advertising, research also can play a productive role. Advertising strategy research is often invaluable in clarifying communication objectives, target markets, and positioning alter- natives. To evaluate the effectiveness of message and creative strategies, copy testing is often conducted, in which a sample of consumers is exposed to candidate ads and their reactions are gauged in some manner.
Unfortunately, copy-testing results vary considerably depending on exactly how tests are con- ducted. Consequently, the results must be interpreted as only one possible data point that should be combined with managerial judgment and other information in evaluating the merits of an ad. Copy testing is perhaps most useful when managerial judgment reveals some fairly clear positive and negative aspects to an ad, and is, therefore, somewhat inconclusive. In this case, copy-testing research may shed some light on how these various conflicting aspects “net out” and collectively affect consumer processing.
Regardless, copy-testing results should not be seen as a means of making a “go” or “no go” decision; ideally, they should play a diagnostic role in helping to understand how an ad works.
Future Prospects. Although doubts have been raised about the future of television and tradi- tional mass marketing advertising, it is clear that they are not going away anytime soon. Some key facts to keep in mind about TV advertising follow.
A great deal of television advertising is now focused on live TV events including various awards shows such as the Academy Awards and Grammys and sporting events such as the Olym- pic Games and World Cup Soccer. In the United States, National Football League (NFL) games are extremely popular, culminating in the Super Bowl. Some marketers focus their television advertising around these live events.13
According to David Christopher, CMO of AT&T Mobility, “TV, at least in the foresee- able future, is always going to have a place in big brands’ media mixes. Every medium has a place in your mix. We think about it as video, not TV. That’s how we buy it and how we think about it.”14
Most of the impact of digital channels has been on the newspaper, magazine, and radio indus- tries. Television advertising still offers a unique medium for advertising. Television advertising has evolved to include ads served during shows streamed on cable and broadcast channels, streaming apps, and Hulu. Although reports vary about how much time-shifting takes place, one analysis suggests that, in 2017, among adults 35 years and older, time-shifted television watching now accounts for 34 percent of the number of hours of television watched each week.15 Among mil- lennials, this number is much higher, and they watch 55 percent of their content on time-shifted formats.16Ads aired during shows that are streamed via Hulu which are viewed on large screens may be thought of as television, but are technically classified as digital advertising.17
Radio. Radio is a pervasive medium: According to Nielsen research, 270 million, or 90 per- cent of the U.S. population, listen to the radio at least weekly.18 The main advantage to radio is flexibility—stations are highly targeted, ads are relatively inexpensive to produce and place, and
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222 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
short closings allow for quick responses. Companies such as Comcast, T-Mobile, and Berkshire Hathaway are among the highest spenders in the United States on radio advertising.19
Radio is a particularly effective medium in the morning and can effectively complement or reinforce TV ads. Radio also enables companies to achieve a balance between broad and localized market coverage. One recent industry study claimed that $1 spent on radio advertising returns $12 in purchases for consumer-packaged goods companies.20 Obvious disadvantages of radio, however, are the lack of visual image and the relatively passive nature of consumer processing that results. Several brands, however, have effectively built brand equity with radio ads.
Using the clever slogan, “We’ll Leave the Light on for You,”
radio—complemented by magazine ads like this—has been a
highly effective brand-building medium for Motel 6.
Source: Ken Wolter/Shutterstock
MOTEL 6
One notable radio ad campaign is for Motel 6, the nation’s largest budget motel chain, which was founded
in 1962 when the “6” stood for $6 a night. After finding its business fortunes hitting bottom in 1986 with
an occupancy rate of only 66.7 percent, Motel 6 made some marketing changes, including the launch of a
radio campaign of humorous 60-second ads featuring folksy contractor-turned-writer Tom Bodett. Contain-
ing the clever tagline “We’ll Leave the Light on for You,” the campaign is credited with a rise in occupancy
and a revitalization of the brand that continues to this day.21 Keeping the same ad format, Motel 6’s latest
ad campaign still features Tom Bodett who riffs about millennials. The Motel 6 radio ad campaign has with-
stood the test of time for nearly three decades, a remarkable feat for a brand.22
What makes an effective radio ad?23 Radio has been less studied than other media. Because of its low-involvement nature and limited sensory options, advertising on the radio often must be fairly focused. For example, the advertising pioneer David Ogilvy believed four factors were critical:24
1. Identify your brand early in the commercial. 2. Identify it often. 3. Promise the listener a benefit early in the commercial. 4. Repeat it often.
Nevertheless, radio ads can be extremely creative. Some see the lack of visual images as a plus because they feel the clever use of music, sounds, humor, and other creative devices can tap into the listener’s imagination in a way that creates powerfully relevant and liked images.
Print. Print media has taken a huge hit in recent years as more and more consumers choose to collect information and seek entertainment online. In response, publishers are doing their own digital innovation in the form of iPad apps and a stronger Internet presence.
Print media does offer a stark contrast to broadcast media. Most importantly, because they are self-paced, magazines and newspapers can provide detailed product information. At the same time, the static nature of the visual images in print media makes it difficult to provide dynamic presentations or demonstrations. Another disadvantage of print advertising is that it can be a fairly passive medium.
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 223
Pros and Cons. The two main print media—magazines and newspapers—have many of the same advantages and disadvantages. Magazines are particularly effective at building user and usage imagery. They can also be highly engaging: one study showed that consumers are more likely to view magazine ads as less intrusive, more truthful, and more relevant than ads in other media and are less likely to multitask while reading.25
Newspapers, however, are more timely and pervasive. Daily newspapers in the United States have about 35 million subscribers, but the numbers of subscribers are declining each year.26 On the other hand, although advertisers have some flexibility in designing and placing newspaper ads, poor reproduction quality and short shelf life can diminish some of the possible impacts of newspaper advertising. These are disadvantages that magazine advertising usually does not share.
Although print advertising is particularly well suited to communicate product information, it can also effectively communicate user and usage imagery. Fashion brands such as Calvin Klein, Ralph Lauren, and Guess have also created strong nonproduct associations through print adver- tising. Some brands attempt to communicate both product benefits and user or usage imagery in their print advertising, for example, car makers such as Ford, Volkswagen, and Volvo or cosmetics makers such as Maybelline and Revlon.
One of the longest-running and perhaps most successful print advertising campaigns ever is for the Samsung Galaxy S8 in Switzerland.27
THE NEWSPAPER DESIGN EDITION CAMPAIGN
In the highly saturated, globally competitive mobile
phone market, Samsung has tried innovative ways
to promote the launch of its products. The star cam-
paigns for Samsung have been #OverToYou (2013),
Oscar Selfie (2014), and Samsung Within (2018).
Switzerland was considered an iPhone-dominated
market in 2017. For the Newspaper Design Edition
campaign for the launch of Galaxy S8 in Switzerland,
Samsung teamed up with 20 Minuten, a daily com-
muter newspaper with a readership of 1.2 million, the
largest in the country. The objective of the print cam-
paign was to create a positive perception about the
revolutionary design of the new mobile phone, and it
did so through a radical design change in an issue of
20 Minuten that correlated with the new design of the
Samsung Galaxy S8.
The concept was developed in conjunction with
Jung von Matt/Limmat, the agency responsible for the
launch of Galaxy S8 in Switzerland. The redesign was
done by Studio Feixen, a Swiss graphic design stu-
dio, and included a redesigned layout for a single day
involving changes in typography, new icons for every
section, and the use of striking, brightly colored graph-
ics such as brushstrokes and dots. Even minor sections
like the horoscope and weather map were redesigned.
The principle element across all design changes was
that it focused on the new Samsung Galaxy S8.
The newly designed Swiss daily was published
on the day the Samsung Galaxy S8 was launched. The
newspaper design got global press coverage, and the
message that Samsung Galaxy S8 was synonymous with
revolutionary new designs reached four million contacts.
Sales of the new phone were over 40 percent more
than during the launch for the Galaxy S7, and Samsung
outperformed Apple for the first time in Switzerland.28
The Newspaper Design Edition campaign
demonstrated to smartphone users in
Switzerland that the new Galaxy S8 is an
iconic design marvel.
Source: Daniel Krason’ /Alamy Stock Photo
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224 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Guidelines. What makes an effective print ad? The evaluation criteria we noted earlier for television advertising apply, but print advertising has some special requirements and rules. For example, research on print ads in magazines reveals that it is not uncommon for two-thirds of a magazine audience to not even notice any one particular print ad, or for only 10 percent or so of the audience to read much of the copy of any one ad. Many readers only glance at the most visible elements of a print ad, making it critical that an ad communicates clearly, directly, and consistently in the ad illustration and headline. Finally, many consumers can easily overlook the brand name if it is not readily apparent. We can summarize the creative guidelines for print ads in three simple criteria: clarity, consistency, and branding.
Direct Response. In contrast to advertising in traditional broadcast and print media, which typically communicates to consumers in a nonspecific and nondirective manner, direct
response uses mail, telephone, Internet, and other contact tools to communicate with or solicit a response from specific customers and prospects. Direct response can take many forms and is not restricted to solicitations by mail, telephone, or even within traditional broadcast and print media.
Direct mail remains popular, and more than 100 million U.S. adults made a catalog purchase in 2016.29 Marketers are exploring other options, however. One increasingly popular means of direct marketing is infomercials, formally known as direct response TV marketing.30 In a market- ing sense, infomercials attempt to combine the sell of commercials with the draw of educational information and entertainment. We can, therefore, think of them as a cross between a sales call and a television ad. According to Infomercial DRTV, a trade Web site, infomercials are typically 28 minutes and 30 seconds long with an average cost in the $150,000 to $250,000 range (although production can cost as little as $75,000 and as much as $500,000).31
Starting with infomercials, although now moving online and also employing social media, many infomercial products are now showing up in stores carrying little “As Seen on TV” signs.
Brands such as Apple, Nissan, Discover Card, Nikon, and the U.S. Navy have all employed some form of direct response on television.32 Some of the best-known infomercial campaigns have garnered millions of dollars in sales revenue. For example, Nutrisystem (the nutrition management system) had $545.5 million in revenue in 2016 and had $1.7 billion in market value in 2017, and a large part of their success is owed to infomercials.33 Another infomercial success story is the Snuggie, which had $400 million in revenue in 2015.34
Guidelines. The steady growth of direct marketing in recent years is a function of techno- logical advances like the ease of setting up toll-free numbers and Web sites; changes in con- sumer behavior, such as the increased demand for convenience; and the needs of marketers, who want to avoid wasteful communications to nontarget customers or customer groups. The advantage of direct response is that it makes it easier for marketers to establish relationships with consumers.
Direct communications through electronic or physical newsletters, catalogs, and so forth allow marketers to explain new developments with their brands to consumers on an ongoing basis as well as allow consumers to provide feedback to marketers about their likes and dislikes and specific needs and wants. By learning more about customers, marketers can fine-tune marketing programs to offer the right products to the right customers at the right time. Direct marketing is often seen as a key component of relationship marketing—an important marketing trend we reviewed in Chapter 5. Some direct marketers employ what they call precision marketing— combining data analytics with strategic messages and compelling colors and designs in their communications.35
As the name suggests, the goal of direct response is to elicit some type of behavior from consumers; given that, it is easy to measure the effects of direct marketing efforts—people either respond or they do not. The disadvantages to direct response, however, are intrusive- ness and clutter. To implement an effective direct marketing program, marketers need the three critical ingredients of (1) developing an up-to-date and informative list of current and potential future customers, (2) putting forth the right offer in the right manner, and (3) tracking the effectiveness of the marketing program. To improve the effectiveness of direct marketing programs, many marketers are embracing database marketing, as highlighted by The Science of Branding 6-1.
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 225
Formally, database marketing has been defined as “managing
a computerized relational database, in real time, of comprehen-
sive, up-to-date, relevant data on customers, inquiries, prospects
and suspects, to identify our most responsive customers for the
purpose of developing a high quality, long-standing relationship
of repeat business by developing predictive models which enable
us to send desired messages at the right time in the right form to
the right people—all with the result of pleasing our customers,
increasing our response rate per marketing dollar, lowering our
cost per order, building our business, and increasing our profits.”
Regardless of the particular means of direct marketing, data-
base marketing can help create targeted communication and
marketing programs tailored to the needs and wants of specific
consumers. When customers place orders, send in a coupon, fill
out a warranty card, or enter a sweepstakes, database marketers
collect their names and information about their attitudes and
behavior, which they compile in a comprehensive database.
Database marketing is generally more effective at helping
firms retain existing customers than in attracting new ones. Many
marketers believe it makes more sense the higher the price of the
product and the more often consumers buy it. Database mar-
keting is often at the heart of a successful loyalty rewards pro-
gram. Best Western uses both online and mail outlets to contact
its program participants and relies on database information to
improve the relevance and timeliness of its messages.
Database marketing pioneers include a number of financial
services firms and airlines. Even packaged-goods companies,
however, are exploring the possible benefits of database market-
ing. For example, Procter & Gamble created a database to market
Pampers disposable diapers, allowing it to send out individualized
birthday cards for babies and reminder letters to parents to move
their child up to the next size. Combining this effort with a well-
developed helpline and Web site and in-store couponing, P&G is
creating interactive, individualized, value-added contacts.
Database management tools will become a priority to marketers
as they attempt to track the lifetime value (LTV) of customers. Some
database marketing activities that can occur through the applica-
tion of LTV analysis include predictive modeling, multiple campaign
management, targeted promotions, up-selling, cross-selling, seg-
mentation, churn management, multichannel management, product
personalization, and acquisition and retention management.
Sources: Robert C. Blattberg, Byung-Do Kim, and Scott A. Neslin, Data- base Marketing: Analyzing and Managing Customers (New York: Springer Science + Business, 2008); James Tenser, “‘Behavior-Activated Research’ Benefits P&G’s Pampers Brand,” www.cpgmatters.com; Thomas Haire, “Best Western Melds Old and New,” Response, March 2009.
THE SCIENCE OF BRANDING 6-1
The Importance of Database Marketing
Place. The last category of advertising is also often called “nontraditional,” “alternative,” or “sup- port” advertising, because it has arisen in recent years as a means to complement more traditional advertising media. Place advertising, also called out-of-home advertising, is a broadly defined category that captures advertising outside traditional media. Increasingly, ads and commercials are showing up in unusual spots, sometimes as parts of experiential marketing programs.
The rationale is that, because traditional advertising media—especially television advertis- ing—are becoming less effective, marketers are better off reaching people in other environments, such as where they work, play, and, of course, shop. According to the Outdoor Advertising Asso- ciation of America, out-of-home advertising accounted for $7.3 billion in ad expenditures in 2015.36 Some of the options include billboards and posters; movies, airlines, lounges, and other places; product placement; and point-of-purchase advertising. Top advertisers that use outdoor ads include McDonald’s restaurant, Apple, Anheuser-Busch, Geico, Sprint, Coca-Cola, Universal Pictures, Verizon, Citi, and Walt Disney Pictures.37 Outdoor advertising can help augment and reinforce advertising through more traditional media such as television, digital, and print.
Billboards and Posters. Billboards have a long history but have been transformed over the years and now employ colorful, digitally produced graphics, backlighting, sounds, movement, and unusual—even three-dimensional—images to attract attention. The medium has improved in terms of effectiveness (and measurability), technology (some billboards are now digitized), and provide a good opportunity for companies to sync their billboard strategies with mobile advertising.
Billboard-type poster ads are now showing up everywhere in the United States each year to increase brand exposure and goodwill. Transit ads on buses, subways, and commuter trains have been around for years and have now become a valuable means to reach working women. Street furniture (bus shelters, kiosks, and public areas) has also become a fast-growing area. In Japan, cameras and sensors are being added to signs and electronic public displays so that—combined with cell-phone technology—they can become more interactive and personalized.38 In Times Square, Coca-Cola launched a billboard featuring a robotic 3D ad with 1760 LED screens, which was particularly high in visual appeal.39
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226 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Billboards do not even necessarily have to stay in one place. Marketers can buy ad space on billboard-laden trucks that are driven around all day in marketer-selected areas. Oscar Mayer sends seven “Wienermobiles” traveling across the country each year. New York City became the first major city to allow its taxi cabs to advertise via onboard television screens.
Advertisers can now buy space in stadiums and arenas and on garbage cans, bicycle racks, parking meters, airport luggage carousels, elevators, gasoline pumps, the bottom of golf cups, airline snacks, and supermarket produce in the form of tiny labels on apples and bananas. Leaving no stone unturned, advertisers can even buy space in toilet stalls and above urinals, which, accord- ing to research studies, office workers visit an average of three to four times a day for roughly four minutes per visit. At Chicago O’Hare airport, digital commercials are now being shown in 150 bathroom mirrors above lavatory sinks.40 Figure 6-4 displays some of the most successful outdoor advertisers.
Oscar Mayer’s Wienermobile,
with its two Hotdoggers
drivers, tour the country and
make appearances at various
events.
Source: Leila Navid/ZUMA Press Inc/Alamy Stock Photo
FIGURE 6-4
Obie Hall of Fame
Winners (as selected by
the Outdoor Advertising
Association of America)
Chick-fil-A (2006)
Walt Disney Company (2007)
Altoids (2008)
Absolut (2009)
MINI Cooper (2010)
Cracker Barrel Old Country Store (2011)
Maker’s Mark (2012)
ESPN (2013)
Gap (2014)
HBO (2015)
Corona Extra (2016)
Warner Brothers (2017)
MillerCoors (2018)
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 227
Movies, Airlines, Lounges, and Other Places. Increas- ingly, advertisers are placing traditional TV and print ads in unconventional places. Companies such as Whittle Commu- nication and Turner Broadcasting have tried placing TV and commercial programming in classrooms, airport lounges, and other public places. Airlines now offer media-sponsored audio and video programming that accepts advertising (USA Today Sky Radio and National Geographic Explorer). Movie theater chains such as Loews Cineplex now run 30-, 60-, or 90-second ads on 2,000-plus screens. Although the same ads that appear on TV or in magazines often appear in these unconventional places, many advertisers believe it is impor- tant to create specially designed ads for these out-of-home exposures to better meet consumer expectations.
Product Placement. Many major marketers pay fees of $50,000 to $100,000 and even higher so their products can make cameo appearances in movies and on television, with the exact fee depending on the amount and nature of the brand exposure. This practice got a boost in 1982, when—after Mars declined an offer for the use of its M&M’s brand—sales of Reese’s Pieces increased 65 percent after the candy appeared prominently in the blockbuster movie E.T.: The Extraterrestrial.41 More recently, hit shows such as Breaking Bad have been targets for product placement, as advertisers benefit from the exposure they get through the show’s popularity.42 With stream- ing services becoming increasingly popular, it is possible that product placement can also be personalized to the target’s location as well as shopping history and preferences.
Among the brands with the highest number of product placements are Mercedes Benz, Apple, and Pepsi.43 Marketers combine product placements with special promotions to publicize a brand’s entertainment tie-ins and create “branded entertainment.” For example, Beats headphones uses its product placement in movies such as Avengers to connect with its target audience and reinforce its positioning at the high end. Beats also uses product placement in music videos, appropriately enough, but also with leading athletes at major sporting events.44
Point of Purchase. Myriad possibilities have emerged in recent years as ways to communicate with consumers at the point of purchase. In-store advertising includes ads on shopping carts, cart straps, aisles, or shelves, as well as promotion options such as in-store demonstrations, live sam- pling, and instant coupon machines.45 Stores like Marshall’s, TJ Maxx, Nordstrom Rack, Sephora, and Victoria’s Secret all use physical displays to create a path for customers to wind down on their way to check out; these physical displays showcase small items that cost significantly less. Similarly, Best Buy practices point-of-purchase marketing within its stores by allowing customers to try out the latest version of PlayStation or Xbox.46
The appeal of point-of-purchase advertising lies in the fact that, as numerous studies have shown, consumers in many product categories make the bulk of their final brand decisions in the store. In-store media are designed to increase the number and nature of spontaneous and planned buying decisions. One company placing ads on the entryway security panels of major retail chains reported that the advertised brands experienced an average increase in sales of 20 percent over the four-week period in which their ads appeared.47
Guidelines. Nontraditional or place media present some interesting options for marketers to reach consumers in new ways. Advertisements now can appear virtually any place where consum- ers have a few spare minutes or even seconds and thus, enough time to notice them. The main advantage of nontraditional media is that they can reach a very precise and captive audience in a cost-effective and increasingly engaging manner.
Because the audience must process out-of-home ads quickly, however, the message must be simple and direct. In fact, outdoor advertising is often called the “15-second sell.” In noting how out-of-home aligns with twenty-first-century consumers, one commentator observed that, with people on-the-go and wanting content in short bursts, “Billboards are the original tweets—you get a quick image or piece of knowledge then move on.”48 In that regard, strategically, out-of-home
Ad placement in unconventional places (e.g., movie theaters,
airport lounges, and other places) constitutes another approach
to increase effectiveness of advertising.
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228 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
advertising is often more effective at enhancing awareness or reinforcing existing brand associa- tions than at creating new ones.
The challenge with nontraditional media is demonstrating their reach and effectiveness through credible, independent research. Another danger of nontraditional media is a consumer backlash against overcommercialization. Perhaps because of the sheer pervasiveness of advertis- ing, however, consumers seem to be less bothered by nontraditional media now than in the past.
Consumers must be favorably affected in some way to justify the marketing expenditures for nontraditional media, and some firms offering ad placement in supermarket checkout lines, fast-food restaurants, physicians’ waiting rooms, health clubs, and truck stops have suspended business at least in part because of lack of consumer interest. The bottom line, however, is that there will always be room for creative means of placing the brand in front of consumers—the possibilities are endless.
Promotion Although they do very different things, advertising and promotion often go hand-in-hand. Sales
promotions are short-term incentives to encourage trial or usage of a product or service.49 Mar- keters can target sales promotions to either the trade or end consumers. Like advertising, sales promotions come in all forms. Whereas advertising typically provides consumers a reason to buy, sales promotions offer consumers an incentive to buy. Thus, sales promotions are designed to do the following:
• Change the behavior of the trade so that they carry the brand and actively support it. • Change the behavior of consumers so that they buy a brand for the first time, buy more of the
brand, or buy the brand earlier or more often.
Analysts maintain that the use of sales promotions grew as a business practice for a number of reasons. Brand management systems with quarterly evaluations were thought to encourage short- term solutions, and an increased need for accountability seemed to favor communication tools like promotions, whose behavioral effects are more quickly and easily observed than the often “softer” perceptual effects of advertising. Economic forces worked against advertising effectiveness as ad rates rose steadily despite what marketers saw as an increasingly cluttered media environment and fragmented audience. Consumers were thought to be making more in-store decisions, and to be less brand loyal and more immune to advertising than in the past. Many mature brands were less easily differentiated. On top of it all, retailers became more powerful.
For all these reasons, some marketers began to see consumer and trade promotions as a more effective means than advertising to influence the sales of a brand. There clearly are advantages to sales promotions. Consumer sales promotions permit manufacturers to price discriminate by effectively charging different prices to groups of consumers who vary in their price sensitivity. Besides conveying a sense of urgency to consumers, carefully designed promotions can build brand equity through information or actual product experience that helps to create strong, favor- able, and unique associations. Sales promotions can encourage the trade to maintain full stocks and actively support the manufacturer’s merchandising efforts.
One interesting finding by researchers examining purchase behavior across 23 product cat- egories and four supermarket chains showed that instant reward programs—a reward for consum- ers that is given immediately based on fixed spending—can increase the number of shopping trips made by consumers, whereas bonus premiums—a nonprice premium that is attached to the purchase of a brand—can increase a brand’s market share within a category and also make consumers more likely to buy within a category.50
On the other hand, from a consumer behavior perspective, there are some disadvantages of sales promotions, such as decreased brand loyalty and increased brand switching, decreased quality per- ceptions, and increased price sensitivity. Besides inhibiting the use of franchise-building advertising or other communications, diverting marketing funds into coupons or other sales promotion leads to reductions in research and development budgets and staff. Perhaps most importantly, the widespread discounting arising from trade promotions may have led to the increased importance of price as a factor in consumer decisions, breaking down traditional brand loyalty patterns.
Another disadvantage of sales promotions is that, in some cases, they may merely subsidize buyers who would have purchased the brand anyway. Interestingly, the more affluent, educated, suburban, and ethnically Caucasian a household is, the more likely it is to use coupons, mainly
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 229
because its members are more likely to read newspapers where the vast majority of coupons appear. Another drawback to sales promotions is that new consumers attracted to the brand may attribute their purchase to the promotion and not to the merits of the brand per se and, as a result, may not repeat their purchase when the promotional offer is withdrawn. As an example, when JCPenney withdrew its coupon offers in 2012, it saw a 23 percent decline in sales.51 Finally, retail- ers have come to expect and now demand trade discounts. The trade may not actually provide the agreed-upon merchandising and take advantage of promotions by engaging in nonproductive activities such as forward buying (stocking up for when the promotion ends) and diversion (ship- ping products to areas where the promotion was not intended to go).52
Promotions have a number of possible objectives.53 With consumers, objectives may target new category users, existing category users, and/or existing brand users. With the trade, objectives may center on distribution, support, inventories, or goodwill. Next, we consider some specific issues related to consumer and trade promotions.
Consumer Promotions. Consumer promotions are designed to change the choices, quantity, or timing of consumers’ product purchases. Although they come in all forms, we distinguish between customer franchise-building promotions like samples, demonstrations, and educational material, and noncustomer franchise-building promotions such as price-off packs, premiums, sweepstakes, and refund offers.54 Customer franchise-building promotions can enhance the attitudes and loyalty of consumers toward a brand—in other words, affect brand equity.
For example, sampling is a means of creating strong, relevant brand associations while also perhaps kick-starting word-of-mouth among consumers. Marketers are increasingly using sampling at the point of use, growing more precise about where and how they deliver samples to maximize brand equity. For a $10 monthly subscription, one new firm, Birchbox, sends consumers a box of deluxe-size samples from such notable beauty brands as Benefit, Kiehl’s, and Marc Jacobs. Members can go to the Web site to collect more information, provide feedback, and earn points for full-sized products. The beauty brands like the selectivity and customer involvement of the promotion.55
Thus, marketers increasingly judge sales promotions by their ability to contribute to brand equity as well as generate sales. Creativity is as critical to promotions as it is to advertising or any other form of marketing communications. The Promotion Marketing Association (PMA) bestows Reggie awards to recognize “superior promotional thinking, creativity, and execution across the full spectrum of promotional marketing.”
Promotion strategy must reflect the attitudes and behavior of consumers. The percentage of coupons consumers redeem dropped steadily for years—in part due to the clutter of coupons that were increasingly being distributed. In 2016, there were 305 billion coupons distributed in the United States.56 Free-standing inserts (FSIs) accounted for 89 percent of all redeemed coupons, and their value exceeded 545 million dollars in 2017.57 Although redemption rates for coupons delivered from FSIs are fairly low (0.5–2 percent), the redemption rates for e-mail coupons is higher at 2.7 percent.58 One area of promotional growth is in-store coupons, which marketers have increasingly turned to given that their redemption rates far exceed those of traditional out-of-store coupons. Another growing area is digital coupons, and 55 percent of adults in the United States used a digital coupon in 2016, and mobile coupon redemption rate is 10 percent. 59 One survey of 30,000 Web shoppers showed that 83 percent receive coupons by advertisers via e-mail, 66 percent by social media, 48 percent by mobile app or push notification, and 44 percent through word of mouth from others.60
GROUPON
Groupon launched in 2008 as a company offering a new marketing vehicle to businesses. By leveraging the
Internet and e-mail, the company helps businesses use promotions as a form of advertisement. Specifically,
Groupon maintains a large base of subscribers who receive a humorously worded daily deal—a specific
percentage or dollar amount off the regular price—for a specific branded product or service. Through these
e-mail discounts, Groupon offers three benefits to businesses: increased consumer exposure to the brand,
the ability to price discriminate, and the creation of a “buzz factor.” For these benefits, Groupon takes a
40 to 50 percent cut in the process. Many promotions are offered on behalf of local retailers such as spas,
fitness centers, and restaurants, but Groupon also manages deals on behalf of national brands such as
Gap, Southwest Airlines, and FTD. As of 2017, Groupon had 49.5 million unique customers and had a sales
revenue of 2.84 billion dollars.61 Groupon now faces several competitors in the market it helped create,
including LivingSocial, RetailMeNot, and so on.
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230 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Companies such as Groupon and LivingSocial have been trying to disrupt the sales promotion industry
by creating a platform that customers would use to buy all types of coupons. The issue with these platforms is
that they are seen as more beneficial to customers than the merchants/retailers. The merchants typically expe-
rience a decline in traffic, as customers typically stockpile in advance to avail themselves of the coupons.62
Groupon is an online marketplace which connects its subscribers with local mer-
chants through a variety of promotional offers.
Source: Jarretera/Shutterstock
Trade Promotions. Trade promotions are often financial incentives or discounts given to retail- ers, distributors, and other channel members to stock, display, and in other ways facilitate the sale of a product through slotting allowances, point-of-purchase displays, contests and dealer incentives, training programs, trade shows, and cooperative advertising. Trade promotions are typically designed either to secure shelf space and distribution for a new brand, or to achieve more prominence on the shelf and in the store. Shelf and aisle positions in the store are important because they affect the ability of the brand to catch the eye of the consumer; placing a brand on a shelf at eye level may double sales over placing it on the bottom shelf.63
Because of a large amount of money spent on trade promotions, there is increasing pressure to make trade promotion programs more effective. Many firms are failing to see the brand-building value in trade promotions and are seeking to reduce and eliminate as much of their expenditures as possible.
Online Marketing Communications The first decade of the twenty-first century has seen a headlong rush by companies into the world of interactive, online marketing communications. With the pervasive incorporation of the Internet into everyday personal and professional lives, marketers are scrambling to find the right places to be in cyberspace. The main advantages to marketing on the Web are the low cost and the level of detail and degree of customization it offers. Online marketing communications can accomplish almost any marketing communication objective and are especially valuable in terms of solid relationship building. We provide a detailed description of digital communications in Chapter 7.
Events and Experiences As important as online marketing is to brand management, “real world” events and experiences
play an equally important role. Brand building in the virtual world must be complemented with
brand building in the real or physical world. Events and experiences range from an extravagant
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multimillion dollar sponsorship of a major international event to a simple local in-store product demonstration or sampling program. What all these different kinds of events and experiences share is that, one way or another, the brand engages the consumers’ senses and imagination, changing brand knowledge in the process.
Experiences can take all forms and are limited only by the marketers’ imagination. To create awareness of insights generated from Facebook’s IQ platform, it created an event series called IQ Live which launched a kickoff event in New York with a 500-guest gathering. It also had events in Chicago and New York, which helped bring Facebook’s data insights to life in a fun and personal way. To do this, as an example, in the New York event, they created a stage which was inspired by Madison Square Garden. The stage was covered in Astroturf, and included a model newsstand and a café. This everyday setting was based on IQ’s major findings that Facebook is a platform allowing users to share their life’s big moments.64 As another example, consider Subaru’s yearly Palm Challenge.
SUBARU PALM CHALLENGE
Auto company Subaru uses an annual endurance competition as part of its experiential marketing strategy to
connect with its consumers in Asia. Known as the Palm Challenge, contestants have to place their palm on a
Subaru car while standing for the whole duration of the contest. As it is an outdoor event, contestants have
to endure all weather elements around the clock and are only given 5-minute breaks every six hours. The
last standing contestant wins a brand-new Subaru car. The record standing time is 82 hours and 16 minutes.
During the event, there is extensive coverage on TV, radio, and multiple social media platforms including
interviews with family and friends, who are often on-site to support the contestants. According to Subaru,
this event allows the public to experience physical and mental strength that is reflective of the Subaru brand
and the spirit of its car owners. Now into its 17th year, the event, which originated in Singapore, has crossed
into countries such as China, Vietnam, Cambodia, Taiwan, and the Philippines and has significantly boosted
Subaru’s brand awareness in the region.65
Subaru uses an annual endurance competition in an effective
way to connect with its consumers.
Source: Xinhua/Alamy Stock Photo
Formally, event marketing can be defined as public sponsorship of events or activities related to sports, art, entertainment, or social causes. According to one survey of B2B, B2C, and nonprofit companies, 79 percent of those polled (based on a sample size of 931 respondents), saw events as important to their business. The survey highlighted various reasons that event marketing is used, such as educating customers, generating leads, and receiving donations. Companies such as EventBrite and Meetup.com have allowed companies to organize events seamlessly, thus providing a boost to event marketing.66 Additionally, 80 percent of marketers believe that event marketing is key to the success of their business, with technology including event management software, mobile event apps, marketing automation systems, software integration, live-streaming, social media, social walls, augmented reality, and the like, acting as major facilitators of event marketing.67 Nearly 20 percent of a business-to-business marketers’ budget comprises of event marketing.68
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232 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Global sponsorship spending was approximately $62.7 billion globally in 2017, and a vast majority of these expenditures were in the following categories: sports, entertainment, causes, arts festivals and fairs.69 Once employed mostly by cigarette, beer, and auto companies, sports marketing is now being embraced by virtually every type of company. Moreover, seemingly every sport—from dogsled racing to fishing tournaments and from tractor pulls to professional beach volleyball—now receives corporate backing of some kind. Chapter 8 examines the issues of event
marketing and sponsorship in terms of the secondary associations that they bring to the brand.
Rationale. Event sponsorship provides a different kind of communication option for market-
ers. By becoming part of a special and personally relevant moment in consumers’ lives, sponsors
can broaden and deepen their relationship with their target market. Marketers report a number of
reasons why they sponsor events:70
• To identify with a particular target market or lifestyle: Marketers can link their brands
to events popular with either a select or broad group of consumers. They can target custom-
ers geographically, demographically, psychographically, or behaviorally, according to the
sponsored events. In particular, marketers can choose events based on attendees’ attitudes
and usage of certain products or brands. No athletic event in the United States attracts
more “pentamillionaires”—those with a net worth of more than $5 million—than the U.S.
Open tennis tournament. Perhaps it is no surprise that its sponsors include luxury brands
such as American Express, Chase, Westin, and Grey Goose, which largely target affluent
customers.71
• To increase awareness of the company or product name: Sponsorship often offers sus-
tained exposure to a brand, a necessary condition for building brand recognition. By skillfully
choosing sponsorship events or activities, marketers can enhance identification with a product
and thus, also brand recall.
• To create or reinforce consumer perceptions of key brand image associations: Events
themselves have their own associations that help to create or reinforce brand associations.
Seiko has been the official timer of the Olympics and other major sporting events for years.
Subaru believes there is a match in interests between skiing events and potential buyers of
its all-wheel-drive vehicles.
• To enhance corporate image dimensions: Sponsorship is a soft sell and a means to improve
perceptions that the company is likable, prestigious, and so forth. Marketers hope consumers
will credit the company for its sponsorship and favor it in later product choices. Mountain
Dew created the multicity Dew Tour, in which athletes compete in different skateboarding,
BMX, and freestyle motocross events to reach and make a favorable impression with the
coveted, but fickle, 12- to 24-year-old target market. The Dew Tour now includes events under
the themes of City, Beach, and Mountain. The brand also created a digital platform called
Green-Label.com, whose mission is to support young artists and musicians, and currently
traffic to this Web site exceeds visitors to the Mountain Dew.com Web site.72 Mountain Dew
also encourages its employees to participate in these events, thereby allowing employees and
consumers to connect and to generate deeper employee engagement.
• To create experiences and evoke feelings: Events can be part of an experiential marketing
program. The feelings engendered by an exciting or rewarding event may indirectly link to
the brand. Marketers can also use the Web to provide further event support and additional
experiences.
• To express commitment to the community or on social issues: Often called cause- related marketing, sponsorships dedicated to the community or to promote social issues
create corporate tie-ins with nonprofit organizations and charities (see Chapter 12). For over
23 years, Colgate-Palmolive has sponsored the Starlight Children’s Foundation, which grants
wishes to young people who are critically ill.
• To entertain key clients or reward key employees: Many events have lavish hospitality
tents and other special services or activities that are available only for sponsors and their
guests. For example, Bank of America’s golf tournament sponsorship includes special events
for clients. Involving clients with the event in these and other ways can engender goodwill
and establish valuable business contacts. From an employee perspective, events can build
participation and morale or create an incentive.
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• To permit merchandising or promotional opportunities: Many marketers tie in contests or sweepstakes, in-store merchandising, and direct response or other marketing activities with their event. Warner-Lambert sponsors the “Taste of Chicago” promotion in part so it can gain shelf space in stores and participate in retailer co-op advertising.
Despite these potential advantages, there are some potential disadvantages to sponsorship. The success of an event can be unpredictable and out of the sponsor’s control. There can be much clutter in sponsorship. Finally, although many consumers will credit sponsors for provid- ing necessary financial assistance to make an event possible, some consumers may still resent the commercialization of events through sponsorship.
Guidelines. Developing successful event sponsorship means choosing the appropriate events, designing the optimal sponsorship program, and measuring the effects of sponsorship on brand equity.
Choosing Sponsorship Opportunities. Because of the huge amount of money involved and numerous event opportunities, many marketers are thinking more strategically about the events with which they will get involved and the manner by which they will do so.
There are some potential guidelines for choosing events. First, the event must meet the mar- keting objectives and communication strategy defined for the brand. That is, the audience deliv- ered by the event must match the target market of the brand. Moreover, the event must have sufficient awareness, possess the desired image, and be capable of creating the desired effects with that target market. Of particular concern is whether consumers make favorable attributions to the sponsor for its participation.
An “ideal event” might be one whose audience closely matches the ideal target market, that generates much favorable attention, that is unique but not encumbered with many sponsors, that lends itself to ancillary marketing activities, and that reflects or even enhances the brand or cor- porate image of the sponsor. Adding digital and social activations can help bring the event to life and help generate positive buzz or word-of-mouth surrounding the event.
Of course, rather than linking themselves to an event, some sponsors create their own. Branding Brief 6-1 describes how cable sports network ESPN created the X Games to appeal to a market segment not easily attracted by traditional sports. More and more firms are also using their names to sponsor the arenas, stadiums, and other venues that actually hold the events. American Express Community Stadium is in the U.K., the American Airlines Arena in Dallas, and Heinz Field in Pittsburgh. Staples paid $100 million over 20 years to name the downtown Los Angeles arena where the NBA Lakers and Clippers and the NHL Kings play, and where concerts and other events are also held. Although stadium naming rights can command high fees, its direct contribution to building brand equity is primarily in creating brand recognition, not brand recall, and marketers can expect it to do little for brand image except perhaps to convey a certain level of scope and size.
Designing Sponsorship Programs. Many marketers believe that the marketing program accompanying a sponsorship is what ultimately determines its success. A sponsor can strategi- cally identify itself at an event in various ways, including banners, signs, and programs. For more significant and broader impact, however, sponsors typically supplement such activities with samples, prizes, advertising, retail promotions, publicity, and so forth. Marketers often note that the budget for related marketing activities should be at least two to three times the amount of the sponsorship expenditure.
Although the action sports industry contains a variety of high-
energy and sometimes potentially high-risk sports, it is largely
defined by various forms of skateboarding, snowboarding,
surfing, and BMX biking. Action sports are increasingly seen as
BRANDING BRIEF 6-1
Brand Building via the X Games
mainstream in terms of legitimacy, participation, public interest,
and sponsor/business investment. They have become increasingly
profitable, with skate, snow and surf gear, apparel, and accesso-
ries categories contributing to the sports apparel industry. GoPro,
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234 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
The X Games, which have become an annual event focused
on action sports, have become an excellent opportunity for
advertisers to reach out to and engage a younger, athletic
consumer.
Source: ZUMA Press, Inc./Alamy Stock Photo
the tiny video maker has transformed the action sports industry as
athletes can wear these cameras as they do their incredible stunts
whether they are trail cyclists, big wave surfers, half pipe snow-
boarders, kite boarders, or Tough Mudder racers. These incredible
feats are then uploaded to YouTube, and have caused many of
these action sports to become more mainstream. GoPro had a
sales revenue of $1.18 billion in 2017.
ESPN’s X Games, begun as a biannual event in 1995, remain
at the forefront of the industry. They are ESPN’s largest owned
and operated property and are regarded as the gold standard
in the action sports world. While the public initially saw the X
Games as “the circus coming to town” or as a showcase for
death-defying stunts and tricks, people have begun to realize
that the riders are legitimate athletes in a sustainable business.
Viewers 18 and younger, especially, have grown up with the X
Games and consider it their own Olympics.
X Games quickly grew into a franchise and has successfully
launched a variety of brand extensions in consumer products
and home entertainment and touches all seven continents. ESPN
believes the evolution and growth of all elements of the X Games
have positioned it well for continued successes—in brand percep-
tion and relevance, live event attendance, record-setting broad-
cast viewership and ratings, increased sponsor investment, and
overall popularity and incorporation into the mainstream.
X Games has many sponsors including Harley-Davidson, Jeep,
LifeProof, Monster Energy, and Geico, which have sponsored it
over a number of years. Newer brands such as Netflix and Great
Clips joined the list of prominent sponsors in 2018. In return for
sponsorship rights, brands gain a significant media presence dur-
ing the X Games telecasts, in addition to prominent positions on
social media platforms and access to VIP experiences during the
games. Figure 6-5 provides sponsorship details for the X Games.
The X Games held its sixteenth consecutive Winter X Games
in Aspen in 2017. During this event, the X Games viewership
through WatchESPN grew significantly by 32 percent, with 16
million minutes of X Games events being viewed. The Facebook
page for X Games gained 23,000 likes, and the X Games Aspen’s
Snapchat story had 6.5 million users. Globally, X Games Aspen
was televised in 215 countries to more than 365 million homes.
The four-day and final attendance for Summer X Games in Min-
neapolis 2017 was about 105,000 attendees.
Despite its exponential growth, the action sports sector is
not without its challenges. Chief among these challenges include
the warmer winters that have limited action sports during the
winter months. The cost of participation has also been steadily
increasing, making it difficult for families with children to afford
the cost of participating in these sports. These have contributed
FIGURE 6-5
X Games 17 Sponsorship
Information
Source: Fay Wells, “ESPN X Games: Launching a New Category,” in Best Practice Cases in Branding, 4th ed. Kevin Lane Keller and Lowey Sichol (Upper Saddle River, NJ: Pearson, 2013).
Official Sponsors
BFGoodrich—BFGoodrich’s national marketing efforts included television spots, print collateral, digital advertising, on-site activations, and competition course signage.
Ford—Ford’s national marketing efforts included television spots, print collateral, digital advertising, on-site activations, and competition course signage.
U.S. Navy—The U.S. Navy's national marketing efforts included television spots, print collateral, digital advertising, radio campaigns, on-site activations, and competition course signage.
Red Bull—Red Bull’s national marketing efforts included television spots, print collateral, digital ad space, on-site activations, and unique competition course signage.
Event Sponsors
Casio G’zOne Commando—Casio’s national marketing efforts included television spots, online advertising, on-site activations, and competition course signage.
Shark Week—Discovery’s national marketing efforts included television spots, print collateral, online advertising, on-site activations, and competition course signage.
Mobil 1—Mobil 1’s national marketing efforts included television spots, online advertising, radio campaigns, and competition course signage.
Sony—Sony’s national marketing efforts included television spots, online advertising, on-site TV displays, and competition course signage.
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Measuring Sponsorship Activities. There are two basic approaches to measuring the effects of sponsorship activities: the supply-side method focuses on potential exposure to the brand by assessing the extent of media coverage, and the demand-side method focuses on reported expo- sure from consumers.
Supply-side methods attempt to approximate the amount of time or space devoted to the brand in media coverage of an event. For example, we can estimate the number of seconds the brand is clearly visible on a television screen, or the column inches of press clippings covering an event that mention the brand. Then, we can translate this measure of potential impressions delivered by an event sponsorship into an equivalent value in advertising dollars, according to the fees asso- ciated with actually advertising in the particular media vehicle. Additionally, one can evaluate the extent of incremental traffic to one’s Web site based on public relations campaigns, and also examine the impact on social media engagement.
Although supply-side exposure methods provide quantifiable measures, equating media coverage with advertising exposure ignores the content of the respective communications that consumers receive. The advertiser uses media space and time to communicate a strategically designed message. Media coverage and telecasts only expose the brand and do not embellish its meaning in any direct way. Some public relations professionals maintain that positive editorial coverage can be worth 5 to 10 times the advertising equivalency value, but it is rare that sponsor- ship affords the brand such favorable treatment. Many critics note that TV ads, for example, are carefully designed to persuasively reflect as many positives of the brand as possible. The brand is the “star” of the ad, unlike the case with sponsorship, where the event or game takes center stage and the brand only just appears visually, if it is even noticed.
An alternative measurement approach is the demand-side method, which attempts to identify the effects that sponsorship has on consumers’ brand knowledge structures. Thus, tracking or custom surveys can explore the ability of the event sponsorship to affect awareness, attitudes, or even sales. We can identify and survey event spectators after the event to measure recall of the event’s sponsor, as well as attitudes and intentions toward the sponsor as a result of the event. We can also conduct internal tracking to see how different aspects of the sales process are impacted.
BRAND AMPLIFIERS Complementing these four broad sets of marketing communication activities are efforts to engage consumers and the public via word-of-mouth and public relations and publicity. Although they can perform many different functions, they are especially well-suited at amplifying the effects created by other marketing activities.73
Public Relations and Publicity Public relations and publicity relate to a variety of programs and are designed to promote or pro- tect a company’s image or its products. Publicity is nonpersonal communications such as press releases, media interviews, press conferences, feature articles, newsletters, photographs, films, and tapes. Public relations may also include annual reports, fund-raising and membership drives, lobbying, special event management, and public affairs.
March 30, 2018; Interview with Rick Alessandri, senior vice president and managing director of ESPN X Game’s franchise, November 2008; www.xgamesmediakit.com/read-me/, accessed March 30, 2017; www .xgamesmediakit.com/read-me/, accessed March 30, 2017; Lars Becker, “Action Sports: An Industry Searching for the Way Out of Crisis,” June 21, 2016, www.ispo.com/en/trends/id_78182622/action-sports-an- industry- searching-for-the-way-out-of-crisis.html, accessed March 30, 2018; Kay- lee Bradstreet, “The State of Skate 2016 Official Report | How Much International Growth Will the Skate Market See?,” June 21, 2016, https:// www.adventuresportsnetwork.com/transworld-business/state-skate- 2016-international-growth/, accessed March 30, 2018; William L. Shankin and John Kuzma, “Buying That Sporting Image,” Marketing Management (Spring 1992): 65.
to these sports to appear inaccessible to many people. Despite
these trends, there is a great deal of potential in overseas markets,
particularly Europe and Asia; while action sports such as skate-
boarding have become more mainstream in the United States, in
emerging markets like Japan, it is still a growing trend.
Sources: Fay Wells and Kevin Lane Keller (2013), “ESPN X Games— Building a Youth Sports Brand,” edited by Lowey Bundy Sichol (Case-Marketing.com); Kevin Gray, “Tiny Camera, Big Impact: How GoPro Transformed Sports,” June 27, 2014, www.zdnet.com/article/tiny- camera-big-impact-how-gopro-transformed-sports/, accessed March 30, 2018; www.marketwatch.com/investing/stock/gpro/financials, accessed
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236 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
The marketing value of public relations received a big boost in 1983 when public relations firm Burson-Marsteller’s skillful handling of Johnson & Johnson’s Tylenol product tampering incident was credited with helping to save the brand. Brand Focus 11.0 provides a comprehensive account of that landmark campaign. Around that time, politicians also discovered the power of campaign sound bites that were picked up by the press as a means of broad, cost-efficient candi- date exposure.
Marketers now recognize that although public relations are invaluable during a marketing cri- sis, it can also be an important part of any marketing communications program. In 2018, PRWeek awarded Frito-Lay the Campaign of the Year award for their work on the Tostitos Party Safe Bag, which doubled as a breathalyzer-like alcohol detector. In order to generate publicity, the brand partnered with Mothers Against Drunk Driving (MADD), a well-known advocacy group for pre- venting drunk driving. It also partnered with Uber to offer $10 off any Uber ride on Super Bowl Sunday, by using the codes on the back of the Tostitos bag. To strengthen its appeal to NFL fans, the brand partnered with sports celebrity Delanie Walker, who previously underwent a personal tragedy due to drunk driving. The nature of the campaign and its unusual focus made it a huge success with 13 million views generated, without even a single commercial being aired. More than 30,000 Uber rides were given during the promotion.74
Word-of-Mouth Publicity and PR often serve another important role—they get people talking. Word-of-mouth is a critical aspect of brand building as consumers share their likes, dislikes, and experiences with brands and with each other.75 The power of word-of-mouth is the credibility and relevance it often brings. Study after study has shown that the most trusted source of product information is friends and families.
If marketers do their job right and create marketing programs that offer consumers superior delivery of desired benefits, people will write and talk about the brand, amplifying any marketing effects. In effect, a buzz has been created among consumers. Companies are attempting to create this consumer word-of-mouth through various techniques such as influencer marketing.76
In Chapter 7, we provide a deeper assessment of influencer marketing, which refers to the
practice of using social influencers to spread word-of-mouth about a product or a brand. Although
it is a sponsored form of word-of-mouth (social influencers typically get paid by the company
either via cash or free products), its influence on consumer decision-making has been increasing.
DEVELOPING INTEGRATED MARKETING COMMUNICATION PROGRAMS We have examined in depth some of the communication options available to marketers. Chapter 7
offers a deep dive into online and digital channels. Now, we consider how to develop an integrated
marketing communication (IMC) program by choosing the best set of options and managing the
relationships between them.77 Integrated marketing communications is regarded as a process
of strategically managing stakeholders, content, channels, and results of brand communication
programs.78 Our main theme is that marketers should “mix and match” communication options
to build brand equity—that is, choose a variety of communication options that share common
meaning and content but also offer different, complementary advantages so that the whole is
greater than the sum of the parts.79
Integrated marketing communication is shown to drive a brand’s financial performance
through influencing the effectiveness of communication campaigns and the brand’s market-
based performance. However, there are several impediments to successfully implementing
IMC including miscommunication, compartmentalization of duties, and loss of trust.80 These
are further exacerbated due to the proliferation of new media, and the consequent lowering of
attention among consumers who are faced with a tremendous explosion of information.81 To
effectively implement IMC, one approach proposes combining a bottom-up communications
matching model—involving the identification of communication options best suited to dif-
ferent stages of the consumer purchase funnel with a top-down communications model—in
which a marketing communications program is judged in terms of its ability to drive sales
and equity.82
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Numerous firms are embracing this broad-based approach to developing their communica- tions program. Lululemon, an athletic apparel brand, uses a combination of brand ambassadors, events and out-of-home and social media to build engagement with its consumers. For example, brand ambassadors are used to giving free class events in stores several times per week, while social media influencers show off the product on Instagram, YouTube, and Snapchat; digital video does the heavy lifting; the company did not even run ads until 2017.83
Criteria for IMC Programs In assessing the collective impact of an integrated marketing communication program, the mar- keter’s overriding goal is to create the most effective and efficient communication program pos- sible. Here are six relevant criteria, known as “the 6 Cs” for short:84
1. Coverage 2. Contribution 3. Commonality 4. Complementarity 5. Conformability 6. Cost
After considering the concept of coverage and how it relates to the other five criteria, let’s look quickly at each in turn.
Coverage. Coverage is the proportion of the audience reached by each communication option, as well as how much overlap exists among communication options. In other words, to what extent do different communication options reach the designated target market, and the same or different consumers making up that market? As Figure 6-6 shows, the unique aspects of coverage relate to the direct main effects of any communication; the common aspects relate to the interaction or multiplicative effects of two communication options working together. Communication effects from consumer exposure to one communication option can be enhanced when consumers have had prior exposure to a different communication option.
The unique aspect of coverage is the inherent communication ability of a marketing com- munication option, as suggested by the second criterion, contribution. If there is some overlap in communication options, however, marketers must decide how to design their communication program to reflect the fact that consumers may already have some communication effects in memory before exposure to any particular communication option.
A communication option can either reinforce associations and strengthen linkages that are also the focus of other communication options, or it can address other associations and linkages, as suggested by the third and fourth criteria, commonality and complementarity. Moreover, if less
FIGURE 6-6
IMC Audience Communication
Option Overlap
Communication Option B
Communication Option C
Aud ien
ce
Communication Option A
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238 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
than perfect overlap exists—which is almost always the case—marketers can design a communi- cation option to reflect the fact that consumers may or may not have seen other communication options, as suggested by the fifth criterion, conformability. Finally, all of these considerations must be offset by their cost, as suggested by the sixth criterion.
Contribution. Contribution is the inherent ability of a marketing communication to create the desired response and communication effects from consumers in the absence of exposure to any other communication option. In other words, contribution describes the main effects of a marketing communication option in terms of how it affects consumers’ processing of a com- munication and the resulting outcomes. As we noted earlier, marketing communications can play many different roles, like building awareness, enhancing the company’s image, eliciting responses, and inducing sales, and the contribution of any marketing communication option will depend on how well it plays that role. Also, as we noted earlier, much prior research has considered this aspect of communications, generating conceptual guidelines and evaluation cri- teria in the process. Given that overlap with communication options exists, however, marketers must consider other factors, as follows.
Commonality. Regardless of which communication options marketers choose, they should coordinate the entire marketing communication program to create a consistent and cohesive brand image in which brand associations share content and meaning. The consistency and cohesiveness of the brand image are important because the image determines how easily consumers can recall existing associations and responses and how easily they can link additional associations and responses to the brand in memory.
Commonality is the extent to which common information conveyed by different communica- tion options shares meaning across communication options. Most definitions of IMC emphasize only this criterion—sending target audiences the same consistent message across communication options.
In general, we learn and recall information that is consistent in meaning more easily than unrelated information—though the unexpectedness of inconsistent information sometimes can lead to more elaborate processing and stronger associations than consistent information.85 Never- theless, with inconsistent associations and a diffuse brand image, consumers may overlook some associations, or, because they are confused about the meaning of the brand, form less strong and less favorable new associations.
Therefore, in the long run, marketers should design different communication elements and combine them so that they work effectively together to create a consistent and cohesive brand image. The more abstract the association to be created or reinforced by marketing communica- tions, the more likely it would seem that we could effectively reinforce it in different ways across heterogeneous communication options.86
For example, if the association we desire is “contemporary,” then there may be a number of different ways we can make a brand seem modern and relevant. On the other hand, if our desired association is a concrete attribute, say, “rich chocolate taste,” then it may be difficult to convey it in communication options that do not permit explicit product statements, such as sponsorship.
Take Heineken, for example. The brand seeks to achieve a strong premium image and posi- tioning in its communications. Heineken’s “Walk-In Fridge” campaign started as a video and then a TV ad that first showed a group of girlfriends jumping up and down and shrieking with joy when one of them gets a walk-in wardrobe closet, followed by a group of guys equally ecstatic over a walk-in refrigerator lined with Heineken. Heineken next placed gigantic cardboard boxes labeled “Walk-In Fridge” all over Amsterdam as if put out in the trash. Finally, Heineken placed real walk-in fridges at various beer festivals, allowing groups of friends to mimic the ad and video and upload their own video to YouTube.87
Finally, another commonality issue is the extent of execution consistency across communica- tion options—that is, the extent to which we convey nonproduct-related information in different communication options. The more coordinated execution information is, the more likely it is that this information can serve as a retrieval cue to other communication effects.88 In other words, if a symbol is established in one communication option, like a feather in a TV ad for a deodorant to convey mildness and softness, then marketers can use it in other communications to help trigger
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 239
the knowledge, thoughts, feelings, and images stored in memory from exposure to a previous communication.
Complementarity. Communication options are often more effective when used in tandem. Complementarity describes the extent to which different associations and linkages are emphasized across communication options. The ideal marketing communications program would ensure that the communication options chosen are mutually compensatory and reinforcing to create desired consumer knowledge structures.
Marketers might most effectively establish different brand associations by capitalizing on those marketing communication options best suited to eliciting a particular consumer response or establish- ing a particular type of brand association. For example, some media, like sampling and other forms of sales promotion, are demonstrably better at generating trial than engendering long-term loyalty. Research with some industrial distributors has shown that follow-up sales efforts generate higher sales productivity when firms have already exposed customers to its products at a trade show.89
The Science of Branding 6-2 describes how communication options may need to be explicitly tied together to capitalize on complementarity to build brand equity.
For brand equity to be built, it is critical that communication
effects created by advertising be linked to the brand. Often,
such links are difficult to create. Television ads, in particular, do
not “brand” well. There are a number of reasons why:
• Competing ads in the product category can create inter-
ference and consumer confusion as to which ad goes with
which brand.
• “Borrowed interest” creative strategies and techniques—
humor, music, special effects, sex appeals, fear appeals, and
so on—may grab consumers’ attention, but result in the
brand being overlooked in the process.
• Delaying brand identification or providing few brand men-
tions may raise processing intensity but direct attention away
from the brand.
• Limited brand exposure time in the ad may allow little oppor-
tunity for the elaboration of existing brand knowledge.
• Consumers may not have any inherent interest in the product
or service category or may lack knowledge of the specific
brand.
• A change in advertising strategy may make it difficult for
consumers to easily relate new information to existing brand
knowledge.
Strategies to Strengthen Communication Effects
For a variety of reasons, advertising may “succeed” in the sense
that communication effects are stored in memory, yet “fail” at the
same time in that these communication effects are not accessible
when critical brand-related decisions were made.
To address this problem, one common tactic marketers
employ is to make the brand name and package information
prominent in the ad. Unfortunately, this increase in brand empha-
sis means that communication effects and brand associations are
less likely to be able to be created by the ad and stored in con-
sumer memory. In other words, although consumers are better
able to recall the advertised brand, there is less other information
about the brand actually to recall. Three potentially more effec-
tive strategies are brand signatures, ad retrieval cues, and media
interactions.
Brand Signatures
Perhaps the easiest way to increase the strength of brand links
to communication effects is to create a more powerful and com-
pelling brand signature. The brand signature is the manner by
which the brand is identified in a TV or radio ad or displayed
within a print or digital ad. The brand signature must creatively
engage the consumer and cause him or her to pay more attention
to the brand itself, and, as a consequence, increase the strength
of brand associations created by the ad.
An effective brand signature often dynamically and stylisti-
cally provides a seamless connection to the ad as a whole. For
example, the famous “Got Milk?” campaign always displayed
that tagline or slogan in a manner fitting the ad (in flames for
the “yuppie in hell” ad or primary-school print for the “school
lunchroom bully” ad). As another example, the introductory
“Intel Inside” ad campaign always ended with a swirling image
from which the Intel Inside logo dramatically appeared, in effect
stamping the end of the ad with Intel Inside in an “in your face”
manner.
Ad Retrieval Cues
Another effective tactic to use advertising retrieval cues—visual
or verbal information uniquely identified with an ad that is evident
when consumers are making a product or service decision. The pur-
pose is to maximize the probability that consumers who have seen
or heard the cued ad will retrieve the communication effects stored
in long-term memory. Ad retrieval cues may consist of a key visual,
a catchy slogan, or any unique advertising element that serves as an
effective reminder to consumers. For example, Eveready featured
a picture of its pink bunny character on packages of Energizer bat-
teries to reduce consumer confusion with Duracell.
THE SCIENCE OF BRANDING 6-2
Coordinating Media to Build Brand Equity
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240 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Media Interactions
Finally, digital, print and radio reinforcement of television ads
(in which the video and audio components of a TV ad serve
as the basis for the respective type of ads) can be an effec-
tive means to leverage existing communication effects from
TV ad exposure and more strongly link them to the brand.
Cueing a TV ad with an explicitly linked digital, radio, or print
ad can create similar or even enhanced processing outcomes
that can substitute for additional TV ad exposures. Moreover,
a potentially useful, although rarely employed, media strategy
is to run explicitly linked digital, print, or radio ads prior to (or
concurrently with) the accompanying TV ad. The digital, print,
and radio ads, in this case, function as teasers and increase
consumer motivation to process the complete television ad
consisting of both audio and video components. Conversely,
TV ads can also encourage audiences to engage with the
brand via social media, but advertising a Web link or a link to
a campaign (e.g., a Twitter handle), where consumers can find
more information. One research study by Joo and colleagues
found that television advertising for financial services advertis-
ing increased the likelihood that audiences conducted branded
keyword searches for a given advertised brand (rather than
generic searches), confirming the potential for media interac-
tions in ad campaigns.
Sources: Raymond R. Burke and Thomas K. Srull, “Competitive Interference and Consumer Memory for Advertising,” Journal of Consumer Research 15, no. 1 (June 1988): 55–68; Kevin Lane Keller, “Memory Factors in Advertis- ing: The Effect of Advertising Retrieval Cues on Brand Evaluations,” Journal of Consumer Research 14, no. 3 (February 1987): 316–333; Robert J. Kent and Chris T. Allen, “Competitive Interference Effects in Consumer Memory for Advertising: The Role of Brand Familiarity,” Journal of Marketing 58, no. 3 (July 1994): 97–105; Kevin Lane Keller, Susan Heckler, and Michael J. Houston, “The Effects of Brand Name Suggestiveness on Advertising Recall,” Journal of Marketing 62, no. 1 (January 1998): 48–57; William E. Baker, Heather Honea, and Cristel Antonia Russell, “Do Not Wait to Reveal the Brand Name: The Effect of Brand-Name Placement on Television Advertis- ing Effectiveness,” Journal of Advertising 33, no. 3 (Autumn 2004): 77–85; Micael Dahlén and Sara Rosengren, “Brands Affect Slogans Affect Brands? Competitive Interference, Brand Equity and the Brand-Slogan Link,” Journal of Brand Management 12, no. 3 (February 2005): 151–164; Peter J. Danaher, André Bonfrer, and Sanjay Dhar, “The Effect of Competitive Advertising Interference on Sales for Packaged Goods,” Journal of Marketing Research 45, no. 2 (April 2008): 211–225; Isaac M. Dinner, Harald J. Van Heerde, and Scott A. Neslin. “Driving Online and Offline Sales: The Cross-channel Effects of Traditional, Online Display, and Paid Search Advertising,” Journal of Marketing Research 51, no. 5 (2014): 527–545; Mingyu Joo, Kenneth C. Wilbur, Bo Cowgill, and Yi Zhu, “Television Advertising and Online Search,” Management Science 60, no. 1 (2013): 56–73. Peter J. Danaher and Tracey S. Dagger, “Comparing the Relative Effectiveness of Advertising Channels: A Case Study of a Multimedia Blitz Campaign,” Journal of Marketing Research 50, no. 4 (August 2013): 517–534.
Conformability. Conformability refers to the extent that a marketing communication option is robust and effective for different groups of consumers. There are two types of conformability: communication and consumer. The reality of any IMC program is that when consumers are exposed to a particular marketing communication, some consumers will have already been exposed to other marketing communications for the brand, and others will not. The ability of a marketing communication to work at two levels—effectively communicat- ing to both groups—is critically important. We consider a marketing communication option conformable when it achieves its desired effect regardless of consumers’ past communica- tion history.
Besides this communication conformability, we can also judge a communication option in terms of broader consumer conformability, that is, how well does it inform or persuade con- sumers who vary on dimensions other than communication history? Communications directed at primarily creating brand awareness, like sponsorship, may be more conformable by virtue of their simplicity.
There seem to be two possible means of achieving this dual communication ability:
1. Multiple information provision strategy: Provide different information within a com- munication option to appeal to the various types of consumers. An important issue here is how information designed to appeal to one target market of consumers will be processed by other consumers and target markets. Issues of information overload, confusion, and annoyance may come into play if communications become burdened with a great deal of detail.
2. Broad information provision strategy: Provide information that is rich or ambiguous enough to work regardless of prior consumer knowledge. The important issue here is how potent or successful marketers can make that information. If they attempt to appeal to the lowest common denominator, the information may lack precision and sufficient detail to have any meaningful impact on consumers. Consumers with disparate backgrounds will have to find information in the communication sufficiently relevant to satisfy their goals, given their product or brand knowledge or communications history.
Cost. Finally, evaluations of marketing communications on all of the preceding criteria must be weighed against their cost to arrive at the most effective and efficient communica- tion program.
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 241
REVIEW
This chapter provided conceptual frameworks and managerial guidelines for how marketing com- munications can be integrated to enhance brand equity. The chapter addressed this issue from the perspective of customer-based brand equity, which maintains that brand equity is fundamentally determined by the brand knowledge created in consumers’ minds by the supporting marketing, program. Four main types of communications were identified as being critical: (1) advertising and promotion, (2) interactive marketing, and (3) events and experiences.
A number of specific communication options—broadcast, print, direct response, and place advertising media; consumer and trade promotions; Web sites, online ads, videos, and social media online marketing; and events and experiences—were reviewed in terms of basic characteristics as well as success factors for effectiveness. Brand amplifiers that enhance these effects in the form of publicity and public relations, word-of-mouth, and buzz marketing were also discussed. The chapter also provided criteria as to how different communication options should be combined to maximally build brand equity.
Two key implications emerge from this discussion. First, from the perspective of customer- based brand equity, all possible communication options should be evaluated regarding their ability
Using IMC Choice Criteria The IMC choice criteria can provide some guidance for designing integrated marketing communi- cation programs. Two key steps are evaluating communication options and establishing priorities and trade-offs.
Evaluating Communication Options. We can judge marketing communication options or communication types according to the response and communication effects they can create, as well as how they rate on the IMC choice criteria. The communication types and options have dif- ferent strengths and weaknesses and raise varying issues.
Several points about the IMC choice criteria are worth noting. First, there are not necessar- ily any inherent differences across communication types for contribution and complementar- ity, because each communication type, if properly designed, can play a critical and unique role in achieving those communication objectives. Similarly, all marketing communications appear expensive, although some differences in cost per thousands can prevail. Communication types vary, however, in their breadth and depth of audience coverage, and regarding commonality and conformability according to the number of modalities they employ: The more modalities available with a communication type, the greater its potential commonality and conformability.
Arriving at a final mix requires making decisions on priorities and tradeoffs among the IMC choice criteria as discussed next.
Establishing Priorities and Trade-Offs. The IMC program a marketer adopts, after profiling the various options, will depend in part on how he or she ranks the choice criteria. Because the IMC choice criteria themselves are related, the marketer must also make tradeoffs. The objectives of the marketing communications program, and whether they are short run or long run, will set priorities along with a host of factors beyond the scope of this chapter. We identify three possible tradeoffs with the IMC choice criteria that result from overlaps in coverage.
• Commonality and complementarity will often be inversely related. The more various marketing communication options emphasize the same brand attribute or benefit, all else being equal, the less they can effectively emphasize other attributes and benefits.
• Conformability and complementarity will also often be inversely related. The more a communication program accounts for differences in consumers across communication options, the less necessary it is that any one type of communication be designed to appeal to many different groups.
• Commonality and conformability do not share an obvious relationship. It may be pos- sible, for example, to develop a sufficiently abstract message, like “Brand X is contemporary,” to effectively reinforce the brand across multiple communication types including advertising, interactive, sponsorship, and promotions.
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242 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
to affect brand equity. In particular, the CBBE concept provides a common denominator by which the effects of different communication options can be evaluated: Each communication option can be judged in terms of the effectiveness and efficiency by which it affects brand awareness and by which it creates, maintains, or strengthens favorable and unique brand associations. Different communication options have varying strengths and can accomplish differing objectives. Thus, it is important to employ a mix of communication options, each playing a specific role in building or maintaining brand equity.
The second important insight that emerges from the conceptual framework is that the market- ing communications program should be put together in a way such that the whole is greater than the sum of the parts. As such, there should be a match among certain communication options so that the effects of any one type of communication option are enhanced by the presence of another option.
In closing, the basic message of this chapter is simple: marketers need to evaluate marketing communication options strategically to determine how they can contribute to brand equity. To do so, marketers need some theoretical and managerial guidelines by which they can determine the effectiveness and efficiency of various communication options both singularly and in combination with other marketing communications. Figure 6-7 provides one philosophy concerning the design, implementation, and interpretation of marketing communication strategies.
FIGURE 6-7
General Marketing
Communication Guidelines:
The “Keller Bs”
1. Be analytical: Use frameworks of consumer behavior and managerial decision making to develop well-reasoned communication programs.
2. Be curious: Better understand customers by using all forms of research, and always be thinking of how you can create added value for consumers.
3. Be single-minded: Focus your message on well-defined target markets (less can be more).
4. Be integrative: Reinforce your message through consistency and cuing across all communication options and media.
5. Be creative: State your message in a unique fashion; use alternative promotions and media to create favorable, strong, and unique brand associations.
6. Be observant: Keep track of competition, customers, channel members, and employees through monitoring and tracking studies.
7. Be patient: Take a long-term view of communication effectiveness to build and manage brand equity.
8. Be realistic: Understand the complexities involved in marketing communications.
DISCUSSION QUESTIONS
1. Pick a brand and gather all its marketing communication materials. How effectively has the brand mixed and matched marketing communications? Has it capitalized on the strengths of different media and compensated for their weaknesses at the same time? How explicitly has it integrated its communications program?
2. What possibilities does the Internet grant brands looking to build relationships with their customers?
3. Pick up a current issue of a popular magazine. Which print ad do you feel is the best, and which ad do you feel is the worst based on the criteria described in this chapter?
4. Look at the coupon supplements in a Sunday newspaper. How are they building brand equity, if at all? Try to find a good example and a poor example of brand-building promotions.
5. Some experts believe that product placements on television will rise in the future. What are some of the pros and cons of product placements on television?
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 243
In a comprehensive academic endeavor, a number of research-
ers have worked together to accumulate what they call “empiri-
cal generalizations” (EG) of advertising. In putting this research
into context, the lead authors Jerry Wind and Byron Sharp note:
“Even advertising has scientific laws, empirical patterns that
generalize across a wide range of known conditions. These em-
pirical generalizations provide us with benchmarks, predictions,
and valuable insights into how the digital revolution may affect
advertising.”
Empirical generalizations emerge from careful, thoughtful
research. The authors are quick to add several caveats. Empirical
generalizations are not formal laws themselves, and there may
be important exceptions and boundary conditions as to when
they operate. Nevertheless, they suggest three possible benefits
to having some empirical generalizations: (1) as a starting point in
the development of an advertising strategy; (2) as an initial set of
tentative rules that management can follow; and (3) as a bench-
mark, giving management some sense of how much change to
expect when advertising is launched or something changes in the
advertising environment.
The empirical generalizations they identified can be grouped
into four broad topics: return on investment (ROI), 360-degree
media planning, value of TV, and creative quality. While digital
and social media continues to increase in importance, we feature
the research findings in this area in greater detail in Chapter 7.
However, we feature some of the research examining cross-media
interactions (digital and television, digital and print, and so on),
in this overview.
ROI
• Advertising typically has a half-life of three to four weeks. If
advertising is to be sales-effective in the long term, it must
show immediate sales effects in single-source data.
• Based on the established EG that advertising elasticity is
approximately 0.1, net profit is optimized by setting the adver-
tising budget to be 10 percent of gross profit. If the elasticity
is 0.15, then the advertising budget should be 15 percent of
gross profit, and so on.
• Brand advertising often has a pronounced short-term sales
impact (as shown in single-source data). This impact decays
over time. The most dramatic influence on short-term effect
is creative copy.
• Even with no clicks or minimal clicks, online display advertise-
ments generate lift in site visitation, trademark search queries,
and lift in both online and offline sales.
• In-store digital signage featuring “newsworthy” informa-
tion (e.g., new items, seasonal offers, and promotions) has a
markedly favorable impact on sales. This effect is stronger for
hedonic (food and entertainment) products.
• TV advertising for consumer services follow a 70:30 rule
(70 percent of the efforts create interest, 30 percent create
action). And 90 percent of TV advertising for consumer ser-
vices dissipates within three months (versus four months for
consumer goods).
• If advertising changes by 1 percent, sales or market share will
change by about 0.1 percent. (That is, advertising elasticity
is 0.1.) The advertising elasticity is higher in Europe relative
to the United States, for durables relative to nondurables, in
early relative to late stages of the product life cycle, and in
print over television.
• There is a greater than 50 percent chance that the typical TV
advertising campaign will lose money both short term and
long term. The risk of losing money fluctuates over the years,
but has been over 50 percent. The average elasticity of TV
advertising has fluctuated between 0.043 and 0.163 over the
past 25 years.
• The advertising response curve is “convex”—the greatest mar-
ginal response is from the first exposures. As the number of
cumulative exposures in a period increases, the marginal effect
of the advertising drops.
360-Degree Media Planning
• A retail store layout that makes shopping quicker results in
increased shopper spending.
• Approximately 20 percent of word-of-mouth (WOM) about
brands refers to paid advertising in media. The level and effec-
tiveness of WOM are substantially increased when stimulated,
encouraged, and/or supported by advertising, increasing the
probability by about 20 percent that a consumer will make a
strong recommendation to buy or try a product.
• If the advertisements recently recalled were on traditional
media, they were more likely to have left a positive impres-
sion than if they were on digital media. If the consumers had
a previous positive impression of the brand or product adver-
tised for advertisements recently recalled, the advertisements
were more likely to have left a positive impression, regardless
of the media.
• Doubling the clutter does not halve the number of adver-
tisements recalled. Advertisements recalled in high clutter are
more likable on average.
• Repeat viewing is 38 percent, and this does not alter when
a program changes time. Repeat viewing is lower for com-
edies than police dramas and for low rating shows, but
within these program types or ratings levels, repeat view-
ing remains at a consistent low or high value across time
changes.
• Where TV, radio, and magazines (and even special inter-
est ones) claim to attract a specific audience, the target
group is typically less than half of the media’s total audi-
ence, and rival outlets often outperform them in reaching
this subsegment.
Empirical Generalizations in Advertising
BRAND FOCUS 6.0
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244 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
• Spaced multiple exposures (distributed) produce greater learn-
ing than repeated exposures with short intervals (massed).
Longer intervals between exposures result in better learning
than shorter intervals.
• Television advertising does influence online shopping, and that
advertising content plays a key role. Content that is action-
focused increased Web site traffic and sales; further infor-
mation-focus and emotion-focus ad content actually reduced
Web site traffic while simultaneously increasing purchases,
with a positive net effect on sales. These results imply ad copy
is a key factor in driving brand sales.
• The main drivers of sales variation for the studied brand
include online owned (10 percent), (un)earned (3 percent),
and paid (2 percent) media, which help explain a substan-
tial part of the path to purchase. It is noteworthy that TV
advertising (5 percent) explains significantly less than online
media.
• Display ads increase search conversion. However, display ads
may also increase search clicks, thereby increasing search
advertising costs. After accounting for these effects, it has
been shown that $1 invested in display and search leads to a
return of $1.24 for display and $1.75 for search ads.
• Across six touchpoint types—brand advertising, retailer
advertising, in-store communications, word-of-mouth, peer
observation (seeing other customers), and traditional earned
media such as editorial—in-store communication is, in gen-
eral, more influential than that of other touchpoints including
brand advertising. Further, the findings showcased the impor-
tance of retailer, social effects and third-party endorsement in
addition to traditional brand advertising in influencing brand
consideration.
• The impact of advertising varies based on brand familiarity.
Specifically, within-online synergy is higher than online–offline
synergy for both familiar brands but not for both unfamiliar
brands. Managers of unfamiliar brands may obtain substantial
synergy from offline marketing spending, whereas managers
of familiar brands can generate more synergy by investing in
different online media.
Value of TV
• Over the past 15 years, television advertising has not declined
in its effectiveness at generating sales lift and appears to be
more effective than either online or print at generating brand
awareness and recognition.
• Households with DVRs are similar to non-DVR households
in the basic measures of advertising effectiveness (recall and
recognition).
• TV still has very high reach. Declining ratings are due to frag-
mentation (more channels), not to reduced TV viewing lev-
els that are remarkably resilient to social and technological
changes and to the emergence of “new media.” Average rat-
ings halve if the number of channels doubles. In addition, the
double jeopardy law applies to TV channels. Bigger channels
have more viewers, and these viewers watch the channel for
more hours.
• Despite increase in TV channels and fragmentation of audi-
ence, TV appears to retain its perceived clout among target
audiences in Asia, Europe, and North America and holds
across recent years. While the influence of digital media has
grown, it has not caused a corresponding decrease in televi-
sion’s perceived clout.
Creative Quality
• Advertising that communicates a unique selling proposition
(USP) outperforms advertising that does not. Ideally, the USP
should be based on an important benefit; alternatively and
riskier, it could be based on a feature that clearly implies a
benefit. It is effective if it is unique in the minds of consum-
ers, even though other brands could make the same claim.
However, it is especially effective if it cannot be easily matched
by competitors.
• The number of times a brand visually appears in a television
commercial increases the degree of correct brand association
with that commercial.
• Emotional response to a television advertisement influences
both branded engagement (directly) and persuasion (indi-
rectly), and therefore, the likelihood of short-term sales. This
pattern holds for TV advertisements across Argentina, Brazil,
and Mexico, but the magnitude of effect is different.
Sources: Yoram Wind and Byron Sharp, “Advertising Empirical Gener- alizations: Implications for Research and Action,” Journal of Advertis- ing Research 49, no. 2 (June 2009): 246–252. See also Scott Koslow and Gerard J. Tellis, “What Scanner Panel Data Tell Us About Advertising: A Detective Story with a Dark Twist,” Journal of Advertising Research 51, no. 1 (March 2011): 87–100; Raj Sethuraman, Gerard J. Tellis, and Richard A. Briesch, “How Well Does Advertising Work? Generaliza- tions from Meta-Analysis of Brand Advertising Elasticities,” Journal of Marketing Research 48, no. 3 (June 2011): 457-471; Paul R. Hoban and Randolph E. Bucklin, “Effects of Internet Display Advertising in the Purchase Funnel: Model-Based Insights from a Randomized Field Experiment,” Journal of Marketing Research 52, no. 3 (2015): 375–393; Pavel Kireyev, Koen Pauwels, and Sunil Gupta, “Do Display Ads Influence Search? Attribution and Dynamics in Online Advertis- ing,” International Journal of Research in Marketing 33, no. 3 (2016): 475–490; Shane Baxendale, Emma K. Macdonald, and Hugh N. Wilson, “The Impact of Different Touch Points on Brand Consideration,” Journal of Retailing 91, no. 2 (2015): 235–253; Jura Liaukonyte, Thales Teixeira, and Kenneth C. Wilbur, “Television Advertising and Online Shopping,” Marketing Science 34, no. 3 (2015): 311–330; Shuba Srini- vasan, Oliver J. Rutz, and Koen Pauwels, “Paths To and Off Purchase: Quantifying the Impact of Traditional Marketing and Online Consumer Activity,” Journal of the Academy of Marketing Science 44, no. 4 (2016): 440–453; Rajeev Batra and Kevin Lane Keller, “Integrating Marketing Communications: New Findings, New Lessons, and New Ideas,” Journal of Marketing 80, no. 6 (2016): 122–145; Koen Pauwels, Ceren Demirci, Gokhan Yildirim, and Shuba Srinivasan, “The Impact of Brand Famil- iarity on Online and Offline Media Synergy,” International Journal of Research in Marketing 33, no. 4 (2016): 739–753; Jura Liaukonyte, Thales Teixeira, and Kenneth C. Wilbur, “Television Advertising and Online Shopping,” Marketing Science 34, no. 3 (2015): 311–330.
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 245
NOTES
1. To obtain a broader perspective, it is necessary to con- sult good advertising texts, such as George E. Belch and Michael A. Belch, Advertising and Promotion: An Integrated Marketing Communications Perspec- tive, 9th ed. (Homewood, IL: McGraw-Hill, 2012); Thomas C. O’Guinn, Richard J. Seminik, and Chris T. Allen, Advertising and Integrated Brand Promo- tion, 6th ed. (Cincinnati, OH: South-Western, 2012); John R. Rossiter and Larry Percy, Advertising and Pro- motion Management, 2nd ed. (New York: McGraw- Hill/Irwin, 1997).
2. William J. McGuire, “The Nature of Attitudes and Atti- tude Change,” in The Handbook of Social Psychology, Vol. 3, 2nd ed., eds. G. Lindzey and E. Aronson (Read- ing, MA: Addison-Wesley, 1969): 136–314; Robert J. Lavidge and Gary A. Steiner, “A Model for Predictive Measurements of Advertising Effectiveness,” Journal of Marketing 25, no. 6 (1961): 59–62; Thomas E. Barry and Daniel J. Howard, “A Review and Critique of the Hierarchy of Effects in Advertising,” International Journal of Advertising 9, no. 2 (1990): 121–135.
3. Thomas C. Kinnear, Kenneth L. Bernhardt, and Kathleen A. Krentler, Principles of Marketing, 4th ed. (New York: HarperCollins, 1995).
4. Alexander L. Biel, “Converting Image into Equity,” in Brand Equity and Advertising, eds. David A. Aaker and Alexander L. Biel (Hillsdale, NJ: Lawrence Erlbaum Associates, 1993): 67–82.
5. David Hinckley, “Average American Watches 5 Hours of TV per Day, Report Shows,” New York Daily News, March 5, 2014, www.nydailynews.com/life- style/average-american-watches-5-hours-tv-day- article-1.1711954.
6. John Koblin, “How Much Do We Love TV? Let Us Count the Ways,” The New York Times, June 30, 2016, www.nytimes.com/2016/07/01/business/media/nielsen- survey-media-viewing.html.
7. Adage.com, “What It Costs: Ad Prices from TV’s Biggest Buys to the Smallest Screens,” AdAge, April 6, 2015, http://adage.com/article/news/costs-ad-prices- tv-mobile-billboards/297928/.
8. Brian Sternberg, “‘Sunday Night Football’ Remains Costliest Show,” Advertising Age, October 26, 2009, http://adage.com/article/ad-age-graphics/tv-advertising- sunday-night-football-costliest-show/139923/.
9. “Crocodile Dundee Inspires $36m American Tour- ism Push,” Tourism Australia website, https://www. news.com.au/entertainment/movies/super-bowl-2018- margot-robbie-chris-hemsworths-dundee-trailer-is- actually-a-tourism-australia-ad/news-story/344e69054 3f74337b483a318073fa394; Chris Smith, “That Fake ‘Crocodile Dundee’ Movie Was Actually a Very Expen- sive Ad for Australia,” BGR, February 5, 2018, https:// bgr.com/2018/02/05/crocodile-dundee-super-bowl-ad- explained-tourism-movie/.
10. Alexandra Bruell and Sharon Terlep, “P&G Cuts More Than $100 Million in ‘Largely Ineffective’ Digital Ads,” The Wall Street Journal, July 27, 2017, www
.wsj.com/articles/p-g-cuts-more-than-100-million-in- largely-ineffective-digital-ads-1501191104.
11. John R. Rossiter and Larry Percy, Advertising and Pro- motion Management (New York: McGraw-Hill Book Company, 1987).
12. The American Marketing Association gives EFFIE awards for advertising campaigns that can demonstrate an impact on sales and profits. They are awarded based on the following subjective criteria: background and strategy (marketing challenge, target insight, campaign objective), creative (idea, link to strategy, and quality of execution), and media (link to market strategy, link to creative strategy), which together account for 70 percent of an ad campaign’s score. Proof of results accounts for 30 percent. See www.effie.org.
13. Andrew Nusca, “Why Isn’t TV Advertising Dead? It’s Complicated,” Fortune, January 5, 2017, http://fortune .com/2017/01/05/tv-advertising-cmo/.
14. Ibid. 15. Rani Molla, “Millennials Mostly Watch TV after It’s
Aired,” Recode, www.recode.net/2017/9/9/16266854/ millennials-watch-tv-live-video-on-demand; Nielsen .com, “Connecting With the Cosmos: The Total Audi- ence Media Universe,” Nielson, March 19, 2015, www .nielsen.com/us/en/insights/news/2015/connecting-with- the-cosmos-the-total-audience-media-universe.html.
16. Rani Molla, “Millennials Mostly Watch TV after It’s Aired,” www.recode.net/2017/9/9/16266854/millennials- watch-tv-live-video-on-demand, accessed March 27, 2018.
17. Julia Greenberg, “Nope TV Business Isn’t Dead, Far from It, Really,” May 9, 2016, www.wired .com/2016/05/nope-tv-business-isnt-dead-yet-far- really/, accessed March 30, 2018.
18. The Nielsen Company, “Nielsen Audio,” www.nielsen .com/us/en/solutions/capabilities/audio.html; Radio Advertising Bureau, “Why Radio,” www.rab.com/why- radio.cfm.
19. “Radio Advertising Spending in the United States from 2012 to 2021 (in billion U.S. dollars),” www.statista .com/statistics/272412/radio-advertising-expenditure- in-the-us/, accessed March 7, 2018.
20. Chris Ariens, “Study Shows That Every $1 Spent on Radio Advertising Returns $12 in Purchase Activity,” AdWeek, March 6, 2018, www.adweek.com/digital/ study-shows-that-every-1-spent-on-radio-advertising- returns-12-in-purchase-activity/.
21. Steve Krajewski, “Motel 6 Keeps Light On,” Adweek, May 4, 1998, https://www.adweek.com/brand- marketing /motel-6-keeps-light-44593/; “Motel 6 Earns Grand Prize at Radio Mercury Awards,” July 1, 2009, www .motel6.com; C. Marcucci, “Mercurys Give the Richards Group Top Honors for Motel 6 Spot,” RBR, June 18, 2009, https://www.rbr.com/mercurys-give-the- richards-group-top-honors-for-motel-6-spot/, accessed November 2, 2018.
22. Tim Nudd, “30 Years Later, Motel 6 and Tom Bodett Are Still Cranking Out the World’s Best Radio
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246 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Ads,” AdWeek, April 20, 2017, www.adweek.com/ creativity/30-years-later-motel-6-and-tom-bodett-are- still-cranking-out-the-worlds-best-radio-ads/, accessed November 2, 2018.
23. For a comprehensive overview, see Bob Schulberg, Radio Advertising: The Authoritative Handbook ( Lincolnwood, IL: NTC Business Books, 1990).
24. David Ogilvy, Ogilvy on Advertising (New York: Vintage Books, 1983).
25. Magazine Publishers of America, “How Do You Measure a Smile?” Advertising Age, September 26, 2005, M6.
26. Statista.com, “Paid Circulation of Daily Newspapers in the United States from 1985 to 2016 (in thousands),” www.statista.com/statistics/183422/paid- circulation-of- us-daily-newspapers-since-1975/, accessed March 25, 2018; Pew Research Center, www.journalism.org/fact- sheet/newspapers/, accessed March 25, 2018.
27. Andrew Kohut, “Internet Gains on Television as Pub- lic’s Main News Source,” Pew Research Center for the People & Press, January 4, 2011, http://www.people- press.org/2011/01/04/internet-gains-on-television- as- publics-main-news-source/.
28. Adforum.com, “Samsung Galaxy S8: The News- paper Design Edition,” https://www.adforum.com/ creative-work/ad/player/34568766/the-newspaper- design-edition/samsung-galaxy-s8; Eurobest 2018, “The Newspaper Design Edition,” https://www2. eurobest.com/winners/2018/design/entry.cfm?entryid =2114&award=99&order=0&direction=1; “A Design Edition of Switzerland’s Highest-Circulation Daily Newspaper to Mark the Swiss Launch of the Sam- sung Galaxy S8,” Pixel, April 28, 2017, http://pixel. co.uk/a-design-edition-of-switzerlands-highest-circu- lation-daily-newspaper-to-mark-the-swiss-launch-of- the-samsung-galaxy-s8/; Campaigns of The World, “Samsung Galaxy S8 - The Newspaper Design Edi- tion,” https://campaignsoftheworld.com/technology/ samsung-galaxy-s8-the-newspaper-design-edition/.
29. David Gianatasio, “How Blending Art and Commerce Drove Absolut Vodka’s Legendary Campaigns,” AdWeek, September 28, 2015, www.adweek.com/brand-marketing/ how-blending-art-and-commerce-drove-absolut-vodka- s-legendary- campaigns-167143/.
30. Lois Brayfield and Lauren Ackerman, “Direct Mail Sta- tistics,” The DMA Organization, 2017, https://thedma .org/ marketing-insights/marketing-statistics/direct- mail-statistics/.
31. Matt Robinson, “As Seen on TV—and Sold at Your Local Store,” BusinessWeek, August 1, 2010, 21–22; Lacey Rose, “Shill Shocked,” Forbes, November 22, 2010, 146–148.
32. Infomercial DRTV, “Infomercial Cost,” www .infomercialdrtv.com/infomercial-cost.htm.
33. Tim Hawthorne, “7 Things Brand Advertisers Should Know about DRTV,” https://blog.hubspot.com/ agency/7-things-brand-advertisers-should-know-about- drtv, accessed May 28, 2018.
34. Lia Sestric, “The Most Profitable As Seen on TV Prod- ucts of All Time,” GOBankingRanks, September 30, 2017, www.gobankingrates.com/making-money/ profitable-seen-tv-products-time/#2.
35. Courtney Nagle, “Are Infomercial Products Really Worth the Costs?,” Clearpoint, September 15, 2015, www.clearpoint.org/blog/are-infomercial-products- really-worth-the-costs/.
36. Bruce Britt, “The Medium Gets Larger,” Deliver 7, no. 2 (April 2011): 15–17; Jeff Zabin and Gresh Brebach, Precision Marketing: The New Rules for Attracting, Retaining and Leveraging Profitable Cus- tomers (Hoboken, NJ: John Wiley & Sons, Inc., 2004).
37. Outdoor Advertising Association of America, “OAAA: OOH Finished Strong 2015, Looks for Solid 2016 a High,” OAAA, March 15, 2016, https://oaaa.org/ StayConnected/NewsArticles/ IndustryRevenue/ tabid/322/id/4449/Default.aspx.
38. Outdoor Advertising Association of America, “Out of Home Advertising Up 4.1% in Q2 2016,” OAAA, Septem- ber 16, 2006, https://oaaa.org/StayConnected/NewsArti- cles/IndustryRevenue/tabid/322/id/4616/Default.aspx.
39. Daisuke Wakabayashi, “Billboards That Can See You,” The Wall Street Journal, September 2, 2010, http:// allthingsd.com/20100903/billboards-that-can-see-you/; Emily Steel, “The Billboard That Knows: Ad Industry Experiments with Technologies That Recognize Expres- sions, Gestures,” February 28, 2011, https://www.wsj. com/articles/SB1000142405274870469290457616727 2357856608, accessed November 2, 2018.
40. Zack Palm, “3D Coca-Cola Ad Gives Billboards a New Look in NYC’s Times Square,” PSFK, August 2017, www.psfk.com/2017/08/3d-coca-cola-ad-give-nyc- times-square.html.
41. Ben Mutzabaugh, “Wash Your Hands, Watch a Com- mercial,” USA Today, March 12, 2011, 87–100.
42. David T. Friendly, “Selling It at the Movies,” Newsweek, July 4, 1983, 46.
43. CBC Radio, “Show Me the Money: The World of Product Placement,” CBC, August 25, 2015, www.cbc .ca/radio/undertheinfluence/show-me-the-money-the- world-of-product-placement-1.3046933.
44. Abe Sauer, “Announcing the 2016 Brandcameo Product Placement Awards,” February 24, 2016, http:// brandchannel.com/2016/02/24/2016- brandcameo- product-placement-awards-022416/.
45. Abe Sauer, “Apple and Beats: A Match Made in Product Placement Heaven,” Brand Channel, March 28, 2014, http://brandchannel.com/2014/05/28/apple-and-beats- a-match-made-in-product-placement-heaven/, accessed June 13, 2018.
46. “Walmart Updates In-Store TV Network,” Promo, September 8, 2008.
47. Kali Hawlik, “Point of Purchase Marketing: How Retail- ers Can Optimize POP Areas for Higher Sales,” Shopify, February 23, 2017, www.shopify.com/retail/point-of- purchase-marketing-how-retailers-can- optimize-pop- areas-for-higher-sales.
48. Michael Applebaum, “Run from Interactive Digital Displays to Traditional Billboards, Out-of-Home Is on an Upswing,” Adweek, April 15, 2011.
49. For a classic summary of issues related to the type, scope, and tactics of sales promotions design, see John A. Quelch, “Note on Sales Promotion Design,” Teaching Note N-589-021 (Boston: Harvard Business School, 1988).
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CHAPTER 6 • INTEGRATING MARKETING COMMUNICATIONS TO BUILD BRAND EQUITY 247
50. Alec Minnema, Tammo H.A. Bijmolt, and Mariëlle C. Non, “The Impact of Instant Reward Programs and Bonus Premiums on Consumer Purchase Behavior,” International Journal of Research in Marketing 34, no. 1 (March 2017): 194–211, www.sciencedirect .com/science/article/abs/pii/S0167811616300842, accessed November 2, 2018.
51. Lita Epstein, “The Pros & Cons of Using Coupons for Your Business,” Investopedia, www.investopedia.com/ articles/personal-finance/051815/pros-cons-using- coupons-your-business.asp, accessed November 2, 2018.
52. Andrew Ehrenberg and Kathy Hammond, “The Case against Price-Related Promotions,” Admap 418 (June 2001): 30–32.
53. John A Quelch, Note on Sales Promotion Design (Cambridge, MA: Harvard Business School, 1988).
54. Michael L. Ray, Advertising and Communication Management (Upper Saddle River, NJ: Prentice Hall, 1982).
55. Suzy Evans, “Random Samples No More,” Fast Com- pany, (February 2011): 35.
56. Statista.com, “Total Number of Coupons Distributed in the United States from 2011 to 2016 (in billions), https://www.statista.com/statistics/630086/total- number-of-coupons-distributed-in-the-us/, accessed November 2, 2018.
57. Statista.com, “Cumulative Value of Free Standing Insert (FSI) Coupons Offered in the United States from 2013 to 2017 (in billion U.S. dollars),” https://www.statista .com/statistics/502230/value-fsi-coupons-usa/, accessed November 2, 2018.
58. Alex Brown, “Study Shows ROI for Mobile Coupon Redemption,” https://pointofsale.com/Success-stories/ Study-Shows-ROI-for-Mobile-Coupon-Redemption .html.
59. Brandon Carter, “Coupon Statistics: The Ultimate Collection,” November 15, 2017, https://blog .accessdevelopment.com/ultimate-collection-coupon- statistics/, accessed May 9, 2018.
60. Deal Nerd, “Study: How Coupon Codes Are Influencing Online Purchase Decisions,” https://www.blippr.com/ about/coupon-code-stats/, accessed November 2, 2018.
61. Statista.com, “Number of Groupon’s Active Custom- ers from 2nd Quarter 2009 to 2nd Quarter 2018 (in millions),” https://www.statista.com/statistics/273245/ cumulative-active-customers-of-groupon/, accessed November 2, 2018.
62. Karan Girotra, Simone Marinesi, and Serguei Netes- sine, “Can Groupon Save Its Business Model?, Har- vard Business Review, December 26, 2013, https://hbr .org/2013/12/can-groupon-save-its-business-model.
63. John R. Rossiter and Larry Percy, Advertising and Pro- motion Management. (New York: McGraw-Hill Book Company, 1987).
64. Jenny Berg, “How Facebook Made a Data-Focused Event Fun,” BizBash, July 15, 2015, www.bizbash .com/how-facebook-made-a-data-focused-event-fun/ new-york/story/30738/#.WqPSbmfsZRI.
65. “Events: Subaru Palm Challenge,” Subaru website, http://sites.subaru.asia/mig/en/lifestyle/palm-challenge. php; “Mediacorp Subaru Car Challenge Returns with
Almost 400 Participants,” Channel NewsAsia, Octo- ber 28, 2018, https://www.channelnewsasia.com/news/ singapore/mediacorp-subaru-car-challenge-returns- almost-400-participants-10871142.
66. Edmund Ingham, “Who Are the Major Players Disrupt- ing the Events Industry?,” Forbes, December 10, 2014, www.forbes.com/sites/edmundingham/2014/12/10/ who-are-the-major-players-disrupting-the-events- industry/2/#11e556c43463.
67. Brandon Rafalson, “Marketing Stats That Point to the Future of the Industry,” Hello Endless, November 2, 2017, https://helloendless.com/event-marketing-stats/.
68. Ruth P. Stevens, “How to Triple Your Trade Show Mar- keting Results,” AdAge, July 31, 2014, http://adage.com/ article/guest-columnists/triple-trade-show-marketing- results/294357/.
69. Statista.com, “Global Sponsorship Spending from 2007 to 2018 (in billion U.S. dollars),” https://www.statista .com/statistics/196864/global-sponsorship-spending- since-2007/, accessed November 2, 2018.
70. See also IEG, “IEG’s Guide to Guide to Why Compa- nies Sponsor,” http://www.sponsorship.com/Resources/ What-Companies-Sponsor.aspx.
71. U.S. Tennis Association, “Sponsors,” U.S. Open, accessed November 2, 2018, www.usopen.org/en_US/ about/sponsors.html.
72. Stan Phelps, “Three Lessons from Mountain Dew on Leveraging Events to Create an Authentic Brand Experience,” Forbes, October 18, 2014, www.forbes .com/sites/stanphelps/2014/10/18/three-lessons-from- mountain-dew-on-leveraging-events-to-create-an- authentic-brand-experience/#3fb56cda7d27.
73. John E. Hogan, Katherine N. Lemon, and Barak Libai, “Quantifying the Ripple: Word-of-Mouth and Advertis- ing Effectiveness,” Journal of Advertising Research 44, no. 3 (September 2004): 271–280.
74. PRWeek.com, “PRWeek U.S. Awarded 2018: The Win- ners,” PRWeek, March 16, 2018, www.prweek.com/ article/1458806/prweek-us-awards-2018-winners.
75. Jonah Berger and Eric Schwartz, “What Drives Immedi- ate and Ongoing Word-of-Mouth?,” Journal of Market- ing Research 48, no. 5 (October 2011): 869–880.
76. Gerry Khermouch, “Buzz Marketing,” BusinessWeek, July 30, 2001, https://www.bloomberg.com/news/ articles/2001-07-29/buzz-marketing; Mark Hughes, Buzz- marketing: Get People to Talk about Your Stuff (New York: Penguin Books, 2005); Knowledge@Wharton, “What’s the Buzz About Buzz Marketing,” January 12, 2005, http://knowledge.wharton.upenn.edu/article/whats-the- buzz-about-buzz-marketing/, accessed November 2, 2018.
77. For a review of some academic and practitioner issues with IMC, see Prasad A. Naik, “Integrated Marketing Communications: Provenance, Practice and Principles,” in Handbook of Advertising, eds. Gerard J. Tellis and Tim Ambler (Thousand Oaks, CA: Sage Publications, 2007); Tom Duncan and Frank Mulhern, eds., “A White Paper on the Status, Scope, and Future of IMC,” March 2004, Daniels College of Business at the University of Denver.
78. Mart Ots and Gergely Nyilasy, “Integrated Marketing Communications (IMC): Why Does It Fail?: An Analy- sis of Practitioner Mental Models Exposes Barriers of IMC Implementation,” Journal of Advertising Research
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55, no. 2 (2015): 132–145; J. Kliatchko, “Revisiting the IMC Construct,” International Journal of Advertising, 27, no. 1 (2008): 133–160.
79. Prasad A. Naik, Kalyan Raman, and Russ Winer, “Plan- ning Marketing-Mix Strategies in the Presence of Inter- actions,” Marketing Science 24, no. 10 (2005): 25–34.
80. Mart Ots, and Gergely Nyilasy, “Integrated Marketing Communications (IMC): Why Does It Fail?: An Analy- sis of Practitioner Mental Models Exposes Barriers of IMC Implementation,” Journal of Advertising Research 55, no. 2 (2015): 132–145.
81. Rajeev Batra and Kevin Lane Keller, “Integrating Mar- keting Communications: New Findings, New Lessons, and New Ideas,” Journal of Marketing 80, no. 6 (2016): 122–145.
82. Ibid. 83. Jackie Quintana, “5 Companies Who Are Doing Inte-
grated Marketing Right in 2017,” Lonely Brand, January 7, 2017, https://lonelybrand.com/blog/3-companies- integrated-marketing-right/.
84. This discussion assumes that the marketer has already thoroughly researched the target market and fully understands who they are—their perceptions, attitudes, and behaviors—and therefore knows exactly what needs to be done with them in terms of communication objectives.
85. Susan E. Heckler and Terry L. Childers, “The Role of Expectancy and Relevancy in Memory for Verbal and
Visual Information: What Is Incongruency?” Journal of Consumer Research 18, no. 4 (March 1992): 475–492; Michael J. Houston, Terry L. Childers, and Susan E. Heckler, “Picture-Word Consistency and the Elaborative Processing of Advertisements,” Journal of Marketing Research 24, no. 4 (November 1987): 359–369; Thomas K. Srull and Robert S. Wyer, “Person Memory and Judg- ment,” Psychological Review 96, no. 1 (1989): 58–83.
86. Michael D. Johnson, “Consumer Choice Strategies for Comparing Noncomparable Alternatives,” Journal of Consumer Research 11, no. 3 (December 1984): 741–753.
87. David Kiley and Robert Klara, “Heineken’s ‘Walk-In Fridge’,” Adweek Media, November 1, 2010, 15.
88. Julie A. Edell and Kevin Lane Keller, “The Information Processing of Coordinated Media Campaigns,” Journal of Marketing Research 26, no. 2 (May 1989): 149–163; Julie Edell and Kevin Lane Keller, “Analyzing Media Interactions: The Effects of Coordinated Print-TV Adver- tising Campaigns,” Marketing Science Institute Report, No. 99-120, http://www.msi.org/reports/analyzing- media-interactions-the-effects-of-coordinated-tv-print- advertisin/, accessed November 2, 2018.
89. Timothy M. Smith, Srinath Gopalakrishna, and Paul M. Smith, “The Complementary Effect of Trade Shows on Personal Selling,” International Journal of Research in Marketing 21, no. 1 (2004): 61–76.
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249
Learning Objectives
After reading this chapter, you should be able to
1. Describe changes in marketing and consumer behav- ior in a digital era.
2. Define brand engagement and understand the brand engagement pyramid and key drivers of brand engagement.
3. Understand digital communications and the various options available.
4. Understand the role of e-mail marketing and Web site optimization as important components of digital marketing strategy.
5. Evaluate the pros and cons of various social media channels (e.g., Facebook and Twitter) as digital mar- keting tools.
6. Understand ongoing developments within mobile marketing.
7. Develop a broad understanding of influencer market- ing approaches and how word-of-mouth and social influence occurs and can be managed.
8. Describe content marketing and its role in creating brand awareness and engagement.
9. Describe changes in brand management organiza- tional structure.
Branding in the Digital Era
7
Brand managers are
increasingly required
to coordinate their
communications (message
and appearance) across
various digital channels and
across different devices, as
consumers utilize multiple
devices and channels to
complete their purchase.
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250 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
KEY ISSUES FOR BRANDING IN THE DIGITAL ERA In this section, we review a number of important developments with branding in the digital era. To help set the stage, consider the following findings and how they highlight today’s rapidly changing marketing landscape and the profound implications for brand marketers:1
1. Ninety-seven percent of consumers turn to a search engine like Google when they are buying a product.
2. Ninety-six percent of consumers search for product information using their mobile device. 3. Ninety-five percent of millennials expect brands to have a Facebook presence. 4. Eighty-nine percent of consumers do online research before purchasing in-store.
Table 7-1 summarizes some key digital trends, which are described in detail.
Changes in the Consumer Decision Journey The traditional consumer decision journey implied a series of systematic stages, including aware- ness, consideration, purchase intention, and purchase. Imagine a couple, Anne and Joe, who are looking for a new refrigerator to replace their old one. In the “old days,” they would have driven to the nearest physical outlet, such as Sears, and looked at a few options. After talking to the sales staff about their needs, they might identify and shortlist three models across two brand names. They would then complete their purchase after perhaps conferring with a couple of friends who had recently undergone a similar purchase in the same product category. Mapping their consumer decision journey would have been fairly simple, including predictable steps such as trips to the local retailer and discussions with sales staff within the store.
Due to the dramatic developments in digital marketing and social media, however, Anna and Joe’s consumer decision journey today would be significantly different.
In recent times, branding and brand management have undergone a tremendous shift, primarily due to the growth of online and digital marketing as a means of communicating with and selling to consumers. Brands are taking on more and different kinds of meaning, and consumers are playing a bigger and more explicit role in the success—or failure—of those brands. At the same time, marketers know more about consumers than ever and can employ different marketing tactics to reach and influence them.
As consumers increasingly spend time and money in online channels, both marketing and consumer behavior have evolved and changed significantly. We begin our analysis by outlining some of the important changes taking place in both consumer behavior and brand management in the digital area. We then introduce the important topic of brand engagement and profile the wide variety of digital communications that exists for marketers. Finally, we consider some issues around social influence and brand management structure. Brand Focus 7.0 reviews some research findings regarding online word-of-mouth.
PREVIEW
1. Changes in the consumer decision journey 2. A sharp increase in buying via online retail channels 3. A shift in advertising and promotion expenditures toward digital channels 4. The rise of many-to-many communications 5. A dramatic increase in consumer touchpoints 6. A tremendous increase in data availability 7. The use of digital personalization 8. A loss of control over the brand message and the co-creation of brand meaning 9. The role of user experiences
10. The growth of brands as cultural symbols
Table 7-1 Key Digital Era Trends with Implications for Branding and Brand Management
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 251
Anna and Joe are likely to begin their search for a new refrigerator by going online to get information about the top models and their attribute ratings on any number of review sites, including Amazon reviews, online Consumer Reports, and so forth. During this information search phase, a manufacturer such as Samsung may target them with an online ad for refrigerators, based on a Google search algorithm that has been opti- mized to target individuals who are searching online for information about “purchasing a refrigerator.” This exposure to online ads may cause Anna and Joe to focus on a brand they had never purchased before but is offering a large discount on the product during the upcoming holiday (e.g., Memorial Day) weekend. Anna and Joe also post a query on Facebook asking their friends for some recommendations for refrigerator brands, which results in two new recommended brand names. Based on the ads that were served up online and word-of-mouth information from friends on Facebook, Anna and Joe decide to purchase a particular make and model.
They place their order online with Amazon, and while they are placing this order, Ama- zon’s recommendation agent uses a machine-learning algorithm to suggest additional, related products that other people typically buy along with refrigerators, including a microwave oven. Anna has an Amazon account, so she quickly places an order and sets a delivery date for the following week. When the product gets installed on the stated date, Anna and Joe try out the new product. Anna is pleased with her purchase, and she goes on Facebook to thank the two friends for their recommendation. She posts a picture of herself posing next to her new refrigerator and posts a review, along with a Facebook “like” for the product. At the same time, they receive an e-mail from Amazon asking them to rate their customer service experience, which Anna and Joe rate very positively with 5 stars.
Clearly, this depiction of the consumer decision journey in the digital era diverges from previous journeys consumers have undertaken in many important ways. The implications for brand management are also significant. The traditional purchase funnel involves a sequence of steps beginning with awareness and ending with choice; in contrast, the online context produces conditions in which consumers may move through these steps in no particular sequence, with new information about brands impacting the decision journey at any stage.2 Brand managers should account for the multitude of available online channels that provide consumers with brand informa- tion across various stages of decision-making. Figure 7-1 provides an overview of the expanded consumer decision journey that is especially pertinent to an online context.
In response to the aforementioned changes in the consumer decision journey—and its more complex nature—brand managers should equip themselves with information about how the deci- sion journey varies across different segments of consumers. Furthermore, consumers should be encouraged to engage with the brand following a purchase. Given the important post-purchase advocacy that consumers can provide for a brand, marketers should incentivize and encourage consumers to provide positive referrals for the brand. We return to a discussion of the role of word-of-mouth later in this chapter.
FIGURE 7-1
Expanded Consumer Decision Journey
Source: R. Batra and K. L Keller, “Integrat- ing Marketing Communications: New Findings, New Lessons, and New Ideas,” Journal of Marketing 80, no. 6 (2016): 122–145.
Felt a need or want for it
Likes it
Is satisfied with it
Is loyal buyer of it
Is engaged with it
Is active advocate for it
Is willing to pay for it
Chooses to try it
Consumes it
Knows about it
Considers it Learns about
it
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252 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Growth of Online Retailing In addition to communication channels, the number of online retail options has also multiplied. The popularity of online retailing can be inferred from the following statistics:3
1. The value of e-commerce sales will reach $414 billion in 2018. 2. Sixty percent of American adults are happy to not shop in a crowded mall or store. 3. Seventy-one percent of shoppers believe they will get a better deal online than in stores. 4. Forty percent of men and 33 percent of women aged 18 to 34 years say they would ideally
“buy everything online.”
It is no surprise that online retailers have been phenomenally successful. Amazon alone accounts for 5 percent of all retail sales, with overall sales of $35 billion. The rapid growth in the popularity of online retailing has been accompanied by a decrease in preference for in-store shopping, which has further threatened the existence of many brick-and-mortar retailers, such as Macy’s, JCPenney, Walmart, and so on.
Brand managers should therefore find ways of increasing their online appeal and presence and optimize brand experiences online. Online retailers have added many new features to help make online shopping experiences personalized and engaging. Still, many consumers like to visit stores and to touch and feel products—sometimes called showrooming—and is often followed by consumers placing an online order (at the lowest available price). Consumers like to visit retail locations, and this reality can serve as a reassurance that not all brick-and-mortar retailers will disappear any time soon.4 These trends have important implications for managing brands by strategically coordinating online and offline channels.
One of the most prominent success stories in the online retailing context is that of Amazon. As Amazon continues to disrupt retail through its innovations in drone deliveries and acquisi- tions (e.g., Whole Foods), brands should be mindful of all the changes taking place in online retailing, as these changes can significantly affect how they merchandise and distribute their products. Branding Brief 7-1, which follows, chronicles Amazon’s meteoric rise as it has grown to become a dominant player in the online retailing context.
In 1995, Amazon sold its first book as an online bookseller. At
that point in time, no one could have imagined what Amazon
would eventually become. From selling a single book to becoming
a multinational conglomerate, Amazon has continued to wildly
surpass expectations on its path to success.
For two years, Amazon grew its bookstores and was able to
issue an IPO in 1997, allowing the company to begin its rapid
expansion. During this time, Amazon revealed its new logo, sig-
naling to the marketplace that it desired to sell everything from
A to Z. In the period ranging from 2001 to 2004, Amazon began
making quarterly profits, launched cloud computing software,
and started selling jewelry and shoes for the first time. These
expansions were very profitable for Amazon.
In 2005, Amazon launched its membership platform, Amazon
Prime, featuring its free two-day shipping in the United States. In
2006, Amazon expanded into the food sector for the first time by
launching AmazonFresh, a fresh food delivery service. In 2007, Ama-
zon unveiled its Kindle e-reader, briefly returning to its roots in the
book industry. In 2008, Amazon bought Audible, which provides digi-
tal audiobooks in downloadable form, thereby expanding Amazon’s
ability to provide books to its customers in many different formats.
By 2010, Amazon had further expanded into other related
segments. For instance, Amazon Studios, an original televi-
sion studio, launched in 2010. In 2011, Amazon expanded its
technology offerings when it unveiled its first tablet, the Kindle
Fire. In 2013, the company took steps to transform its package-
delivery system that had existed until that point with the introduc-
tion of drone delivery service. By this point, Amazon had almost
completely transformed any previously held notions about what
online shopping and shipping would look like in the future.
BRANDING BRIEF 7-1
The Phenomenal Rise of Amazon
Amazon’s CEO Jeff Bezos describes Amazon’s ability to
make quick changes as a key ingredient of its success.
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 253
FIGURE 7-2
Amazon’s Timeline
Sources: Lindsay Deutsch, “20 Years of Amazon: 20 Years of Major Disruptions,” USA Today, Gannett Satellite Information Network, July 15 2015, www.usatoday.com/story/news/nation-now/2015/07/14/working---amazon-disruptions-timeline/30083935/; James Quinn, “Amazon Timeline: From Internet Bookshop to the World’s Biggest Online Retailer,” The Telegraph, Telegraph Media Group, August 15, 2015, www.telegraph.co.uk/ technology/amazon/11801515/Amazon-timeline-from-internet-bookshop-to-the-worlds-biggest-online-retailer.html.
1995 Amazon sells its first book about a year after the company first incorporated.
1997
Amazon makes its first IPO, allowing the company to start expanding from bookstore to
superstore.
2000
Marketplace, Amazon’s third-party seller, launches. The company’s new logo is revealed,
signaling Amazon’s desire to sell everything from A to Z.
2001 Amazon makes its first quarterly profit.
2002 Amazon Web Services, a cloud computing technology, launches.
2003 Amazon starts selling jewelry for the first time.
2004 Amazon sells shoes for the first time.
2005 Amazon Prime, the company’s premium
membership platform, launches in the US.
2006 An online, fresh food delivery service, Amazon Fresh launches in
Seattle, expanding the company into the food sector for the first time.
2007 Amazon launches the Kindle e-reader.
2010 Amazon Studios, an original television studio, launches in
order to expand into the entertainment sector.
2011 Amazon unveils the Kindle
Fire, the company’s first tablet.
2013 Amazon reveals its new drone delivery system, officially
overhauling the online shopping experience.
2014 Amazon Echo, the company’s first artificial
intelligence voice command system, launches.
2015 Amazon celebrates its 20th birthday with a market value of about $250
billion.
2016 Amazon Prime Video launches, leading to original
award-winning shows and movies such as “Transparent” and “Manchester by the Sea.”
2017
Amazon opens a grocery store prototype in Seattle. The company later goes on to acquire Whole Foods for $14 billion. The company’s
products continue to dominate with Amazon Web Services holding 40% of market share for cloud computing and Amazon Prime video
expanding to over 200 countries.
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254 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Advertising and Promotions Using Digital Channels Among the most important changes taking place with the advent of digital channels is the change in how advertising dollars are allocated across online and offline channels. As of 2017, the expen- diture on digital media worldwide exceeded the amount spent on traditional television advertising ($209 billion for digital ad spending versus $178 billion for TV advertising worldwide).5 Further- more, the growth in digital media is expected to outpace growth in traditional media channels. It has been projected that, by 2020, online channels will be almost 50 percent larger than TV advertising ($113 billion for digital relative to $78 billion for traditional TV advertising budgets).6 Of particular importance is the rapid increase in mobile advertising spending relative to advertis- ing on a desktop device. Worldwide, mobile advertising accounts for $100 billion in advertising expenditures and nearly half of all digital advertising.7 Branding Brief 7-2 shows how REI has utilized online channels to reinforce its brand message and create resonance with their customers.
The day following Thanksgiving in America, called ”Black
Friday,” is often a day that avid shoppers look forward to getting
incredible deals and price promotions, such as a $300 savings on
a high-definition television, a $50 discount on a $300 PlayStation,
or a 60 percent discount off handbags from Saks Fifth Avenue.
Black Friday is a day when bargain hunters can experience a surge
of adrenaline as they locate the best deals in town. Malls are full
of throngs of frenzied shoppers—who often wait for hours outside
for stores to open—hoping to get the best deals and doorbusters.
This day officially marks the start of the holiday shopping season,
which culminates with Christmas. With plenty of special offers and
deals, what’s not to love about this special shopping day?
However, Black Friday is not without its detractors and nay-
sayers. Some have protested against this “holiday” because retail-
ers make their employees work during a time when many of them
would prefer to be spending time with their families enjoying
the Thanksgiving holiday. With many of the deals being available
online before they come to the stores, some retailers have made a
statement by shutting their stores on Black Friday. REI was among
the first to pioneer the “Alternative Black Friday Movement” and
became a disruptor by choosing to close all 143 of its stores, dis-
tribution centers, and headquarters on Black Friday. The strategy
produced very positive PR for the company, and customers and
employees applauded the company for its bold move.
How exactly did REI’s Alternative Black Friday work? Instead
of the usual Black Friday sales and visits to retail outlets for the
occasion, REI’s #OptOutside campaign exhorted its employees
and customers to go outdoors on Black Friday, using a series of
billboards, videos, social media posts, and so on, to promote its
campaign. The company utilized various digital and social chan-
nels to build excitement for its unique #OptOutside campaign.
BRANDING BRIEF 7-2
Igniting a Digital Firestorm
REI encouraged its customers to opt-out of Black Friday
shopping and, instead, spend the day enjoying the outdoors.
In 2014, Amazon continued to broaden its technology product
portfolio by introducing Amazon Alexa (a voice-controlled intelli-
gent personal assistant) and its companion product Amazon Echo.
The Amazon Fire TV product, launched in 2014, was designed as
a network appliance that would allow consumers to gain access to
streaming digital video and audio content. Through the introduc-
tion of Amazon Fire, Amazon gained entry into the entertainment
sector, which subsequently led to various entertainment service
offerings, such as Amazon Prime Video which launched in 2016.
Amazon celebrated its 20th birthday in 2015. Its gift? A mar-
ket value of about $250 billion. Amazon accomplished an entire
lifetime of growth and diversification within its first 20 years,
expanding to seemingly every sector possible. It grew from a sin-
gle bookstore that took four years to earn a profit to a company
that dominates in both branding and product offerings. Many
of these are huge success stories. Its foray into original program-
ming has earned awards for original shows such as Transparent
and Manchester by the Sea. Amazon Web Services (AWS) is now
widely regarded as a market leader, boasting 40 percent of rev-
enue share worldwide in the cloud computing market. In 2017,
Amazon even acquired the grocery store giant Whole Foods for
$14 billion, marking its expansion into brick-and-mortar retail.
What is the secret of Amazon’s success? Founder and CEO Jeff
Bezos describes Amazon’s ability to make quick and bold decisions as
one of the reasons for its spectacular success. This ability to take on
calculated risks was one of the hallmarks of Jeff Bezos’ management
style as he presided over Amazon’s growth. In the two decades since
he founded the company, Amazon expanded into new markets by
finding creative new ways to identify and deliver customer value. It was
able to foresee trends in digitization and mobility and invest in new
products (e.g., Amazon Kindle) at exactly the right time. Amazon has
been effective in its overseas expansion as well, with offerings such as
Amazon Prime Video available in more than 200 countries. Figure 7-2
provides a timeline of key events in Amazon’s development over time.
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 255
The results were a major success, and REI increased its men-
tions on Facebook, Instagram, and Twitter by an astounding
7,000 percent. More than 170 other organizations subsequently
decided to close down for Black Friday, and hundreds of parks
opened without charging any fees. It is estimated that nearly 1.4
million people spent their day outdoors. Due in part to the online
campaign, REI received a record 1 million new memberships in
2015. In-store sales increased by 7 percent, and digital sales grew
by almost 23 percent. Given the initial success of this campaign,
REI has made #OptOutside an annual event.
REI’s Black Friday campaign is an example of how social-
media buzz can increase awareness of brand messages. A
large part of the success of REI’s campaign can be attributed
to the tight linkage between its products (i.e., outdoor gear)
and the theme of the campaign (i.e., encouraging consumers
to go outside). REI used this campaign as an opportunity to
demonstrate its understanding of what truly mattered and reso-
nated with its customers and therefore was able to generate
greater awareness and engagement among its target custom-
ers. This was a bold move on REI’s part to show its customers
and employees that the company cared more about them than
about the money and profits that have become synonymous
with the traditional view of Black Friday.
A video for the REI ad for #OptOutside can be found at
https://youtube/MEVXU4RDUoI.
Sources: “#OptOutside—Will You Go Out With Us?,” REI, www.rei .com/blog/news/optoutside-will-you-go-out-with-us; Shep Hyken, “The Alternative Black Friday Movement,” Forbes, November 26, 2016, www.forbes.com/sites/shephyken/2016/11/26/the-alternative- black-friday-movement/#4ad1cffc6007.
One-to-Many to Many-to-Many Channels The traditional world of marketing involved brand managers relying on mass media channels, such as TV, print, and radio advertising, to communicate with consumers. The direction of communication was usually from manufacturer to consumer, and limited feedback was provided by consumers to manufacturers in turn. Thus, audiences were generally passive recipients of carefully crafted messages sent by brand marketers. This was particularly true in the case of the traditional one-to-many marketing approach to communications, as depicted in Figure 7-3 (where customers are labeled as A, B, and C).
Over time, the one-to-many channels gave way to a greater emphasis on interactive or one-to-one communications between the brand and the customer (see Figure 7-4). Catalog companies such as L.L.Bean or J.Crew embraced this direct marketing approach by viewing each customer individu- ally. In recent years, these one-to-many and one-to-one channels are being supplemented or even replaced by many-to-many channels, such as Facebook and Twitter, in which consumers have become broadcasters in conversation with one another (many-to-many communications) and have become engaged in a two-way dialogue with brand marketers. This fundamental shift from one-to-many com- munications to many-to-many communications has led to other significant related trends, including an increase in consumer touchpoints and data availability, which are discussed in the next section.
FIGURE 7-4
New Media Environment:
Two-Way and Many-to-Many
Communications
One-to-One Communications
A
B
C
Brand
Many-to-Many Communications
A
B
C
Brand
FIGURE 7-3
Traditional Marketing: One-to-Many
Communications
One-to-Many Communications
A
BBrand
C
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256 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Increase in Consumer Touchpoints Meet Anita Berman, senior brand manager for a leading cosmetics brand who works in New York City. Anita started out as a brand assistant for a leading skincare brand nearly 20 years ago. At that time, her life in brand management involved meetings with product development, advertising agencies, R&D, sales force, and the like. She remembers meet- ings with the rest of the brand team in the late 1990s, when they would brainstorm with the ad agency regarding the brand’s ad campaign. At the time, their primary options for adver- tising included ads on TV and in print (particularly magazines). Anita remembers that this was the time when the Internet was just starting, and there was no such thing as Facebook.
Fast-forward to 2018. Anita’s meetings with her brand team still include discussions about product development and getting input from the sales team. However, they now spend a lot of time thinking about a social media and digital marketing strategy for the cosmetics brand that she is managing and its target audience of 18- to 24-year-olds. Anita wonders how best to allocate her advertising budget across various channel options, including TV, display ads on magazine Web sites, social media advertising on Instagram, and video ads on YouTube. They are also launching a mobile app for the brand, which allows her custom- ers to check their appearance and get day-to-day tips on makeup. They have contracted with a weather channel to partner on the mobile app, so that the makeup tips can vary based on where her customers live and the weather on any given day. Anita has to track various metrics such as click-through rates on banner ads, number of impressions, cost-per-click, and so on. They are also launching a social influencer program and are in the process of deciding which social media celebrity would offer the best return on investment.
The growth of digital marketing and social media channels and consumers’ ability to commu- nicate with one another have fueled a sharp increase in the number of touchpoints that brand managers have at their disposal to engage with and communicate with their consumers. As noted previously, the traditional model included one-to-many communications, in which the options would be restricted to one-way communications using mass media channels such as TV, print, radio, and so on. Today, brand managers have a dizzying array of digital communica- tion options they can use to connect with consumers, including Facebook, Twitter, Instagram, Pinterest, LinkedIn, and so on. The implication of this increase in media options is growth in the complexity of media planning; brand managers have to orchestrate these various channels to create an integrated strategy across the consumer decision journey. Furthermore, brand man- agers have to ensure that brands have a unified message and a consistent look and feel across all these platforms. Having a sharply defined brand positioning and clear guidelines on how a brand should be presented and marketed to consumers is an important step in ensuring that the brand has a consistent theme across all channels. Another key concern of brand managers is to understand which channels are producing the greatest return on advertising dollar expenditures. This particular set of tasks—called attribution modeling—can be complex and challenging.
Increase in Data Availability Data, data everywhere! The growth of digital channels has caused a deluge of data, ranging from
clickstream data on users’ browsing behaviors on companies’ Web pages, to data on advertising
metrics (e.g., click-through rates and cost per clicks), to information regarding the number of
Brand managers have various digital
channels to choose from for placement of
ads, including social media venues such as
Facebook and Twitter.
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 257
unique visitors to a brand’s Web site. Marketers now have the ability to use information gathered from customers’ online behavior to tailor their offerings to customers’ needs.9 Yet this quantity of information can quickly become overwhelming if brands don’t invest in tools for transforming all this information into usable bits of knowledge.
With data being so abundant, how can companies gather useful knowledge from the vast stores of information they have access to? Many companies rely on advanced analytics to generate insights from these data. For example, when J.Crew began using clickstream analysis, it generated key insights that increased online sales by 22 percent.10 Its analysis showed that certain channels (e.g., Facebook, Twitter, Pinterest, and Instagram) yielded customers with the highest engage- ment. J.Crew also has optimized its presence on Facebook so that audiences can click on featured links and make purchases on the company’s Web site.11 It found that 21 percent of Pinterest users were likely to buy an item in a store after liking it on Pinterest, and this rate was even higher among younger consumers. In ways such as this, insights into the online behaviors of consumers can improve the brand marketer’s ability to fine-tune segmentation and targeting strategies and strengthen customer engagement and sales.
Another factor contributing to the vast increase in data availability is the growth in social media conversations taking place on Facebook, Twitter, and so on. These conversations can be effectively mined using advanced analytics to generate important insights into consumers’ mind- sets and sentiments related to specific brands. To further illustrate the magnitude and scope of this type of data, Table 7-2 lists the top five brands and the number of social media mentions worldwide during 2015–2016, based on a study by NetBase.12 The nearly 61 million mentions of Facebook and 29 million mentions of Apple represent a wealth of information for brand marketers and pro- vide unique insights into consumers’ thoughts and perceptions of their brand. Social media control rooms offer brand marketers the ability to listen to customer conversations and understand trends.
While the availability of data has provided many advantages to brand marketers in target- ing consumer segments with specific benefits and offers, there are also downsides to these vast amounts of data. One challenge of data availability has to do with ensuring that customer privacy is preserved. Privacy violations can lower consumers’ trust in brands. Brand marketers have to balance their desire to collect, analyze, and use customer data to improve their strategy while avoiding loss in customer trust.
Digital Personalization Maya, an 18-year-old female college student, likes to shop online and is interested in fashion. She is looking for a new pair of jeans to purchase in time for an upcoming fam- ily reunion. While browsing for jeans, she found a yellow dress that she really liked.
Brands (Based on Mentions) Number of Social Media Mentions Worldwide (2015–2016)8
Facebook 60,665,800
Apple 28,858,274
eBay 28,677,175
Amazon 26,001,012
Disney 16,543,436
Table 7-2 Top Five Brands in Social Media Mentions
The digital ecosystem is complex and
offers various new opportunities for
brands to engage with customers. Digital
personalization is a new trend that uses
customer data to develop specific offerings
tailored to customer needs.
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258 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
She almost purchased it and placed it in her shopping cart, but she decided at the last minute that it was too expensive. Although she logged out, the online retailer, which had hired a digital analytics firm to identify patterns of customer behavior, was able to track Maya’s abandoned shopping cart along with its contents. As Maya went about her day, she got a text on her mobile phone asking her to unlock a special offer from the same online retailer. This time, Maya could not resist and decided to purchase the dress.
This anecdote describes a familiar scenario to anyone who has shopped online. The idea that the same product can become available at different prices based on expressed customer interest is called dynamic pricing. Various online retailers have invested in extensive analyt- ics that allow companies to explicitly target individual consumers with varying offers to try to ensure that they complete the purchase. Marketers now have the ability to offer highly tailored messages relevant to various audiences to potentially elicit higher customer loyalty from a larger segment of people.
The advent of digital tools has ushered in an era of unprecedented personalization, in terms of both product and message.13 Digital personalization has been defined as “the tailoring of messages and offerings to individuals based on their actual behavior.” One study found that this ability to personalize can help reduce customer acquisition costs by 50 percent, increase revenues by 5 to 15 percent, and strengthen marketing efficiency by 10 to 30 percent.
Brand managers have access to big data and can utilize it to micro-target consumers at various touchpoints and in different stages of the decision journey. This targeting should take into account various demographic and psychographic aspects of consumers, their online browsing patterns, and their propensity to respond positively to different types of online offers made across various online channels. The data should also show consumers’ proximity to brick-and-mortar locations (i.e., the nearest physical retailer) so that these retailers can provide some inducements and price discounts to incentivize purchase.
What are the implications of microtargeting for consumer behavior? While digital person- alization offers many advantages from the marketer’s perspective, it can also have a downside. Some researchers have suggested consumers may react negatively to personalized offers because of privacy concerns. These negative reactions might be overcome by reminding consumers of various free services and benefits that are provided to them online and by seeking their permission to use their information to target them with personalized offers.14
As our anecdote reveals, one way that digital personalization works is by retargeting con- sumers—that is, by targeting consumers with ads for products that they previously browsed but did not buy. One risk with this approach is that customers might react negatively to variable deals or offers and perceive this practice to be unfair. Orbitz was the target of customer outcry when it was discovered that the company was serving up higher prices on hotel rooms when visitors to their Web site used a Mac (versus a PC).15 Orbitz’s actions were based on the observation that Mac users typically spend 30 percent more on a hotel room. Still, the publicity surrounding this revelation led to a loss of reputation for Orbitz. This incident highlights a potential downside of personalizing offers to suit customers’ profiles.
Retargeting, or targeting consumers with
ads for products that they previously
browsed but did not buy, is increasingly used
by online retailers to convert browsers to
buyers.
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 259
Researchers have shown that, under certain conditions, retargeting is more effective, particu- larly after consumers visited a product review site and for consumers who are browsing infor- mation about the category as a whole.16 Retargeting is particularly effective because it allows brand marketers to be more focused in their advertising to users who have demonstrated previous interest, thereby allowing firms to strengthen their conversions among customers who visit their Web site. Ideally, an integrated strategy in which customers are targeted with ads using search advertising, display advertising, or content marketing, and are then made the focus of retargeting, helps strengthen the overall effectiveness of a digital marketing campaign.
A primary goal for brand marketers is to understand key triggers that work well with consum- ers with different profiles and in varying stages of the consumer decision journey. An analytics engine may uncover important nuggets of information (e.g., a job change to a different city or a propensity among consumers to go golfing every Saturday), and these nuggets can be leveraged to target specific offers to customers, in real time, to improve the conversion efficiencies (or the rates at which consumers move from one stage of the decision journey to the next).
One major bank added $300 million in savings by utilizing customer data to better target customers across various stages of the purchase decision process. This was done by specifying the various stages of the banking decision journey—including when customers first browse the Web, when they visit a branch, when they call, and so on—and targeting customers with offers that varied depending on which stage they were in. To undertake such personalization, organizational infrastructure is an important consideration.
To be successful in engaging in digital personalization, organizations must be proficient in prioritizing and identifying the data they need, developing agile teams, and having an effective testing-and-learning process. These key organizational strengths are preconditions for digital per- sonalization at scale. The following points summarize three organizational prerequisites for digital personalization to be successful:17
1. Organizations must invest in a customer data warehouse that provides continuous monitoring and feedback regarding customer needs and wants and how well those are being satisfied through company offerings.
2. Organizations must deploy cross-functional teams to understand the customer’s decision journey, which may involve a variety of different channels, including the company’s Web site, a mobile app, or an in-store experience.
3. Organizations must employ an iterative process of testing and learning to identify what works and what does not.
Loss of Control over Brand Message and Co-Creation of Brand Meaning The shift to digital has decreased the extent of control that a brand manager has on brand meaning. In the nondigital era, brand managers exercised greater control over their messages that were available through limited channels. With today’s many-to-many communications model (see Figure 7-4), the growth and proliferation of large social media platforms, such as Facebook,
Twitter, and Instagram, have ushered in an era in which dynamic and real-time conversations are
taking place among consumers on a massive scale. Therefore, it behooves marketers to coordinate
brand meaning generation on a large scale.18
The large number of social media channels
available to consumers has reduced the
amount of control that a brand can exert on
the conversation.
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260 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
This shift in the role of consumers as co-creators of brand meaning means that brand manag- ers must manage and guide consumer conversations without holding a central or exclusive role as the authors or sources of brand meaning. This is a complex task that is exacerbated by the fact that experiences and stories are being shared in social media, which further decreases the abil- ity of brand marketers to control the conversation. In addition, brand meaning can be shaped by many unexpected forces. For example, one study that provided a novel approach for measuring brand image based on Twitter found that 7UP was closely linked to the brand Smirnoff in social media.19 The unexpected link to Smirnoff was due to a new cocktail recipe that was gaining favor in social media that included 7UP as a key ingredient.
In summary, the digital age has created conditions in which brand meaning is co-produced by three different but interacting forces:
1. Firm-generated brand meaning: Through their online and offline marketing activities and pro- grams, along with other means, firms attempt to shape the meaning of brands with consumers.
2. Consumer-generated brand meaning: In the digital age, consumer-to-consumer conversations are enabled through social media platforms (e.g., Facebook and Twitter) that supplement traditional offline word-of-mouth. These conversations, which are taking place on various digital platforms and on a large scale, can significantly shape brand meaning.
3. Media and cultural influences: A variety of new entities and channels also play a signifi- cant role in co-creating brand meaning. Media channels may themselves contribute to brand meaning. Furthermore, cultural influences are continually evolving and shaping customer conversations and contributing to brand meaning.
Figure 7-5 provides a visual depiction of the role of consumers and firms in co-creating brand meaning, in addition to broader media and cultural influences.
Customer-generated brand meaning can have a powerful impact on how other consumers view a brand and their impact on brand image. The social media megaphone can amplify both negative and positive stories about brands and have a massive impact. For example, when Samsung Galaxy phones were the subject of a recall, the negative social media buzz posed a serious threat to the brand’s reputation. In contrast, when Apple launches a new product (i.e., the iPhone XR), social media buzz about the product builds up months before the actual launch.
The challenge for brand managers is to assess how best to coordinate multiple sources of brand meaning in a cohesive manner. They should also be prepared to handle public relations crises in a quick and efficient way to minimize any possible damage to brand reputation. In
Chapter 9, we describe the role of social media monitoring as one potential way for brands to
keep up with social media conversations.
One important technology-induced change is the ability and willingness of brands to invite
consumers to co-create brand meaning in an explicit manner. This involvement may also extend
to consumers providing valued input into which product designs brands should choose. Brands
may also seek advice on which types of logos work best and even ask consumers to design ads to
use in branded campaigns.
Some of these invitations from brands to consumers are structured as contests with one large
prize given for a winning submission. For example, the Frito-Lay Doritos’ “Crash the Super
FIGURE 7-5
Sources of Brand Meaning
Mass Media and Cultural
Influence- Based
Meaning
Firm- Generated
Brand Meaning
Co-Created Brand
Meaning
Consumer- Generated
Brand Meaning
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 261
Bowl” ad contest had a $1 million prize, and the winning ad was aired during the Super Bowl. The contest, which ran from 2006 until 2015, marked one of the first efforts by a big brand name to outsource a part of its advertising to amateur participants via a contest and was seen as a bold and risky move on the brand’s part.20 This approach toward co-creating products and brands has become more prevalent today. Still, there are limits to how much co-creation a brand can engage in, as outlined below in The Science of Branding 7-1.
User Experience Is the Key to Digital Brand Success Whether its Amazon’s easy-to-use interface that allows users to make purchases with a single click, the intuitive appeal of Apple devices that allows even a 5-year-old child to easily operate an iPad, or the elegant simplicity of Google’s search engine that is popular all over the world, successful digital brands have mastered the art of making the user experience flow seamlessly and smoothly.21 These success stories showcase how crucial a seamless user experience is to the success of a digital brand.
Creating an interface that consumers can effortlessly navigate is one part of maximizing user experience. Another key element is to ensure that consumers can seamlessly switch from one device to another, allowing for a smoother user experience. For example, Apple has worked tirelessly to create an ecosystem such that its hardware, software, and peripherals are integrated into a single system that works seamlessly, as one commentator noted:22
Steve Jobs and Apple took end-to-end responsibility for the user experience—something too few companies do. From the performance of the ARM microprocessor in the iPhone to the act of buying that phone in an Apple Store, every aspect of the customer experi- ence was tightly linked together.
What are the implications of social media from a consumer’s
standpoint? Are consumers, in fact, motivated to participate in
co-creation of brands and products? When does consumer co-
creation of brands and products benefit a firm? On the positive
side, research has shown that co-creation can increase loyalty
by promoting feelings of psychological ownership and makes
consumers feel empowered. Furthermore, the amount of effort
consumers put in and the enjoyment they experience from par-
ticipating in co-creating a product can lead to greater consumer
preference for the co-created product itself.
While co-creation can positively influence consumers’
preferences for the products that they are helping to co-
create, not all consumers are equally willing to participate
or benefit from such involvement. Similarly, the benefits to
brands are also uneven and depend on various factors. In an
advertising setting, researchers have shown that co-creation
can benefit brands when viewers’ ability to scrutinize mes-
sages is low, when the identities of the ad creators and view-
ers are similar, or when viewers are highly loyal to the brand.
In product categories in which quality is extremely important
or with luxury products, co-creation efforts are less success-
ful. Moreover, when consumers’ cultural orientations include
a high belief in power distance (or the belief in inequality or
hierarchy), their propensity to purchase co-created products
is also lower.
These findings indicate that brand marketers should tread
carefully when implementing mechanisms that allow for con-
sumer participation. While there appear to be many benefits,
there are also significant downsides if the co-creation efforts
involve the wrong product categories or customer groups.
Sources: C. Fuchs, E. Prandelli, and M. Schreier, “The Psychological Effects of Empowerment Strategies on Consumers’ Product Demand,” Journal of Marketing 74, no. 1 (2010): 65–79; Christoph Fuchs and Martin Schreier, “Customer Empowerment in New Product Development.” Jour- nal of Product Innovation Management 28, no. 1 (2011): 17–32; Christoph Fuchs, Emanuela Prandelli, Martin Schreier, and Darren W. Dahl, “All That Is Users Might Not Be Gold: How Labeling Products as User Designed Backfires in the Context of Luxury Fashion Brands,” Journal of Marketing 77, no. 5 (2013): 75–91; Debora Thompson and Prashant Malaviya, “Consumer-Generated Ads: Does Awareness Co-Creation Help or Hurt Persuasion?” Journal of Marketing 77, no. 3 (May 2013): 33–47; Martin Schreier, Christoph Fuchs, and Darren W. Dahl, “The Innovation Effect of User Design: Exploring Consumers’ Innovation Perceptions of Firms Selling Products Designed by Users,” Journal of Marketing 76, no. 5 (2012): 18–32; N. Franke and M. Schreier, “Why Customers Value Self- Designed Products: The Importance of Process Effort and Enjoyment,” Journal of Product Innovation Management 27, no. 7 (2010): 1020–1031; Susan Fournier and Jill Avery, “The Uninvited Brand,” Business Hori- zons 54, no. 3 (2011): 193–207; Neeru Paharia and Vanitha Swaminathan, “Who Is Wary of Cocreation? The Hazards of Empowering Power-Distant and Conservative Consumers,” working paper, Georgetown University.
THE SCIENCE OF BRANDING 7-1
Is Co-Creation of Brands and Products Always Good?
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262 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
This level of utility and convenience that is expected from online brands now translates to the offline world as well. Designing both online and offline interfaces to ensure that Web sites are so simple to navigate that consumers will easily locate what they are looking for or ensuring that a smartphone app is designed to optimize user convenience will be critical to the success of a brand.23 As American Marketing Association CEO Russ Klein writes, “No industry space is an island. You expect Avis to be as effortless and friction-free as Uber.”24
Brands as Cultural Symbols Brands have greater impact as cultural icons than ever before. Brands can help consumers feel a part of something and allow them to signal to and connect with others.25 As brands become increas- ingly embedded in consumers’ daily online conversations, brand managers must deploy a new set
PEPSI’S AD MISFIRE
Kendall Jenner—a supermodel who starred in a Pepsi commercial—inadvertently became the target of con-
troversy following a Pepsi ad campaign. In the commercial, Jenner was featured as leaving a photo shoot to
stop a political protest by handing a policeman a can of Pepsi. The ad was the subject of significant backlash
from its viewers, who felt that it was inappropriately exploiting a national protest movement—the Black
Lives Matter movement—in an attempt to increase Pepsi’s own sales. Even though Pepsi quickly pulled the
ad to avert further controversy, it had to issue an apology to ensure that its audiences were not offended by
Pepsi’s “lack of taste” in its choice of advertising themes. Nevertheless, the incident drew criticism on social
media from various sources. Notably, Bernice King, daughter of Martin Luther King Jr., issued a scathing
criticism, arguing that the ad trivialized the sacrifices of many of the people (such as those of Martin Luther
King) involved in civil rights protests.
One Pepsi ad featuring Kendall Jenner became a source of
controversy for seemingly trivializing the protests surrounding
the Black Lives Matter movement. Pepsi later apologized for the
unintentional tone of the ad.
Apple’s extraordinary focus on a seamless
user experience both instore, online,
and across all its devices, is one of the most
important reasons for its success.
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 263
of techniques to ensure that brands maintain their cultural relevance.26 Brand managers should incorporate ways for consumers to “friend” brand names on Facebook, Twitter, and Instagram; they should allow consumers to participate in brand communities and, at the same time, preserve the authenticity of the brand community by embracing a hands-off approach. They should find ways of achieving cultural resonance by presenting an authentic voice and a genuine point of view. Brands whose efforts to reach consumers have any traces of hypocrisy will be subject to parody. For example, Pepsi’s ad campaign featuring Kendall Jenner was the subject of much ridicule and criticism in social media.27
Pepsi learned the lesson of how quickly a public relations crisis can spread through social media channels. Brands have to be prepared for sudden crises to occur and develop a crisis management plan to ensure that the organization is prepared to address any controversies as they arise.
BRAND ENGAGEMENT Consumer–brand engagement is an important focus of brand managers, and there is even more emphasis on achieving this in a digital marketing and social media context. As noted in Chapter 2,
when customers are engaged, they are willing to invest time, energy, money, or other resources
in the brand beyond those expended during its purchase or consumption. For example, customers
may choose to join a club related to a brand, receive updates, and exchange correspondence with
other brand users or formal or informal representatives of the brand itself.
In an online context, consumers engage in a number of activities that go beyond mere purchase,
including cross-buying, word-of-mouth and referrals, and posting reviews and blogging about a
brand. These customer actions may be described as customer engagement. At the most basic level,
consumers engage with firms by donating their own time, money, or other resources that help
strengthen their bonds with a brand or firm. This section provides an overview of brand engagement
and related issues, including (1) describing the brand engagement pyramid, (2) highlighting brand
and non-brand drivers of brand engagement, and (3) reviewing the role of brand boycotts and social
movements as specific examples of consumer activism in the digital era.
We distinguish three levels of customer engagement based on the extent to which a customer
engages in various types of behaviors:
1. Low brand engagement: Low levels of engagement may translate into a higher frequency of
purchasing a product or providing positive feedback about a product or service. On a related
note, we should recognize that a vast majority of consumers may have no engagement with a
brand. This type of consumer may be referred to as being “indifferent” to the brand.
2. Moderate brand engagement: Calling a company’s 1-800 help line to seek additional infor-
mation about a product or service or providing the company with some feedback about new
flavors may be viewed as moderate brand engagement.
3. High brand engagement: Positive forms of high brand engagement include joining a brand
community or starting a fan page on Facebook dedicated to a brand, evangelizing by trouble-
shooting customer complaints on a Web site, helping others find the right product variant to
suit their needs, and so on. Companies should foster such evangelizing among their customers
by offering various monetary and nonmonetary incentives.
Many consumers of a given brand could engage in these behaviors to varying degrees and
be characterized as having low, moderate, and high engagement with the brand. It is worth
recognizing, however, that some consumers may also have negative brand engagement. On
the negative side, low engagement may involve withdrawing from a brand by lowering pur-
chase frequency, complaining about a product or service, and so on. Stronger negative actions
toward the brand may include terminating a service contract, posting a negative review about
the brand on a review Web site, or discouraging others from purchasing the product. An even
more extreme set of behaviors could involve boycotting a brand or encouraging consumers to
join a “brand hate” group on Facebook (e.g., “I Hate Walmart” and “Comcast Sucks”). In a
subsequent section, we analyze the role of online channels in fostering social movements and
brand boycotts.
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264 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
FIGURE 7-6
Brand Engagement
Pyramid
Non-Brand Influences
1
1
2
3
2
3
Brand Marketing
Highly Engaged
Moderately Engaged
Not Very Engaged
Brand Engagement Pyramid Customers vary in their propensity to engage with firms; therefore, marketers must develop various approaches to strengthen and foster positive brand engagement. Segmenting customers according to their propensity to engage with a firm can be accompanied with segment descriptions based on age, income, expertise, and so on. The resulting brand engagement pyramid can offer insights into who to target and how to market to these segments. Figure 7-6 captures the possible ways a company might segment its customer base according to their level of engagement. The blue arrows reflect brand marketing activities or other influences that are outside the control of the brand marketers; the red arrows reflect the flow of information and influence both within and across different levels of the brand engagement pyramid.
The following set of questions represent some key issues that marketers need to address regarding their customers’ level of brand engagement:
1. What is the shape of the brand engagement pyramid? What is the size of the highly positively engaged group? What is the size of the not-very-engaged versus the highly engaged group? How many negatively engaged customers exist and at what levels?
2. Are there any trickle-down effects, such that those who are highly engaged exert influence over those who are less engaged? Are there any influences of the disengaged group on the engaged group, or vice versa? Does a reverse influence of the less engaged on the highly engaged customers harm the brand, and how can marketers stem this direction of influence if it is negative in nature?
3. What are the flows of information (as well as influence) for a given level of engagement? What does this imply for brand loyalty and purchase behavior?
4. Among those who are highly engaged, what are the most efficient means of marketing com- munications? Similarly, among those who are least engaged, how can marketing communica- tions be leveraged to strengthen engagement?
Branding Brief 7-3 provides insights into how Dollar Shave Club has been able to strengthen engagement among its customers. The Science of Branding 7-2 provides some academically grounded insights into drivers of brand engagement.
Taken together, understanding the different levels of brand engagement and how market- ing communications can strengthen brand engagement is critically important. Next, we offer a description of online brand communities, social movements and brand boycotts and brand hate and parody as instances of negative brand engagement and discuss the role of digital media in facilitating such movements.
Negative Brand Engagement The growth of digital marketing and social media has resulted in greater collaboration and the creation of brand communities among consumers. While these brand communities are generally positively disposed toward brands, they can also become the source of hatred and dissatisfaction with the brand. Facebook pages such as “Comcast Sucks” and “I Hate Apple” command large followings and allow consumers to vent their frustration regarding the brands’ failings, including their lack of customer service or high prices.
Sometimes, these communities can present opportunities for brands to redress customer griev- ances. In fact, a number of companies hire service personnel to act as brand ambassadors to specifi- cally help redress consumers’ concerns. These Web sites stand in stark contrast to brand fan pages that often spring up around communities of individuals who are positively disposed toward a brand
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 265
Dollar Shave Club (DSC) is positioned as a convenient and
cost-effective alternative to delivering razors and personal groom-
ing products via mail. The company has garnered 3.4 percent of
a competitive razor market and has 1.7 million active members
per month. Its positioning as a value brand is consistent with its
pricing at $1 per month for a package of razors, and custom-
ers choose from a variety of subscription services based on their
particular needs.
To highlight its value proposition, DSC campaigns effec-
tively leverage humor to increase their social media buzz. DSC’s
#RazorBurn campaign used humor to poke fun at its competi-
tors, mocking the higher-priced alternatives and inaccessibility
of rival products. Their online videos have been watched more
than 20 million times, and nearly 50,000 of its highly engaged
customers provide referrals to new customers to join DSC each
month. For example, the campaign jokes that typical razor
companies had blades of such high quality that you could use
them for a month. The campaign then featured images of old,
“gross” razors with captions such as “Your razor’s so old it eats
dinner at 4:30.”
According to the company, the campaign was successful,
resulting in a 24 percent lift in overall social media mentions,
with social followers increasing by 6 percent and DSC’s Twitter
engagement increasing by 31 percent. The keys to online brand
engagement for DSC included a clear value proposition, which
targeted a felt need among consumers (i.e., alleviating the high
prices of personal grooming products), and a very reasonable cost
for an online subscription, which offered greater convenience.
These benefits resulted in high loyalty toward and brand engage-
ment with the DSC brand.
BRANDING BRIEF 7-3
Shaving the Price of Razors
Dollar Shave Club
and typically love a brand. Both brand love and brand hate can become more exaggerated in online communities, as individuals with similar beliefs unite together around their opinions about a brand.
These communities can also become the basis for social movements and brand boycotts—for example, when consumers boycotted retailers that carried merchandise owned by Ivanka Trump. The campaign, #GrabYourWallet, was meant to boycott businesses (e.g., Macy’s and Bed Bath & Beyond) that carried Trump-family products as an expression of protest against the perceived ethical failings of the president. In contrast, during the same period, Amazon saw an increase in sales of Ivanka Trump- branded perfume, as supporters of the brand demonstrated their support.
The availability of various means of communicating easily or in a relatively anonymous man- ner has increased the likelihood of brands being ridiculed and parodied to a greater extent than
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266 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
What are some factors that drive consumers to exhibit low,
moderate, or high levels of brand engagement? According to
research findings, brand characteristics, message characteristics,
medium characteristics, and consumer characteristics can all drive
brand engagement.
• Brand characteristics: Certain types of brands have higher
engagement. For example, brands that have more symbolic
(or nonfunctional) positioning and those with unique or dif-
ferentiating attributes or associations tend to elicit higher
brand engagement. The type of good (whether publicly
consumed or private) has also been shown to impact brand
engagement, with consumers demonstrating higher engage-
ment for publicly consumed goods.
• Message characteristics: Messages pertaining to a brand
could include advertising by the brand, content created or
curated by the brand and shared via social media, sponsored
blogs, or any news item featuring the brand. Characteristics
of these messages can impact brand engagement. Message
relevance to the consumer can also increase brand engage-
ment. An additional way for brands to engage consumers
is to arouse certain emotions via the messages that they
post online. For example, research has shown that emotions
such as awe and surprise increase consumers’ willingness to
engage with a brand’s message.
• Medium characteristics: The size of the audience and the
strength of ties between the consumer and the audience
(i.e., other consumers) can also change engagement with
the brand message. Research has shown that consumers can
also be strategic in where they post messages based on the
type of medium. The co-location of brands with other brand
names on the same medium or within the same message can
also impact perceptions of a given brand by creating a con-
versation space in which brands vie with each other for cus-
tomer attention. Therefore, brands may be better off selecting
unique or less crowded social media venues or channels, thus
improving their ability to be “heard” by consumers.
• Consumer characteristics: Several consumer characteristics
have also been shown to drive brand engagement, including
prior loyalty and identity goals, such as consumers’ desire to
express themselves or to manage others’ impressions of them.
Inviting consumers to co-create different aspects of a product
or service or advertising can help strengthen engagement, but
this only works for certain types of consumers and in certain
product categories (see The Science of Branding 7-1).
Sources: Vanitha Swaminathan, Andrew H. Schwartz, and Shawndra Hill, “The Language of Brands: Understanding Brand Image through Text Min- ing of Social Media Data,” (2017), University of Pittsburgh; Oded Netzer, Ronen Feldman, Jacob Goldenberg, and Moshe Fresko, “Mine Your Own Business: Market-Structure Surveillance through Text Mining,” Marketing Science 31 (May–June 2012): 521–543; Christian Hughes, Vanitha Swam- inathan, and Gillian Brooks, “In Blogs We Trust: The Impact of Blogging on Awareness and Brand Engagement,” (2018), University of Pittsburgh; Jonah Berger, and Katherine L. Milkman, “What Makes Online Content Viral?,” Journal of Marketing Research 49 (April 2012): 192–205; Yu- Jen Chen and Amna Kirmani, “Posting Strategically: The Consumer as an Online Media Planner,” Journal of Consumer Psychology 25 (Octo- ber 2015): 609–21; Zoey Chen, “Social Acceptance and Word of Mouth: How the Motive to Belong Leads to Divergent WOM with Strangers and Friends,” Journal of Consumer Research 44 (October 2017): 613–632.
THE SCIENCE OF BRANDING 7-2
Drivers of Brand Engagement
previously. When United Airlines passenger and musician Dave Carroll met with poor customer service from the airline—the airline broke his Taylor guitar during a flight—the musician took to YouTube and created a video called “United Breaks Guitars.” The video became a viral sensation and caused the company’s stock prices to plunge in the immediate aftermath of the video’s release. More recently, the airline was again in the news when one of its passengers was unceremoniously dragged off an airplane and the entire incident was captured on video and posted online.28
The social media megaphone has provided consumers with unprecedented power to share information with millions of current and future consumers, thereby shifting considerable power into their hands. The next section offers a closer look at the many channels that are available to brand marketers today to share information and to engage with consumers. Digital communica- tions across a variety of channels—for example, Web site, e-mail, search and banner ads, and influencer marketing using blogs—can complement traditional forms of communication. Each of these channels has unique aspects that are worth considering as marketers embark on a plan to incorporate different digital media. We begin with an overview of three types of communications: paid, owned, and earned channels.
DIGITAL COMMUNICATIONS In this section, we provide an overview of three types of channels that are available to the digital brand marketer—paid, owned, and earned channels—as first introduced in Chapter 1. A paid channel is one in which a marketer typically runs paid advertising, such as Facebook
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 267
advertising, and can also include traditional paid advertising channels, such as TV, print, and so on. Paid (digital) channels include search advertising (e.g., Google AdWords), display advertising, banner advertising, social media advertising (e.g., advertising on Facebook, Twitter, Instagram, and Pinterest), e-mail marketing, and mobile ads (e.g., messaging or in-app advertising). Social media advertising is increasingly shifting toward video ads that are placed on various social media Web sites. Owned channels—such as a company’s Web site, a YouTube channel, or mobile apps— can be valuable sources of information for consumers about a company’s offerings.
Earned channels refer to review sites and reviews posted online that typically do not cost the company anything but create a buzz to help build publicity for the brand, especially if the reviews are positive. Earned channels include social media mentions of a brand or likes and comments in response to a social media post or blog post. These earned channels are valuable real estate on the Internet because they do not cost anything to a brand. Generating sufficient buzz online can be an important contributor to brand engagement and online sales, as both TripAdvisor and Airbnb have found.
Figure 7-7 summarizes the main communication vehicles that are available to digital mar- keters today. All three—paid, owned, and earned channels—can contribute to brand presence and brand engagement. For example, Warby Parker utilizes its Web site to invite customers to design a unique pair of eyeglasses, which it then delivers to customers. In addition to leveraging the ability of the Internet to offer customization options to its users, Warby Parker has leveraged online social media to build brand engagement and create loyalty. Recently, to call attention to the important
FIGURE 7-7
Summary of Digital
Marketing Communica-
tion Channels
Paid
Search Advertising Company Web Sites
Review Web Sites (e.g., Amazon Reviews, Yelp)
Public Relations
Media Coverage
Company-Owned Social Media (e.g., Facebook
Pages, YouTube Channel)
Mobile Apps
Display Advertising
Social Media Advertising
E-mail Marketing
Paid Bloggers/Influencers
Mobile In-App Advertising
Owned Earned
HOW MILLENNIALS FUELED TRIPADVISOR AND AIRBNB
Millennials are the prime driver of the sharing economy, so it should come as no surprise that most of them
tend to rely on their peers’ reviews to plan their holidays. This has helped TripAdvisor, which encourages
travelers to share their honest holiday experiences, become one of the most influential websites. Another
company that has benefited from millennials’ eagerness to share experiences is Airbnb. Many millennials
look for personal and “real” adventure while traveling, and living in other people’s homes can provide that
sense of authenticity. Sharing such experiences on social media helps fuel the popularity of Airbnb’s services
among millennials even further.29
Sites like TripAdvisor benefit greatly from millennials’ predilec-
tion for sharing experiences.
Source: Ian Dagnall /Alamy Stock Photo
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268 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
role of sharing of information by consumers on various social media, some commentators have added shared media to paid, owned, and earned channels as a fourth type of communication channel. We describe these various word-of-mouth effects in Brand Focus 7.0 at the end of this chapter.
In summary, a mix of paid, earned, and owned channels can help support a brand’s overall marketing strategy. We begin our subsequent discussion by describing the role and impor- tance of two important channel options, company Web sites and e-mail marketing. These two channels are among the most traditional approaches to using digital channels to appeal to customers.
Company Web Sites As an example of an owned channel, the company’s Web site represents a key brand asset and a primary marketing tool in the online context. Consumers often use the Web site as the first place they turn to learn more about a brand. Web sites offer companies the ability to tell their story to their customers and can offer an effective platform for engagement. Company Web sites are particularly crucial to the success of small businesses and in business-to-business set- tings because they are often the only vehicle of communication between the company and the customer. Company Web sites provide various advantages to marketers, including generating leads, providing contact information, and facilitating customer communications, feedback, and after-sales service.30
Companies have to invest time and money, however, in ensuring that the company Web site reflects the look and feel of the brand itself, in addition to ensuring that the content reflects the story they want to tell. Company Web sites should be optimized to make sure that their presence on search engines allows customers to find them quickly. This optimization requires that the content companies provide has high relevancy with respect to the keywords that consumers employ while searching for them, thus maximizing their position in organic searches. We will later describe the nuances of search advertising, which relies on sponsored ads to allow customers to land on com- pany Web sites. Recently, companies have begun making mobile apps available as an option for consumers to access company content via their mobile devices. These are particularly beneficial as they are relatively easy to set up.
E-mail Marketing E-mail marketing, while sometimes eclipsed by its more glamorous counterparts such as social media advertising, is still the most effective form of communication. Various studies have described the exceptional return on investment of e-mail marketing. For example, one study by the Data & Marketing Association suggests that the median return on investments in e-mail marketing (122 percent) is four times higher than that of other notable commu- nication channels, including social media (28 percent), direct mail (27 percent), and paid search (25 percent).31 Perhaps due to its high return on investment, studies have shown that marketers intend to spend more on e-mail marketing in the coming years.32 There are a few key considerations in conducting an effective e-mail campaign, as discussed in the following paragraphs.33
Segmenting, Targeting, and Personalization. Segmenting e-mail lists, identifying the right customers to target, and then sending personalized e-mail messages to these targets are exceedingly important to the success of an e-mail campaign.34 Developing buyer perso- nas that describe each segment’s interests and needs often provides the basis for effective targeting. However, not all personalization is equally effective, and much depends on deliv- ering personalized messages that take into account the recipient’s unique purchase history or demographic. Merely creating e-mails with the individual’s name in the greeting may not result in successful response rates. In fact, individuals may be wary of e-mails listing their first names, as many recipients might suspect that these communications are scams or phishing attempts.
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 269
E-mail Structure and Subject Line. Differences in content and structure, as well as the subject line used, have been shown to result in different response rates. Extremely short subject lines (49 characters or less) have been shown to be as effective as subject lines with more than 70 characters. One study tracked more than 900 million e-mails in its analysis and showed that there was no increase in either open rate or click-throughs at the 60- to 70-character length of the subject line.35 The e-mail campaign conducted by the Obama campaign prior to his election in 2008 showed a significant success rate with short subjects like “Hey” and “Wow.”
Timing and Industry Differences. There are many differences in success rates based on when (e.g., what day of the week) e-mail campaigns are sent and which industries these e-mail campaigns are used in. Mondays are the most effective for e-mail campaigns, with a 13.3 percent open rate relative to Fridays, which have an 11.9 percent open rate. Among industries, the insur- ance industry has the highest usage of commercial e-mail, with nearly 94 percent of insurance companies using this channel.
Entertaining and Engaging Content. Having a unique and appealing message is the key to success in e-mail marketing. JetBlue is known for its quirky and attention-grabbing advertising, and it also has developed engaging e-mails to send to its audiences. A recent JetBlue e-mail cam- paign reminded customers about their one-year anniversary and created fun and engaging content to pique audience attention.36 Successful engagement can also involve offering unique promotions or providing good value, wrapped in entertaining content.37
Testing and Monitoring. Analytics are now available to track the success of all digital cam- paigns. A company can test and monitor different versions of e-mail campaigns to identify the ones that are working and then optimize the e-mail marketing campaign accordingly.
Google’s search advertising matches potential customers and
companies using search terms provided by users.
Source: Ilesia/123RF
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270 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Search Advertising. Search advertising is perhaps the largest source of spending among all digital ad formats and is expected to account for $130 billion in advertising spending worldwide by 2019. Branding Brief 7-4 provides an overview of Google AdWords, which represents the most popular product within the search advertising industry.
Advertisers that seek to build a brand can utilize Google search advertising as a brand awareness-building tool. By connecting to category-level keywords and by targeting specific search terms, a new brand can increase the number of consumers who click on their ad and then take them to a landing page with more information. Alternatively, brand marketers can provide specific product-level information to target potential new customers by advertising key aspects of the product (e.g., upcoming promotions or discounts). This type of advertis- ing is geared toward those who are ready to make a purchase or those in later stages of the purchase funnel.38
Thus, based on the goals of the advertiser, search advertising can provide a highly tar- geted approach to advertising. Because advertisers only pay based on actual clicks (also
The Google AdWords search advertising platform is among the
largest digital advertising platforms available. Within the United
States, Google search advertising dominates the search advertis-
ing space and accounts for almost 78 percent of advertising rev-
enues from search ads. Search advertising continues to increase,
with a growth rate of approximately 10 percent in 2017.
How does AdWords work? AdWords can be thought of as a
platform that connects buyers and sellers within Google’s search
engine and complements the organic search results of a par-
ticular query. Sponsored search ads typically appear on the right
side or the top of the Google home page. For ads to appear at
the top of the page or high on the list of search ads, marketers
need to bid for particular keywords in an online auction that
takes place continuously. The behind-the-scenes online auction
makes keywords available for a price, with the price being deter-
mined based on demand. Payment to Google is on a cost-per-
click basis.
Advertisers typically only pay Google when someone clicks
on the ad, so merely serving up an ad on a search engine might
drive impressions but not necessarily increase the cost of an ad
campaign. The position of an ad on the home page or the rank
of the ad plays an important role in its effectiveness: The higher
the rank of the ad, the higher is its effectiveness. The ad rank for
a given ad is based on the cost-per-click bid on a given keyword
and the quality score metric that determines how relevant the ad
is to a given user. In general, ad rank is determined by the combi-
nation of maximum bid on a given keyword and the quality score
associated with the ad. For example, an online shoe retailer such
as Zappos may bid on keywords such as “buy shoes online” or
“online shoes” so that a search ad will appear when consumers
type those keywords into Google’s search engine.
Brand marketers must choose keywords carefully by under-
standing how consumers search for their category or brand. Com-
panies may advertise using branded keywords (e.g., Zappos shoes)
or generic or unbranded keywords (e.g., shoes online). The selec-
tion of branded or unbranded keywords is based in part on the
extent of brand recognition that already exists. If consumers are
not as familiar with a brand and its name, search is more likely to
use category-related, unbranded search terms. An example of a
search ad for 1-800-Flowers appears in Figure 7-8. The ad is shown
in response to a branded search for 1-800-Flowers. In contrast, the
second ad is for an unbranded, generic search for “auto insurance.”
The success of a search ad depends on the placement of the
ad on the Google search page: The higher the placement, the
better are the chances of the ad being seen by consumers. In turn,
the ad’s placement depends on Google’s quality score. Google has
a proprietary algorithm that assigns a score to each ad based on
various factors such as the overall historical performance of a key-
word within Google, ad text relevance (i.e., the match between
the keywords and the content on the advertiser’s landing page),
and user experience on the landing page or Web site.
Google offers various ways of targeting consumers, including
geo-targeting. Consumers in certain geographic regions can be
targeted, and users whose IP addresses are geotagged as belong-
ing to a particular location will be shown an ad. Highly targeted
ads that best address a customer’s search query are most likely to
be clicked on and therefore will ensure a higher success rate, as
measured by the click-through rate.* Impressions are measured
based on the number of times an ad is displayed on Google or
within a Google network.
*The formula for click-through rate is: Number of Clicks
Number of Impressions .
If an ad generates 50,000 impressions and generates 1,700 clicks, the click-through rate is .034 or 3.4%.
Source: www.emarketer.com; https://support.google.com/adwords/ answer/2454010?co=ADWORDS.IsAWNCustomer%3Dfalse&hl=en.
BRANDING BRIEF 7-4
Campaigning Using Clicks with Google AdWords
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 271
FIGURE 7-8
Google Search
Advertising
known as a cost-per-click advertising model), there is no waste (or comparably fewer wasted dollars relative to traditional ad campaigns) of advertising dollars.39 As of 2016, the average cost-per-click was $2.14, and the click-through rates were 1.16 percent, with high click- through rates in industries such as dating/personal services (3.4 percent), finance (2.65 per- cent), business-to-business (2.55 percent), consumer services (2.40 percent), and technology
(2.38 percent).40 In addition to click-through rate, conversion rate is another metric used
to gauge the success of a search ad: The higher the conversion rate, the more successful is
the search ad campaign. Based on how the advertiser defines a conversion, it could involve
something as simple as a user requesting further information about a product or could involve
an actual sale.
Display Advertising. Display advertising or banner ads involve the placement of ads in related
Web sites. Display advertising is an effective mechanism for reaching a large number of people
and for generating impressions. Unlike search advertising, display advertising is monetized on a
cost-per-thousand basis and relies on impressions generated by an ad. Banner advertising can be
an incredibly efficient awareness-generating tool, enabling brands to advertise on Web sites that
are closely linked to a particular target audience. For example, a banner ad on The Wall Street Journal Web site alongside an article about financial prudence in The Wall Street Journal is a
means to target consumers with an interest in financial analysis.
Taken together, search ads and banner or display ads are very effective ways of building an
online brand presence. The low cost of purchasing keywords and the high degree of targeting pos-
sible makes these types of ads a viable medium for companies with modest advertising budgets or
even business-to-business companies that value the direct approach to targeting consumers with
their ad message. Next, we provide a closer look at a variety of social media paid channel options
available to marketers today.
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272 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
OVERVIEW OF SOCIAL MEDIA PAID CHANNELS Social media channels (e.g., Facebook and Twitter) offer unparalleled access to communities of users with similar demographic, geographic, and psychographic characteristics. Social media plays many roles, including (1) establishing a public voice and online presence, (2) amplifying marketing messages, (3) helping monitor and obtain feedback from consumers, and (4) promoting customer engagement. In recent years, various forms of social media advertising have also become available to marketers. These forms of advertising leverage the benefits of social media platforms. Managing social media effectively requires a broad understanding of what social media can accomplish in general, but also understanding how various platforms within social media differ from each other; each social media platform has unique benefits that marketers should be aware of, but each has potential limitations too.
Overall, social media offers a unique way for marketers to promote dialogue with their audiences, gather feedback and insights, and solicit input regarding their products. However, a caveat is in order. As noted previously with regard to the brand engagement pyramid, only some consumers want to get involved with only some of their brands, and even then, maybe only some of the time. Some consumers may view a brand’s presence on social media channels as intrusive and imposing on their privacy. Companies should monitor their social media presence to ensure that it is appropriate and welcomed by consumers.
Next, we review the largest social media platforms (see Table 7-3), describing the pros and cons of marketing brands on these platforms and highlighting some examples of campaigns that have successfully leveraged these platforms.
Facebook If Facebook were a country, it would be the largest country in the world! Facebook’s social media platform has 1.6 billion active users, which is larger than China’s population of 1.4 billion; stated differently, 1 in 4 persons in the world can be accessed via Facebook, and 80 percent of these users access Facebook via mobile devices.41 Consider the demographics of Facebook users: 79 percent of American adults have a Facebook account. As a social network, Facebook is particularly influential among young adults, and 88 percent of Americans aged 18 to 29 have a Facebook account.42 It is also especially popular among females, with 83 percent of females in the United States using Facebook, relative to 75 percent of males. Facebook is also comprised of users who are educated (79 percent of Facebook users in the United States have a college degree) and who live in urban and suburban areas.
Advertising revenue comprises the largest source of revenue for Facebook. In 2017, based on projections by eMarketer, the global ad revenues for Facebook approached $34 billion. In 2017, Facebook’s share of the digital ad business in the United States was 21 percent, and 87 percent of Facebook’s revenue was from mobile advertising.43
Some metrics that are of relevance in assessing the impact of Facebook advertising campaigns include the following:
1. Reach: Facebook breaks down reach into organic, paid, and viral. Organic reach is the num- ber of people who have seen a post in the news feed, in the ticker, and on the page itself. Paid
reach is the number of unique people who have seen an ad or a sponsored story. Viral reach is the number of unique people who have seen a story about a page published by a friend.
2. Followers: The number of Facebook followers is a good metric to capture the reach and popularity of a given message.
Facebook 1.9 billion
Twitter 317 million
Instagram 600 million
Snapchat 300 million
Pinterest 150 million
Sources: “Assets,” Facebook, June 10, 2018, https://en.facebookbrand.com/assets; Kathleen Chaykowski, “Pinterest Reaches 150 Million Monthly
Users, Boosts Engagement Among Men,” Forbes, October 13, 2016, https://www.forbes.com/sites/kathleenchaykowski/2016/10/13/pinterest-
reaches-150-million-monthly-users/#4cb46f4a732e; “Most Famous Social Network Sites Worldwide as of September 2017, Ranked by Number of
Active Users (in millions),” Statista.com, September 2017, https://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-
users/; “Social Media Logos,” Freepik, http://www.flaticon.com/packs/social-media-logos-2.
Table 7-3 Number of Users across Selected Social Media Venues (January 2017)
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CHAPTER 7 • BRANDING IN THE DIGITAL ERA 273
3. Likes and shares: The number of Facebook likes is indicative of customer engagement with a particular message. The number of Facebook shares also indicates how viral a particular message is.
Next, we consider the various pros and cons to advertising on Facebook.
Pros. Clearly, the large size of the Facebook community provides marketers with a tremendous set of advantages by offering a large marketplace for connecting buyers and sellers. Sellers can instantly generate brand awareness among a large number of globally distributed users by advertis- ing on Facebook. In addition to its ability to generate brand awareness among its users, Facebook’s advertising platform provides many features that allow advertisers to target very specific segments of users on a variety of characteristics including age, gender, political orientation, hobbies, inter- ests, and so on. This targeting capability allows advertisers to reach their target audience with a minimum waste of ad dollars. Facebook’s direct purchasing feature and instant-play videos allow campaigns to reach more consumers and facilitate direct customer service.
Cons. One downside of Facebook advertising is the reality that a Facebook post will likely not reach every user who follows the company because users can choose which posts to view. Further- more, companies like Procter & Gamble have begun stepping away from Facebook as a result of
THE TOUGH MUDDER CAMPAIGN
Tough Mudder is a challenging obstacle race for teams, designed in the spirit of British Special Forces. It
features 29 different obstacles with creative names such as the Devil’s Beard, Shocks on the Rocks, and Funky
Monkey. Competitors encounter hazards such as walls, 15-foot planks, ice baths, nightmare monkey bars,
greased halfpipes, and electrified army crawls. Funded with $20,000 in seed capital in 2010, Tough Mudder
spent its entire $8,000 communication budget at launch on Facebook advertising, which generated plenty
of word-of-mouth. By 2013, more than 750,000 competitors were participating in 53 scheduled events.
With entry fees of about $155 per person, the company’s margin was about 48 percent.
Tough Mudder—a challenging obstacle race—leveraged Facebook advertising to generate word-of-
mouth and create awareness.
their realization that precision targeting can sometimes produce suboptimal results. For example, when Procter & Gamble tried targeting ads for its Febreze air freshener to pet owners and large households, the company found that sales were stagnant; however, when the target audiences were expanded to anyone older than 18 years of age, sales increased significantly.44 Social media also
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274 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
carries the risk of a firestorm when users target a company’s social network presence due to a company scandal or its position on political or social issues. Further, Facebook and other social media platforms are increasingly under fire because of the possibility that data on consumers is being used without their explicit permission, which in turn, poses both legal and reputational issues for platforms such as Facebook. This has become an increasingly hot-button issue, and one which could potentially harm the future of social media advertising, unless consumers, policymakers, and social media platforms come together to ensure that these concerns about data-sharing and privacy are resolved to everyone’s satisfaction.
#LIKEAGIRL
Procter & Gamble launched the #LikeAGirl campaign for its Always feminine hygiene brand in 2015 to
expose the effects of the phrase “like a girl” on limiting the possibilities for young women. The campaign
was launched with a television advertisement that appeared during the Super Bowl, with both pre- and
post-puberty women stating the effects that societal limitations have had on them, whether it be quitting
a sports team or not having confidence to take on challenges. The girls then wrote how the effects of the
phrase impacted their life on boxes, which they then destroyed. The ad went viral, with #LikeAGirl trending
on Twitter after the ad appeared on TV. The ad itself has been viewed more than 80 million times since airing.
The Always brand has built on the interest the ad generated and created LikeAGirl confidence summits and
an interactive Web site, where feminine care products are sold on the bottom of the page. The ad marks
the growing movement among advertisers to support women’s empowerment causes, which in turn has
led to increased sales in some cases.
Twitter Twitter is the second largest social medium after Facebook. There are many advantages to Twitter advertising. Every Twitter message (or Tweet) goes directly to followers, and they are easy to cre- ate. This allows for direct communication between customer service and customers and shows a brand’s personality. However, Twitter is not without its downsides. Twitter is flooded with tweets, making it more difficult for a company’s posts to stand out. There is limited visual content, and tweets are constrained to 140 characters (although Twitter increased its limit to 280 characters).45 The following example of the #LikeAGirl campaign shows how a company can leverage Twitter to increase its brand presence.
Twitter is particularly beneficial in helping resolve customer service issues. Delta Air Lines used a Twitter strategy to improve social interactions with its customers and to provide customer service. The Delta Assist Twitter handle was helpful in connecting the company with its custom- ers. Delta has used the #deltaassist to both listen to customer complaints and respond to issues. A number of other companies followed Delta’s lead in making their Twitter account a focus of their customer service enhancement strategy. Beginning in May 2015, Domino’s Pizza used Twitter to let customers request delivery of their favorite pizza by tweeting a pizza emoji to the @Dominos Twitter account and by using the hashtag #EasyOrder. More recently, Domino’s made the pizza- ordering process even simpler by introducing an app that would do the same.46 This campaign received significant media coverage, and more than 50 percent of Domino’s orders come from digital channels today.
Instagram Instagram is a platform with about 400 million users that is targeted to a younger audience and typically has higher brand engagement levels than comparable platforms. Its ability to engage its audiences visually (through images and videos) allows for more nontraditional marketing approaches. Instagram’s younger, more cynical audience is more likely to see traditional ads negatively and as “too manufactured.” Instagram offers the opportunity to reach these users in ways that traditional media cannot. For instance, Samsung implemented a holiday marketing cam- paign called #SamsungPayItForward that promoted its new mobile payment service. A number of social influencers were engaged to promote this service, which resulted in a series of sponsored Instagram posts showcasing how people used the payment app.47
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Domino’s used Twitter to let customers request delivery of their favorite pizza by using
the hashtag #EasyOrder.
Source: James A. Martin, “10 Top Social Media Marketing Success Stories,” CIO.com, April 28, 2016. www.cio.com/article/3062615/social-networking/10-top-social-media-marketing-success-stories. html#slide7
Pinterest Pinterest is a medium that allows users to share and post pictures featuring different brands. It is particularly conducive to marketing certain brands that rely on visual imagery. Pinterest’s easy-to- create “Buy It” pins on products, as well as its ability to generate more referral traffic than other forms of social media, present significant advantages to brand marketers. However, limitations include its niche content (focus on lifestyle content) and a disproportionate appeal to a female fan base.
Krylon paint is an example of a Pinterest success story when it held its “first-ever Pinterest yard sale.” The 127 Yard Sale is the “World’s Largest Yard Sale” and happens every August in six states along Highway 127, stretching between Michigan and Alabama.48 In 2015, Krylon sent its DIY experts to buy 127 seemingly worthless items along the route and transform them into something desirable, listing the resulting items for sale using Pinterest’s “Buy It” pin feature. All proceeds from the sale were subsequently donated to charity. As a result of this campaign, Krylon saw a 4,400 percent increase in its following on Pinterest and gained $2.7 million in earned media from a $200,000 budget.
Video Video has become an important medium for brand building, particularly when brands want to engage in deeper themes and storytelling using their brand. Videos can be paid ads that appear on social networking Web sites such as YouTube or Facebook; in addition, brand videos may appear in owned media channels, such as the company’s Web site or other places. There are various examples that demonstrate the power of video advertising to elevate a brand’s ability to engage in storytelling. A successful campaign that used video advertising was Nivea’s “Second Skin”
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276 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
YouTube video. This video featured a mother and her adult son who could not spend Christmas together. The video showed how advanced technology (virtual-reality goggles and a fabric simu- lating human skin) could help reunite mother and son. By using a nonsales approach and evoking human emotion, the Nivea campaign received considerable buzz with more than 150,000 views. Examples such as Nivea show how video advertising can impact consumers positively by touching them emotionally as much—if not more—than any 60-second commercial.
As another example, the German supermarket chain Edeka created a Christmas-themed video that showed an elderly man alone on Christmas and whose grown children were too busy to visit. The #HeimKommen ad helped highlight the loneliness of older people during the holidays. The
Nivea’s Second Skin Ad
Source: James A. Martin, “10 Top Social Media Marketing Success Stories,” CIO, April 28, 2016. www.cio.com/article/3062615/social- networking/10-top-social-media-marketing-success-stories.html#slide7
Krylon’s 127 Yard Sale campaign leveraged Pinterest to create the “World’s Largest Yard Sale.”
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video garnered 33.5 million views within a week, and two weeks later, it had 20 million views and 579,000 shares, making it a successful campaign that raised brand awareness and enhanced brand image.49
Video advertising can also be used by luxury brands to feature exclusive video content, helping the brand maintain its upscale or prestige image. For example, in 2016, Burberry became among the first luxury brands to run a Snapchat-Discover-channel ad, which featured a new Burberry fragrance. The video featured exclusive content that was meant to be only available for a brief period in time.50
Global Use of Social Media It is worth noting how social media is a global phenomenon, and many of the techniques pre- sented here are applicable in many parts of the world. One notable exception is in China. Due to government restrictions, Facebook, YouTube, and Twitter are banned in China. Still, the Chinese consumer loves to use social media. We provide a brief review of the top social media platforms in China in Branding Brief 7-5.
WeChat (owned by Tencent), often known
as the “Facebook of China,” is a dominant social
media platform. It is an all-in-one messaging app
that provides games, online shopping, and other
services and has more than 1 billion active monthly
users. With 10 million apps, Chinese consumers
use WeChat for various daily activities, including
booking flights, making investments, shopping,
paying taxes, and so on. Brands can also use the
WeChat platform to communicate with their cus-
tomers. For example, brands can leverage WeChat
Moments to push messages and other content out
to their followers.
Sina Weibo, or Weibo, is a micro-blogging
platform and is considered a combination of Twit-
ter and Facebook. Users typically use Weibo to
upload videos and images, follow individuals, read
their posts, and so on. Weibo has 313 million active
monthly users and is particularly popular in urban
locations.
QQ (also owned by Tencent) is another messaging
app that offers its vast installed base of 869 million
users various features, including games, shopping,
group chats, and voice chats.
Youku is the video-sharing analog of YouTube in
China. It offers its users streamed or downloaded
movies and TV shows. With 580 million active
users, it allows brands to appeal to their audi-
ences via banner ads, branded viral videos, and
pause ads.
Baidu Tieba (part of the Chinese search engine
company Baidu) offers a communication platform
that is tightly connected with the search engine
services offered by Baidu. With 660 million active
monthly users, it offers businesses (and brands)
BRANDING BRIEF 7-5
On Being Social in China
Chinese consumers use the popular social media platform WeChat for mul-
tiple purposes including playing games, booking flights, and online shopping.
Baidu is the largest search engine in China and the second-largest
search enginge in the World.
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278 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
MOBILE MARKETING Did you know that consumers today may check their mobile phones 150 times a day, and many view smartphones as a “lifeline” or a “butler”? It is not surprising, therefore, that mobile adver- tising and promotions are expected to grow tremendously in the near future. The global mobile advertising market totaled $141.7 billion in 2017 and is expected to grow to $531 billion in 2024. Various forms of mobile communications (display, search, SMS, among others) together totaled approximately $50 billion in 2017 advertising expenditures in the United States alone. Of these, display advertising accounted for approximately $26 billion in 2017 ad expenditures, and search advertising accounted for $22 billion.51
Why is mobile so popular? Clearly, the importance of smartphone devices for information, social interaction, and, to a lesser extent, shopping has contributed to this increase. Consumers in the United States spend more time on their mobile devices (more than 3 hours per day relative to the one hour a day that consumers spent just a few years ago) than on their desktop computers. In particular, consumers (particularly in the United States) spend 42 percent of their time using mobile devices on a single favored app. Social media apps, including Facebook, Google, and You- Tube, are among the most popular apps, reinforcing the notion that mobile is primarily a means of entertainment and communication rather than commerce.52
Mobile advertising is particularly helpful in sending timely, location-based messages to cus- tomers at the right time and place. This increase in relevance offered by mobile messages—that is, reaching a customer at the right time and place—creates opportunities for developing a vast database of customers’ needs and wants based on their responses to mobile advertising and promo- tions. Because mobile devices are always on, marketers can communicate in real time with their customers. This puts additional pressure on marketers to engage with customers using intuitive interfaces with easy navigation. Mobile ad copy has to be simple and direct to attract the attention of its target audience.
Furthermore, mobile marketing helps engage customers while they are shopping by offering them timely promotions, discounts, and so on. Mobile promotions can vary based on different geographic locations as well as different “dayparts,” suggesting that marketers can customize their advertising and promotions to an unparalleled degree. This also means that customers who are targeted with advertising messages and promotions based on their location, time of day, or behavior will find marketing efforts of greater relevance to their purchases.
Messaging Services. Of the various mobile options available, text messages—specificaly, short messaging service (SMS) and multimedia messaging service (MMS)—can offer cus- tomers unique offers based on time and location. SMS marketing has remained popular, as research has shown that 90 percent of messages are read within 3 minutes, and audiences are five times more likely to respond to a text than an e-mail. For example, Reuters used texts to engage with its customers in connection with its Eikon suite of financial products. BMW ran a messaging campaign to remind its customers in Germany of the importance of snow tires during winter.
In-App Advertising. In-app advertising is another way mobile marketing can help brands touch customers. For example, the social media platform Snapchat allows brands to utilize its mobile app to target customers. Taco Bell used Snapchat for its popular “Taco Head” campaign, in which each customer turned themselves into visual tacos and then shared their branded images with their friends. This campaign generated nearly 224 million views in a single day and increased visual engagement three times (up to 24 seconds) relative to regular images (which are typically
the ability to create their own forums that users can be directed
to based on searches of the brand name on the search engine.
Sources: Laurie Beaver, “WeChat Breaks 700 Million Monthly Active Users,” Business Insider, April 20, 2016, www.businessinsider.com/ wechat-breaks-700-million-monthly-active-users-2016-4; Lauren
Johnson, “5 Things Brands Need to Know about WeChat, China’s Mobile Giant,” Adweek, December 14, 2015, www.adweek.com/ digital/5-things-brands-need-know-about-wechat-chinas-mobile- giant-168588/; Nha Thai, “10 Most Popular Social Media Sites in China,” Dragon Social, June 30, 2017. https://www.dragonsocial.net/ blog/social-media-in-china/.
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viewed for 8 seconds).53 Alternatively, in-game advertising involves delivering messages within mobile games or sponsoring entire games to drive customer engagement. Grab is another example of how mobile apps can drive customer engagement for brands.54
Grab, a Singapore-based ride-hailing mobile app, plans to evolve its ride-hailing app into an all-in-one everyday app by linking its ride-hailing service with its merchant-partners, the ultimate goal being to create a seamless, multi-service experience. For example, when passengers are en route to a shopping mall they may receive in-app push notifications of promotions or discounts offered by Grab’s merchant-partners at the mall even before they arrive. They can enjoy the convenience of ordering food through GrabFood, pay through the cashless GrabPay service, and earn loyalty points via the GrabReward program, which can be redeemed for trips and discounts. Through these integrated in-app services, Grab hopes to unlock value for both its customers and its business partners in Asia. There are three key lessons here: (1) mobile apps can help compa- nies learn about their customers’ motives; (2) mobile apps can be used to reward customers at just the right time, thus increasing its effectiveness; and (3) mobile apps can be useful in helping companies strengthen their bond with customers. Most importantly, Grab perfected their mobile payment system and app processes while competing with Uber, giving them the necessary skills to offer a seamless and superior experience.
Proximity Systems Marketing. Proximity systems marketing, or geo-fencing, involves deliv- ering particular advertising messages to mobile users within a defined geographic area. By serving up highly targeted, relevant ads, geo-targeting and proximity systems can benefit companies and customers alike.55 For example, Campari offered customers in a tightly defined geographic area (an area with many bars) $5 off or a free Lyft ride if they checked a score on an app.56 Branding Brief 7-6 provides another example of a company, Red Roof Inn, that effectively used location-based targeting.
Red Roof Inn’s mobile marketing approach of leveraging flight
cancellation information to increase reservations is an excellent
example of the power of mobile marketing strategies in enabling
companies to target customers in real time. Previously, Red Roof
Inn was struggling to compete with big-budget hotel chains in
the search marketing landscape. Achieving a high ranking in the
search ad space was increasingly challenging. There was also
competition with searches from travel intermediaries such as
Kayak and Vayama.
In this context, Red Roof Inn decided to utilize its limited
budget toward a mobile search advertising approach in which
it would target only those customers with a high likelihood of
conversion. One potential segment of travelers that presented
an interesting opportunity were those whose travel plans were
disrupted by delays or cancellations (typical of air travel). With
an estimated 2 to 3 percent of flights cancelled daily, 500 planes
don’t take off, and 90,000 passengers get stranded.
Using real-time data and geographical information, along
with specific search queries, the company targeted these stranded
travelers with specific search queries such as “hotels near O’Hare
Airport.” The algorithm developed by Red Roof Inn included
automatically boosting bids and adjusting ad copy across its
various mobile search campaigns. These ads would be displayed
when the volume of cancellations exceeded a threshold. As it
turned out, 2014 had one of the harshest winters in history, and
the company utilized flight cancellation data to develop an algo-
rithm to automatically target stranded travelers when the volume
of flight cancellations was high and during the evenings. The ads
showed distances from travelers’ airports.
The campaign, beginning in March 2014, demonstrated the
effective use of technology and big data to augment search man-
agement, such that, despite budget limitations, Red Roof Inn was
able to capitalize on specific moments of opportunity—in this
case, when a traveler was stranded at an airport and looking for
a place to stay. Using a blend of real-time data and mobile search,
Red Roof Inn was able to target prospects who were most likely to
convert to buyers. Ads that featured the call to action “Stranded
at the airport? Come stay with us!” allowed Red Roof Inn to
perfectly target consumers who were willing to book a room,
increasing Red Roof Inn’s bookings by more than 60 percent rela-
tive to other campaigns. The precision targeting of more than
400,000 stranded travelers allowed Red Roof Inn to gain first
position within the segment of last-minute queries. Overall, Red
Roof Inn showed a 375 percent increase in conversion rate, a 650
percent increase in share-of-voice, and a 98 percent increase in
click-through rates across all nonbrand campaigns.
Sources: Matt Lawson, “Win Every Micro-Moment with a Bet- ter Mobile Strategy,” Think with Google, September 2015. www .thinkwithgoogle.com/marketing-resources/micro-moments/
BRANDING BRIEF 7-6
Turning Flight Delays into Marketing Opportunities
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280 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
One key takeaway from the Red Roof Inn example is the importance of understanding how consumers react to your brand throughout the day and identifying particular moments during the day that present an opportunity to target consumers with specific offerings. The ability to reach consumers at a time and place that is more relevant to their purchasing of a brand with mobile marketing provides marketers with tremendous ability to hypertarget their offerings and to engage their customers to an even higher degree. Push notifications allow a company to notify users about new messages or events even when they are not actively using the app—they can be sent to all users or a particular group of users. For example, Walmart developed a mobile app that allows customers to search, browse, buy, and view rollbacks and locate their nearest store (and for Walmart to send push notifications).57
As mobile devices continue to grow in importance to consumers’ daily lives, research has also examined how mobile marketing techniques can contribute to added sales. A few key findings from academic research are worth noting:58
1. Environments may impact the effectiveness of mobile advertising and promotions. One study found that, counterintuitively, mobile promotions can actually be more effective in crowded areas (e.g., trains), as consumers adaptively focus more on their mobile devices to tune out external noise and distractions.
2. Mobile targeting based on time and location is more effective the closer the promotion is to actual purchase.
3. Targeting consumers who are closer in physical location to competitors’ locations produces better results than targeting mobile promotions to consumers who are closer to the company’s own locations. Targeting consumers closer to the company’s own location with mobile pro- motions and discounts may result in cannibalizing sales from that location and reducing profitability.
4. Targeting consumers with mobile promotional coupons can boost overall spending, par- ticularly unplanned spending, if the coupon requires consumers to travel farther than their planned path.
INFLUENCER MARKETING AND SOCIAL MEDIA CELEBRITIES Influencer marketing involves utilizing key influencers, such as bloggers, celebrities, topic experts, and opinion leaders, to provide information and opinions about products and brands.59 Influencer marketing is expected to account for $5 billion dollars of global marketing expenditure within the next five years.60 Instagram influencer marketing alone is a $1 billion industry and is forecasted to reach $2 billion by 2019.61 In 2016, 86 percent of marketers invested in social influencer market- ing, and 48 percent of marketing practitioners surveyed indicated that they planned to increase their budgets for influencer marketing in 2017.62
Marketers have been utilizing influencers for their brands to a greater extent in recent years because of the results they have seen. Sponsored bloggers and celebrity influencers can often hold greater sway over some consumers than any advertiser can. One study reported that audiences exposed to influencer marketing spent $639,700 more than an audience that had not been exposed.63 The popularity of influencer marketing also has translated into the success of online social influ- encers. Some of these online social influencers, such as beauty guru Michelle Phan, can earn up to $3 million per year based on their endorsement of specific brands.64 Top influencers on YouTube can earn $300,000 per video, while a top Facebook influencer can earn $200,000 per post.65 There have been a number of studies examining how word-of-mouth influences consumers, particularly as it pertains to online word-of-mouth (we review these studies in Brand Focus 7.0 at the end of the chapter). However, it is worth noting that there is a difference between organic word-of-mouth and sponsored word-of-mouth (which is more consistent with the idea of influencer marketing).
Many brands have leveraged social media celebrities to influence their audiences. For exam- ple, Emirates Airlines wanted to use social and digital channels to appeal to American consumers.
win-every-micromoment-with-better-mobile-strategy/; “Red Roof Inn Turns Flight Cancellations into Customers” Mobile Market- ing Association, accessed September 23, 2017, www.mmaglobal .com/case-study-hub/case_studies/view/31739; Rob Petersen, “16 Case Studies of Companies Proving ROI of Big Data,” B2C.com,
December 27, 2015, www.business2community.com/big-data/16- case-studies-companies-proving-roi-big-data-01408654#ZPCMLZ 1w53LZLPp5.99; Sunil Gupta, “In Mobile Advertising, Timing Is Everything,” Harvard Business Review, November 4, 2015. https:// hbr.org/2015/11/in-mobile-advertising-timing-is-everything.
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Emirates hired online influencer and YouTuber Casey Neistat to talk about an upgrade he received from business class to first class on Emirates. This campaign was an instant success, and his video generated more than 27 million views. Mercedes-Benz also used online social influencers with its #MBPhotoPass campaign, in which the company let influencers tell a story using their vehicles. These influencers were given keys to a Mercedes-Benz vehicle and were asked to drive around while taking pictures and curating the brand’s Instagram account. One video featured a dog and his owner, and by telling a unique and relevant story about their relationship, this video provided Mercedes with the opportunity to tell a real, genuine story that connected the brand to its audience. The campaign was wildly successful; nearly 1,700 videos were created to tell influencer-based stories, generating 173 million impressions, 2.3 million likes and comments, and $4 million worth of earned media. The ability of influencers to engage in storytelling about brands can thus be a powerful way for brands to connect with their consumers.
Influencer marketing relies a great deal on the authentic tone of the influencer, who that are often, in fact, paid to post information about a brand. Marketers need to exercise caution that the information regarding sponsorship of the influencer’s post by the brand is made obvious to the customer. The Federal Trade Commission requires clear and unambiguous language to be made available. Recently, in the United States, the Federal Trade Commission actually sent out letters to more than 90 Instagram influencers, informing them know that their relationships with brands must be disclosed on their social media accounts.66
CONTENT MARKETING What is content marketing? According to the Content Marketing Institute, “Content marketing is a strategic marketing approach focused on creating and distributing valuable, relevant, and con- sistent content to attract and retain a clearly defined audience—and, ultimately, to drive profitable customer action.”67 Content marketing is a type of marketing that involves the creation and shar- ing of online material (e.g., videos, blogs, and social media posts) that does not explicitly promote a brand but is intended to stimulate interest in its products or services.68 Content marketing can be beneficial to companies in appealing to certain groups of people and in achieving specific goals.69
Guidelines for Good Content Marketing A key difference between content marketing and traditional marketing is that consumers typically want to consume the posts that form part of a content marketing campaign.70 The goal of content marketing is to engage an audience in topics of interest to them. Therefore, selling products and services cannot be the primary goal of content marketing.
Emirates Airlines used key influencers to highlight their experiences with the brand,
in order to strengthen their appeal to American consumers.
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Understanding buyer needs must always be a starting point for generating good content. This may involve mapping out a buyer’s decision journey. Developing a set of buyer personas that depict the typical customer at various stages of the decision journey can also be very helpful. Evolving content that addresses the information needs of different types of consumers at each of these stages is a key task of content marketers. Another key to success in content marketing is excellent storytelling. As Joe Pulizzi, founder and executive director of Content Marketing Insti- tute puts it, “The integration of storytelling and content marketing is now, more than ever, critical for retaining customers and attracting potential leads.”71
It is important to recognize that content distribution is an extremely important component of the content marketing effort. Much thought must go into the various channels in which content will be distributed. To ensure broad distribution, the strategy for distributing content must involve channels beyond social media sharing and may involve identifying unique ways of disseminating content to ensure audience reach. For example, a blog may be a great way of ensuring that there is a ready and committed audience for content pieces.
A good content strategy has to be integrated with a broader public relations and marketing strategy. The goals of the overall marketing strategy in terms of reaching and engaging the audi- ence should be aligned with the content marketing strategy; doing so can help reach the audience, build a brand, increase brand awareness, generate leads, and ensure sales.72
Case Studies
John Deere. The Furrow magazine was launched by John Deere in 1895 by the founder’s son, Charles. The magazine was launched as a way of addressing farmers’ needs for informa- tion regarding soil health, soil conversation, and other topics, and it currently has a circula- tion of 2 million globally in 40 countries and 12 languages. Unlike other content marketing efforts, John Deere makes its sponsorship of the magazine prominent, as the brand appears in the magazine. Furthermore, the magazine is actually distributed by John Deere dealers. However, the magazine’s success has been in large part due to its focus on its customers. According to David Jones, the publication manager for The Furrow, “Telling stories that folks enjoy reading—and that they can use in their own operations—has been the recipe since the beginning.” The magazine has evolved over years. As a corporate historian for John Deere noted, “Looking back at our archives, you can see the changes, from an advertorial, to a general agriculture journal with farming hints and reprinted articles that look a lot like the Farmers’ Almanac, to today’s magazine that tells farmers how to run their businesses.” By maintaining its focus on the target audience—that is, farmers, rather than John Deere’s equipment—the magazine has maintained its appeal over the 120+ years of the magazine’s history.73
Movoto. Real estate agency Movoto launched a campaign called “Mapping Marvel Origins” with the goal of stimulating comic book fans’ interest in regional real estate.74 An infographic was created that featured the background stories of Marvel characters and showing their birth- places around the world. The campaign featured 365 stories about Marvel characters that were placed in various outlets such as Yahoo, Mashable, and MTV, among others. The campaign, which effectively leveraged the popularity of Marvel characters, resulted in more than 9,000 shares in social media.
Legal and Ethical Considerations While content marketing can be effective, it may also give rise to various legal and ethical concerns that marketers should be wary of. In particular, the Federal Trade Commission’s rules for sponsorship identification of broadcast content mandate that any piece of content posted by an author who received any reimbursement for the content from a company sponsor must disclose that compensation.75 Thus, content marketing efforts must walk the fine line between sponsorship of content and ensuring that such sponsorship efforts (particularly in the case of social media promotions and endorsements) are adequately disclosed, to ensure compliance with the law.
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John Deere’s The Furrow magazine represents one of the earliest uses of
content marketing to appeal to consumers.
Source: Kate Gardiner, “The Story Behind ‘The Furrow’ the World’s Oldest Con- tent Marketing,” The Content Strategist, October 3, 2013. https://contently.com/ strategist/2013/10/03/the-story-behind-the-furrow-2/.
THE PROS AND CONS OF PAID CHANNELS AND THE NEED FOR INTEGRATION Given the plethora of choices available with online and social media channels, brand marketers have to make an effort to create integrated digital media campaigns that leverage the benefits of different social media. For easy reference, Table 7-4 provides a summary of the pros and cons of primary paid channels. Because of similarities in these types of communications, we combine influencer marketing and content marketing. Brand managers can evaluate the pros and cons of different paid options and create campaigns that provide the optimal balance of targeting, reach, conversions, and engagement.
Integrating across channels can also provide significant benefits to storytelling. For exam- ple, when the Chicago Cubs won the World Series in 2016, it ended a 108-year long losing streak that began in 1908. To leverage the excitement of the win, Anheuser-Busch used special effects to create a video that had the Cubs’ fans’ legendary, but deceased, announcer Harry Caray call the victory. Anheuser-Busch created a compelling video that showed its understanding of the city’s nostalgia and history; the video contained historic footage of the Cubs playing in various
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close-call games. The brand leveraged social media as well as TV advertising as the Cubs won the game, and over the course of the campaign, the video generated more than 3 million views. This campaign showcases how a brand can wrap a story around its message (in this case, an underdog story) to demonstrate that it understands its customers, thereby creating relevancy.76
BRAND MANAGEMENT STRUCTURE The digital era has also shifted consumer behavior in significant ways, and these changes are important because they help illuminate the shifts taking place in branding and brand manage- ment. Brand marketers have to evolve a strategy to address the shifts in advertising spending across a range of digital channels and implement an organizational structure and processes that support the strategy. Various factors for creating a successful strategy have been suggested to organizations to help them to cope with these changes, some of which are described in the following list:
1. Senior management for the organization should be tasked with understanding how products and brands are being researched and viewed online, and how consumers are using these chan- nels to research their products.
2. Cross-functional coordination within the organization is increasingly important for faster decision-making and problem-solving in a more integrated manner.
3. Data-driven decision-making will become the standard operating procedure, and organiza- tions should compete to gain access to the best data available and to use it in the most effec- tive way.
Channel Pros Cons
E-mail Less costly, quick and easy to conduct a campaign. Highest return on investment (ROI) among major chan- nel options.
Unsolicited e-mails may lower reputation among cus- tomers; e-mails may be viewed as scam.
Search Allows for hypertargeting of desired target audience and high-quality lead generation; required budgets are small, campaigns have clear ROI metrics.
Competition for certain keywords can drive up budgets; optimization of a campaign is time-consuming; a non- visual (text-only) ad type can limit what the brand can convey.
Display or banner High reach of banner ads is ideal for building aware- ness. Flexible style and format.
Lack of control over ad placement, potentially harmful to reputation, could be viewed as spam.
Social media advertising (e.g., Facebook, Twitter, LinkedIn, etc.)
Effective targeting capabilities; on Facebook, it is pos- sible to target based on specific interests, political affiliation, etc.; on LinkedIn, by profession, job titles, etc. Affordable and generally effective. Click-through rates of Facebook ads are 8 times that of normal Web ads. High degree of accessibility to all types of businesses or individuals.
ROI is unknown, and social media ads may be viewed as intrusive by consumers. Optimizing an ad campaign requires constant monitoring and updating. Concerns over privacy may prompt further legislation preventing use of customer information for advertising targeting.
Video advertising (e.g., Facebook video and YouTube video)
Video allows brands to engage customers through sight, sound, and audio.
Targeting may not be as precise; customization or veri- fication is not possible; audience may be too distracted to pay attention.
Sponsored blogging, influencer marketing, and content marketing
Brands can leverage popular social influencers to per- suade consumers through sponsored word-of-mouth. High awareness-generating potential; high potential for engaging customers.
Depends on identifying the right influencers with the right appeal. The Federal Trade Commission requires all sponsored bloggers to disclose their sponsorships, thus lowering the effectiveness of word-of-mouth relative to organic word-of-mouth.
In-app (mobile) advertising Ability to target consumers at the right place and time. Mobile in-app advertising leverages the popularity of mobile devices. Location data allows for precision tar- geting, particularly of coupons and promotions.
In-app banner ads may not generate the most revenue.
Sources: Evan LePage, “Display Ads, Search Ads, and Social Media Ads: Pros and Cons,” Hootsuite, June 3, 2015, https://blog.hootsuite.com/display-ads-search-ads-and-social-media-ads/;
George Root, “The Pros & Cons of Email Marketing,” Chron, accessed September 27, 2017, http://smallbusiness.chron.com/pros-cons-email-marketing-1448.html; James Brook, “The Pros and
Cons of Facebook and YouTube Video Advertising,” ClickZ, February 4, 2016, www.clickz.com/the-pros-and-cons-of-facebook-and-youtube-video-advertising/92925/.
Table 7-4 Pros and Cons of Primary Paid Channels
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REVIEW
The growth of digital marketing and social media has ushered in a new era with many distinct trends. These trends portend changes that need to be made in how marketers organize their efforts and deliver value to their customers. The wide variety of communication options and the avail- ability of data to target customers with offerings at the right time and place put marketers in a powerful position to engage with customers. These changes also imply that brands will occupy a different role in consumers’ lives and have an even greater role as cultural symbols.
DISCUSSION QUESTIONS
1. When you purchase a new electronic device, what role does the Internet play in your decision-making process? Which digital channels, if any, influence your decision the most? Why?
2. This question tests your familiarity with three key concepts that were discussed in the con- text of search and display advertising: click-through rates (CTR), cost-per-click (CPC), and cost-per-thousand (CPM). • Assume a company launched a search advertising campaign that generated 10,000 impres-
sions and 100 clicks. What is the click-through rate of the ad? • 100/10,000 = .01, or this can be expressed in percentage terms as .01*100 or 1%.
• What is the cost-per-click if an ad campaign costing $250 generates 50 clicks? • 250/50 = $5 is the cost-per-click (CPC).
• What is the cost-per-thousand (CPM) if an ad gets 20,000 impressions and the total cost is $100? • CPM is $5 (100/20).
3. Highlight some of the issues associated with brand marketers losing control over brand mean- ing. Are there any benefits to firms intervening to control the conversations taking place in social media? Why or why not?
4. How can brands develop systems to ensure that dynamic information coming in from social media is acted upon quickly? What would this imply for the brand management function?
5. Provide a summary of pros and cons associated with the following: (1) mobile advertising and (2) content marketing. What are some brands that appear to utilize these channels in an effective manner?
4. A brand or marketing strategy should be viewed as a part of an overall strategy exercise that involves understanding how data is collected, used, and shared within the organization.
5. By acquiring high-quality data about what types of customers are interested in which products, which digital or social media channels they use to access information about the product and brand, and how they feel about different products that are offered in the category, marketers can personalize a given message to an audience based on their behavior. Marketers also have to be aware of how a brand’s appeal shifts across various stages of consumer decision-making.
6. The availability of vast amounts of customer data implies that companies can create personalized offerings for their customers. Accessing data on consumers’ conversations will help uncover important information that can be useful to brand managers in pro- viding customized offerings (as described in Chapter 5). The social listening industry,
with companies such as Crimson Hexagon, Radian6, and Brandwatch, have emerged to
address the needs of brand marketers with regard to social monitoring. Several companies
(e.g., Gatorade) have installed in-house social monitoring “control rooms” to provide
continuous insights to top management regarding conversations about their brand. Chap-
ter 9 provides more insights into the role of social listening and monitoring in
decision-making.
7. Understanding how online and offline communications interact and coordinating an online
digital channel strategy are important. Even within digital channels, there are many options
that go beyond just social media marketing, including e-mail marketing, search and banner
advertising, the brand Web site, and so on.
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An important trend for brand marketers is that consumers are
spending considerable time posting reviews as well as accessing
and researching word-of-mouth information posted by others in
various blogs and videos (e.g., YouTube), microblogs (Twitter),
online forums, and review sites (Amazon reviews) before purchas-
ing a brand. A global survey of 30,000 consumers in more than
60 countries shows that while 60 percent of consumers trusted
traditional advertising—including TV, print, and so on—a much
larger percentage (83 percent) said that the most credible form of
advertising was recommendations from people they knew.
Given the importance of online word-of-mouth (also known
as electronic word-of-mouth, or eWOM) as a key factor in con-
sumer decision-making about products/brands, it has received
prominent attention in academic research. Researchers have iden-
tified the following five aspects of online word-of-mouth that
influence overall sentiment and engagement toward a brand and
drive sales.
Word-of-Mouth Volume and Valence
Two key factors that impact the influence of online word-of-mouth
are the volume of word-of-mouth information available online
and its valence (i.e., how positive or negative the word-of-mouth
information is). Not surprisingly, a high volume of word-of-mouth
information has been shown to exert a significant impact on sales.
Furthermore, researchers have found that negative word-of-mouth
information in the form of negative ratings or reviews exerts a greater
impact than positive ratings or reviews. Paradoxically, researchers
have shown that there is a much larger prevalence of positive infor-
mation posted online than negative information. Some observers
have ascribed this to the prevalence of fake reviews—that is, com-
panies attempt to manipulate what is said about a brand by posting
positive reviews themselves.
Word-of-Mouth Venue and Source
In addition to what is being shared, the location of where the
information is shared also has an impact. Research has shown that
approaches to monitoring online word-of-mouth that ignore the
variations in brand sentiment across different social media ven-
ues or platforms can lead to misleading conclusions. Instead, it is
recommended that measures of brand sentiment incorporate the
wide variations that sometimes exist across different social media
venues or platforms. This could be the outcome of the type of
information shared (e.g., videos versus text), as well as the types
of consumers that are attracted to different social media venues
(e.g., Facebook and Twitter may command different audiences).
Furthermore, researchers have shown that social media venues are
important because they correspond to a set of competitor brands
that vie for attention on those often crowded venues. Therefore,
considering the venue of word-of-mouth is critically important.
Virality and Content of Word-of-Mouth Information
Research has shown that content that evokes emotions such
as awe or surprise (i.e., high-arousal content) tends to spread
faster than posts that evoke sadness (e.g., low-arousal content).
Furthermore, one study has shown that positive content is more
likely to spread virally on social media than negative content.
Who and When Are Important in Word-of-Mouth
The timing of online word-of-mouth matters. Word-of-mouth
information exerts the greatest impact just before the launch of
a new product. Researchers have also shown that only a small
percentage of users’ social media connections influence their
behavior in an online setting, suggesting that there is a benefit
to identifying who the key influencers are that impact their fol-
lowers’ brand perceptions.
Online Word-of-Mouth Is Complementary to Other Information Sources
Researchers have distinguished online word-of-mouth effects
across paid media (e.g., advertising), owned media (e.g., com-
pany Web sites), and earned media (e.g., online reviews). In fact,
one study shows that earned media from social media channels
exerts a greater impact than traditional earned media. Another
study shows that both traditional and social media sources impact
each other, creating an “echoverse” of reverberating brand com-
munication information. In short, these researchers suggest that
brand marketers should use social media (e.g., Twitter) to person-
alize customer responses, alongside traditional consumer com-
munication approaches such as press releases and advertising.
Online Word-of-Mouth Can Help with Brand Mapping and Positioning
Research has shown that data from mining online word-of-mouth
information can be used to infer various aspects of brand posi-
tioning, including how a brand is perceived by its customers and
employees, and to map how a brand is positioned relative to its
competitors. These insights can provide a valuable tool to brand
managers as they track their brand image over time.
Word-of-Mouth Correlates with Referrals, Customer Satisfaction, Sales, and Stock Market Performance
Research has examined whether word-of-mouth correlates with
important outcome measures such as customer satisfaction, sales,
and stock market performance. Three key findings in this area
include the following: (1) word-of-mouth referrals can be more
impactful in the long-term than referrals from more traditional
sources, (2) negative word-of-mouth has a stronger impact than
positive word-of-mouth on sales and stock market returns, and
(3) customers acquired through word-of-mouth have stronger
loyalty toward brands.
Sources: “Recommendations from Friends Remain Most Credible Form of Advertising among Consumers, Branded Websites Are the Second- Highest-Rated Form,” Nielson, last modified September 28, 2015. www .nielsen.com/us/en/press-room/2015/recommendations-from-friends- remain-most-credible-form-of-advertising.html; Andrew T. Stephen
Understanding How Online Word-of-Mouth Influences Brands and Brand Management
BRAND FOCUS 7.0
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50. Sunil Gupta, “For Mobile Devices, Think Apps, not Ads,” Harvard Business Review, March 2013, https://hbr .org/2013/03/for-mobile-devices-think-apps-not-ads.
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52. Tim Peterson, “Snapchat Adopts Facebook-Style Ad, Targeting Like Email, Mobile Device Matching,” Mar- keting Land, September 13, 2016, http://marketingland .com/snapchat-adopts-facebook-style-ad-targeting-like- email-mobile-device-matching-191207.
53. Bruce Horovitz, “Snapchat: The Future of Marketing,” QSR, September 2016, https://www.qsrmagazine.com/ technology/snapchat-future-marketing.
54. Desmond Ng, “How Uber, Valued at Billions, Was Sent Packing by a Start-up in Singapore,” Channel NewsAsia, August 19, 2018, https://www.channel- newsasia.com/news/cnainsider/uber-grab-singapore- ride-hailing-southeast-asia-private-hire-10630396; Vivienne Tay, “Grab Unveils New Ad to Push ‘Every- day App’ Position,” Marketing Interactive, May 30, 2018, https://www.marketing-interactive.com/ grab-unveils-new-ad-to-push-everyday-app-position/.
55. Robert D. Hof, “Marketing in the Moments, to Reach Customers Online,” The New York Times, January 17, 2016, http://www.nytimes.com/2016/01/18/business/ media/marketing-in-the-moments-to-reach-customers- online.html?_r=0.
56. Alex Samuely, “Campari Unscrews Real-Time Data for Lyft Offer Targeting Bar-Goers,” Mobile Marketer, June 29, 2015, http://www.mobilemarketer.com/cms/news/ strategy/20764.html.
57. Phil Wahba, “Walmart Launches Its Own Mobile Payment System,” Fortune, December 10, 2015, http:// fortune.com/2015/12/10/walmart-mobile- payment/; Julian Chokkattu, “Walmart Pay Is Here to Enhance Your Walmart Shopping Experi- ence,” Digital Trends, July 6, 2016, http://www .digitaltrends.com/mobile/walmart-pay/; Brielle Jaekel, “Walmart’s Take on Mobile Video Ads Increased In- store Sales,” Mobile Marketer, March 25, 2016, http:// www.mobilemarketer.com/cms/news/video/22512 .html?utm_referrer=https%3A%2F%2Fwww.google .co.nz%2F.
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61. “Instagram Influencer Marketing Is a $1 Billion Dol- lar Industry,” Mediakix, http://mediakix.com/2017/03/ instagram-influencer-marketing-industry-size- how-big/#gs.nB4resk.
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63. Bill Sussman, “Influencer Marketing and the Power of Data Science,” Forbes, July 28, 2017, https://www .forbes.com/sites/forbesagencycouncil/2017/07/28/ influencer-marketing-and-the-power-of-data-science/ #6e2b351e79a6/.
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291
Learning Objectives
After reading this chapter, you should be able to
1. Outline the eight main ways to leverage secondary associations.
2. Explain the process by which a brand can leverage secondary associations.
3. Describe some of the key tactical issues in leveraging secondary associations from different entities.
Leveraging Secondary Brand Associations to Build Brand Equity 8
If Salomon decided to extend
from skis to tennis racquets,
there are a number of different
ways it could leverage secondary
brand associations.
Source: Karl Mathis/EPA/Newscom
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292 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
The preceding chapters described how we can build brand equity through the choice of brand ele- ments (Chapter 4) or marketing program activities and product, price, distribution, and marketing communication strategies (Chapters 5 and 6). Chapter 7 presented an overview of digital channels that can be leveraged to communicate with consumers. This chapter considers the third means of building brand equity—namely, through leveraging related or secondary brand associations.
Brands themselves may be linked to other entities that have their own knowledge structures in the minds of consumers. Because of these linkages, consumers may assume or infer that some of the associations or responses that characterize the other entities may also be true for the brand. In effect, the brand “borrows” some brand knowledge and, depending on the nature of those associations and responses, perhaps some brand equity from other entities.
This indirect approach to building brand equity is leveraging secondary brand associations for the brand. Secondary brand associations may be quite important for creating strong, favorable, and unique associations or positive responses if existing brand associations or responses are deficient in some way. It can also be an effective way to reinforce existing associations and responses freshly and differently.
This chapter considers the different means by which we can leverage secondary brand asso- ciations by linking the brand to the following (see Figure 8-1 for a fuller depiction):
1. Companies (through branding strategies) 2. Countries or other geographic areas (through identification of product origin) 3. Channels of distribution (through channel strategy) 4. Other brands (through co-branding) 5. Characters (through licensing) 6. Spokespersons (through endorsements) 7. Events (through sponsorship) 8. Other third-party sources (through awards or reviews)
The first three entities reflect source factors: who makes the product, where the product is made, and where it is purchased. The remaining entities deal with related people, places, or things.
As an example, suppose that Salomon—makers of alpine and cross-country ski bindings, ski boots, and skis—decided to introduce a new tennis racquet called “the Avenger.” Although Salomon has been selling safety bindings for skis since 1947, much of its growth was fueled by its diversifica- tion into ski boots and the introduction of a revolutionary new type of ski called the Monocoque in 1990. Salomon’s innovative, stylish, and top-quality products have led to strong leadership positions.
In creating the marketing program to support the new Avenger tennis racquet, Salomon could attempt to leverage secondary brand associations in several different ways.
PREVIEW
FIGURE 8-1
Secondary Sources of
Brand Knowledge
Ingredients Company
Alliances Other brands
People Brand
Endorsers
Country of origin
Things
Places
CausesEvents
Employees
Extensions
Third-party endorsements
Online and offline channels
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 293
• Salomon could leverage associations to the corporate brand by sub-branding the product—for example, by calling it “Avenger by Salomon.” Consumers’ evaluations of the new product extension would be influenced by the extent to which they held favorable associations about Salomon as a company or brand because of its skiing products, and how strongly they felt that such knowledge could predict the quality of a Salomon tennis racquet.
• Salomon could try to rely on its European origins (it is headquartered near Lake Annecy at the foot of the Alps), although such a location would not seem to have much relevance to tennis.
• Salomon could try to sell through upscale, professional tennis shops and clubs in hopes that these retailers’ credibility would rub off on the Avenger brand.
• Salomon could attempt to co-brand by identifying a strong ingredient brand for its grip, frame, or strings (as Wilson did by incorporating Goodyear tire rubber on the soles of its ProStaff Classic tennis shoes).
• Although it is doubtful that a licensed character could be effectively leveraged, Salomon could attempt to find one or more top professional players to endorse the racquet or could choose to become a sponsor of tennis tournaments, or even the entire professional ATP men’s or WTA women’s tennis tour. Salomon could create a social influencer campaign using well-known celebrities—such as Novak Djokovic, Serena Williams, Roger Federer—who also command large social media audiences, to help raise awareness of the Avenger brand.
• Salomon could attempt to secure and publicize favorable ratings from third parties, such as Tennis magazine.
Thus, independent of the associations created by the racquet itself, its brand name, or any other aspects of the marketing program, Salomon may be able to build equity by linking the brand to other entities in various ways.
This chapter first considers the nature of brand knowledge that marketers can leverage or transfer from other entities, and the process for doing so. We then consider in detail each of the eight different means of leveraging secondary brand associations. The chapter concludes by con- sidering the special topic of Olympic sponsorship in Brand Focus 7.0.
CONCEPTUALIZING THE LEVERAGING PROCESS Linking the brand to some other entity—some source factor or related person, place, or thing— may create a new set of associations from the brand to the entity, as well as affecting existing brand associations. Let’s look at both of these outcomes.
Creation of New Brand Associations By making a connection between the brand and another entity, consumers may form a mental association from the brand to this other entity and, consequently, to any or all associations, judg- ments, feelings, and the like linked to that entity. In general, these secondary brand associations are most likely to affect evaluations of a new product when consumers lack either the motivation or the ability to judge product-related concerns. In other words, when consumers either do not care much about or do not feel that they possess the knowledge to choose the appropriate brand, they may be more likely to make brand decisions on the basis of secondary considerations such as what they think, feel, or know about the country from which the product came, the store in which it is sold, or some other characteristic.
Effects on Existing Brand Knowledge Linking the brand to some other entity may create not only new brand associations to the entity but also affect existing brand associations. This is the basic mechanism. Consumers have some knowledge of an entity. When a brand is identified as linked to that entity, consumers may infer that some of the associations, judgments, or feelings that characterize the entity may also char- acterize the brand. Several different theoretical mechanisms from psychology predict this type of inference. One is “cognitive consistency”—in other words, in the minds of consumers, what is true for the entity, must be true for the brand.1
To describe the process more formally, here are three important factors in predicting the extent of leverage from linking the brand to another entity:
1. Awareness and knowledge of the entity: If consumers have no awareness or knowledge of the secondary entity, then obviously, there is nothing they can transfer from it. Ideally, consumers
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294 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
would be aware of the entity; hold some strong, favorable, and perhaps even unique associa- tions about it; and have positive judgments and feelings about it.
2. Meaningfulness of the knowledge of the entity: Given that the entity evokes some positive associations, judgments, or feelings, is this knowledge relevant and meaningful for the brand? The meaningfulness may vary depending on the brand and product context. Some associa- tions, judgments, or feelings may seem relevant to and valuable for the brand, whereas others may seem to consumers to have little connection.
3. Transferability of the knowledge of the entity: If some potentially useful and meaningful associations, judgments, or feelings exist regarding the entity and could possibly transfer to the brand, how strongly will this knowledge actually become linked to the brand?
In other words, the basic questions we want to answer about transferring secondary knowledge from another entity are: What do consumers know about the other entity? Does any of this knowl- edge affect what they think about the brand when it becomes linked or associated in some fashion with this other entity?
Theoretically, consumers can infer any aspect of knowledge from other entities to the brand (see Figure 8-2), although some types of entities are more likely to inherently create or affect certain kinds of brand knowledge than others. For example, events may be especially conducive to the creation of experiences; people may be especially effective for the elicitation of feelings; other brands may be especially well suited for establishing particular attributes and benefits; and so on. At the same time, any one entity may be associated with multiple dimensions of knowledge, each of which may affect brand knowledge directly or indirectly.
For example, consider the effects on knowledge of linking the brand to a cause, such as CVS’s “Quit Smoking Together” campaign or AT&T’s “It Can Wait” pledge which asked consumers not to text and drive. A cause marketing program could build brand awareness via recall and recogni- tion; enhance brand image in terms of attributes such as brand personality or user imagery like kind and generous; evoke brand feelings like social approval and self-respect; establish brand attitudes such as trustworthy and likable; and create experiences through a sense of community and participation in cause-related activities.
FIGURE 8-2
Understanding Transfer
of Brand Knowledge
Awareness
Attributes
Benefits
Images
Thoughts
Feelings
Attitudes
Experiences
Awareness
Attributes
Benefits
Images
Thoughts
Feelings
Attitudes
Experiences
Other EntityBrand
T R A N S F E R
CVS’s “Quit Smoking
Together” campaign
leveraged a cause to
build the brand’s equity.
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 295
Judgments or feelings may transfer more readily than more specific associations, which are likely to seem irrelevant or be too strongly linked to the original entity to transfer. As we will see
in Chapter 12, the inferencing process depends largely on the strength of the linkage or connection
in consumers’ minds between the brand and the other entity. The more consumers see the similarity
between the entity and the brand, the more likely they will infer similar knowledge about the brand.
Guidelines Leveraging secondary brand associations may allow marketers to create or reinforce an important
point-of-difference or competitive point-of-parity versus competitors. When choosing to empha-
size source factors or a particular person, place, or thing, marketers should take into account
consumers’ awareness of that entity, as well as how the associations, judgments, or feelings for it
might become linked to the brand or affect existing brand associations.
Marketers can choose entities for which consumers have some or even a great deal of similar
associations. A commonality leveraging strategy makes sense when consumers have associations
to another entity that are congruent with desired brand associations. For example, consider a
country such as New Zealand, which is known for having more sheep than people. A New Zealand
sweater manufacturer that positioned its product on the basis of its “New Zealand wool” presum-
ably could more easily establish strong and favorable brand associations because New Zealand
may already mean “wool” to many people.
On the other hand, there may be times when entities are chosen that represent a departure for
the brand because there are few if any common or similar associations. Such complementarity
branding strategies can be strategically critical in terms of delivering the desired position. The
marketer’s challenge here is to ensure that the less congruent knowledge for the entity has either
a direct or an indirect effect on existing brand knowledge. This may require skillfully designed
marketing programs that overcome initial consumer confusion or skepticism. For example, when
the ice cream chain Cold Stone Creamery and coffee shop Tim Horton’s embarked on a co-branded
partnership where selected stores would feature the other’s menu items, the partnership may have
caused some questions and doubts. The two companies had similar target customers, but there
was little overlap in terms of their menu offerings. However, the complementary offerings also
were a particular advantage. While Tim Horton’s sales primarily occurred in the morning or
the afternoon, Cold Stone’s menu offerings were more popular with customers in the evening.
Tim Hortons and Cold
Stone Creamery entered
into a co-branded part-
nership to leverage the
complementary nature
of their product offer-
ings, which were con-
sumed at different times
of the day, or dayparts.
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296 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Thus, the two combined their complementary daypart offerings, which allowed them to appeal to a broader range of customers. With the success of the partnership, the companies even began offering some joint menu options (e.g., coffee floats).2
Even if consumers buy into the association one way or another, leveraging secondary brand associations may be risky because the marketer gives up some control of the brand image. The source factors or related person, place, or thing will undoubtedly have a host of other associations, of which only some smaller set will be of interest to the marketer. Managing the transfer process so that only the relevant secondary knowledge becomes linked to the brand may be difficult. Moreover, this knowledge may change over time as consumers learn more about the entity, and these new associations, judgments, or feelings may or may not be advantageous for the brand. The following sections consider some of the main ways by which we can link secondary brand associations to the brand.
COMPANY Branding strategies are an important determinant of the strength of association from the brand to the company and any other existing brands. Three main branding options exist for a new product:
1. Create a new brand; 2. Adopt or modify an existing brand; 3. Combine an existing and a new brand.
Existing brands may be related to the corporate brand, say Samsung, or a specific product brand, such as Samsung Galaxy C8 mobile phone. If the brand is linked to an existing brand, as with options 2 and 3, then knowledge about the existing brand may also become linked to the brand.
A corporate or family brand can be a source of much brand equity. For example, a corporate brand may evoke associations of common product attributes, benefits, or attitudes; people and relationships; programs and values; and corporate credibility. Branding Brief 8-1 describes the corporate image campaign for IBM.
Leveraging a corporate brand may not always be useful, however. In fact, in some cases, large companies have deliberately introduced new brands or bought successful niche brands in an attempt to convey a “smaller” image. Examples of the latter strategy—that might even sur- prise their existing customers!—include Ben and Jerry’s (Unilever), Kashi (Kellogg’s), Odwalla (Coca-Cola), and Tom’s of Maine (Colgate-Palmolive). Clorox paid almost $1 billion for Burt’s Bees—famous for beeswax lip balm, lotions, soaps and shampoos—in part because of the mar- ket opportunity, but also to better learn about best practices for environmental sustainability, an emerging corporate priority.3 Louis Vuitton Moet Hennessey acquired a stake in the dynamic Asian label Charles & Keith as part of its plans to expand into fast fashion in China.
IBM’s long tradition as “Big Blue” helped it become one of the
world’s most successful companies of the twentieth century.
Unfortunately, many of the product areas on which this success
was built became highly competitive and increasingly commod-
itized in the new millennium. As a result, IBM decided it needed
to radically transform itself from a product-focused company to
a value-added, services-oriented company.
IBM Chairman and CEO Sam Palmisano spun off the com-
pany’s famous personal computer (PC) division and began to
invest heavily in software and business consulting. Another
critical aspect of the transformation was aligning the public per-
ception of IBM with this new vision. The vision itself—and the
corresponding marketing communications program—was rooted
in a basic belief that the world was changing in three significant
ways that provided clear direction to IBM’s new mission. In other
words, the world was becoming:
• Instrumented (“Instrument the world’s systems”)
• Interconnected (“Interconnect them”)
• Intelligent (“Make them intelligent”)
IBM wanted to be the leader in each of these three areas. The
original name chosen to reflect this new positioning was the very
literal “Integrated Intelligent Infrastructure,” but further work led
BRANDING BRIEF 8-1
IBM Promotes a Smarter Planet
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 297
to the snappier, more inspiring “Smarter Planet” phrase that also
became the slogan for the corporate campaign. The basic prem-
ise of the campaign was that every business would become a
technology company and be forced to face new and challenging
policy changes, especially concerning sustainability, security, and
privacy. IBM was positioned to be the ideal partner to assist in
these efforts. Given the ambitious scope of the positioning, gov-
ernment officials became the target as much as business leaders.
The “Smarter Planet” positioning had its roots in some of
IBM’s recent accomplishments. For example, in Stockholm,
Sweden, IBM smart traffic systems cut gridlock by 20 percent,
reduced emissions by 12 percent, and resulted in a dramatic
increase in the use of public transportation. Smart grid projects
in various locales had already helped consumers save 10 percent
on their bills and reduced peak demand by 15 percent.
With these accomplishments in mind, the initial goal of the
“Smarter Planet” campaign was to position IBM as a leader
in solving the world’s most pressing problems. The “Building
a Smarter Planet” campaign was launched with full-page ads
in leading newspapers along with TV ads that targeted three
groups: business and government leaders in large organizations,
IT professionals, and the mid-market. It included a strong digi-
tal component, with an expanded IBM Web site and a Smarter
Planet blog. Videos were created and distributed across eight of
the largest video-sharing sites. IBM also launched a “Smarter Cit-
ies” global tour to bring key policy and decision makers together
to discuss the topical issues they faced, such as transportation,
energy, health care, education, and public safety.
IBM analysts estimated that the Smarter Planet strategy con-
tributed significantly to revenue increases and helped strengthen
the brand. IBM’s brand tracking revealed increases across the
board on a variety of image measures (such as “making the
world a better place” and “an expert in how the world works”)
and overall judgments related to consideration, preference, and
the likelihood of doing business. IBM’s stock price during the
campaign increased by 64 percent, while the Dow index grew
only 14 percent over the same time.
In 2009, IBM launched its Smarter Cities campaign, extend-
ing its Smarter Planet strategy, to help cities run more efficiently,
conserve resources, and improve quality of life for its citizens. It
held 100 Smarter Cities Forums around the world to identify ways
of transforming life in these cities, making use of interconnected
information, and addressing key challenges such as traffic con-
gestion, energy use, and sustainable communities. By 2010, IBM
began working with colleges and universities to help give stu-
dents access to technologies and training to learn new skills and
help put them to work in cities around the world. IBM’s Smarter
Planet initiative showed a revenue growth with $3 billion, across
6,000 client engagements across a variety of areas—including
mobile Web, nanotechnology, stream computing, analytics, and
cloud computing. IBM used the Smarter Planet initiative to make
inroads into several high-growth industries such as health care
and oil and gas. During this year, IBM also received the “Gold
Global Effie” for its Smarter Planet initiative and was identified
by PRWeek as the “Corporate Branding Campaign of the Year.”
In 2011, IBM began using smarter systems to enable reductions
of energy utilization and increases in efficiency in designing
“smarter buildings.”
In 2015, in an apparent shift of strategy, IBM replaced the
Smarter Planet brand strategy with a new campaign called “Cog-
nitive Business,” which reflects the shift in focus towards cloud
computing and data analytics. This shift in strategy was prompted
by the emergence of artificial intelligence and big data analytics
as important trends that IBM has embraced through its Watson
technology. IBM’s new data analytics products surrounding cogni-
tive computing has focused on taking vast amounts of data (such
as medical data) and producing insights and learnings to improve
decision-making. As part of its Cognitive Business campaign, IBM
developed ads with spots featuring the voice of IBM’s Watson chat-
ting with former Jeopardy! champ Ken Jennings and folk-rock leg-
end Bob Dylan. Thus, IBM’s Cognitive Business campaign articulates
a brand and corporate strategy for IBM in the era of big data, and
represents the evolution of the company itself from a focus on using
the information to solve modern-day challenges (which formed the
basis for the Smarter Planet campaign), to generating data-driven
solutions by leveraging the power of computing technology. Figure
8-3 has an excerpt from a talk given by a longstanding IBM execu-
tive (now retired) talking about the Smarter Planet campaign.
IBM’s “Smarter Planet” positioning has strengthened the
corporate brand, benefiting all the company’s associated
product and services.
Source: Courtesy of International Business Machines Corporation, © International Business Machines Corporation.
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298 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
FIGURE 8-3
Excerpt from IBM’s
“Building a Smarter
Planet” First Op-Ad
Piece
Source: www.ibm.com/ smarterplanet; www.ibm. com. Used with permission of IBM.
Just over a year ago, we began a global conversation about how the planet is becoming smarter. By smarter, we mean that intelligence is being infused into the systems and processes that make the world work—into things no one would recognize as computers: cars, appliances, roadways, power grids, clothes, even natural systems such as agriculture and waterways.
Trillions of digital devices, connected through the Internet, are producing a vast ocean of data. And all this information—from the flow of markets to the pulse of societies—can be turned into knowledge because we now have the computational power and advanced analytics to make sense of it. With this knowledge we can reduce costs, cut waste, and improve the efficiency, productivity and quality of everything from companies to cities.
A year into this new era, the signs of a smarter planet are all around us. Smarter systems are being implemented and are creating value in every major industry, across every region in both the developed and developing worlds. This idea isn't a metaphor, or a vision, or a proposal—it's a rapidly emerging reality.
Sources: Talk given by Jon Iwata, SVP, Marketing & Communications, IBM, at the Tuck School of Business at Dartmouth College, February 10, 2010; “Let’s Build a Smarter Planet,” 2010 Gold Effie Winner, www .effie.org/-winners/showcase/2010/4625; www.ibm.com/-smarterplanet; www.ibm.com; www-03.ibm.com/ibm/history/ibm100/us/en/icons/
smarterplanet/, accessed December 17, 2017; Kate Kaye (2015), “Tangled Up in Big Blue: IBM Replaces Smarter Planet with . . . Bob Dylan,”
http://adage.com/article/datadriven-marketing/ibm-replaces-smarter-
planet-cognitive-business-strategy/300774/, October 6, 2015, accessed
December 17, 2017.
LVMH
Louis Vuitton Moet Hennessey (LVMH) is a French company ranked as the world’s largest luxury group. Its
brands include Louis Vuitton, Fendi, Marc Jacobs, Kenzo, Givenchy, Pucci, and Sephora. LVMH has frequently
struggled to project its exclusive brand image while simultaneously driving sales growth through more store
outlets and consumers. Louis Vuitton is the company’s most profitable brand, accounting for 45 percent of
its profit, and analysts predict that its sales could double in seven years, fueled by growth in Asia.
In 2011, LVMH made a strategic $24 million investment to secure a 20 percent stake in Charles & Keith,
a Singaporean affordable high-fashion shoe retailer. Started in 1996 by two brothers, Charles & Keith now
has over 200 outlets across Asia and the Middle East and intends to increase sales from 300 percent to 500
percent by expanding into the United States, China, India, and Europe.
The LVMH investment is expected to fund Charles & Keith’s planned expansion into China and improve
its shoe quality for the highly demanding Middle East market. Charles & Keith will continue to operate under
its own name and management team. Meanwhile, LVMH will gain exposure to Charles & Keith’s explosive
top-line growth, get insights into running an Asian low-cost operation, and maintain its own brand exclusiv-
ity by running the businesses independently.4
Finally, brands and companies are often unavoidably linked to the category and industry in
which they compete, sometimes with adverse consequences. Some industries are characterized by
fairly divided opinions, but consider the challenges faced by brands in the oil and gas or financial
services industries, which consumers have generally viewed in a negative light.5 By membership
in the category in which it competes, an oil company may expect to face a potentially suspicious
or skeptical public regardless of what it does. Chapters 11 and 12 describe in detail how marketers
can leverage the equity of existing brands to launch their new products.
COUNTRY OF ORIGIN AND OTHER GEOGRAPHIC AREAS Besides the company that makes the product, the country or geographic location from which it
originates may also become linked to the brand and generate secondary associations.6 Many coun-
tries have become known for expertise in certain product categories or for conveying a particular
type of image.
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 299
The world is becoming a “cultural bazaar” where consumers can pick and choose brands originating in different countries, based on their beliefs about the quality of certain types of products from certain countries or the image that these brands or products communicate.7 Thus, a consumer from anywhere in the world may choose to drink French wine, wear Italian suits, exercise in U.S. athletic shoes, drive a German car, or drink English ale.
Choosing brands with strong national ties may reflect a deliberate decision to maximize product utility and communicate self-image, based on what consumers believe about products from those coun- tries. Some brands can create a strong point-of- difference, in part because of consumers’ identification of and beliefs about the country of origin. For example, consider the following strongly linked brands and countries:
Levi’s jeans—United States Toyota—Japan
Chanel perfume—France Cadbury—England
Foster’s beer—Australia Gucci shoes and purses—Italy
Barilla pasta—Italy Mont Blanc pens—Switzerland
BMW—Germany Ikea—Sweden
Samsung—South Korea
Other geographic associations besides country of origin are pos- sible, such as states, regions, and cities. Three classic U.S. tourism slogans, “I Love New York,” “Virginia Is for Lovers,” and Las Vegas’s “What Happens Here, Stays Here,” are for these more specific types of locales.
Marketers can establish a geographic or country-of-origin asso- ciation in different ways. They can embed the location in the brand name, such as Idaho potatoes, Real California Milk, Irish Spring soap, or South African Airways, or combine it with a brand name in some way as in Bailey’s Irish Cream. Alternatively, they can make the location the dominant theme in brand advertising, as has been the case for Coors with Foster’s beer.
Some countries have even created advertising campaigns to promote their products. For example, “Rums of Puerto Rico” advertise that they are the finest-quality rums, leading to a 70 percent share of U.S. brand sales.8 Other countries have developed and advertised labels or seals for their products.9 Branding Brief 8-2 describes how New Zealand’s launch of its “The New Zealand Way” brand has led to much marketing success for the country.
Because it is typically a legal necessity for the country of origin to appear somewhere on the product or package, associations to the country of origin almost always have the potential to be created at the point of purchase and to affect brand decisions there. The question really is one of relative emphasis, and the role of country of origin or other geographic regions throughout the marketing program. Becoming strongly linked to a country of origin or specific geographic region is not without potential disadvantages. Events or actions associated with the country may color people’s perceptions.10
Puerto Rico rum makers have leveraged their geo-
graphical roots to establish a dominant market
position.
Source: Bowers/Stringer/Getty Images
BRAND AMERICA
The turn of the century and George W. Bush’s presidency coincided with a sharp drop in the image of the
United States in the eyes of the world’s citizens. A comprehensive analysis by the Pew Research Center in
2008 concluded:
The U.S. image abroad is suffering almost everywhere. Particularly in the most economically developed
countries, people blame America for the financial crisis. Opposition to key elements of American
foreign policy is widespread in Western Europe, and positive views of the U.S. have declined steeply
among many of America’s longtime European allies. In Muslim nations, the wars in Afghanistan and
particularly Iraq have driven negative ratings nearly off the charts. The United States earns positive
ratings in several Asian and Latin American nations, but usually by declining margins.11
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300 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
In 2013, a Forbes survey of country brands listed New Zealand
as the fifth-strongest country brand in the world—ahead of the
United States—by brand consultancy FutureBrand’s Country Brand
Index. The ranking was a credit to the country’s remarkable quali-
ties, but also to its concerted marketing program through the years.
Back in 1991, New Zealand began a branding initiative called
“The New Zealand Way.” The key objectives of the New Zealand
Way brand campaign were to reposition New Zealand to reflect its
contemporary positioning and undertake a sustained campaign
that could be a powerful force to benefit trade and tourism in the
BRANDING BRIEF 8-2
Selling Brands the New Zealand Way
One BBC-commissioned poll of 26,000 respondents in the 25 largest countries in 2007 found that roughly
half thought the United States had a “mostly negative” influence on the world. A global economic recession,
unpopular wars, and disagreements on various social and environmental policies took their toll. Although
few global U.S. companies experienced the same erosion in reputation—many people seemed willing to
compartmentalize politics and commerce—restoring U.S. image became a popular theme with the presiden-
tial election of Barack Obama in 2008. Recognizing the importance of tourism to the U.S. economy—one
in nine U.S. jobs is in a travel or tourism-related sector—the U.S. Travel Association has been aggressively
marketing visits to the United States to the international travel industry.12
More recently, the image of America around the world has dropped significantly. In a Pew Research Survey
conducted across more than 40,000 people in 39 countries, only 22 percent of those who participated in the
survey indicated confidence in their views of the U.S. President and America’s role on the world stage.13 Accord-
ing to the Pew Research Survey, this was particularly true in the aftermath of the 2016 election of Donald Trump
as the President of the United States; President Trump indicated a desire to withdraw from international trade
agreements and climate accords. These stances may have contributed to the loss of America’s brand image on
the world stage.
Countries such as the United States can be viewed as brands,
and their images can have implications for various industries
such as tourism and commerce.
Finally, consider the favorability of a country-of-origin association from both a domestic and a foreign perspective. In the domestic market, country-of-origin perceptions may stir consum- ers’ patriotic notions or remind them of their past. As international trade grows, consumers may view certain brands as symbolically important of their own cultural heritage and identity. Some research found that domestic brands were more strongly favored in collectivistic countries such as Japan and other Asian countries that have strong group norms and ties to family and country. In individualistic societies such as the United States and other Western countries that are more guided by self-interest and personal goals, consumers demand stronger evidence of product superiority.14
Patriotic appeals have been the basis of marketing strategies all over the world. However, they can lack uniqueness and even be overused. For example, during the Reagan administration in the 1980s, a number of different U.S. brands in a diverse range of product categories including cars, beer, and clothing used pro-U.S. themes in their advertising, perhaps diluting the efforts of all as a result. In recent years, the debate over outsourcing and offshoring and, tragically, the events of September 11, 2001, raised the visibility of patriotic appeals once again.
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 301
global marketplace. The innovative program
was owned and funded by the New Zealand
Tourism Board, and New Zealand Trade &
Enterprise (NZTE, the government’s official
economic development agency), working
with the best businesses across tourism and
trade, known as “Brand Partners.”
The New Zealand Way brand campaign
promoted the country, its tourism and trade
products and services, and its famous people,
known as “Brand Ambassadors.” From this
research and focus groups, a fern logo was
developed and intellectually protected as a
new icon for New Zealand. It represented
New Zealand’s green provenance and lever-
aged the well-known existing silver fern used
by many sports teams (such as the rugby
team the All Blacks) and some industries
(such as Anchor butter). From research, a set
of brand values were also agreed on by New
Zealanders to inform the repositioning.
Buoyed also by publicity from the highly
popular Lord of the Rings film trilogy, which
was filmed there, plus the profile from the
America’s Cup, which Tourism New Zealand
cleverly used for promotion, the number of visitors to the country
increased by 50 percent during this time. NZTE chose to focus its
branding efforts on international business development reflecting
emerging and relevant values for enterprise such as innovation,
creativity, and integrity. This complemented the ongoing suc-
cesses of the primary sector and New Zealand’s clean and green
environment.
In 2011, the tagline for the tourism campaign was changed
to “100% Pure You” with the subline, “It’s About Time.” The
intent was to build on the prior campaign to target people who
were actively considering New Zealand for a holiday vacation and
to encourage them to travel soon. The “100% Pure” tagline was
originally conceived for tourism, but has since become a tagline
leveraged by New Zealand across multiple industries, specifically
agriculture and food exports, in which “clean, green” is linked
to food quality and safety. The country’s wine producers have
marketed their products’ origin as the “clean, green land,” while
New Zealand’s dairy industry has placed advertising in congested
London settings, depicting happy cows on spacious, green fields.
The success of the campaign resulted in a growing awareness of
New Zealand as a destination for travel and resulted in a record
number of visitors by 2014, representing a 5 percent growth over
the previous year.
The campaign for marketing New Zealand as a destination
also involved using digital media channels. To attract tourists, the
campaign relied heavily on targeting international travelers who
were looking for an outdoors destination with a focus on scen-
ery and nature. Rather than spending on mass media advertising,
the company spent money on search engine marketing to identify
travelers that sought the types of destinations that New Zealand
represented. Further, the company’s own Web site NewZealand.
com, which attracts about 20 million visits a year, was used to
provide information for visitors to learn more about New Zealand.
Social media channels such as Facebook and Sina Weibo were used
to spread awareness to potential travelers across the world.
The campaign also managed the travelers’ experiences after
they arrived in New Zealand. For instance, the campaign relied
on a mobile app to connect people as they visited New Zealand
to potential activities and accommodations listings. Using social
media platforms, travelers could access stories and images about
what was happening in New Zealand, thus helping them by cre-
ating travel itineraries and providing information. The goal of
these activities was to build strong relationships with customers,
and to encourage travelers to New Zealand to spread positive
word-of-mouth.
A big component of destination branding involves manag-
ing myriad partnerships with other organizations. The destina-
tion marketing organization for New Zealand has partnered
with airlines, airports, and travel sellers, and it becomes more
important as the decision-making path becomes more inte-
grated and people receive advice from different sources. The
brand’s association with famous movies such as the Lord of
the Rings trilogy, and additional movies such as Avatar 2 and
Pete’s Dragon has helped the brand increase awareness among
potential audiences. Thanks to the marketing efforts, brand
New Zealand has the attributes of a strong brand including high
awareness as well as strong, favorable, and unique associations
as a travel destination.
Sources: New Zealand, https://ww.newzealand.com; Valarie Tjolle, “Tour- ism New Zealand Unveils New Digital Marketing Campaign,” www.travel- mole.com, February 21, 2011; Grant McPherson, “Branding Debate Goes Beyond Logos,” www.nzte.govt.nz, August 23, 2011; Magdalena Florek and Andrea Insch, “The Trademark Protection of Country Brands: Insights from New Zealand,” Journal of Place Management and Development 1, no. 3 (2008): 292–305; Top 25 Country Brands, Forbes, www.forbes .com/pictures/efkk45lgim/5-new-zealand/#7df87b57b580, accessed December 17, 2017; Samantha Skift, “Interview: Tourism New Zealand CEO on Smarter Digital Marketing,” March 5, 2015, https://skift.com/2015/03/05/ interview-tourism-new-zealand-ceo-on-smarter-digital-marketing/#1, accessed December 17, 2017.
New Zealand has benefited from popular films and a concerted marketing
effort to build the country brand.
Source: Tourism New Zealand
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302 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Another challenge with country-of-origin is how consumers actually define it and under what circumstances they care. Many U.S. companies are moving their manufacturing offshore. Although they may still base their headquarters on U.S. soil, some very iconic brands— including Converse, Levi’s, Mattel, and Rawlings baseballs—are no longer manufactured in the United States. Some other famous U.S. brands, such as Ben & Jerry’s, Budweiser, and Gerber, are owned by foreign corporations.
In an increasingly globally connected world, the concept of country-of-origin is likely to become very confusing at times. Governments in some countries have even taken steps to protect their popular industries. Swiss lawmakers have stipulated that local watchmakers can label their products Swiss-made only if non-Swiss parts equal less than 50 percent of the value of the watch’s movement, or motor.15
CHANNELS OF DISTRIBUTION Chapter 5 described how members of the channels of distribution could directly affect the equity of the brands they sell. Let’s next consider how retail stores can indirectly affect brand equity through an “image transfer” process because of consumers’ associations linked to the retail stores.
Because of associations to product assortment, pricing and credit policy, quality of service, and so on, retailers have their own brand images in consumers’ minds. The Science of Branding 8-1 summarizes academic research into the dimensions of retailer images. Retailers create these associations through the products and brands they stock and the means by which they sell them. To more directly shape their images, many retailers aggressively advertise and promote directly to customers.
A consumer may infer certain characteristics about a brand by where it is sold: “If it’s sold by Nordstrom, it must be good quality.” Consumers may perceive the same brand differently depend- ing on whether it is sold in a store viewed as prestigious and exclusive, or in a store designed for bargain shoppers and having more mass appeal.
Like the brands they sell, retailers have brand images that
influence consumers and must be carefully constructed and
maintained. Academics have identified the following five
dimensions of a retailer’s brand image.
Access
The location of a store and the distance that consumers must
travel to shop are basic criteria in their store choice decisions.
Access is a key component in consumers’ assessment of total
shopping costs, and is especially important for retailers who wish
to get a substantial share of wallet from fill-in trips and small-
basket shoppers.
Store Atmosphere
Different elements of a retailer’s in-store environment, such as
color, music, and crowding can influence consumers’ perceptions
of its atmosphere, whether or not they visit a store, how much
time they spend in it, and how much money they spend there.
A pleasing in-store atmosphere provides substantial hedonic util-
ity to consumers and encourages them to visit more often, stay
longer, and purchase more. Although it improves consumers’
perceptions of the quality of merchandise in the store, consum-
ers also tend to associate it with higher prices. An appealing in-
store atmosphere also offers much potential in terms of crafting
a unique store image and establishing differentiation. Even if the
products and brands stocked by a retailer are similar to those
sold by others, the ability to create a strong in-store personality
and rich experiences can play a crucial role in building retailer
brand equity.
Price and Promotion
A retailer’s price image is influenced by attributes, such as average
level of prices, how much variation there is in prices over time,
the frequency and depth of promotions, and whether the retailer
positions itself on a continuum between EDLP (everyday low price)
and HILO (high-low promotional) pricing. Consumers are more
likely to develop a favorable price image when retailers offer fre-
quent discounts on a large number of products than when they
offer less frequent, but steeper, discounts. Further, products that
have a high unit price and are purchased more frequently are
more salient in determining the retailer’s price image. One pricing
format does not dominate another, however research has shown
that large-basket shoppers prefer EDLP stores, while small-basket
shoppers prefer HILO, and it is optimal for HILO stores to charge
an average price that is higher than the EDLP. Finally, price pro-
motions are associated with store switching, however the effect
is indirect, altering consumers’ category purchase decisions while
they are in the store rather than their choice of which store to visit.
THE SCIENCE OF BRANDING 8-1
Understanding Retailers’ Brand Images
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 303
Cross-Category Assortment
Consumers’ perception of the breadth of different products and
services offered by a retailer under one roof significantly influ-
ences store image. A broad assortment can create customer
value by offering convenience and ease of shopping. It is risky
to extend too far too soon, but staying too tightly coupled to
the current assortment and image may unnecessarily limit the
retailer’s range of experimentation. The logic and sequencing of
a retailer’s assortment policy are critical to its ability to successfully
expand its meaning and appeal to consumers over time.
Within-Category Assortment
Consumers’ perceptions of the depth of a retailer’s assortment
within a product category are an important dimension of store
image and a key driver of store choice. As the perceived assort-
ment of brands, flavors, and sizes increases, variety-seeking con-
sumers will perceive greater utility, consumers with uncertain
future preferences will believe they have more flexibility in their
choices, and, in general, consumers are more likely to find the
item they desire. A greater number of SKUs need not directly
translate to better perceptions. Retailers often can reduce the
number of SKUs substantially without adversely affecting con-
sumer perceptions, as long as they pay attention to the most
preferred brands, the organization of the assortment, and the
availability of diverse product attributes.
Online versus Offline Retailer Image
With the growth of e-commerce and online retailing, an impor-
tant question is how retailers manage their image in online and
offline settings. One study examined how incongruity between
online and offline retailer brand image impacts consumer attitudes
towards a Web site. The study found that any incongruity between
online and offline experiences can disrupt the Web site’s navi-
gation experience. With the proliferation of digital channels and
interfaces (e.g., tablet versus PC versus mobile phone), ensuring a
seamless user experience is critical to maintaining retailer image.
Sources: Kusum L. Ailawadi and Kevin Lane Keller, “Understanding Retail Branding: Conceptual Insights and Research Priorities,” Journal of Retailing 80, no. 4 (December 2004): 331–342; Dennis B. Arnett, Debra A. Laverie, and Amanda Meiers, “Developing Parsimonious Retailer Equity Indexes Using Partial Least Squares Analysis: A Method and Applications,” Journal of Retailing 79, no. 3 (December 2003): 161–170; Dhruv Grewal and Michael Levy, “Emerging Issues in Retailing Research,” Journal of Retailing 85, no. 4 (December 2009): 522–526; Myles Landers, Sharon E. Beatty, Sijun Wang, and David L. Mothersbaugh, “The Effect of Online versus Offline Retailer-Brand Image Incongruity on the Flow Experience,” Journal of Marketing Theory and Practice 23, no. 4 (2015): 370–387.
The transfer of store image associations can be either positive or negative for a brand. For many high-end brands, a natural growth strategy is to expand the customer base by tapping new channels of distribution. Such strategies can be dangerous, however, depending on how existing customers and retailers react. When Vera Wang decided to also distribute her wares through Kohl’s, Macy’s decided to drop her popular lingerie line. The retailer also cut ties with Liz Claiborne when the fashion brand decided to offer a line called Liz & Co. to JCPenney.16 Conversely, offering exclusive brands can also negatively harm the retailer. For example, when Sears began offering Rolex, Chanel, Jimmy Choo, Stella McCartney, and other fashion brands on its online marketplace, a number of analysts questioned whether this would be the right strategy for the retailer, because this could dilute the image of the affordable, mass-market Sears brand.17
CO-BRANDING We’ve noted that through a brand extension strategy, a new product can become linked to an existing corporate or family brand that has its own set of associations. An existing brand can also leverage associations by linking itself to other brands from the same or different company. Co-branding—also called brand bundling or brand alliances—occurs when two or more existing brands are combined into a joint product or are marketed together in some fashion.18 A special case of this strategy is ingredient branding, which we’ll discuss in the next section.19
Co-branding has been around for years; for example, Betty Crocker paired with Sunkist Growers in 1961 to successfully market a lemon chiffon cake mix.20 Interest in co-branding as a means of building brand equity has increased in recent years. For example, Hershey’s Heath toffee candy bar has not only been extended into several new products—Heath Sensations ( bite-sized candies) and Heath Bits and Bits of Brickle (chocolate-covered and plain toffee baking products)— but also has been licensed to a variety of vendors, such as Dairy Queen (with its Blizzard dessert), Ben & Jerry’s, and Blue Bunny (with its ice cream bar).
Some other notable supermarket examples of co-branding are Yoplait Trix yogurt, Betty Crocker’s brownie mix with Hershey’s chocolate syrup, and Kellogg’s Cinnabon cereal. In the credit card market, co-branding often links three brands, as in the Shell Gold MasterCard from Citi Cards. With airlines, brand alliances can unite a host of brands, such as Star Alli- ance, which includes 16 different airlines such as United Airlines, Lufthansa, and Singapore Airlines. Technology brands have also begun partnering with their non-technology counterparts in unique ways to appeal to customers. For example, Nike and Apple co-branded to create a new
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304 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
footwear line called Nike+. Apple equipped these shoes with a microchip that helps record users’ progress as they activate this feature via their iPhone, and it can record user statistics such as calories burned.21 Nike and Apple expanded this partnership to the Apple Watch Nike+, which allows users to stream their favorite music from an app called Nike+ Run Club. When launched from their watch, the app can provide in-ear training, and the custom face on the watch provides motivation for wearers with slogans such as “Are We Running Today?” By co-branding with Nike, Apple has increased Apple Watch’s appeal to athletes and fitness-minded consumers. In turn, Nike has benefitted from its association with the Apple Watch as it reinforces Nike’s associations with fitness and health and allows it to broaden its appeal to regular runners, as well as the aspira- tional group of fitness enthusiasts.
Figure 8-4 summarizes the advantages and disadvan- tages of co-branding and licensing. The main advantage of co-branding is that a product may be uniquely and convincingly positioned by virtue of the multiple brands in the campaign. Co- branding can create more compelling points-of-difference or points-of-parity for the brand—or both—than otherwise might have been feasible. As a result, it can generate greater sales from the existing target market as well as additional opportunities with new consumers and channels. When Kraft adds Dole fruit to its popular Lunchables lunch combinations line for kids, it was partly to help address health concerns and criticism from nutrition critics.22
Co-branding can reduce the cost of product introduction because it combines two well-known images, accelerating potential adoption. Co-branding also may be a valuable means to learn about consumers and how other companies approach them. In poorly differentiated categories especially, co-branding may be an important means of creating a distinctive product.23
The potential disadvantages of co-branding are the risks and lack of control that arise from becom- ing aligned with another brand in the minds of consumers. Consumer expectations about the level of involvement and commitment with co-brands are likely to be high. Unsatisfactory performance thus could have negative repercussions for both (or all) brands.24 If the brands are very distinct, consum- ers may be less sure about what each brand represent.25 If the other brand has entered into other co- branding arrangements, there also may be a risk of overexposure that would dilute the transfer of any association. It may also result in distraction and a lack of focus on existing brands.
Guidelines The Science of Branding 8-2 provides some academic insight into how consumers evaluate co- branded products. To create a strong co-brand, both brands should have adequate brand aware- ness; sufficiently strong, favorable, and unique associations; and positive consumer judgments
FIGURE 8-4
Advantages and
Dis advantages of
Co-Branding and
Licensing
Advantages
Borrow needed expertise Leverage equity you don’t have Reduce cost of product introduction Expand brand meaning into related categories Broaden meaning Increase access points Source of additional revenue
Disadvantages
Loss of control Risk of brand equity dilution Negative feedback effects Lack of brand focus and clarity Organizational distraction
Apple and Nike’s co-branded partnership increased the appeal
of both brands by allowing users to track their fitness goals
using an app that could be accessed via their iPhones.
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 305
Brand alliances, which combine two brands in some way,
come in all forms. Academic research has explored the effects of
co-branding and ingredient branding strategies.
Co-branding
Park, Jun, and Shocker compare co-brands to the notion of
“ conceptual combinations” in psychology. A conceptual com-
bination (“apartment dog”) consists of a modifying concept, or
“modifier” (apartment) and a modified concept, or “header”
(dog). Experimentally, Park and his colleagues explored the
different ways that Godiva (associated with expensive, high-
calorie boxed chocolates), and Slim-Fast (associated with
inexpensive, low- calorie diet food) could hypothetically introduce
a chocolate cake mix separately or together through a co-brand.
They found that the co-branded version of the product was
better accepted than if either brand attempted to extend indi-
vidually into the cake mix category. They also found that con-
sumers’ impressions of the co-branded concept were driven by
the header brand—Slim-Fast chocolate cake mix by Godiva was
viewed as lower calorie than if the product was called Godiva
chocolate cake mix by Slim-Fast; the reverse was true for asso-
ciations of richness and luxury. Similarly, consumers’ impres-
sions of Slim-Fast after exposure to the co-branded concept
were more likely to change when it was the header brand than
when it was the modifier brand. The findings show how care-
fully selected brands can be combined to overcome the potential
problems of negatively correlated attributes (here, rich taste and
low calories).
Simonin and Ruth found that consumers’ attitudes toward
a brand alliance could influence subsequent impressions of each
partner’s brands (spillover effects existed), but that these effects
also depended on other factors such as product fit or compat-
ibility and brand fit or image congruity. Brands less familiar than
their partners contributed less to an alliance but experienced
stronger spillover effects than their more familiar partners. Voss
and Tansuhaj found that consumer evaluations of an unknown
brand from another country was more positive when it was allied
with a well-known domestic brand.
Levin and Levin explored the effects of dual branding,
which they defined as a marketing strategy in which two
brands, usually restaurants, share the same facilities while
providing consumers with the opportunity to use either one
or both brands. Kumar found that introducing a co-branded
extension into a new product category made it less likely that a
brand from the new category could turn around and introduce
a counterextension into the original product category. LeBar
and colleagues found that joint branding helped to increase a
brand’s perceived differentiation, but also sometimes decreased
consumers’ perceived esteem for the brand and knowledge
about the brand.
Swaminathan and colleagues examined situations when
co-branded partnerships featuring two brands with dissimilar
(or complementary attribute levels, such as Godiva partnering
with Ben & Jerry’s) would be preferred by consumers, to those
partnerships among similar (or non-complementary) co-branded
partners (such as Godiva and Weight Watchers). They argue that
different segments of consumers may evaluate these types of co-
branded products favorably, based on their thinking or processing
style (linked to different cultural orientations). Under a property-
mapping thinking style, complementary co-branded partnerships
are evaluated more favorably. When consumers process co-brand
information in a relational way, partnerships with similar brands
were more favorably evaluated.
Another study examined whether partners in a brand alliance
should be similar or dissimilar in brand image, to foster favor-
able fit perceptions. Van der Lans, van den Bergh, and Dieleman
found that conceptual coherence across brands in terms of their
brand personalities (e.g., similarities in levels of sophistication in
brand personalities) that entered into a co-branded partnership
predicted attitudes towards the alliance.
One research study examined the links between international
and native brands on perceptions of a co-branded partnership.
They found that the prominent partner brand—for example, the
brand whose name appears first in the co-branded partnership—
exerts a stronger impact on the perceptions of the co-branded
product.
A review paper by Newmeyer and colleagues proposes an
overarching framework of evaluating co-branded partnerships.
They argue that evaluations of co-branded products are influ-
enced by both the structure of the partnership and the con-
stituent brands. The structure could involve how well the two
partner brands are integrated as well as exclusivity and duration
of the partnership. The consistency of brand images can impact
co-brand evaluations as well.
Thus, across various studies, past research has elucidated
basic rules for how to choose co-branded partners. Researchers
have helped shine a light on how consumers view co-branded
partnerships. These rules can help clarify which partnerships are
likely to succeed, based on the structure of the partnership itself
and the consistency in partners’ brand images.
Ingredient Branding
Desai and Keller conducted a laboratory experiment to con-
sider how ingredient branding affected consumer acceptance
of an initial line extension, as well as the ability of the brand
to introduce future category extensions. They studied two par-
ticular types of line extensions, defined as brand expansions:
(1) slot filler expansions, in which the level of one exist-
ing product attribute changed (a new type of scent in Tide
detergent), and (2) new attribute expansions, in which an
entirely new attribute or characteristic was added to the prod-
uct (cough relief liquid added to LifeSavers candy). They exam-
ined two types of ingredient branding strategies by branding
the target attribute ingredient for the brand expansion with
either a new name as a self-branded ingredient (Tide with
its own EverFresh scented bath soap) or an established, well-
respected name as a co-branded ingredient (Tide with Irish
Spring scented bath soap).
The results indicated that with slot filler expansions, although a
co-branded ingredient eased initial acceptance of the expansion, a
self-branded ingredient led to more favorable later extension eval-
uations. With more dissimilar new attribute expansions, however,
THE SCIENCE OF BRANDING 8-2
Understanding Brand Alliances
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306 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
and feelings. Thus, a necessary, but not sufficient, condition for co-branding success is that the two brands separately have some potential brand equity. The most important requirement is a logical fit between the two brands, so that the combined brand or marketing activity maximizes the advantages of the individual brands while minimizing the disadvantages.26
Besides these strategic considerations, marketers must enter into and execute co-branding ventures carefully. They must ensure the right kind of fit in values, capabilities, and goals in addition to an appropriate balance of brand equity. When it comes to execution, marketers need detailed plans to legalize contracts, make financial arrangements, and coordinate marketing pro- grams. As one executive at Nabisco put it, “Giving away your brand is a lot like giving away your child—you want to make sure everything is perfect.” The financial arrangement between brands may vary, although typically the company using the other brand will pay some type of licensing fee and/or royalty from sales. The aim is for the licensor and the licensee to benefit from these agreements as a result of the shared equity, increased awareness for the licensor, and greater sales for the licensee.
More generally, brand alliances, such as co-branding, require marketers to ask themselves a number of questions, such as:
• What capabilities do we not have? • What resource constraints do we face (people, time, money)? • What growth goals or revenue needs do we have?
In assessing a joint branding opportunity, marketers will ask themselves:
• Is it a profitable business venture? • How does it help to maintain or strengthen brand equity? • Is there any possible risk of dilution of brand equity? • Does it offer any extrinsic advantages such as learning opportunities?
One of the highest-profile brand alliances was that of Disney and McDonald’s, which had the exclusive global rights from 1996 to 2006 in the fast-food industry to promote everything from Disney movies and videos to TV shows and theme parks. Interestingly, because of concerns that the fast-food industry is fueling childhood obesity, Disney ended its exclusive partnership with McDonald’s, although they agreed to continue partnering on some occasional promotions. This example demonstrates some of the downsides of co-branded partnerships, particularly when one partner ceases to be a source of positive brand associations.27 It may help for brands to consider a potential exit strategy if their partnerships do not work out. However, McDonald’s continues to have partnerships with a number of different brands, including leading toy and entertainment
a co-branded ingredient led to more favorable evaluations of both
the initial expansion and the subsequent extension.
Venkatesh and Mahajan derived an analytical model based
on bundling and reservation price notions to help formulate opti-
mal pricing and partner selection decisions for branded compo-
nents. In an experimental application in the context of a university
computer store selling 486-class laptop computers, they showed
that at the bundle level, an all-brand Compaq PC with Intel 486
commanded a clear price premium over other alternatives. The
relative brand strength of the Intel brand, however, was shown
to be stronger in some senses than that of the Compaq brand.
Sources: C. Whan Park, Sung Youl Jun, and Allan D. Shocker, “Composite Branding Alliances: An Investigation of Extension and Feedback Effects,” Journal of Marketing Research 33, no. 4 (November 1996): 453–466; Bernard L. Simonin and Julie A. Ruth, “Is a Company Known by the Company It Keeps? Assessing the Spillover Effects of Brand Alliances on Consumer Brand Attitudes,” Journal of Marketing Research 35, no. 2 (1998): 30–42; Piyush Kumar, “The Impact of Cobranding on Cus- tomer Evaluation of Brand Counterextensions,” Journal of Marketing 69, no. 3 (July 2005): 1–18; Kalpesh Desai and Kevin Lane Keller, “The
Effects of Ingredient Branding Strategies on Host Brand Extendibility,” Journal of Marketing 66, no. 1 (January 2002): 73–93; Mrinal Ghosh and George John, “When Should Original Equipment Manufacturers Use Branded Component Contracts with Suppliers?,” Journal of Marketing Research 46, no. 5 (October 2009): 597–611; Alokparna Basu Monga and Loraine Lau-Gesk, “Blending Cobrand Personalities: An Examination of the Complex Self,” Journal of Marketing Research 44, no. 3 (August 2007): 389–400; Casey E. Newmeyer, R. Venkatesh, and Rabikar Chat- terjee, “Cobranding Arrangements and Partner Selection: A Conceptual Framework and Managerial Guidelines,” Journal of the Academy of Mar- keting Science 42, no. 2 (2014): 103–118; Vanitha Swaminathan, Zeynep Gürhan-Canli, Umut Kubat, and Ceren Hayran. “How, When, and Why Do Attribute-Complementary versus Attribute-Similar Cobrands Affect Brand Evaluations: A Concept Combination Perspective,” Journal of Con- sumer Research 42, no. 1 (2015): 45–58; Ralf van der Lans, Bram Van den Bergh, and Evelien Dieleman, “Partner Selection in Brand Alliances: An Empirical Investigation of the Drivers of Brand Fit,” Marketing Science 33, no. 4 (2014): 551–566; Yan Li and Hongwei He, “Evaluation of Inter- national Brand Alliances: Brand Order and Consumer Ethnocentrism,” Journal of Business Research 66, no. 1 (January 2013): 89–97; Philip Kotler and Waldemar Pfoertsch, Ingredient Branding: Making the Invis- ible Visible (New York: Springer, 2010); John Quelch, “How to Brand an Ingredient,” October 8, 2007, www.blogs.hbr.org.
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 307
companies for its Happy Meals, and other consumer brands such as Kraft’s Oreo, Hershey’s M&M’s, and Rolo brands for its McFlurry dessert.
Ingredient Branding A special case of co-branding is ingredient branding, which creates brand equity for materials, components, or parts that are necessarily contained within other branded products.28 Some successful ingredient brands over the years include Intel chips, Arm & Hammer Baking Soda, OnStar security service, Oreo cookies, Stainmaster stain- resistant fibers, and Scotchgard fabrics. In a digital setting, ingredient branding is also useful in boosting the attractive- ness of the host brand. For example, Apple’s CarPlay is a feature that is available in certain automobiles only, and a car such as Fiat 500 may be more attractive to a potential buyer because it is among the shortlist of cars that offer the mobile iOS as an option to its customers.29
Ingredient brands attempt to create enough awareness and preference for their product that consumers will not buy a host product that does not contain the ingredient.
From a consumer behavior perspective, branded ingredients are often a signal of quality. In a provocative academic research study, Carpenter, Glazer, and Nakamoto found that the inclusion of a branded attribute (“Alpine Class” fill for a down jacket) significantly affected consumer choices even when consumers were explicitly told that the attribute was not relevant to their decision.30 Clearly, consumers inferred certain quality characteristics as a result of the branded ingredient.
The uniformity and predictability of ingredient brands can reduce risk and reassure consum- ers. As a result, ingredient brands can become industry standards and consumers will not want to buy a product that does not contain the ingredient. In other words, ingredient brands can become, in effect, a category point-of-parity. Consumers do not necessarily have to know exactly how the ingredient works—just that it adds value.
Ingredient branding has become more prevalent as mature brands seek cost-effective means to differentiate themselves on the one hand, and potential ingredient products seek means to expand their sales opportunities on the other hand. Corning’s Gorilla Glass was sold as a stand- alone product prior to its use by phone manufacturers as a way of preventing phone screens from cracking. After a successful video series, which garnered millions of views, Motorola began touting its use of Gorilla Glass as a key differentiator.31 Some companies create their own ingredient brands, such as Nike’s Dri-Fit technology—a high-performance, microfiber fabric—which, when used in athletic wear, can help keep athletes dry and comfortable; similarly, another example is the ingredient brand EcoBoost that Ford developed for its new engines that improves fuel economy and increases performance.32 To illustrate the range of alternatives in ingredient branding, consider how Singapore Airlines uses both co-branded and self-branded ingredients in their service delivery.
Thus, as in this example, one product may contain some different branded ingredients. Ingre- dient brands are not restricted to products and services. For example, through the years, Chevy Camaro has been featured in the movie Transformers as the character Bumblebee. In this case,
OnStar security service has built a strong component brand by
advertising that its presence in cars is a source of security and
safety for passengers.
SINGAPORE AIRLINES
In its Suites class of service, Singapore Airlines offers bedding and tableware from Givenchy as well as new
chairs hand stitched by “master Italian craftsman” Poltrona Frau. The First Class SkySuites feature leather
seats trimmed with burr wood. The airline offers the Krisworld entertainment system and Givenchy fleece
blankets. In the more expensive suites, first, and business classes, customers can enjoy Bose QuietComfort
2 acoustic noise-canceling headphones (economy flyers get Dolby). For its cuisine, Singapore Airlines’s meals
are prepared by its International Culinary Panel featuring renowned chefs, and premium classes enjoy ethni-
cally branded meals, such as Shahi Thali (suites and first class) and Hanakoireki (business class). All passengers
can join the KrisFlyer frequent flyer program.
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308 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Singapore Airlines uses a combination of co-branded and self-
branded ingredients in branding its services.
Source: Steve Parsons/PA Images/Getty Images
the Chevy Camaro may be seen as an ingredient in the Transformers movie. The alliance between Chevy and Transformers allowed the brand to gain status as a pop culture icon and increase its visibility with younger audiences.33 The yellow Chevy Camaro saw an increase in sales of about 10 percent, and sold nearly 80,000 of the yellow cars, most of which was attributable to the co- branding with Transformers. The look of the car also changed to keep up with the movie’s sequel releases. For example, during the fourth film, the car was redesigned to appear more aggressive and muscular. Various other models of GM such as Cadillac and the green Corvette Stingray were featured in various roles in the Transformer movies, thus generating both awareness and sales for the brands. Another example of co-branding can be found in retail partnerships, as in the exclusive partnership between Barnes & Noble and Starbucks, in which Starbucks has an in-store coffee shop in numerous Barnes & Noble bookstore locations.
The highly successful
Transformer mov-
ies featured a yellow
Chevy Camaro and
allowed the com-
pany to gain status
and build brand
awareness.
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 309
Advantages and Disadvantages. The pros and cons of ingredient branding are similar to those of co-branding.34 From the perspective of the firm making and supplying the ingredient, the benefit of branding its products as ingredients is that by creating consumer pull, the company can generate greater sales at a higher margin. There may also be more stable and broader customer demand and better long-term supplier–buyer relationships. Enhanced revenues may accrue from having two revenue streams—the direct revenue from the cost of the supplied ingredients, as well as possible extra revenue from the royalty rights paid to display the ingredient brand.
From the standpoint of the host product manufacturer, the benefit is in leveraging the equity from the ingredient brand to enhance its own brand equity. On the demand side, the host product brands may achieve access to new product categories, different market segments, and more distribution channels than they otherwise could have expected. On the supply side, the host product brands may be able to share some production and development costs with the ingredient supplier.
Ingredient branding is not without its risks and costs. The costs of a supporting marketing com- munications program can be high—advertising to sales ratios for consumer products often surpass 5 percent—and many suppliers are relatively inexperienced at designing mass media communications that may have to contend with inattentive consumers and noncooperative intermediaries. As with co-branding, there is a loss of control, because marketing programs for the supplier and manufac- turer may have different objectives, and thus, may send different signals to consumers.
Some manufacturers may be reluctant to become supplier dependent or may not believe that the branded ingredient adds value, resulting in a loss of possible accounts. Manufacturers may resent any consumer confusion about what is the “real brand” if the branded ingredient gains too much equity. Finally, the sustainability of the competitive advantage may be somewhat uncertain, because brands that follow may benefit from consumers’ increased understanding of the role of the ingredient. As a result, follower brands may have to communicate not so much the importance of the ingredient as for why their particular ingredient brand is better than the pioneer or other brands.
Guidelines. Ingredient branding programs build brand equity in many of the same ways that conventional branding programs do. Branding Brief 8-3 describes ingredient branding efforts at DuPont, which has successfully introduced many such brands.
Perhaps one of the most successful ingredient brand mar-
keters of all times is DuPont, which was founded in Dela-
ware as a black-powder manufacturer in 1802 by Frenchman
E. I. du Pont de Nemours. Over the years, the company intro-
duced a number of innovative products for use in markets
ranging from apparel to aerospace. Many of the company’s
innovations, such as Lycra and Stainmaster fabrics, Teflon
coating, and Kevlar fiber, became household names as ingre-
dient brands in consumer products manufactured by many
other companies. Although some have been spun off, the
company still maintains a healthy roster of consumer prod-
ucts. It should be noted that both Teflon and Stainmaster
have both been spun off and are no longer a part of Dupont
(which is now DowDupont). Still, the lessons from ingredi-
ent branding based on DuPont’s approach are worthy of
our attention.
In 2016, DuPont generated some 24.5 billion U.S. dollars of
revenue. On August 31, 2017, it merged with The Dow Chemical
Company to create DowDuPont Inc., the world’s largest chemical
company in terms of sales. Following the merger with Dow, the
new company DowDuPont has an estimated value of $130 billion
and will be organized as three separate companies focusing on
agricultural chemicals, materials science, and specialty product
industries.
Early on, DuPont learned an important branding lesson the
hard way. Because the company did not protect the name of
its first organic chemical fiber, nylon, it was not trademarkable
and became generic. The brands created by DuPont through
the years have been components in a wide variety of prod-
ucts that are marketed to make everyday life better, safer, and
healthier. The innovations that DuPont has been known for over
the years are a result of its investments in R&D. DuPont has 150
research and development facilities located in China, Brazil, India,
Germany, and Switzerland. On average, the DuPont company
invested $2 billion annually in a diverse range of technologies and
employed more than 10,000 scientists and engineers.
A key question that DuPont constantly confronts is whether
to brand a product as an ingredient brand. To address this
BRANDING BRIEF 8-3
Ingredient Branding the DuPont Way
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310 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Another example of an ingredient brand, Kevlar is known
for its bulletproof material and protective strength.
question, the firm has traditionally applied several criteria, both
quantitative and qualitative.
• On the quantitative side, DuPont has a model that esti-
mates the return on investment of promoting a product
as an ingredient brand. Inputs to the model include brand
resource allocations such as advertising and trade support;
outputs relate to favorability ratings and potential sales.
The goal of the model is to determine whether branding an
ingredient can be financially justified, especially in industrial
markets.
• On the qualitative side, DuPont assesses how an ingredient
brand can help a product’s positioning. If competitive and
consumer analyses reveal that conveying certain associations
would boost sales, DuPont is more likely to brand the ingredi-
ent. For example, one reason that DuPont launched its stain-
resistant carpet fiber under the ingredient brand Stainmaster
was that the company felt a “tough” association would be
highly valued in the market. As noted previously, Stainmas-
ter is no longer owned by DuPont. In 2003, DuPont sold its
Invista unit (which included Stainmaster) to Koch Industries
for $4.4 billion.
DuPont maintains that an appropriate, effective ingredi-
ent branding strategy leads to a number of competitive advan-
tages, such as higher price premiums (often as much as 20 percent),
enhanced brand loyalty, and increased bargaining power with
other members of the value chain. DuPont employs both push and
pull strategies to create its ingredient brands. Consumer advertis-
ing creates consumer pull by generating interest in the brand and a
willingness to specifically request it. Extensive trade support in the
form of co-op advertising, training, and trade promotions creates
push by fostering a strong sense of loyalty to DuPont from other
members of the value chain. This loyalty helps DuPont negotiate
favorable terms from distributors and leads to increased coopera-
tion when new products are introduced.
Sources: Nigel Davis, “DuPont Innovating a Way Out of a Crisis,” www.icis.com, June 23, 2009; Kevin Lane Keller, “DuPont: Managing a Corporate Brand,” Best Practice Cases in Branding, 3rd ed. (Upper Saddle River, NJ: Pearson Prentice Hall, 2008); “2010 DuPont Annual Review,” www.dupont.com; “2013 DuPont Databook,” www.dupont.com, accessed December 20, 2017; Wikipedia, https://en.wikipedia.org/wiki/ DuPont#cite_note-data-1, accessed December 20, 2017; “Company News; DuPont to Sell Invista Unit for $4.4 Billion,” Bloomberg News, November 18, 2003, https://www.nytimes.com/2003/11/18/business/company-news- dupont-to-sell-invista-unit-for-4.4-billion.html, accessed October 27, 2018.
Turning to the other side of the equation, what are some specific requirements for successful ingredient branding? In general, ingredient branding must accomplish four tasks:
1. Consumers must first perceive that the ingredient matters to the performance and success of the end product. Ideally, this intrinsic value is visible or easily experienced.
2. Consumers must then be convinced that not all ingredient brands are the same, and that the ingredient is superior. Ideally, the ingredient would have an innovation or some other sub- stantial advantage over existing alternatives.
3. A distinctive symbol or logo must be designed to clearly signal to consumers that the host product contains the ingredient. Ideally, the symbol or logo would function essentially as a “seal” and would be simple and versatile—it could appear virtually anywhere—and credibly communicate quality and confidence to consumers.
4. Finally, a coordinated push and pull program must be put into place such that consumers understand the importance and advantages of the branded ingredient. Often, this will include consumer advertising and promotions and, sometimes in collaboration with manufacturers, retail merchandising and promotion programs. As part of the push strategy, some communi- cation efforts may also need to be devoted to gaining the cooperation and support of manu- facturers or other channel members.
LICENSING Licensing creates contractual arrangements whereby firms can use the names, logos, characters, and so forth of other brands to market their own brands for some fixed fee. Essentially, a firm is “renting” another brand to contribute to the brand equity of its own product. Because it can be a
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 311
DISNEY CONSUMER PRODUCTS
The Walt Disney Company is recognized as having one of the strongest brands in the world. Much of its
success lies in its flourishing television, movie, theme park, and other entertainment ventures. These differ-
ent vehicles have created a host of well-loved characters and a reputation for quality entertainment. Disney
Consumer Products (DCP) is designed to keep the Disney name and characters fresh in the consumer’s mind
through various lines of business: Disney Toys, Disney Fashion & Home, Disney Food, Health & Beauty, and
Disney Stationery. DCP has a long history, which can be traced back to 1929 when Walt Disney licensed the
image of Mickey Mouse for use on a children’s writing tablet. Disney started licensing its characters for toys
made by Mattel in the 1950s. Disney Consumer Products (DCP) ranked as the number-one global licensor
in 2015, reporting $52.5 billion in retail sales of licensed merchandise worldwide.36 DCP’s Star Wars fran-
chise was the most dominant property of the year at retail, generating $7.2 billion in retail sales in 2015.
Marvel’s Avengers, Frozen, Disney Princess, and “Doc McStuffins” also contributed significantly to licensing
revenues. Artists in Disney Licensing’s Creative Resources department work closely with manufacturers on
all aspects of product marketing, including design, prototyping, manufacturing, packaging, and advertising.
Licensing continues to be an important source of revenue for Disney particularly from the video game developers,
publishers, and retailers. According to their 10-K report, “The Consumer Products & Interactive Media segment
generates revenue primarily from licensing characters and content from our film, television, and other properties
to third parties for use on consumer merchandise, published materials, and in multi-platform games,” (pg. 14).
Additionally, Disney also has merchandise licensing operations of its own including toys, apparel, stationery,
footwear, consumer electronics, and some of the main licensing properties for Disney include Star Wars, Mickey
and Minnie, Frozen, Avengers, Disney Princess, etc.37 Over a five-year period (2010–2015), Disney added a total
of $23.9 billion in retail sales of licensed merchandise—thereby retaining Disney’s no. 1 position in licensing
revenues in the United States—a fact which is indicative of the strength of the Disney brand.
Disney’s licensing activities represent an important source of
revenue for the company, particularly from video game devel-
opers, publishers, and retailers.
Source: Kevin Britland/Alamy Stock Photo
shortcut means of building brand equity, licensing has gained in popularity in recent years. The top 125 global licensors drove more than $184 billion in sales of licensed products in 2010. Perhaps the champion of licensing is Walt Disney.35
Entertainment licensing has certainly become big business in recent years. Successful licen- sors include movie titles and logos, such as Harry Potter, Transformers, and Spider-Man; comic strip characters such as Garfield and Peanuts; and television and cartoon characters from Sesame Street, The Simpsons, SpongeBob SquarePants, and others. Every summer, marketers spend mil- lions of dollars in movie tie-ins as they look for the next blockbuster franchise.
Licensing can be quite lucrative for the licensor. It has long been an important business strategy for designer apparel and accessories, for example. Designers such as Donna Karan, Calvin Klein, Pierre Cardin, and others command large royalties for the right to use their name on a variety of merchandise such as clothing, belts, ties, and luggage. Throughout three decades, Ralph Lauren became the world’s most successful designer, licensing his Ralph Lauren, Double RL, and Polo brands to many different kinds of products. In 2015, Ralph Lauren’s earned revenues from licensing
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312 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
were $169 million.38 Everyone seems to get into the act with licensing. Sports licensing of cloth- ing apparel and other products has grown considerably to become a multibillion-dollar business.
Licensing can also provide legal protection for trademarks. Licensing the brand for use in certain product categories prevents other firms or potential competitors from legally using the brand name to enter those categories. For example, Coca-Cola entered licensing agreements in a number of product areas, including radios, glassware, toy trucks, and clothes, in part as legal protection. As it turns out, its licensing program has been so successful, the company now sells a variety of products bearing the Coca-Cola name directly to consumers.
Licensing certainly carries risks, too. A trademark can become overexposed if marketers adopt a saturation policy. Consumers do not necessarily know the motivation or marketing arrangements behind a product and can become confused or even angry if the brand is licensed to a product that seemingly bears no relation. Moreover, if the product fails to live up to consumer expectations, the brand name could become tarnished.
Guidelines One danger in licensing is that manufacturers can get caught up in licensing a brand that might be popular at the moment but is only a fad and produces short-lived sales. Because of multiple licens- ing arrangements, licensed entities can also easily become overexposed and wear out quickly as a result. Sales of Izod Lacoste, with its familiar alligator crest, peaked at $450 million in 1982, but dwindled to an estimated $150 million in shirt sales in 1990 after the brand became overexposed and discount priced.39 A number of knock-off replicas flooded the market, further exposing the brand, and lowering its value. The name was split into Lacoste and Izod brands, and while Lacoste tried to move upmarket, Izod stayed mid-scale. Ultimately, the brands were sold to separate com- panies, with Izod being owned by Van Heusen. Subsequently purchased by Phillips-Van Heusen, the brand has been making a comeback as the result of more careful marketing.
Firms are taking a number of steps to protect themselves in their licensing agreements, especially those firms that have little brand equity of their own and rely on the image of their licensor.40 For example, firms are obtaining licensing rights to a broad range of licensed entities—some of which are more durable—to diversify their risk. Licensees are developing unique new products and sales and marketing approaches so that their sales are not merely a function of the popularity of other brands. Some firms conduct marketing research to ensure the proper match of product and the licensed entity or to provide more precise sales forecasts for effective inventory management.
Corporate trademark licensing is the licensing of company names, logos, or brands for use on various, often unrelated products. For example, in the depths of a financial crisis a number of years ago, Harley-Davidson chose to license its name—synonymous with motorcycles and a certain lifestyle—to a polo shirt, a gold ring, and even a wine cooler. Once it regained firmer financial footing, the company developed a much more concerted strategy, meeting with much success as described in its 10-K report in 2015.
The Company creates an awareness of the Harley-Davidson brand among its customers and the non-riding public through a wide range of products for enthusiasts by
Luxury brands such as Ralph Lauren utilize licensing as an
important source of secondary revenue.
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licensing the name “Harley-Davidson” and other trademarks owned by the Company. The Company’s licensed products include t-shirts, vehicles and vehicle accessories, jew- elry, small leather goods, toys, and numerous other products. Although the majority of licensing activity occurs in the U.S., the Company continues to expand these activities in international markets. According to Harley Davidsons’ 10-K report in 2015, royalty rev- enues from licensing, included in Motorcycles segment net revenue, were $46.5 million, $47.1 million, and $58.9 million in 2015, 2014, and 2013, respectively.41
Other seemingly narrowly focused brands such as Jeep, Caterpillar, John Deere, and Jack Daniels have also entered a broad portfolio of licensing arrangements.
In licensing their corporate trademarks, firms may have different motivations, including gen- erating extra revenues and profits, protecting their trademarks, increasing their brand exposure, or enhancing their brand image. The profit appeal can be enticing because there are no inventory expenses, accounts receivables, or manufacturing expenses. In an average deal, a licensee pays a corporation a royalty of about 5 percent of the wholesale price of each product, although the actual percentage can vary from 2 percent to 10 percent. As noted in Chapter 5, some firms now
sell licensed merchandise through their own catalogs.
As in any co-branded arrangement, however, the risk is that the product will not live up to
the reputation established by the brand. Inappropriate licensing can dilute brand meaning with
consumers and marketing focus within the organization. Consumers do not care about the finan-
cial arrangements behind a particular product or service; if the brand is used, the brand promise
must be upheld.
CELEBRITY ENDORSEMENT Using well-known and admired people for promoting products is a widespread phenomenon with
a long marketing history. Even the late U.S. President Ronald Reagan was a celebrity endorser,
pitching several different products, including cigarettes, during his acting days. Some U.S. actors
or actresses who refuse to endorse products in the United States are willing to do so in overseas
markets. For example, rugged American actors Arnold Schwarzenegger (Bwain drink), Brad
Pitt (Softbank), and Harrison Ford (Kirin beer) have all done ads for brands in Japan. Although
Millward Brown estimates that celebrities show up in 15 percent of U.S. ads, that number jumps
to 24 percent for India and 45 percent for Taiwan.42
The rationale behind these strategies is that a famous person can draw attention to a brand and
shape the perceptions of the brand, by the inferences that consumers make based on the knowledge
they have about the famous person. The hope is that the celebrities’ fans will also become fans
of their products or services. The celebrity must be well enough known to improve awareness,
image, and responses for the brand.
In particular, a celebrity endorser should have a high level of visibility and a rich set of
potentially useful associations, judgments, and feelings.43 Ideally, he or she would be credible
in terms of expertise, trustworthiness, and likability or attractiveness, as well as having specific
associations that carry potential product relevance. One person who has done a remarkable job
building and leveraging a highly credible brand is Oprah Winfrey.
OPRAH WINFREY
One of the most successful and valuable person brands in the world is Oprah Winfrey—Forbes magazine
estimates her net worth at a staggering $3.1 billion.44 Overcoming a childhood of poverty and other personal
challenges and driven by her own motto, “Live Your Best Life,” she has parlayed her relentless optimism
and drive for self-improvement into an entertainment franchise covering all media markets and corners of
the globe. Her empathetic connection with her audience has created a marketing gold mine in the process.
Her Harpo production company, shrewdly formed early in her show’s syndication life, launched hit spin-off
shows for some of her most popular guests such as Dr. Phil, Dr. Oz, Rachael Ray, and design expert Nate
Berkus. Her magazine, O, the Oprah Magazine, published by Hearst, celebrated fifteen years in 2015, and
has a monthly circulation of roughly 18 million.45 Winfrey has produced Broadway shows, feature films,
and television movies and has her own satellite radio station. After ending the 25-year run of her broadcast
television show on May 25, 2011, she turned her energy to her new cable channel, OWN. Her television
network OWN (Oprah Winfrey Network) was seen by 15.8 million viewers daily in the United States alone,
and was eventually sold to Discovery Communications.46
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314 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Potential Problems Despite the potential upside of linking a celebrity endorser to a brand, there are some potential problems. First, celebrity endorsers can endorse so many products that they lack any specific product meaning or are seen as opportunistic or insincere. Although NFL star quarterback Peyton Manning has parlayed success on the football field and his “Aw, shucks” personality into endorse- ment contracts for several different brands—DirectTV, Gatorade, MasterCard, Oreo, Reebok, and Sprint, among others—he runs the risk of overexposure, especially given that so many of his ads run concurrently with the football season.48 The case study on Rachael Ray Nutrish described in Branding Brief 8-4 highlights this type of risk.
Second, there must be a reasonable match between the celebrity and the product.49 Many endorsements would seem to fail this test. Despite being featured in their ads, NBA star Kobe Bryant and race car driver Danica Patrick would seem to have no logical connection to Turkish Airlines and the Go Daddy Internet domain registrar and Web hosting company, respectively.
Third, celebrity endorsers can get in trouble or lose popularity, diminishing their marketing value to the brand, or just fail to live up to expectations. Most companies conduct background
Winfrey’s sincere nature and credibility with her audience have made any product or brand endorse-
ments instant hits—a phenomenon called the “Oprah effect.” “Oprah’s Book Club” launched many best-
sellers (e.g., Toni Morrison’s books) and is credited by some with saving the publishing industry. When she
bought a 10 percent stake in Weight Watchers, the company’s stock soared. Her annual infomercial-like
“Favorite Things” show sometimes transformed a low-profile brand into an overnight success. For example,
a natural beauty company called Carol’s Daughter won millions of dollars in celebrity funding after they
appeared on Oprah, and the brand was eventually bought by L’Oréal.47 Oprah Winfrey announced plans to
co-launch a line of packaged foods with Kraft Heinz called “O! That’s Good” featuring reasonably priced
refrigerated comfort foods such as Baked Potato Soup and Broccoli Cheddar Soup. This product line will
both strengthen Oprah Winfrey’s forays into health and nutrition and solidify Kraft Heinz’s position in healthy
refrigerated foods.
Oprah Winfrey’s O Magazine has a large audience and builds
on her popularity as a celebrity.
Source: Getty Images
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 315
Rachael Ray’s Nutrish is a brand of pet food that is aimed at
the super-premium segment of the market. The cat food mar-
ket in particular has a number of competitors including Nestle’s
Purina and IAMS which have a dominant presence. Purina sells
treats for cats, cat litter, and other non-food-related products.
The aim of Rachael Ray’s Nutrish is to provide loving, health-
conscious cat owners with a super-premium product that cats
love by focusing on wholesome, appealing, all-natural ingredi-
ents with zero fillers.
In order to convince pet owners of the nutritional benefits of
the super-premium cat food, they had to embark on a celebrity
endorsement strategy featuring Rachael Ray. Why was Rachael
Ray an ideal celebrity for this brand? Rachael Ray was (and still
is) among the most recognizable chefs in the world, thanks to
her television appearances and shows about cooking. She grew
in prominence from being a cooking instructor at a local mar-
ket to hosting her own show called 30 Minute Meals on the
Food Network. That show was a launching point for several other
shows starring Ray including $40 a Day, Rachael Ray’s Tasty Trav-
els, Rachael Ray’s Week in a Day, and Rachael vs. Guy: Celebrity
Cook-Off. With these shows, two Daytime Emmy Awards, and
multiple Emmy nominations, Rachael Ray was well on her way to
becoming a celebrity chef.
In addition to Rachael Ray’s celebrity chef status, her phil-
anthropic work surrounding pets made her an ideal celebrity
endorser for the brand. Rachael Ray passionately advocated for
no-kill pet shelters across the country through her organization
Rachael’s Rescue, and donated $15 million in 2015 for caring for
pets in pet shelters across the country. News about pets dying
from consuming food made with fillers caused Rachael Ray’s
Nutrish to be launched in 2008 as a no-filler brand to address an
unmet need in the market.
The partnership of Rachael Ray with Nutrish gave the brand
credibility as a tasty alternative in the pet food market and lever-
aged key trends in the market. At this time, a growing emphasis
on health and wellness among consumers had important impli-
cations for the pet food market as well. Many pet owners were
caring for their pets in much the same way as humans have cared
for their children, which was fueling sales growth in the premium
end of the market at a 9 percent rate (relative to a decrease of
6 percent in the value segment). A key customer insight was
that pet owners frequently mixed food from their own meals
into the pet’s bowl. Against this background of “humanization of
pets” and growth in super-premium brands, Rachael Ray’s Nutrish
succeeded by allowing pet owners to feel that they are provid-
ing the best food for their pets prepared using a recipe from a
celebrity chef.
The Rachael Ray’s Nutrish brand’s marketing efforts suc-
cessfully strengthened the sales of the super-premium seg-
ment of the market. The brand increased traffic to the pet food
aisle in mass merchandise retail stores by increasing in-store
signage and by placing purchase triggers in adjacent aisles.
A $40 million ad campaign was created which spanned TV,
print media, and digital advertising to target the brand’s target
audience of ages 35–54 which included busy working moms.
The brand also conducted campaigns involving online social
influencers to drive both awareness and trial for the brand.
A co-branded partnership with BuzzFeed included videos and
sponsored posts with content revolving around cat rescue and
adoption. One co-branded video titled “People Who Hate Cats
Live with Cats for a Week” generated more than 6.5 million
views on YouTube and Facebook, in three weeks following its
launch. Nutrish and BuzzFeed also had a co-branded presence
at CatConLA, where visitors to the booth had the chance to
take home a custom “Caticature”—a caricature of themselves
melded with their cat—created by an on-site caricature artist.
These activations using digital and social media channels, along
with traditional TV and print advertising, and their celebrity
endorser strategy, had the intended effect. In 2015, the Rachael
Ray’s Nutrish brand grew at an astounding pace with a 49 per-
cent compound annual growth rate (CAGR), establishing itself
as a leading pet food brand; as a result of its success, sales of
super-premium dog food in mainstream retailers rose from a
negative sales growth of 0.5 percent in 2011 to 13 percent
in 2015. Steve Joyce, Ainsworth’s vice president of marketing
states that, “We attribute this success to the fact that we offer
a high-quality pet product at a reasonable price where consum-
ers can purchase our products in traditional grocery stores and
mass retailers versus pet specialty stores in addition to con-
sumers connecting with Ray’s genuine love of her dog Isaboo,
animals, and how much Ray cares about nutrition in general.”
BRANDING BRIEF 8-4
Rachael Ray’s Nutrish
Rachael Ray’s Nutrish represents an excellent use of a
celebrity endorser for a pet food brand. Rachael Ray
is a well-known celebrity chef who is also known for
her advocacy of pet shelters through her organization
“Rachael’s Rescue.”
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316 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Despite the success of the co-branded product, the part-
nership also has many downsides. The excessive reliance on a
single celebrity, Rachael Ray, exposes the brand to risks, in the
event that the celebrity loses appeal over time. The strength of
the link to Rachael Ray may also prevent the brand from add-
ing new associations with other celebrity endorsers or leverag-
ing other partnerships. The strong link to healthy pet food may
prevent the brand from introducing new products aimed at
other types of product categories. Therefore, the relationship
with Rachael Ray may prevent the brand from growing in other
ways, thereby limiting its opportunities in the future.
Sources: Meggen Taylor, “Nutrish: Rachael Ray’s Pet Food Comes with a Heaping Dash of Philanthropy,” June 20, 2016, www.forbe. com/sites/meggentaylor/2016/06/20/nutrish-rachael-rays-pet-food- comes-with-a-heaping-dash-of-philanthropy/#440e5a2312c9, accessed December 22, 2017; Nielsen.com, “Premiumization Can Teach an Old Pet Food Brand New Tricks,” March 15, 2016, www.nielsen.com/us/ en/insights/news/2016/premiumization-can-teach-an-old-pet-food- brand-new-tricks.html, accessed December 22, 2017; Tanya Gazdik, “Rachael Ray’s Nutrish Pet Food Launches $ 40 Million Campaign,” May 6, 2016, www.mediapost.com/publications/article/275164/ rachael-rays-nutrish-pet-food-launches-40-millio.html?edition, accessed December 22, 2017.
checks before signing celebs, but that does not guard against bad behavior in the future. A number of spokespeople over the years have run into legal difficulties, personal problems, or controversies of some form that diminished their marketing value, such as Bill Cosby, Lance Armstrong, O.J. Simpson, Martha Stewart, and Michael Jackson.50 Figure 8-5 is a rogue’s gallery of high-profile celebrity endorsement mishaps.
To broaden the appeal and reduce the risks of linking to one celebrity, some marketers have begun to employ several different celebrities or even celebrities who are deceased, and therefore, a known commodity. For example, dead celebrities such as Michael Jackson (who generates $115 million a year), Elvis Presley (who generates $55 million), and Charles Schulz (creator of
the Peanuts characters, which generates $40 million) continue to generate revenues from licens-
ing and endorsements.51
FIGURE 8-5
Celebrity Endorsement Mishaps
Source: Based on Jack Trout, “Celebs Who Un-Sell Products,” Forbes, September 13, 2007; Mike Chapman, “Celebrities Moving Products? Not So Much,” Adweek, June 8, 2011; Steve McKee, “The Trouble with Celebrity Endorsements,” Bloomberg Business- Week, November 14, 2008.
Celebrity & Brand Mishap
James Garner and Cybil Shepherd for Beef
Both actors were dropped as spokespersons after Garner had heart trouble and Shepherd reported in a magazine interview that she did not eat red meat.
Martina Hingis for Sergio Tacchini
In the midst of a 5-year contract, the one-time women’s tennis champ sued the Italian maker of her tennis shoes for $35 million after she claimed they gave her a chronic foot injury.
Michael Vick for Nike, Reebok, Upper Deck, and others
When a dog-fighting conviction led to a prison sentence, pro football star Vick reportedly lost over $50 million in endorsement contracts after being dropped by companies.
Whoopi Goldberg for SlimFast
The comic actress was dropped as an endorser after she made critical comments about then-President George W. Bush during a Democratic fundraiser.
Kobe Bryant for McDonald’s, Sprite, and Nutella
The basketball star lost millions in endorsements after being charged with sexual assault.
Kate Moss for H&M, Pepsi, Burberry, and Chanel
The model was dropped as spokesperson by a number of companies after tabloid newspapers showed her using cocaine.
Michael Phelps for Kellogg The Olympic champion swimmer was dropped after being photographed smoking marijuana.
Tiger Woods for Accenture, Gillette, Gatorade, and AT&T
The golf champion lost numerous endorsements as reports of his serial infidelity emerged.
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 317
Fourth, many consumers feel celebrities are doing the endorse- ment only for the money and do not necessarily believe in or even use the brand. Even worse, some feel the fees celebrities earn to appear in commercials add a significant and unnecessary cost to the brand. In reality, celebrities often do not come cheap and can demand millions of dollars for endorsements.
Celebrities also can be difficult to work with and may not willingly follow the marketing direction of the brand. Tennis player Andre Agassi tried Nike’s patience when—at the same time he was advertising for Nike—he appeared in commercials for the Canon Rebel camera. In these ads, he looked into the camera and proclaimed “Image Is Everything”— the antithesis of the “authentic athletic performance” positioning that has been the foundation of Nike’s brand equity. Winning the French Open, however, put Agassi back in Nike’s good graces.
Finally, as noted in Chapter 6, celebrities may distract attention
from the brand in ads so that consumers notice the stars but have trouble
remembering the advertised brand. PepsiCo decided to drop singers
Beyoncé Knowles and Britney Spears from high-profile ad campaigns
when they felt the Pepsi brand did not get the same promotion boost
from the campaign that the stars were getting.
As we noted in Chapter 7, sometimes brands featuring celebri-
ties could be the subject of controversy, which may lower the stand-
ing of the brand and the associated endorser. Kendall Jenner—a
supermodel who starred in a Pepsi commercial—inadvertently
became the target of controversy following a Pepsi ad campaign.
The ad was the subject of significant backlash from its viewers
who felt that it was inappropriately exploiting a national protest
movement—the Black Lives Matter movement—in an attempt to
increase Pepsi’s sales, thus causing both the brand and celebrity
(i.e., Pepsi and Kendall Jenner) to be the target of negative sentiment.
Brands can become too reliant on a celebrity. Founder and Chairman Dave Thomas was an
effective pitchman for his Wendy’s restaurant chain because of his down-home, unpretentious
folksy style and strong product focus. Recognized by more than 90 percent of adult consumers,
he appeared in hundreds of commercials over a 12-year period until his death in early 2002.52
The brand struggled for years afterward, however, trying to find the right advertising approach to
replace him. The example of Rachael Ray’s Nutrish is also a case study that reflects this concern.
Guidelines To overcome these problems, marketers should strategically evaluate, select, and use celebrity
spokespeople. First, choose a well-known and well-defined celebrity whose associations are rel-
evant to the brand and likely to be transferable. For example, despite false starts for his retirement,
Brett Favre’s rugged, down-to-earth persona fits well for the backyard football games in the “Real.
Comfortable. Jeans.” Wrangler ads.
Then, there must be a logical fit between the brand and the person.53 To reduce confusion
or dilution, the celebrity ideally will not be linked to many other brands or be overexposed.
Popular Hong Kong actor Jackie Chan has been criticized for endorsing too many products—
from electric bikes to antivirus software to frozen dumplings and more. Unfortunately, many
of the products he has endorsed have run into problems—a shampoo was alleged to contain
carcinogens, an auto repair school was hit by a diploma scandal, and makers of both video
compact discs and an educational computer went out of business. As one Chinese editorial
commented: “He has become the coolest spokesperson in history—a man who can destroy
anything!”54
Third, the advertising and communication program should use the celebrity in a creative
fashion that highlights the relevant associations and encourages their transfer. Dennis
Haysbert has played the President of the United States in the TV series 24 and adopted a
similarly stately, reassuring tone for his spokesperson role in the “You’re in Good Hands” ads
for Allstate insurance. William Shatner’s humorous Priceline ads take a completely different
Kobe Bryant (a famous basketball player) repre-
sents one of the many celebrity athletes that Nike
used to effectively promote their brand.
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318 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
tack and take advantage of the actor’s self-deprecating, campy wit to draw attention to its discount message.
Finally, marketing research must help identify potential endorser candidates and facilitate the development of the proper marketing program, as well as track its effectiveness.
Celebrities themselves must manage their own “brands” to ensure that they provide value. Anyone with a public profile, even if just within the company in which he or she works, should consider how to manage his or her brand image best.56 Branding Brief 8-5 offers some thoughts
Q SCORES
Marketing Evaluations conducts surveys to determine “Q Scores” for a broad range of entertainers and
other public figures, such as TV performers, news and sports anchors, and reporters, athletes, and models.
Each performer is rated on the following scale: “One of My Favorites,” “Very Good,” “Good,” “Fair,”
“Poor,” and “Never Seen or Heard of Before.” The sum of the “Favorite” through “Poor” ratings is “Total
Familiar.” Because some performers are not very well known, a positive Q Score is a ratio of the “One of
My Favorites” rating to the “Total Familiar” rating, and a negative Q Score is a ratio of the sum of “Poor”
and “Fair” ratings to the “Total Familiar” rating. Q Scores thus capture how appealing or unappealing a
public figure is among those who do know him or her. Q Scores will move around, depending on the fame
and fortune of the subject. For example, Steph Curry of the Golden State Warriors, who recently topped
LeBron James as the most sought-after National Basketball Association (NBA) star, also boasts of an outsized
Q Score of 34 (relative to higher-ranked Kevin Durant who has a Q score of 26, or LeBron James with a
Q Score of 29 among sports fans).55
Although many branding principles apply, there are some
important differences between a person brand and a product or
service brand. Here are some of the main differences to consider:
1. Person brands are more abstract and intangible but have very
rich imagery.
2. Person brands are more difficult to compare because the
competition is very broad and often not easily relatable.
3. Person brands can be difficult to control and keep consistent.
A person brand can have many facets, and many interactions
and experiences with many different people over time, all
adding to the complexity of brand management.
4. People may adopt different personas for various situations
(such as work versus play) that will affect the dimensionality
of their brand.
5. Repositioning a person brand can be tricky because people
like to categorize other people, but it is not impossible. Actors
and entertainers (such as Mark Wahlberg and Madonna) have
changed their images, whereas others (such as Sylvester Stal-
lone and Jim Carrey) have found it more difficult.
As guidelines for managing a person brand, consider the follow-
ing recommendations:
1. A person brand must manage brand elements. Names can
be shortened and nicknames adopted. Even though a person
does not necessarily have a logo or symbol, appearance in
terms of dress and look can still help to create a brand identity.
2. A person brand is built by the words and actions of that per-
son. Given the intangible nature of a person brand, however,
it is hard to form judgments at one point in time—repeated
exposures are usually necessary.
3. A person brand can borrow brand equity through second-
ary associations such as geographical regions, schools and
universities, and so on. A person brand can employ strategic
partnerships with other people to enhance brand equity.
4. Credibility is key to a person brand. Trustworthiness is impor-
tant, but so is likability and appeal in terms of eliciting more
emotional responses.
5. Person brands can use multiple media channels—online
is especially useful for social networking and community
building.
6. A person brand must stay fresh and relevant and properly
innovate and invest in key person traits.
7. A person brand should consider optimal positioning in terms
of brand potential and associated points-of-parity and points-
of-difference. A clear and compelling point-of-difference is
especially important to carve out a unique identity in the
workplace or market.
8. Brand architecture is simpler for a person brand—sub-branding
is less relevant—but brand extensions can occur, for instance
when a person adds to his or her perceived capabilities.
9. A person brand must live up to the brand promise at all times.
Reputations and brands are built over the years but can be
harmed or even destroyed in days. One slip can be devastat-
ing and difficult to recover from.
10. A person brand must be a self-advocate and help to shape
impressions.
BRANDING BRIEF 8-5
Managing a Person Brand
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 319
about how person branding works in general and how it differs from more traditional branding for products and services.
Social Influencers as the New Celebrities Despite its importance, the area of rapid growth has been in the use of social media celebrities for advertising brands. We provided an overview of this phenomenon and described some lead- ing celebrities who have large YouTube followings. Some of these online social influencers such as beauty guru Michelle Phan can earn up to $3 million per year based on their endorsement of specific brands.57 Top influencers on YouTube can earn $300,000 per video, while a top Facebook influencer can earn $200,000 per post.58
In addition to macro-influencers who may command large followings on social media, there are also several noncelebrity or micro-influencers who hold considerable sway on social media. One survey suggested that these micro-influencers may have 10 times more impact on in-store purchases than celebrity influencers,59 and more than half the respondents suggested that they turned to YouTube reviewers (such as Michelle Phan) to learn more about markets. Today’s cus- tomers trust regular people like Phan because their endorsements appear to be driven by genuine expertise, and not just money. A survey of 1,470 women found that 86 percent of them wanted product recommendations from real people, and that 58 percent turn to YouTube reviewers to get them. In this way, online social influencers are rapidly taking the place of traditional celebrity endorsement strategies as more authentic ways of connecting with smaller audiences.
SPORTING, CULTURAL, OR OTHER EVENTS As Chapter 6 described, events have their own set of associations that may become linked to a sponsoring brand under certain conditions. Sponsored events can contribute to brand equity by becoming associated with the brand and improving brand awareness, adding new associations, or improving the strength, favorability, and uniqueness of existing associations.60
The main means by which an event can transfer associations is credibility. A brand may seem more likable or perhaps even trustworthy or expert by becoming linked to an event. The extent to which this transfer takes place will depend on which events are selected and how the sponsorship program is designed and integrated into the entire marketing program to build brand equity. Brand Focus 8.0 at the end of the chapter discusses sponsorship strategies for leading companies making major investments in sports marketing.
SPORTS SPONSORSHIPS
Sports sponsorship is big business. Football is the most popular sport in the world, and in 2018, the English
Premiere League earned over €1.2 billion from over 448 sponsors, and Manchester United, whose principal
partners include Chevrolet, Aon, and Kohler, earned €268 million. Spanish football club Barcelona is not far
behind Manchester United, with €261 million from sponsors such as Nike.61
Sports sponsorships provide access to specific target audiences and allow brands to align themselves with
various popular sports, thereby strengthening their brand equity. Despite growing consumer cynicism towards
advertisements and media fragmentation that has made it more difficult to reach audiences, sports sponsor-
ships continue to provide a well-established alternative route to communicate with consumers. Favorable
associations with and positive attitudes toward a sport or sporting event can be transferred to the sponsoring
brand—if the brand can make them fit each other.
An example of this sort of branding reasoning is Kia Motors’ sponsorship of the Australian Open tennis
tournament. In 2002, when the Korean car brand became the primary sponsor of the tournament, it was relatively
unknown. The tactic enhanced brand salience with Kia’s audience through brand name recognition and exposure
by establishing a direct link: “Kia Australian Open.” More importantly, it leveraged positive associations that fit
the brand’s positioning while it created and then strengthened its brand presence in Australia. Kia sees itself as
a youthful, dynamic, “challenger” brand, a good fit for the brand image associations of the Australian Open.
Sports sponsorships can thus offer a unique source of brand association transfer and give brands more visi-
bility in a global arena. Kia has renewed its sponsorship of the Australia several times.62 Consumer research shows
that Kia has achieved significant association with the Australian Open in Australia, and Kia’s share of car sales
has grown significantly since the sponsorship began (though it should be noted that they are many contributing
factors to sales).
However, despite the many obvious benefits, it is important to keep in mind that such sponsorship
does not come cheaply, and a company will often have carefully calculated the brand benefits versus the
multi-million-dollar costs before committing to one.
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320 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
THIRD-PARTY SOURCES Finally, marketers can create secondary associations in several different ways by linking the brand to various third-party sources. For example, the Good Housekeeping seal has been seen as a mark of quality for decades, offering product replacement or refunds for defective products for up to two years from purchase. Endorsements from leading magazines like PC magazine, organizations like the American Dental Association, acknowledged experts such as film critic Roger Ebert, or carefully selected Elite critics of the online Yelp consumer review site can obviously improve perceptions of and attitudes toward brands.
Third-party sources can be especially credible sources. As a result, marketers often feature them in advertising campaigns and selling efforts. J.D. Power and Associates’ well-publicized Customer Satisfaction Index helped to cultivate an image of quality for Japanese automakers in the 1980s, with a corresponding adverse impact on the quality image of their U.S. rivals. In the 1990s, they began to rank quality in other industries, such as airlines, credit cards, rental cars, and phone service, and top-rated brands in these categories began to feature their awards in ad campaigns. Grey Goose vodka cleverly employed a third-party endorsement to drive sales.
Distinctive packaging and taste-test awards have
propelled Grey Goose to a leadership position in the
vodka category.
Source: Carl Miller/Alamy Stock Photo
GREY GOOSE
Sidney Frank first found success in the
liquor industry with a little-known Ger-
man liqueur, Jägermeister, which he began
to market in the United States in the mid-
1980s and drove to 700,000 annual cases
in sales and market leadership by 2001.
Turning his sights to the high-margin super-
premium market, Frank decided to create
a French vodka that would use water from
the Cognac region and be distilled by the
makers of Cardin brandy. Branded as “Grey
Goose,” the product had distinctive packag-
ing—a must in the category—with a bottle
taller than competitors that combined clear
and frosted glass with a cutaway of geese
in flight and the French flag. But perhaps
the most important factor in the brand’s
eventual success was a taste-test result from
the Beverage Testing Institute that ranked
Grey Goose as the number-one imported
vodka. Fueled by exhaustive advertising
that trumpeted its big win as “the World’s
Best-Tasting Vodka,” Grey Goose became a
top seller. Frank eventually sold Grey Goose
Vodka brand to Bacardi in 2004 for a stun-
ning $2.2 billion. Its success continues to
this day. Despite the fact that vodka has
been characterized as essentially odorless
and tasteless, it is consistently ranked as the
top brand of vodka brand in consumer loy-
alty polls on the basis of image, versatility,
and smoothness.63
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 321
REVIEW
This chapter considered the process by which other entities can be leveraged to create secondary associations. These other entities include source factors such as the company that makes a product, where the product is made, and where it is purchased, as well as related people, places, or things. When they link the brand to other entities with their own set of associations, consumers may expect that some of these same associations also characterize the brand.
Thus, independent of how a product is branded, the nature of the product itself, and its supporting marketing program, marketers can create brand equity by “borrowing” it from other sources. Creating secondary associations in this fashion may be quite important if the correspond- ing brand associations are deficient in some way. Secondary associations may be especially valu- able as a means to link favorable brand associations that can serve as points-of-parity or create unique brand associations that can serve as points-of-difference in positioning a brand.
Eight different ways to leverage secondary associations to build brand equity are linking the brand to (1) the company making the product; (2) the country or some other geographic loca- tion in which the product originates; (3) retailers or other channel members that sell the product; (4) other brands, including ingredient brands; (5) licensed characters; (6) famous spokespeople or endorsers; (7) events; and (8) third-party sources.
In general, the extent to which any of these entities can be leveraged as a source of equity depends on consumer knowledge of the entity and how easily the appropriate associations or responses to the entity transfer to the brand. Overall credibility or attitudinal dimensions may be more likely to transfer than specific attribute and benefit associations, although the latter can be transferred, too. Linking the brand to other entities, however, is not without risk. Marketers give up some control, and managing the transfer process so that only the relevant secondary associa- tions become linked to the brand may be a challenge.
DISCUSSION QUESTIONS
1. The Boeing Company manufactures different types of aircraft for the commercial airline industry, for example, the 727, 747, 757, 767, 777, and now, the 787 jet models. Is there any way for Boeing to adopt an ingredient branding strategy with its jets? How? What would be the pros and cons?
2. Think of a brand endorsed by a celebrity sportsperson. How credible is this endorsement to you? Why? What factors might compromise the success of this endorsement in the future?
3. Take a trip to a supermarket near you. Look for products that try to generate secondary associations with clues regarding their country of origin on their packaging. What do these associations convey? Do they appeal to you as a consumer? Why?
4. Which retailers have the strongest image and equity in your mind? Think about the brands they sell. Do they contribute to the equity of the retailer? Conversely, how does that retailer’s image help the image of the brands it sells? What is the impact of online versus offline retail storefronts in creating your image of this retailer?
5. Pick a brand. Evaluate how it leverages secondary associations. Can you think of any ways that the brand could more effectively leverage secondary brand associations?
6. Select a social media celebrity. Can you find brand names that could use this celebrity for sponsored posts online? What about a smaller, less known celebrity? How would the effects of these two types of influencers (i.e., large/well-known versus small) vary in terms of their impact on a brand?
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322 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Competition at the Olympics is not restricted to just the ath-
letes. A number of corporate sponsors also vie to maximize the
return on their sponsorship dollars. Corporate sponsorship is a
significant part of the business side of the Olympics and contrib-
utes almost one-third of the revenue of the International Olympic
Committee (IOC). Countries themselves compete for the rights to
host the Games. Rio de Janeiro, Brazil, won the rights to host the
2016 Games over Chicago, Madrid, and Tokyo.
Corporate Sponsorship
Corporate sponsorship of the Olympics exploded with the com-
mercial success of the 1984 Summer Games in Los Angeles. At
that time, many international sponsors, such as Fuji, achieved
positive image building and increased market share.
Eleven companies have paid for the highest level of Olym-
pic sponsorship (TOP)—estimated to cost in the neighborhood
of $200 million—for exclusive worldwide marketing rights to
the Summer, Winter, and Youth Olympic Games: Coca-Cola, Ali-
baba Group, Atos, Bridgestone, Dow, General Electric (GE), Intel,
Omega, Panasonic, P&G, Samsung, Toyota, and Visa.64 In addition
to exclusive worldwide marketing opportunities, partners receive:
• Use of all Olympic imagery, as well as appropriate Olympic
designations on products
• Hospitality opportunities at the Olympic Games
• Direct advertising and promotional opportunities, including
preferential access to Olympic broadcast advertising
• On-site concessions/franchise and product sale/showcase
opportunities
• Ambush marketing protection (discussed later)
• Acknowledgement of their support through a broad Olympic
sponsorship recognition program.
Other tiers at lower levels of sponsorship also exist. For example,
the Winter Olympics in PyeongChang 2018 included various
sponsors such as McDonald’s, KT, The North Face, Korean Air,
Samsung, and Hyundai, among others.
Besides direct expenditures, companies spent hundreds of millions
more on related marketing efforts. A long-time Olympics supporter
since the 1976 Summer Games in Montreal, McDonald’s always runs
a number of promotional campaigns to tie in with its sponsorship.
Building on prior McDonald’s kids’ programs at the Olympic Games
in Beijing and Vancouver, McDonald’s “Champions of Play for the
Olympic Games” brought up to 200 children from around the world
to London (each with a guardian) as part of a new global program.
A relative newcomer beginning its sponsorship with the
Vancouver Olympics in 2010, Procter & Gamble launched its
“Proud Sponsor of Mums (or Moms)” campaign that it extended
throughout P&G’s sponsorship of the Rio 2016 Olympics. P&G’s
Olympic Games partnership is the first to cover multiple brands
under one sponsor and will span the next 10 years, more than 30
product categories, and 205 National Olympic Committees. The
campaign’s goals are to raise awareness of and reward mothers’
contributions globally, based on customer insight that every ath-
lete is supported by an amazing mom.65
Another company in the list of worldwide sponsors is Gen-
eral Electric (GE). In announcing GE’s sponsorship, Jeff Immelt,
chairman and CEO, stated, “The Olympic Games provide a unique
opportunity to showcase our innovative technologies and services.
Hosting a successful Olympic Games is a transformational opportu-
nity for every host city. We are committed to working with the IOC
and the local organizing committees to deliver world-class infra-
structure solutions and a sustainable legacy to future generations.”
GE works closely with host countries, cities, and organizing
committees to provide infrastructure solutions for Olympic Games
venues including power, water treatment, transportation, and
security, and to supply hospitals with ultrasound and MRI equip-
ment to help doctors treat athletes.66
Sponsorship ROI
Although several firms have long-term relationships and com-
mitments with the Olympics, in recent years, other long-time
sponsors have cut their ties. Kodak ended over a century of spon-
sorship after the Beijing Olympic Games, and General Motors
ended its decades-long support at that time, too. Other TOP
partners that chose not to renew after the 2008 Games included
Johnson & Johnson, Lenovo, and Manulife.
Although many factors affect the decision to engage in or
renew an Olympic sponsorship, its marketing impact is certainly
widely debated. For example, one survey of 1,500 Chinese city
residents just before the 2008 Beijing Games revealed that only
15 percent could name two of the 12 global sponsors, and just
40 percent could name one: Coca-Cola. After virtually every
Olympic Games, surveys show that many spectators at the Games
and even avid viewers of the broadcasts mistakenly identify a
nonsponsoring company as an official sponsor.67 Having a tight
connection between the products and the Olympic sponsorship
helps with improving the return on investment (ROI). As an exam-
ple, Nike is a brand which symbolizes athletic achievement and
therefore should provide a natural way of linking the brand with
sponsorship of the Olympic Games.
Ambush Marketing
In some cases, sponsorship confusion may be due to ambush
marketing, in which advertisers attempt to give consumers the
false impression they are Olympic sponsors without paying for
the right to do so. The Brand Protection Guidelines for the 2016
Rio Olympics describe this as “any intentional or unintentional
attempt to create a false, unauthorized commercial association
with a brand or event.”68 Nonsponsoring companies attempt
to attach themselves to the Games by, for instance, running
Olympic-themed ads that publicize other forms of sponsorship,
such as sponsoring a national team, by identifying the brand as
an official supplier, or by using current or former Olympians as
endorsers.69
For the Beijing Games, not only did popular former Chinese
gymnastics champion Li Ning light the Olympic cauldron in the
opening ceremony, he did so wearing shoes from the sportswear
company he had founded. His actions drew tremendous atten-
tion to the Li Ning line while the official athletic sponsor, Adi-
das, which had spent millions on its rights, could only sit and
watch. To improve the marketing effectiveness of sponsorship,
the Olympic Committee has declared that it will vigorously fight
Going for Corporate Gold at the Olympics
BRAND FOCUS 8.0
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CHAPTER 8 • LEVERAGING SECONDARY BRAND ASSOCIATIONS TO BUILD BRAND EQUITY 323
City and Country Effects
Another hotly debated Olympics topic is the value of the payback
to the host city, region, and country. Bringing an aggressive new
sponsorship approach to the Los Angeles Olympics resulted in
those Games being a financial success, but other Games since
then have been a mixed bag. However, some benefits may be
evident for a host country that can be hard to quantify.74
One important psychological benefit is civic pride and
patriotism for serving as host to such an iconic global sporting
event. With a worldwide television audience for two weeks and
more, the Games also serve as a huge advertising and public
relations opportunity to aid tourism, real estate, and commercial
business. The 1992 Barcelona, 2000 Sydney Games, and 2018
PyeongChang Games have enjoyed these broad sets of benefits.
Another often-overlooked benefit is the investment in
improving infrastructure that often leads up to hosting the
Games. Beijing added new subway lines, highways, an airport
to ease transportation, and new parks alongside to add to the
scenery, providing some badly needed improvements in transpor-
tation and quality of life for residents of the city.
Nevertheless, the financial stakes are high, and only careful plan-
ning and execution and the right circumstances can result in success
for the Olympics host city, region, and country. The 1976 Montreal
and 2004 Athens Games, for example, had a much less positive
effect on the host countries. It took Montreal almost 30 years to
pay back the $2.7 billion in debt it incurred in hosting the Games.
Summary
Olympic sponsorship remains highly controversial. Many corpo-
rate sponsors continue to believe that their Olympic sponsorship
yields many significant benefits, creating an image of goodwill
for their brand, serving as a platform to enhance awareness and
communicate messages, and affording numerous opportuni-
ties to reward employees and entertain clients. Others view the
Games as overly commercialized, despite the measures under-
taken by the IOC and USOC to portray the Olympics as whole-
some. In any case, the success of Olympic sponsorship—like that
of any sports sponsorship—depends in large part on how well
it is executed and incorporated into the entire marketing plan.
ambush marketing. It has reduced the number of sponsors to
avoid clutter.70
Containing ambush marketing requires much diligence. For
London 2012, online betting company Paddy Power’s billboards
were the source of the IOC’s wrath because of their proclamation
that it was the official sponsor of “the largest athletics event in
London” that year, which was about an egg-and-spoon race to be
held in London, France (as opposed to what some might believe is
the London Olympics). In each case, the IOC warned the offend-
ing company against employing ambush marketing tactics.71
London 2012 Summer Games
Every Olympic Games also presents the opportunity to learn from
past successes and mistakes and to run an event that will ben-
efit athletes, spectators, viewers, and sponsors alike. Recognizing
the important financial contribution of sponsorship, the London
Games were supported by the British government’s introduction
of extensive anti-ambush legislation. Banned were activities such
as sky-writing, flyers, posters, billboards, and projected advertising
within 200 meters of any Olympic venue. The government also
passed legislation to forbid a variety of words such as “Games,”
“2012,” “Two Thousand and Twelve,” and “Twenty Twelve” to
be used in combination with words such as, “Gold,” “Silver,”
“Bronze,” “London,” “Medals,” “Sponsor,” or “Summer” in an
unauthorized manner such that the general public would think
there was an association with the London Olympics.72
Ticket revenue is also critical to the success of the Olym-
pics, so organizers of the London Games also embarked on a
multimillion-dollar advertising campaign, “The Greatest Tickets
on Earth,” in the hope of raising £500 million from ticket sales.
Twelve ads showcased likely Olympic stars, including local favor-
ites gymnast Beth Twiddle and diver Tom Daley. Over half of all
tickets to the most popular events, however, were earmarked for
corporate sponsors and their employees or guests.73
Outside the country, the government also embarked on a
“Visit Britain” and “Visit London” promotional campaign to
attract tourists. The campaigns set out strategically to emphasize
the “timeless,” “dynamic,” and “genuine” qualities—based on
the people, places, and culture—that define the British brand.
NOTES
1. For an examination of lower-level transfer effects, see Claudiu V. Dimofte and Richard F. Yalch, “The Mere Association Effect and Brand Evaluations,” Journal of Consumer Psychology 21, no. 1 (2011): 24–37.
2. Morgan Williams, “6 Examples of Great Co-Branding,” Altitude Branding, July 7, 2016, http://altitudebranding .com/6-examples-great-co-branding/.
3. Louise Story, “Can Burt’s Bees Turn Clorox Green?,” The New York Times, January 6, 2008, https://www .nytimes.com/2008/01/06/business/06bees.html, accessed June 20, 2018.
4. “LVMH to Expand Luxury Offerings in China,” www .marketing-interactive.com, February 23, 2012; “LVMH Looks to Burnish Vuitton Mystique and Buoy Sales,” www.reuters.com, May 18, 2012; “20 percent of Charles & Keith Acquired by Louis Vuitton,” www .sgentrepreneurs.com, April 1, 2011; Yigang Pan et al.,
“Louis Vuitton Moet Hennessey: Expanding Brand Dominance in Asia,” Harvard Business Review, August 1, 2007; “Staid Singapore Gets a Flair for Fashion,” www.wsj.com, June 11, 2012; “Louis Vuitton Tops Hermès as the World’s Most Valuable Luxury Brand,” www.businessweek.com, May 21, 2012.
5. Jeff Smith, “Reputation Winners and Losers: Highlights from Prophet’s 2010–2011 U.S. Reputation Study,” white paper, March 1, 2011, www.prophet.com.
6. Wai-Kwan Li and Robert S. Wyer Jr., “The Role of Country of Origin in Product Evaluations: Informational and Standard-of-Comparison Effects,” Journal of Consumer Psychology 3, no. 2 (1994): 187–212.
7. Tülin Erdem, Joffre Swait, and Ana Valenzuela, “Brands as Signals: A Cross-Country Validation Study,” Journal of Marketing 70, no. 1 (January 2006): 34–49; Yuliya Strizhakova, Robin Coulter, and Linda Price. Branding in
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324 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
a Global Marketplace: The Mediating Effects of Quality and Self-Identity Brand Signals,” International Journal of Research in Marketing 28, no. 4 ( December 2011): 342–351.
8. Karl Greenberg, “Rums of P.R. Effort Promos Brands, Puerto Rico,” February 23, 2011, https://www . mediapost.com/publications/article/145540/rums-of- pr-effort-promos-brands-puerto-rico.html, accessed November 3, 2018; Rums of Puerto Rico, “Rums of Puerto Rico Encourages Consumers to ‘Just Think, Puerto Rican Rum’,” PR Newswire, February 23, 2011, https://www.prnewswire.com/news-releases/rums-of- puerto-rico-encourages-consumers-to-just-think-puerto- rican-rum-116757469.html, accessed November 3, 2018.
9. For a broader discussion of “nation branding,” see Philip Kotler, Somkid Jatusriptak, and Suvit Maesincee, The Marketing of Nations: A Strategic Approach to Building National Wealth (New York: Free Press, 1997); Wally Olins, “Branding the Nation—The Historical Context,” Journal of Brand Management 9, no. 4 (April 2002): 241–248; and for an interesting analysis in the context of Iceland, see Hlynur Gudjonsson, “Nation Branding,” Place Branding 1, no. 3 (2005): 283–298.
10. For stimulating and enlightening discussion, see www .strengtheningbrandamerica.com.
11. The Pew Research Center, “Global Public Opinion in the Bush Years (2001–2008),” Pew Research Center, December 18, 2008, http://www.pewglobal.org/2008/12/18/ global-public-opinion-in-the-bush-years-2001-2008/.
12. John A. Quelch and Katherine E. Jocz, “Can Brand Obama Rescue Brand America?,” Brown Journal of World Affairs 16, no. 1 (Fall–Winter 2009): 163–178; BBC News, “View of U.S.’s Global Role ‘Worse’,” January 23, 2007, http://news.bbc.co.uk/2/hi/americas/6286755.stm, accessed November 3, 2018; Alex Y. Vergara, “‘Brand America’—How U.S. Tourism Plans to Recover Lost Ground,” Philippine Daily Inquirer, June 19, 2011; Bill Marriott Jr., “America Needs More Tourists,” Fortune, June 1, 2011, http://fortune.com/2011/06/01/america- needs-more-tourists/, accessed November 3, 2018.
13. Richard Wike, Bruce Stokes, Jacob Poushter, and Janell Fetterolf, “U.S. Image Suffers as Publics Around World Question Trump’s Leadership,” Pew Research Center, June 26, 2017, www.pewglobal. org/2017/06/26/u-s-image-suffers-as-publics-around- world-question-trumps-leadership/.
14. Zeynep Gurhan-Canli and Durairaj Maheswaran, “ Cultural Variations in Country of Origin Effects,” Journal of Marketing Research 37, no. 3 (August 2000): 309–317.
15. Thomas Mulier, “Clash of the Angry Swiss Watchmakers,” Bloomberg BusinessWeek, April 28, 2011, https://www .bloomberg.com/news/articles/2011-04-28/clash-of-the- angry-swiss-watchmakers, accessed November 3, 2018.
16. Eric Wilson and Michael Barbaro, “Big Names in Retail Fashion Are Trading Teams,” The New York Times, March 8, 2008, https://www.nytimes.com/2008/03/08/ business/08designers.html, accessed November 3, 2018; Stephanie Rosenbloom, “Liz Claiborne to Be Sold Only at J.C. Penney Stores,” The New York Times, October 9, 2009, https://www.nytimes.com/2009/10/09/ business/09liz.html, accessed November 3, 2018.
17. Robert Passikoff, “Sears Opens Luxury Department Offering Rolex, Chanel, Jimmy Choo, Alaia & Stella McCartney,” July 24, 2013, www. forbes.com/sites/robertpassikoff/2013/07/24/
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18. Akshay R. Rao and Robert W. Ruekert, “Brand Alliances as Signals of Product Quality,” Sloan Management Review 36, no. 1 (Fall 1994): 87–97; Akshay R. Rao, Lu Qu, and Rob- ert W. Ruekert, “ Signaling Unobservable Product Quality through Brand Ally,” Journal of Marketing Research 36, no. 2 (May 1999): 258–268; Mark B. Houston, “Alliance Partner Reputation as a Signal to the Market: Evidence from Bank Loan Alliances,” Corporate Reputation Review 5, no. 4 (Winter 2003): 330–342; Henrik Uggla, “The Brand Association Base: A Conceptual Model for Strategi- cally Leveraging Partner Brand Equity,” Journal of Brand Management 12, no. 2 (November 2004): 105–123.
19. Robin L. Danziger, “Cross Branding with Branded Ingredients: The New Frontier,” paper presented at the ARF Fourth Annual Advertising and Promotion Workshop, February 1992.
20. Kim Cleland, “Multimarketer Melange an Increasingly Tasty Option on the Store Shelf,” Advertising Age, May 2, 1994, https://adage.com/article/news/multimarketer- melange-increasingly-tasty-option-store-shelf/87398/, accessed November 3, 2018.
21. Morgan Williams, “6 Examples of Great Co-Branding,” Altitude Branding, July 7, 2016, http://altitudebranding. com/6-examples-great-co-branding/.
22. E. J. Schultz, “How Kraft’s Lunchables Is Evolving in the Anti-Obesity Era,” Advertising Age, April 19, 2011, https:// adage.com/article/news/kraft-s-lunchables-evolving-anti- obesity-era/227075/, accessed November 3, 2018.
23. Ed Lebar, Phil Buehler, Kevin Lane Keller, Monika Sawicka, et al., “Brand Equity Implications of Joint Branding Programs,” Journal of Advertising Research 45, no. 4 (2005): 413–425.
24. Nicole L. Votolato and H. Rao Unnava, “Spillover of Negative Information on Brand Alliances,” Journal of Consumer Psychology 16, no. 2 (2006): 196–202.
25. Ed Lebar, Phil Buehler, Kevin Lane Keller, Monika Sawicka, Zeynep Aksehirli, and Keith Richey, “Brand Equity Implications of Joint Branding Programs,” Journal of Advertising Research 45, no. 4 (2005): 413–425; Tan- sev Geylani, J. Jeffrey Inman, and Frenkel Ter Hofstede, “Image Reinforcement or Impairment: The Effects of Co-Branding on Attribute Uncertainty,” Marketing Sci- ence, 27, no. 4 (July–August 2008): 730–744.
26. For general background, see Akshay R. Rao, “ Strategic Brand Alliances,” Journal of Brand Management 5, no. 2 (1997): 111–119; Akshay R. Rao, L. Qu, and Robert W. Ruekert, “Signaling Unobservable Product Quality through a Brand Ally,” Journal of Marketing Research 36, no. 2 (May 1999): 258–268; Allen D. Shocker, Raj K. Srivastava, and Robert W. Ruekert, “Challenges and Opportunities Facing Brand Management: An Introduc- tion to the Special Issue,” Journal of Marketing Research 31, no. 2 (May 1994): 149–158; Tom Blackett and Bob Boad, Co-Branding—The Science of Alliance (London: Palgrave MacMillan, 1999).
27. Rachel Abramovitz, “Disney Loses its Appetite for Happy Meal Tie-Ins,” LA Times, May 8, 2006, http://articles.lat- imes.com/2006/may/08/entertainment/et-mcdonalds8.
28. Philip Kotler and Waldemar Pfoertsch, Ingredient Brand- ing: Making the Invisible Visible (New York: Springer, 2010); John Quelch, “How to Brand an Ingredient,”
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October 8, 2007, https://hbr.org/2007/10/how-to-brand- an-ingredient-1, accessed November 3, 2018.
29. Mike May, “What’s an Ingredient Brand? Only the Future of Retail,” Magenta, November 2, 2017, https:// magenta.as/whats-an-ingredient-brand-only-the-future- of-retail-4b53eef2ea2e.
30. Gregory S. Carpenter, Rashi Glazer, and Kent Nakamoto, “Meaningful Brands from Meaningless Differentiation: The Dependence on Irrelevant Attributes,” Journal of Marketing Research 31, no. 3 (August 1994): 339–350. See also Christina Brown and Gregory Carpenter, “Why Is the Trivial Important? A Reasons-Based Account for the Effects of Trivial Attributes on Choice,” Journal of Consumer Research 26, no. 4 (March 2000): 372–385; Susan M. Broniarczyk and Andrew D. Gershoff, “The Reciprocal Effects of Brand Equity and Trivial Attributes,” Journal of Marketing Research 41, no. 2 (2003): 161–175.
31. Mike May, “What’s an Ingredient Brand? Only the Future of Retail,” Magenta, November 2, 2017, https:// magenta.as/whats-an-ingredient-brand-only-the-future- of-retail-4b53eef2ea2e.
32. Firedrive Marketing Group, “Getting Ingredient Branding Right,” Firedrive Marketing, www.firedrivemarketing .com/getting-ingredient-branding-right/, accessed December 20, 2017.
33. Marc Graser, “How Chevy’s Camaro Changed with the ‘Transformers’ Franchise,” Variety, June 26, 2014, http://variety.com/2014/film/news/how-chevy-camaro- changed-with-transformers-franchise-1201242157/.
34. Philip Kotler and Waldemar Pfoertsch, Ingredient Branding: Making the Invisible Visible (New York: Springer, 2010); Donald G. Norris, “ Ingredient Branding: A Strategy Option with Multiple Beneficiaries,” Journal of Consumer Marketing 9, no. 3 (1992): 19–31.
35. License! Global, “Top 125 Global Licensors,” May 10, 2012, https://www.licenseglobal.com/top-125-global- licensors-0, accessed November 3, 2018; “ Disney’s 2011 Investor Conference: Disney Consumer Products,” Disney, accessed February 17, 2011 www. disney.com/ investors; Bruce Orwall, “Disney’s Magic Transformation?” The Wall Street Journal, October 4, 2000.
36. License! Global, “The Top 150 Global Licensors,” May 6, 2015, https://www.licenseglobal.com/magazine- article/ top-150-global-licensors-1, accessed November 3, 2018.
37. The Walt Disney Company, Fiscal Year 2016 Annual Financial Report, Form 10-K, United States Securities and Exchange Commission.
38. Trefis Team, “Why Have Ralph Lauren’s Licensing Revenues Been Declining in Recent Years?,” Forbes, May 5, 2016, www.forbes .com/sites/greatspeculations/2016/05/05/why- have-ralph-laurens-licensing-revenues-been-declining- in-recent-years/#24f04f317e6a.
39. Teri Agins, “Izod Lacoste Gets Restyled and Repriced,” The Wall Street Journal, July 22, 1991, B1.
40. Udayan Gupta, “Licensees Learn What’s in a Pop- Culture Name: Risk,” The Wall Street Journal, August 8, 1991, B2.
41. Form 10 K for the year ending December 31, 2017, Harley-Davidson http://investor.harley-davidson.com/ static-files/98813045-7888-4ad9-8574-8f13991acf26, Accessed June 10, 2018.
42. Cate Doty, “For Celebrities, Ads Made Abroad Shed Some Stigma,” The New York Times, February 4, 2008, https://www.nytimes.com/2008/02/04/business/
media/04japander.html, accessed November 3, 2018; Dean Crutchfield, “Celebrity Endorsements Still Push Product,” Advertising Age, September 22, 2010, https:// adage.com/article/cmo-strategy/marketing- celebrity- endorsements-push-product/146023/, accessed November 3, 2018.
43. Grant McCracken, “Who Is the Celebrity Endorser? Cultural Foundations of the Endorsement Process,” Journal of Consumer Research 16, no. 3 (December 1989): 310–321.
44. Sam Dangremond, “How Much Is Oprah Winfrey Actu- ally Worth?,” Town & Country Magazine, October 16, 2017, www.townandcountrymag.com/society/money- and-power/a12808751/oprah-winfrey-net-worth/.
45. Newswire, “Holland America Line and O, The Oprah Magazine Embark on Exclusive Partnership,” Newswire, February 9, 2017, www.newswire.ca/news-releases/ holland-america-line-and-o-the-oprah-magazine- embark-on-exclusive-partnership-613301673.html.
46. Meg James, “Discovery Buys Majority Stake in OWN from Oprah Winfrey,” LA Times, December 4, 2017, www.latimes.com/business/hollywood/la-fi-ct- discovery-ups-stake-own-oprah-20171204-story.html.
47. Irina Ivanova, “Oprah’s Greatest Product Hits,” Moneywatch, August 10, 2017, www.cbsnews.com/ news/oprah-winfreys-greatest-product-hits/.
48. “Manning’s Roster of Endorsements,” USA Today, November 16, 2006; Curtis Eichelberger, “Colts Victory May Bring Manning $3 Million More in Endorsements,” Bloomberg, February 5, 2010, www. bloomberg.com.
49. Shekhar Misra and Sharon E. Beatty, “Celebrity Spokesperson and Brand Congruence,” Journal of Business Research 21, no. 2 (1990): 159–173.
50. Steve McKee, “The Trouble with Celebrity Endorsements,” Bloomberg BusinessWeek, November 14, 2008, https:// www.bloomberg.com/news/articles/2008-11-14/the- trouble-with-celebrity-endorsementsbusinessweek- business-news-stock- market-and-financial-advice, accessed November 3, 2018.
51. Zack O’Malley Greenburg, “The 13 Top-Earning Dead Celebrities of 2015,” Forbes, October 27, 2015, www .forbes.com/sites/zackomalleygreenburg/2015/10/27/ the-13-top-earning-dead- celebrities-of-2015/#ee 5210159f72; Jonathan Keehner and Lauren Coleman- Lochner, “In Death, Endorsements Are a Girl’s Best Friend,” Bloomberg BusinessWeek, January 23, 2011; Brand Week, “I See Dead People,” March 14, 2011, http://archive.commercialalert.org/news/ archive/2011/03/i-see-dead-people.
52. John Grossman, “Dave Thomas’ Recipe for Success,” Sky, November 2000, 103–107; Bruce Horvitz, “Wendy’s Icon Back at Work,” USA Today, March 31, 1997, B1–B2.
53. Shekhar Misra and Sharon E. Beatty, “Celebrity Spokesperson and Brand Congruence,” Journal of Busi- ness Research 21, no. 2 (1990): 159–173.
54. David Pierson, “If Jackie Chan Says It’s Good—Well, Get a Second Opinion,” Los Angeles Times, August 23, 2010, http://articles.latimes.com/2010/aug/23/business/la-fi- chan-curse-20100823, accessed November 3, 2018; for a more charitable view of Jackie Chan, see Ron Gluckman, “Kicking It Up for Kids,” Forbes, July 18, 2011.
55. Sean Deveney, “Kevin Durant Should Rake in Way More Money and Fame with Warriors, Experts Say,”
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326 PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
Sporting News, July 13, 2016, www.sportingnews .com/nba/news/kevin-durant-marketing-value-golden- state-warriors-q-scores-lebron-james-stephen-curry/ 1nlcro7n3kro1dncmmghhn0yt; Dave McMenamin, “23 for 23: Little-Known Facts about LeBron James,” ESPN, June 4, 2015, www.espn.com/blog/cleveland-cavaliers/post/_/ id/1028/23-for-23-little-known-facts-about-lebron-james.
56. Tom Peters, “A Brand Called You,” Fast Company 31 (August 1997); Dorie Clark, “Reinventing Your Personal Brand,” Harvard Business Review, March 2011 Issue, 78–81, https://hbr.org/2011/03/reinventing-your- personal-brand, accessed November 3, 2018.
57. MediaKix, “How Do Instagram Influencers Make Money?,” March 2016, http://mediakix.com/2016/03/instagram- influencers-making-money/#gs.G6nEIq0, accessed November 3, 2018; Amanda Pressner Kreuser, “What Influencers Like Michelle Phan and PewDiePie Get Paid,” May 26, 2016, https://www.inc.com/amanda-pressner- kreuser/the-pricing-of-fame-what-social- influencers-are- getting-paid.html, accessed November 3, 2018.
58. Clare O’Connor, “Earning Power: Here’s How Much Top Influencers Can Make on Instagram and YouTube,” Forbes, April 10, 2017, https://www.forbes.com/sites/ clareoconnor/2017/04/10/earning-power-heres-how- much-top-influencers-can-make-on-instagram-and- youtube/#3ad16bb224db, accessed November 3, 2018.
59. Matt Roche, “Why Peer-to-Peer Marketing Does More Than Celebrity Endorsements,” Adweek, August 12, 2016, www.adweek.com/digital/why-peer-to-peer- marketing-does-more-than-celebrity-endorsements/.
60. For general background and in-depth research on a number of sponsorship issues, consult the Journal of Sponsorship, a Henry Stewart publication.
61. Sujith M, “Ranking the Top 10 clubs with the High- est Sponsorship Revenues,” Sportskeeda, October 13, 2018, https://www.sportskeeda.com/football/ top-10-clubs-with-the-highest-sponsorship-revenues-ss.
62. John Stensholt, “Australian Open Could Soon Be Second Richest Grand Slam after Record Kia Deal,” Financial Review, January 28, 2018, https://www.afr.com/busi- ness/sport/australian-open-could-soon-be-second-rich- est-grand-slam-after-record-kia-deal-20180125-h0o7fl; “Kia Motors Signs Historic Deal With Tennis Austra- lia,” B&T Magazine, http://www.bandt.com.au/media/ kia-motors-signs-historic-deal-tennis-australia.
63. David Kiley, “World’s Best Vodka? It’s Anybody’s Guess,” Bloomberg BusinessWeek May 23, 2008, https:// www.bloomberg.com/news/articles/2008-05-23/worlds- best-vodka-its-anybodys-guessbusinessweek-business- news-stock-market-and-financial-advice, accessed November 3, 2018; Adweek Staff, “Vodka,” July 1, 2010, https://www.adweek.com/brand-marketing/vodka- 106876/, accessed November 3, 2018; BusinessWire, “Grey Goose Vodka Continues to Soar in the U.S. Despite the Economy,” Reuters, April 6, 2009, https:// www.businesswire.com/news/home/20090406005489/ en/GREY-GOOSE%C2%AE-Vodka-Continues-Soar- U.S.-Economy, accessed November 3, 2018.
64. International Olympic Committee, “The Olympic Partner Programme,” https://www.olympic.org/ sponsors, accessed November 3, 2018; Ira Boudway, “ Olympic Sponsorships Are About to Get More Expensive,” Bloomberg, September 28, 2007, https://www .bloomberg.com/news/articles/2017-09-28/olympic- sponsorships-are-about-to-get-a-lot-more-expensive.
65. Olympic.org, “P&G Launches “Thank You, Mom” Campaign for Rio 2016,” April 27, 2016, accessed December 22, 2017, www.olympic.org/news/p-g- launches-thank-you-mom-campaign-for-rio-2016.
66. The International Olympic Committee, “IOC and GE Extend Partnership to 2020,” June 29, 2011, https://www.olympic .org/news/ioc-and-ge-extend-partnership-to-2020.
67. Frederik Balfour and Reena Jana, “Are Olympic Sponsorships Worth It?,” Bloomberg BusinessWeek, July 31, 2008; Ed Kemp, “Kodak to End 100-Year Olympic Sponsorship Tie,” Campaign US, October 17, 2007, https://www.campaignlive.com/article/ kodak-end-100-year-olympic-sponsorship-tie/745530.
68. Dec Saif Gangjee, “How the IOC Ruthlessly Protects the Olympics Brand,” The New Republic, August 5, 2016, https://newrepublic.com/article/135847/ioc-ruthlessly- protects-olympics-brand; David Wolf, “Let the Ambush Games Begin,” Advertising Age, August 11, 2008.
69. John Grady, Steve McKelvey, and Matthew J. Bernthal, “From Beijing 2008 to London 2012: Examining Event- Specific Olympic Legislation Vis-à-Vis the Rights and Interests of Stakeholders,” Journal of Sponsorship 3, no. 2 (February 2010): 144–156;
70. Nicholas Burton and Simon Chadwick, “Ambush Marketing in Sport: An Analysis of Sponsorship Protection Means and Counter-Ambush Measures,” Jour- nal of Sponsorship 2, no. 4 (September 2009): 303–315.
71. Marina Palomba, “Ambush Marketing and the Olympics 2012,” Journal of Sponsorship 4, no. 3 (June 2011): 245–252; Dana Ellis, Marie-Eve Gauthier, and Benoit Séguin, “Ambush Marketing, the Olympic and Paralympic Marks Act and Canadian Sports Organisations: Awareness, Perceptions and Impacts,” Journal of Sponsorship 4, no. 3 (June 2011): 253–271.
72. Kirsten D. Toft, “UK: Ambush Marketing and the London Olympics 2012,” August 24, 2009, http://www.mondaq .com/uk/x/84874/Trademark/Ambush+Marketing+And +The+London+Olympics+2012, accessed November 3, 2018; Jacquelin Magnay, “London 2012 Olympics: Gov- ernment Unveils Plans to Ban Ambush Marketing and Bol- ster Games Security,” Telegraph, March 7, 2011; Akshata Rangarajan, “Ambush Marketing & the London Olym- pics, Slingshot Sponsorship, February 14, 2011, https:// www.slingshotsponsorship.com/ambush-marketing-the- london-olympics/, accessed November 3, 2018.
73. “Olympic Advertising Aims to Sell £500m in Tickets,” Marketing News, March 21, 2011; Sam Greenhill, “The Freebie Olympics: Corporate Fat Cats Get More Than Half of Top Games Tickets,” Daily Mail, June 3, 2011, https://www.dailymail.co.uk/news/ article-1394064/ London-2012-Olympics-Corporate-fat-cats-half- Games-tickets.html, accessed November 3, 2018; Visit Britain, www.visitbritain.org.
74. Room for Debate: A New York Times Blog, “Do Olympic Host Cities Ever Win?” October 2, 2009, https://roomfordebate.blogs.nytimes.com /2009/10/02/do-olympic-host-cities-ever-win/, accessed November 3, 2018; PricewaterhouseCoopers, “The Eco- nomic Impact of the Olympic Games,” Pricewaterhouse Coopers European Economic Outlook, June 2004, http://www.pages.drexel.edu/~rosenl/sports%20Folder/ Economic%20Impact%20of%20Olympics%20PWC .pdf, accessed November 3, 2018; H. Preuss (2004), “The Economics of Staging the Olympics: A Compari- son of the Games 1972–2008,” London: Edward Elgar.
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327
Learning Objectives
After reading this chapter, you should be able to
1. Describe the new accountability in terms of ROMI (Return on Marketing Investment)
2. Create an understanding of analytics dashboards as a tool for monitoring performance and the implications of brand investments
3. Outline the two main steps in conducting a brand audit and how to execute a digital marketing review
4. Describe how to design, conduct, and interpret a tracking study
5. Identify the steps in implementing a brand equity management system.
Developing a Brand Equity Measurement and Management System 9
PART IV M E A S U R I N G A N D I N T E R P R E T I N G B R A N D P E R F O R M A N C E
Marketing analytics
dashboards are key tools
for tracking a brand’s
metrics and provide a
way for managers to
evaluate the effective-
ness of their marketing
expenditures.
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328 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
The previous eight chapters, which made up Parts II and III of the text, described various strate-
gies and approaches to building brand equity. In the next three chapters, which make up Part IV,
we take a detailed look at what consumers know and feel about and act toward brands, and how
marketers can develop measurement procedures to assess how well their brands are doing.
The customer-based brand equity (CBBE) concept provides guidance about how we can mea-
sure brand equity. Given that customer-based brand equity is the differential effect that knowledge
about the brand has on customer response to the marketing of that brand, two basic approaches
to measuring brand equity present themselves. An indirect approach can assess potential sources
of customer-based brand equity by identifying and tracking consumers’ brand knowledge—all
the thoughts, feelings, images, perceptions, and beliefs linked to the brand. A direct approach,
on the other hand, can assess the actual impact of brand knowledge on consumers’ response to
different aspects of the marketing program.
The two approaches are complementary, and marketers can and should use both. In other
words, for brand equity to provide a useful strategic function and guide marketing decisions,
marketers must fully understand the sources of brand equity, how they affect outcomes of interest
such as sales, and how these sources and outcomes change, if at all, over time. Chapter 3 provided
a framework for conceptualizing consumers’ brand knowledge structures. Chapter 10 uses this
information and reviews research methods to measure sources of brand equity and the customer
mind-set. Chapter 11 reviews research methods to measure outcomes—that is, the various benefits
that may result from creating these sources of brand equity.
Before we get into specifics of measurement, this chapter offers some big-picture perspec-
tives of how to think about brand equity measurement and management. Specifically, we will
consider how to develop and implement a brand equity measurement system. A brand equity
measurement system is a set of research procedures designed to provide marketers with timely,
accurate, and actionable information about brands, so they can make the best possible tactical
decisions in the short run and strategic decisions in the long run. The goal is to achieve a full
understanding of the sources and outcomes of brand equity and to be able to relate the two as
much as possible.
The ideal brand equity measurement system would provide complete, up-to-date, and relevant
information about the brand and its competitors to the right decision makers at the right time
within the organization. After providing some context about the heightened need for marketing
accountability, we will look in detail at three steps toward achieving that ideal—conducting brand
audits, designing brand tracking studies, and establishing a brand equity management system.
PREVIEW
THE NEW ACCOUNTABILITY Although senior managers at many firms have embraced the marketing concept and the impor-
tance of brands, they often struggle with questions such as: How strong is our brand? How can
we ensure that our marketing activities create value? How do we measure that value?
Virtually every marketing dollar spent today must be justified as both effective and efficient
in terms of return on marketing investment (ROMI).1 This increased accountability has forced
marketers to address tough challenges and develop new measurement approaches.
Complicating matters is that, depending on the particular industry or category, some observers
believe up to 70 percent (or even more) of marketing expenditures may be devoted to programs
and activities that improve brand equity but cannot be linked to short-term incremental profits.2
Measuring the long-term value of marketing in terms of both its full short-term and long-term
impact on consumers is thus crucial for accurately assessing return on investment.
This tension between demonstrating short-term profitability versus investing in long-term
value has been exacerbated by the digital economy, with an emphasis on strong long-term cus-
tomer relationships and networks, rather than immediate profitability. A recent Forbes Marketing
Accountability Initiative highlights that many digital companies such as Waze, LinkedIn, Tumblr,
and Airbnb are worth billions of dollars in terms of intangible value derived from their strong
customer relationships.3
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 329
Given this shift, marketers need new tools and procedures that clarify and justify the value of
their expenditures, beyond ROMI measures tied to short-term changes in sales. In Chapter 3, we
introduced the brand resonance model and brand value chain, a structured means to understand
how consumers build strong bonds with brands and how marketers can assess the success of
their branding efforts. In the remainder of this chapter, we offer several additional concepts and
perspectives to help in that pursuit.
CONDUCTING BRAND AUDITS To learn how consumers think, feel, and act toward brands and products so the company can
make informed strategic positioning decisions, marketers should first conduct a brand audit. A
brand audit is a comprehensive examination of a brand to discover its sources of brand equity. In
accounting, an audit is a systematic inspection by an outside firm of accounting records including
analyses, tests, and confirmations.4 The outcome is an assessment of the firm’s financial health
in the form of a report.
A similar concept has been suggested for marketing. A marketing audit is a “comprehen-
sive, systematic, independent, and periodic examination of a company’s—or business unit’s—
marketing environment, objectives, strategies, and activities with a view of determining problem
areas and opportunities and recommending a plan of action to improve the company’s marketing
performance.”5 The process is a three-step procedure in which the first step is agreement on
objectives, scope, and approach; the second is data collection; and the third and final step is report
preparation and presentation. This is an internally, company-focused exercise to make sure mar-
keting operations are efficient and effective.
On the other hand, a brand audit is a more externally, consumer-focused exercise to assess the
health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage
its equity. A brand audit requires understanding the sources of brand equity from the perspective
of both the firm and the consumer. From the perspective of the firm, what products and services
are currently being offered to consumers, and how are they being marketed and branded? From
the perspective of the consumer, what deeply held perceptions and beliefs create the true meaning
of brands and products?
The brand audit can set strategic direction for the brand, and management should conduct
one whenever important shifts in strategic direction are likely.6 Are the current sources of brand
equity satisfactory? Do certain brand associations need to be added, subtracted, or just strength-
ened? What brand opportunities exist, and what potential challenges exist for brand equity? With
answers to these questions, management can put a marketing program into place to maximize
sales and long-term brand equity.
Conducting brand audits on a regular basis, such as during the annual planning cycle, allows
marketers to keep their fingers on the pulse of their brands. Brand audits are thus particularly
useful background for managers as they set up their marketing plans and can have profound
implications on brands’ strategic direction and resulting performance. Consider Domino’s Pizza.
DOMINO’S PIZZA
In late 2009, Domino’s was a struggling business in a declining market. Pizza sales were slumping as con-
sumers defected to healthier and fresher dining options at one end or to less expensive burger or sandwich
options at the other end. Caught in the middle, Domino’s also found its heritage in “speed” and “best in
delivery” becoming less important; even worse, it was undermining consumer’s perceptions of the brand’s
taste, the number-one driver of choice in the pizza category. To address the problem, Domino’s decided to
conduct a detailed brand audit with extensive qualitative and quantitative research. Surveys, focus groups,
intercept interviews, social media conversations, and ethnographic research generated a number of key
insights. The taste problem was severe—some consumers bluntly said that Domino’s tasted more like the box
than the pizza. Research also revealed that consumers felt betrayed by a company they felt they no longer
knew. A focus on impersonal, efficient service meant that in consumers’ minds, there was no Domino’s
kitchens, no chefs, not even ingredients. Consumers were skeptical of “new and improved” claims and felt
companies never admitted they were wrong. Based on these and other insights, Domino’s began its brand
comeback. Step one—new recipes for crust, sauce, and cheese that resulted in substantially better taste-test
scores. Next, Domino’s decided not to run from criticism and launched the “Oh Yes We Did” campaign.
Using traditional TV and print media and extensive online components, the company made clear that it
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330 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
had listened and responded by creating a better pizza. Documentary-type filming showed Domino’s CEO
and other executives observing the original consumer research and describing how they took it to heart.
Surprise visits were made to harsh critics from the focus groups, who tried the new pizza on camera and
enthusiastically praised it. Domino’s authentic, genuine approach paid off, with the company doubling its
revenue and increasing its stock price by 5,000 percent over the next 8 years.7
More recently, Domino’s Pizza has reinforced its brand identity through an innovative social media and
digital marketing activation strategy. Many of these campaigns have been developed and fine-tuned over
time through a process of testing and learning, and observing reactions to various types of activations. For
example, a new digital marketing campaign uses face-swapping technology and images to show the joy of
a Domino’s pizza arriving. Domino’s also used Snapchat lenses to let users imitate the TV ad by “boggling”
their mouth to show their reactions to a pizza. Overall, Domino’s investments in analytics and social media
listening have yielded additional rich insights that have helped it improve its appeal to its target audience.8
A thorough, insightful brand audit helped to convince Domino’s they needed to
confront their own perceived flaws head on.
Source: Domino’s Pizza LLC
The brand audit consists of two steps: the brand inventory and the brand exploratory. We’ll discuss
each in turn. Brand Focus 9.0 illustrates a sample brand audit using the Rolex brand as an example.
Brand Inventory The purpose of the brand inventory is to provide a current, comprehensive profile of how all the
products and services sold by a company are marketed and branded. Profiling each product or ser-
vice requires marketers to catalogue the following in both visual and written form for each product
or service sold: the names, logos, symbols, characters, packaging, slogans, or other trademarks
used; the inherent product attributes or characteristics of the brand; the pricing, communications,
and distribution policies; and any other relevant marketing activity related to the brand.
Often firms set up a “war room” where all the various marketing activities and programs can
be displayed or accessed. Visual and verbal information help to provide a clearer picture. Figure
9-1 shows a wall that software pioneer Red Hat created of all its various ads, brochures, and other
marketing materials. Managers were pleasantly surprised when they saw how consistent all the
various items were in form, look, and content, although they were left scratching their heads as to
why the Red Hat office in Australia had created branded underwear as a promotional gift. Need-
less to say, the “tighty whities” were dropped after being deemed off-brand.9
With the advent of digital marketing and social media, conducting an inventory of digital brand
assets has become an important task in the context of conducting a brand inventory. Digital brand
assets may consist of all assets pertaining to a brand including images, audio, video, etc., which are
deployed online. The digital brand asset inventory may also include various types of content that are
linked to a brand including custom YouTube videos, white papers, blog posts, sponsored content,
customer guides, licensed news articles, and even musings on social media channels.10 The bur-
geoning number of social media channels implies that brand marketers should pay special attention
to maintaining the consistency of look and feel of a brand across digital and social media channels.
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 331
A digital inventory of brand assets may provide four types of useful insights: (1) Outdated
brand accounts that have fallen into disuse, and perhaps need to be closed or updated;
(2) Overlapping brand assets which can be merged or deleted, to ensure a more streamlined set of assets;
(3) Existing brand accounts with information that is either inaccurate or not up-to-date. For
example, brand logos may feature outdated colors or design, which may need to be updated;
(4) Particular digital and social media channels where the brand does not have a presence—this
could be a starting point for reworking the strategy going forward.
The outcome of the brand inventory—both online and offline—should be an accurate, com-
prehensive, and up-to-date profile of how all the products and services are branded in terms of
which brand elements are employed and how, and the nature of the supporting marketing program.
Marketers should also profile competitive brands in as much detail as possible to determine points-
of-parity and points-of-difference.
Rationale. The brand inventory is a valuable first step for several reasons. First, it helps to sug-
gest what consumers’ current perceptions may be based on. Consumer associations are typically
rooted in the intended meaning of the brand elements attached to them—but not always. The brand
inventory, therefore, provides useful information for interpreting follow-up research such as the
brand exploratory we discuss next.
Although the brand inventory is primarily a descriptive exercise, it can supply some useful
analysis, too, and initial insights into how brand equity may be better managed. For example,
marketers can assess the consistency of all the different products or services sharing a brand
name. This assessment should also extend to a brand’s digital asset inventory. Are the different
brand elements used on a consistent basis, or are there many different versions of the brand
name, logo, and so forth for the same product—perhaps for no obvious reason—depending
on which geographic market it is being sold in, which market segment it is being targeted to,
and so forth? Are there consistencies in colors and fonts in online marketing pertaining to the
brand? Similarly, are the supporting marketing programs logical and consistent across related
brands?
As firms expand their products geographically and extend them into other categories,
deviations—sometimes significant in nature—commonly emerge in brand appearance and
marketing. A thorough brand inventory should be able to reveal the extent of brand consistency.
At the same time, a brand inventory can reveal a lack of perceived differences among various
products sharing the brand name—for example, as a result of line extensions—that are designed
to differ on one or more key dimensions. Creating sub-brands with distinct positions is often a
marketing priority, and a brand inventory may help to uncover undesirable redundancy and overlap
that could lead to consumer confusion or retailer resistance.
FIGURE 9-1
Red Hat Brand Wall
Source: Photo courtesy of Red Hat, Inc.
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332 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Brand Exploratory Although the supply-side view revealed by the brand inventory is useful, actual consumer percep-
tions, of course, may not necessarily reflect those the marketer intended. Thus, the second step of
the brand audit is to provide detailed information about what consumers actually think of the brand
by means of the brand exploratory. The brand exploratory is research directed to understanding
what consumers think and feel about the brand and act toward it in order to better understand
sources of brand equity, as well as any possible barriers.
Preliminary Activities. Several preliminary activities are useful for the brand exploratory.
First, a number of prior research studies may exist and be relevant. It is important to dig through
company archives to uncover reports that may have been buried, and perhaps even long forgotten,
but that contain insights and answers to a number of important questions or suggest new questions
that may still need to be posed.
Second, it is also useful to interview internal personnel to gain an understanding of their
beliefs about consumer perceptions for the brand and competitive brands. Past and current market-
ing managers may be able to share some wisdom not necessarily captured in prior research reports.
The diversity of opinion that typically emerges from these internal interviews serves several func-
tions, increasing the likelihood that useful insights or ideas will be generated, as well as pointing
out any inconsistencies or misconceptions that may exist internally for the brand.
Although these preliminary activities are useful, additional research is often required to better
understand how customers shop for and use different brands and what they think and feel about
them. To allow marketers to cover a broad range of issues and to pursue some in greater depth, the
brand exploratory often employs qualitative research techniques as a first step, as summarized in
Figure 9-2, followed by more focused and definitive survey-based quantitative research.
Interpreting Qualitative Research. There are a wide variety of qualitative research techniques.
Marketers must carefully consider which ones to employ.
Criteria. Levy identifies three criteria by which we can classify and judge any qualitative
research technique: direction, depth, and diversity.11 For example, any projective research tech-
nique varies in terms of the nature of the stimulus information (is it related to the person or the
brand?), the extent to which responses are superficial and concrete as opposed to deeper and more
abstract (and requiring more interpretation), and the way the information relates to information
gathered by other projective techniques.
In Figure 9-2, the tasks at the top of the left-hand list ask very specific questions whose answers
may be easier to interpret. The tasks on the bottom of the list ask questions that are much richer but
also harder to interpret. Tasks on the top of the right-hand list are elaborate exercises that consumers
undertake themselves and that may be either specific or broadly directed. Tasks at the bottom of
the right-hand list consist of direct observation of consumers as they engage in various behaviors.
According to Levy, the more specific the question, the narrower the range of information given
by the respondent. When the stimulus information in the question is open-ended and responses are
freer or less constrained, the respondent tends to give more information. The more abstract and
symbolic the research technique, however, the more important it is to follow up with probes and
other questions that explicitly reveal the motivation and reasons behind consumers’ responses.
FIGURE 9-2
Summary of Qualitative
Techniques
Day/Behavior reconstruction Photo/Written journal Participatory design Consumer-led problem solving Real-life experimenting Collaging and drawing Consumer shadowing Consumer–product interaction Video observation
Free association Adjective ratings and checklists Confessional interviews Projective techniques Photo sorts Archetypal research Bubble drawings Story telling Personification exercises Role playing Metaphor elicitation*
*ZMET trademark
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 333
Ideally, qualitative research conducted as part of the brand exploratory should vary in direc-
tion and depth as well as in technique. The challenge is to provide accurate interpretation—-going
beyond what consumers explicitly state to determine what they implicitly mean. Chapter 10
reviews how to best conduct qualitative research.
Mental Maps and Core Brand Associations. One useful outcome of qualitative research is
a mental map. A mental map accurately portrays in detail all salient brand associations and
responses for a particular target market. One of the simplest means to get consumers to create a
mental map is to ask them for their top-of-mind brand associations (“When you think of this brand,
what comes to mind?”). The brand resonance pyramid from Chapter 3 helps to highlight some
of the types of associations and responses that may emerge from the creation of a mental map.
It is sometimes useful to group brand associations into related categories with descriptive
labels. Core brand associations are those abstract associations (attributes and benefits) that char-
acterize the 5 to 10 most important aspects or dimensions of a brand. They can serve as the basis
of brand positioning in terms of how they create points-of-parity and points-of-difference. For
example, in response to a Nike brand probe, consumers may list athletes featured in Nike ads
such as LeBron James or Serena Williams, whom we could call “top athletes.” The challenge is
to include all relevant associations while making sure each is as distinct as possible. Figure 9-3
displays a hypothetical mental map and some core brand associations that were created as part of
a brand analysis for Music Television (MTV) at one time.
A related methodology, brand concept maps (BCM), elicits brand association networks (brand
maps) from consumers and aggregates individual maps into a consensus map.12 This approach struc-
tures the brand elicitation stage of identifying brand associations by providing survey respondents
with a set of brand associations used in the mapping stage. The mapping stage is also structured and
has respondents use the provided set of brand associations to build an individual brand map that
shows how brand associations are linked to each other and to the brand, as well as how strong these
linkages are. Finally, the aggregation stage is also structured and analyzes individual brand maps
step by step, uncovering the common thinking involved. Figure 9-4 displays a brand concept map
for the Mayo Clinic (the subject of Branding Brief 9-3) provided by a sample of patients.
One goal from qualitative, as well as quantitative, research in the brand exploratory is a clear,
comprehensive profile of the target market. As part of that process, many firms are literally creating
personas to capture their views as to the target market, as summarized in The Science of Branding 9-1.
Conducting Quantitative Research. Qualitative research is suggestive, but a more defini-
tive assessment of the depth and breadth of brand awareness, and the strength, favorability, and
uniqueness of brand associations often requires a quantitative phase of research.
FIGURE 9-3A
Classic MTV Mental
Map
Source: MTV logo, MCT/Newscom
Trendsetter
Popular
Leader
Mainstream
Trusting
Informative
Music
Live and immediate
Lifestyle
Connected Interactive
Popular
Irreverent and rebellious
Hip and cool
Young
Fun and entertaining
For me
Real and genuine
Changing Original
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334 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
The guidelines for the quantitative phase of the exploratory are relatively straightforward.
Marketers should attempt to assess all potentially salient associations identified by the qualitative
research phase according to their strength, favorability, and uniqueness. They should examine both
specific brand beliefs and overall attitudes and behaviors to reveal potential sources and outcomes
of brand equity. And they should assess the depth and breadth of brand awareness by employing
various cues. Typically, marketers will also need to conduct similar types of research for competi-
tors to better understand their sources of brand equity and how they compare with the target brand.
Much of the above discussion of qualitative and quantitative measures has concentrated on
associations to the brand name—for example, what do consumers think about the brand when
given its name as a probe? Marketers should study other brand elements in the brand exploratory
as well, because they may trigger other meanings and facets of the brand.
For example, we can ask consumers what inferences they make about the brand on the basis
of the product packaging, logo, or other attribute alone, such as, “What would you think about the
brand just on the basis of its packaging?” We can explore specific aspects of the brand elements—
for instance, the label on the package or the shape of the package itself—to uncover their role in
creating brand associations and thus, sources of brand equity. We should also determine which of
these elements most effectively represents and symbolizes the brand as a whole.
FIGURE 9-4
Sample Mayo Clinic
Brand Concept Map
Cares more about people than money
Can be trusted to do
what’s right for patients
Caring and compassionate
Doctors work as a team
Approachable, friendly doctors
Can figure out what’s wrong when other doctors can’t
Top-notch surgery and treatment
Treats patients with rare complex
illnesses
World leader in new medical treatments
Expert in treating serious illnesses
Leader in medical research
Known worldwide
Leader in cancer research and
treatment
Latest medical equipment and
technology
Treats famous people
Publishes health information
Best doctors in the world
Best patient care available
Mayo
FIGURE 9-3B
Possible MTV Core
Brand Associations
Community Shared experience (literally and talk value)
Modern Hip, cool
Spontaneity Up-to the-minute, immediate
Originality Genuine, creative
Fluidity Always changing and evolving
Music What’s hot and what’s new
Credibility Expert, trusting, reality
Personality Irreverent, hip, cool
Accessibility Relevant, for everyone
Interactivity Connected and participatory
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 335
Digital Marketing Reviews. With the growing importance of
digital marketing, a formal digi-
tal marketing review can provide
important input to a brand audit
which could help generate use-
ful insights regarding a brand’s
online presence. A digital market-
ing review offers the following
benefits:13
1. It can highlight whether a
brand’s digital efforts are
received in online channels,
relative to competitors.
2. It can help unlock important
customer-level insights as
well as industry trends, which is made possible due to in-depth analysis of online conversa-
tions surrounding a brand. This can be useful in developing a better picture of brand image
and brand personality, as it pertains to digital channels.
3. It can provide useful input to brand strategy development and, by providing rich customer
insights, the crafting or refinement of the brand positioning.
4. It can act as a health check of a brand’s digital marketing and social media strategy, and
allow brand managers to introduce course correction measures if the online strategy is seen
as inconsistent with the brand’s overall strategy.
Ongoing social media conversations can be successfully mined to generate granular insights
about topics and themes that are connected with a brand. One way of summarizing the information
obtained from a digital marketing review is to focus on the 5 Cs related to brand conversations that
surround the brand in various digital channels: (1) conversation channel; (2) conversation source;
(3) conversation content; (4) channel-specific engagement; (5) context. Table 9-1 provides more
details of each of these.14
Characteristic of Online Brand Conversations Definition
Conversation channel A digital review should spotlight where the conversation surrounding the brand is taking place (e.g., Facebook, Instagram, Twitter, or YouTube).
Conversation source A digital review can highlight who the source for the conversation is, whether it is consumers, competitors, or third parties/influencers.
Conversation content Marketers are also using digital reviews to learn about the content of conversations surrounding a brand. Social media content can be both verbal as well as visual, and can be summarized in various ways, including (1) senti- ment (positive versus negative); (2) volume of conversation, which can indicate the number of mentions; and (3) topics or themes can be extracted from social media conversations. Word clouds can be useful in summarizing verbal content; the sizes of words in a word cloud typically describe how important they are (larger words in a word cloud are more frequently mentioned), and the colors of the word cloud can be coded to depict positive or negative sentiment. Visual content can be summarized by describing key features, such as images that are typi- cally associated with a brand, as well as content and themes that are typically featured in these images.
Channel-specific engagement Brand engagement refers to actions taken by consumers, as a response to posts or conversations surrounding a brand, and a digital review can summarize the extent to which a brand elicits engagement (or actions) across different types of channels. For example, the number of Facebook Likes for a brand can help summarize the pop- ularity of a brand on Facebook. Or, number of views on YouTube for a video about the brand can be indicative of consumer engagement with the brand on YouTube. In this way, a summary of engagement metrics for various digital channels can help spotlight the extent of consumer engagement.
Context The information that has been generated above can be further refined by providing two types of contextual information: (1) how the themes and sentiment for a given brand compare to key competitors; and (2) how the nature of conversations has shifted over time.
TABLE 9-1 5 Cs of Online Brand Conversations
A brand exploratory
can uncover impor-
tant information about
various brand elements,
including how a brand’s
packaging is perceived
by consumers.
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336 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
One important outcome of the analysis of these social
media conversations is a better understanding of the associa-
tions held by consumers toward the brand. As we described in
Chapter 7, researchers have shown how brand positioning maps
can be constructed by applying natural language processing and
machine learning techniques to data on social media conversa-
tions surrounding a brand. There are several key benefits asso-
ciated with this approach, over more traditional survey-based
approaches, as social media data costs less to collect and can
be more timely. Further, social media data consists of voluntary
posts by consumers; therefore, it overcomes typical biases that
accompany survey responses obtained from consumers.
On the flip side, brand positioning derived from social
media data may only represent a segment of consumers who tend to engage with a brand online;
thus, it is more suitable only for those categories where offline consumption is limited. Addition-
ally, social media posting behavior may be driven by consumers’ motivations to impress others or
project a certain image; therefore, brand posts may reflect such a bias. Despite this, drawing posi-
tioning maps based on social media data represents a good way of supplementing data obtained
from other (more traditional) approaches.
In summary, a digital marketing review can help shine a light into the mind of the consumer,
thus acting as a tool for market research. By tracking brand perceptions over time, periodic digi-
tal reviews can help strengthen brand audits. In turn, these insights generated can help managers
become more responsive to marketplace trends.
Brand Positioning and the Supporting Marketing Program Regardless of whether data is derived from social media or traditional survey-based approaches,
the brand exploratory is meant to uncover the current knowledge structures for the core brand and
its competitors, as well as determining the desired brand awareness and brand image and points-of-
parity and points-of-difference. Moving from the current brand image to the desired brand image
typically means adding new associations, strengthening existing ones, or weakening or eliminating
undesirable ones in the minds of consumers according to the guidelines outlined in Chapter 2.
John Roberts, one of Australia’s top marketing academics, sees the challenge in achieving the
ideal positioning for a brand as being able to achieve congruence among four key considerations:
(1) what customers currently believe about the brand (and find credible), (2) what customers will
value in the brand, (3) what the firm is currently saying about the brand, and (4) where the firm
would like to take the brand (see Figure 9-5).15 Because each of the four considerations may
suggest or reflect different approaches to positioning, finding a positioning that balances the four
considerations as much as possible is key.
A number of different internal management personnel can be part of the planning and position-
ing process, including brand, marketing research, and production managers, as can relevant outside
marketing partners like the marketing research suppliers and ad agency team. Once marketers have a
good understanding from the brand audit of current brand knowledge structures for their target con-
sumers and have decided on the desired brand knowledge structures for optimal positioning, they may
still want to do additional research testing alternative tactical programs to achieve that positioning.
FIGURE 9-5
John Roberts’s
Brand Positioning
Considerations
Source: Used with permission of John Roberts, ANU College of Business and Economics, The Australian National University.
ValuedOwned
Brand Equity
Reality (present)
Customer
Competition
Objective (future)
DesiredClaimed
Analyzing social media conversations surrounding a brand
and tracking these over time offers managers important
insights into customers’ ongoing thoughts and feelings
regarding a brand.
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 337
To crystalize all the information and insights they have gained
about their target market(s), researchers can employ personas.
Personas are detailed profiles of one, or perhaps a few, target
market consumers. They are often defined in terms of demo-
graphic, psychographic, geographic, or other descriptive attitudinal
or behavioral information. Researchers may use photos, images,
names, or short bios to help convey the particulars of the persona.
The rationale behind personas is to provide exemplars or
archetypes of how the target customer looks, acts, and feels
that are as true-to-life as possible, to ensure marketers within
the organization fully understand and appreciate their target
market and therefore, incorporate a nuanced target customer
point of view in all their marketing decision-making. Personas
are fundamentally designed to bring the target consumer to life.
A good brand persona can guide several marketing activities.
For example, many brands have embraced the idea of buyer per-
sonas in developing targeted campaigns. Zipcar’s buyer persona
revolves primarily around millennial urban dwellers. Zipcar’s adver-
tising tone and language is aimed at the millennial world traveler
as shown in the tweet using the Twitter handle #WorthTheTrip.
In addition to developing a single communications campaign
based on buyer personas, another use of personas is to guide
the development of multiple personalized communications that
is tailored to different buyer personas. Personas can help focus
the personalization efforts by helping drive content creation and
content delivery. Analytical tools such as Facebook Insights can
help provide detailed descriptions of target audiences including
their age, gender, and location (country, city, etc.). Further, dif-
ferent media usage habits of varying buyer personas can dictate
the use of different types of online and offline communication
channels for delivering advertising and communications.
Although personas can provide a very detailed and acces-
sible perspective on the target market, it can come at a cost.
Overly focusing on a narrow slice of the target market can lead to
oversimplification and erroneous assumptions about how the tar-
get market as a whole thinks, feels, or acts. The more heterogene-
ity in the target market, the more problematic the use of personas
can be. To overcome the potential problem of overgeneralization,
some firms are creating varying levels of personas, such as pri-
mary (target consumer), secondary (target consumer with differing
needs, targets, goals), and negative (false stereotypes of users).
Sources: Allen P. Adamson, Brand Digital: Simple Ways Top Brands Suc-
ceed in the Digital Age (New York: Palgrave-MacMillan, 2008); Lisa Sanders,
“Major Marketers Get Wise to the Power of Assigning Personas,” Advertising
Age, April 9, 2007, 36; Stephen Herskovitz and Malcolm Crystal, “The Essen-
tial Brand Persona: Storytelling and Branding,” Journal of Business Strategy
31, no. 3 (2010): 21. For additional information on storytelling, see Edward
Wachtman and Sheree Johnson, “Discover Your Persuasive Story,” Marketing
Management (March/April 2009): 22–27; Heidi Cohen, “Social Media Perso-
nas: What You Need to Know,” May 29, 2012, https://heidicohen.com/social-
media-personas-what-you-need-to-know/, accessed November 22, 2017.
THE SCIENCE OF BRANDING 9-1
The Role of Brand Personas
Zipcar used personas to guide the development of personalized communications that were tailored to
different personas.
Buyer personas allow marketers to personalize offers to
customers based on typical buying habits and media usage habits.
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338 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
DESIGNING BRAND TRACKING STUDIES Brand audits are a means to provide in-depth information and insights essential for setting long-
term strategic direction for the brand. But to gather information for short-term tactical decisions,
marketers will typically collect less detailed brand-related information through ongoing tracking
studies.
Brand tracking studies collect information from consumers on a routine basis over time,
usually through quantitative measures of brand performance on a number of key dimensions that
marketers can identify in the brand audit or other means. They apply components from the brand
value chain to better understand where, how much, and in what ways brand value is being created,
offering invaluable information about how well the brand has achieved its positioning.
As more marketing activity surrounds the brand—as the firm introduces brand extensions or
incorporates an increasing variety of communication options in support of the brand—it becomes
difficult and expensive to research each one. Regardless of how few or how many changes are
made in the marketing program over time, marketers need to monitor the health of the brand and
its equity, so they can make adjustments if necessary.
Tracking studies thus play an important role by providing consistent baseline information to
facilitate day-to-day decision-making. A good tracking system can help marketers better under-
stand a host of important considerations such as category dynamics, consumer behavior, competi-
tive vulnerabilities and opportunities, and marketing effectiveness and efficiency.
What to Track Chapter 3 provided a detailed list of potential measures that correspond to the brand resonance
model, which are candidates for tracking. It is usually necessary to customize tracking surveys,
however, to address the specific issues faced by the brand or brands in question. Each brand faces
a unique situation that the different types of questions in its tracking survey should reflect.
Product–Brand Tracking. Tracking an individual branded product requires measuring brand
awareness and image, using both recall and recognition measures and moving from more general
to more specific questions. Thus, it may make sense to first ask consumers what brands come to
mind in certain situations, to next ask for recall of brands on the basis of various product category
cues, and to then finish with tests of brand recognition (if necessary).
Moving from general to more specific measures is also a good idea in brand tracking surveys
to measure brand image, especially specific perceptions like what consumers think characterizes
the brand, and evaluations such as what the brand means to consumers. A number of specific
brand associations typically exist for the brand, depending on the richness of consumer knowledge
structures, which marketers can track over time.
Given that brands often compete at the augmented product level (see Chapter 1), it is impor-
tant to measure all associations that may distinguish competing brands. Thus, measures of spe-
cific, lower-level brand associations should include all potential sources of brand equity such as
performance and imagery attributes and functional and emotional benefits. Benefit associations
often represent key points-of-parity or points-of-difference, so it is particularly important to
track them as well. Marketers may also want to measure the attribute beliefs that underlie those
benefit beliefs to better understand any changes in benefit beliefs for a brand. In other words,
changes in descriptive attribute beliefs may help to explain changes in more evaluative benefit
beliefs for a brand.
Marketers should assess those key brand associations that make up the potential sources of
brand equity on the basis of strength, favorability, and uniqueness in that order. Unless associations
are strong enough for consumers to recall them, their favorability does not matter, and unless they
are favorable enough to influence consumers’ decisions, their uniqueness does not matter. Ideally,
marketers will collect measures of all three dimensions, but perhaps for only certain associations
and only some of the time; for example, favorability and uniqueness may be measured only once a
year for three to five key associations.
At the same time, marketers will track more general, higher-level judgments, feelings, and
other outcome-related measures. After soliciting their overall opinions, consumers can be asked
whether they have changed their attitudes or behavior in recent weeks or months and, if so, why.
Branding Brief 9-1 provides an illustrative example of a simple tracking survey for Starbucks.
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 339
Assume Starbucks is interested in designing a short online
tracking survey. How might you set it up? Although there are
a number of different types of questions, your tracking survey
might take the following form.
Introduction: We’re conducting a short online survey to
gather consumer opinions about quick-service or coffeehouse
chains.
Brand Awareness and Usage
a. What brands of coffeehouse chains are you aware of?
b. At which coffeehouse chains would you consider visiting?
c. Have you visited a coffeehouse chain in the last week? Which
ones?
d. If you were to visit a coffeehouse tomorrow, which one
would you go to?
e. What are your favorite coffeehouse chains?
We want to ask you some general questions about a particular
coffeehouse chain, Starbucks.
Have you heard of this brand? [Establish familiarity.]
Have you ever visited a Starbucks coffeehouse? [Establish trial.]
When I say Starbucks, what are the first associations that come
to your mind? Anything else? [List all.]
Brand Judgments
a. We’re interested in your overall opinion of Starbucks.
b. How favorable is your attitude toward Starbucks?
c. How well does Starbucks satisfy your needs?
d. How likely would you be to recommend Starbucks to others?
e. How good a value is Starbucks?
f. Is Starbucks worth a premium price?
g. What do you like best about Starbucks? Least?
h. What is most unique about Starbucks?
i. To what extent does Starbucks offer advantages that other
similar types of coffeehouses cannot?
j. To what extent is Starbucks superior to other brands in the
coffeehouse category?
k. Compared to other brands in the coffeehouse category, how
well does Starbucks satisfy your basic needs?
We now want to ask you some questions about Starbucks as
a company. Please indicate your agreement with the following
statements.
Starbucks Is . . .
a. Innovative
b. Knowledgeable
c. Trustworthy
d. Likable
e. Concerned about their customers
f. Concerned about society as a whole
g. Likable
h. Admirable
Brand Performance
a. We now would like to ask some specific questions about
Starbucks. Please indicate your agreement with the follow-
ing statements.
Starbucks . . .
a. Is convenient to visit for coffee
b. Provides quick, efficient service
c. Has clean facilities
d. Is ideal for the whole family
e. Has delicious coffee
f. Has tasty snacks
g. Has a varied menu
h. Has friendly, courteous staff
i. Offers fun promotions
j. Has a stylish and attractive look and design
k. Has high-quality food
l. Has baristas who prepare excellent coffee
Brand Imagery
a. To what extent do people you admire and respect visit a
Starbucks?
b. How much do you like people who frequently visit Starbucks?
c. How well do each of the following words describe Starbucks?
Down-to-earth, honest, daring, up-to-date, reliable, success-
ful, upper class, charming, outdoorsy
d. Is Starbucks a coffeehouse chain that you can visit at a variety
of different times of the day?
e. To what extent does thinking of Starbucks bring back pleas-
ant memories?
f. To what extent do you feel that you grew up with Starbucks?
BRANDING BRIEF 9-1
Sample Brand Tracking Survey
Starbucks uses brand tracking surveys to gather consumer
opinions on a periodic basis.
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340 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Assessing the
brand image
of a corporate
brand like Nike
may involve
understanding
which products
are associated
with the brand.
Brand Feelings
Does Starbucks give you a feeling of . . .
a. Warmth?
b. Fun?
c. Excitement?
d. Security or confidence?
e. Social approval?
f. Self-respect?
Brand Resonance
a. I consider myself loyal to Starbucks.
b. I buy Starbucks whenever I can.
c. I would go out of my way to visit a Starbucks.
d. I really love Starbucks.
e. I would really miss Starbucks if it went away.
f. Starbucks is special to me.
g. Starbucks is more than a product to me.
h. I really identify with people who go to Starbucks.
i. I feel a deep connection with Starbucks as a company.
j. I really like to talk about Starbucks to others.
k. I am always interested in learning more about Starbucks.
l. I would be interested in merchandise with the Starbucks
name on it.
m. I am proud to have others know that I eat at Starbucks.
n. I like to visit the Starbucks Web site.
o. Compared to other people, I follow news about Starbucks closely.
Corporate or Family Brand Tracking. Marketers may also want to track the corporate or
family brand separately or concurrently (or both) with individual products. Besides the measures
of corporate credibility we identified in Chapter 2, you can consider other measures of corporate
brand associations including the following (illustrated with the Nike corporate brand):
• How well managed is Nike?
• How easy is it to do business with Nike?
• How concerned is Nike with its customers?
• How approachable is Nike?
• How accessible is Nike?
• How much do you like doing business with Nike?
• How likely are you to invest in Nike stock?
• How would you feel if a good friend accepted employment with Nike?
The actual questions should reflect the level and nature of experience your respondents are
likely to have had with the company.
When a brand is identified with multiple products, as in a corporate or family branding
strategy, one important issue is which particular products the brand reminds consumers of. At the
same time, marketers also want to know which particular products are most influential in affecting
consumer perceptions about the brand.
To identify these more influential products, ask consumers which products they associate
with the brand on an unaided basis (“What products come to mind when you think of the Nike
brand?”) or an aided basis by listing sub-brand names (“Are you aware of Nike’s basketball shoes?
Nike Air Max running shoes?”). To better understand the dynamics between the brand and its cor-
responding products, also ask consumers about their relationship between them (“There are many
different products associated with Nike. Which ones are most important to you in formulating
your opinion about the brand?”).
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 341
Global Tracking. If your tracking covers diverse geographic markets—especially in both devel-
oping and developed countries—then you may need a broader set of background measures to put
the brand development in those markets in the right perspective. You would not need to collect
them frequently, but they could provide useful explanatory information (see Figure 9-6 for some
representative measures).
BIG DATA AND MARKETING ANALYTICS DASHBOARDS With the growth of mobile payments, and the rise of net-
works of data-gathering sensors, there is a sudden availabil-
ity of troves of data which can enable continuous tracking
of customers. For example, MillerCoors previously did not
have direct access to consumer-level data, as it tradition-
ally sold its products to licensed merchants. However, with
mobile payments, it became possible for MillerCoors to
directly track a shopper moving from bar to restaurant to
Costco to Target, and then stopping at a convenience store.
This capability provides the company with effective ways
of optimizing their marketing or communication strategy in
real time.
Social media data has also been a source of data that
facilitates this trend toward continuous tracking. In fact,
McDonald’s decision to move to all-day breakfast was
based on analysis of Twitter data, which showed that mil-
lennials were complaining that breakfast at McDonald’s
FIGURE 9-6
Brand Context Measures
Media Indicators Media consumption: total time spent watching TV, consuming other media Advertising expenditure: total, by media and by product category
Demographic Profile Population profile: age, sex, income, household size Geographic distribution Ethnic and cultural profile
Other Products and Services Transport: own car—how many Best description of car Motorbike Home ownership or renting Domestic trips overnight in last year International trips in last two years
Attitude to Brands and Shopping Buy on price Like to buy new things Country of origin or manufacture Prefer to buy things that have been advertised Importance of familiar brands
Economic Indicators Gross domestic product Interest rates Unemployment Average wage Disposable income Home ownership and housing debt Exchange rates, share markets, and balance of payments
Retail Total spent in supermarkets Change year to year Growth in house brand
Technology Computer at home DVR Access to and use of Internet Phones PDA Microwaves Television
Personal Attitudes and Values Confidence Security Family Environment Traditional values Foreigners vs. sovereignty
Brands like MillerCoors can track shoppers who use mobile
payments as they move from a bar to a restaurant to a conve-
nience store.
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342 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
was not available after 10:30 am. By swiftly moving to offer an all-day breakfast menu,
McDonald’s scored a big hit with millennials—78 percent of them said they visited a
McDonald’s restaurant at least once a month or more in the quarter following their move to
an all-day breakfast.16
Marketing Analytics Dashboards As companies grapple with the tremendous increase in data availability, they are finding signifi-
cant benefits to investing in data analytics systems and processes within the organization, as well
as marketing analytic dashboards, which can communicate important metrics and make them
available throughout the organization. Nearly 27 percent of companies are currently using mar-
keting analytics dashboards for improving their branding strategy.17 In fact, one report suggested
that brands planned to increase spending on analytics dashboards in 2015–2017 by 73 percent.18
The same report highlighted that more than a billion dollars have been invested in data analytics
in this time period, with a growth in the number of marketing tech companies to almost 2,000.
Against this backdrop, we describe the benefits of analytic dashboards as a valuable tool to
help in decision-making. Different from standard tracking tools, these analytic dashboards provide
ways of linking different types of marketing expenditures to outcome variables such as profits.
Marketing analytic dashboards can help answer four types of questions: What happened? Why
did it happen? What will happen if? What should happen?19 Stated differently, questions such as
the ones listed below can be addressed using marketing analytics:
• What is the likely impact of a 15 percent increase in our social media expenditure next year?
• What is the return-on-investment of influencer marketing programs? Why is the ROI of one
campaign higher than another?
• What is the relative impact of offline versus online marketing expenditures on sales revenue
growth in the past three years? What will happen if we shift the budget to spend more money
in online than offline channels next year?
Answers to questions such as the ones outlined above can help allow companies to align their
brand health with financial returns, leading to improved metrics as well as learning.20
The impact of such dashboards on corporate profitability can be profound; one study sug-
gested that an increase in use of marketing analytic dashboards contributed to an 8 percent increase
in return-on-assets.21 Another study showed that adding marketing analytics to a single new
department can result in a .35 percent increase in profitability.22
However, one challenge with the use of marketing analytics within organizations is that of
communication. Only 10 percent of respondents in a survey believed that they were communicat-
ing and activating insights (rather than generating insights). In situations when companies did
communicate insights to the right end-users within the organization, significant benefits accrued.
The case study on Taco Bell in Branding Brief 9-2 below describes how the company utilized its
mobile app to generate insights about customers.
One of the best examples of using analytics to drive social
media strategy is with Taco Bell. In fact, Taco Bell is frequently
listed as a top social media strategist, based on overall social
and digital performance within the restaurant sector. Taco Bell
launched its mobile app in 2015, and within a few months was
receiving nearly 75 percent of its orders via the app. The mobile
strategy was based on a beta test in which Taco Bell added a
number of features based on feedback received from the testing
phase of the mobile app. Another key to its success is the inte-
gration of mobile with other parts of the marketing campaign
including television spots, and promotions offered within its
restaurants.
By using data analytics, Taco Bell has been able to identify
brands which resonate well with their target audiences. In doing
so, Taco Bell has been able to develop their social media strategy
by engaging with big brands on Twitter and striking up conversa-
tions with these brands and their social media handles (see the
figure for examples of Taco Bell and Netflix).
Taco Bell has also leveraged data analytics to improve
its location-based mobile targeting. For example, the brand
BRANDING BRIEF 9-2
How Taco Bell Uses Data-Driven Social Media Marketing to Engage Its Customers
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 343
recently conducted a campaign meant to raise money for a col-
lege scholarship program. The campaign leveraged geolocation
data to both target consumers near its locations, and also gauge
which audiences (based on location) were reacting favorably.
This “Location for Good” campaign encouraged recipients of
the personalized mobile ad to visit a local Taco Bell and purchase
a Doritos Locos Taco. A portion of these proceeds were to be
donated to a scholarship fund. The success of this campaign
allowed the restaurant chain to donate $500,000 to a scholar-
ship fund meant for students whose interests fell outside tradi-
tional athletic or academic categories. Another innovative twist
to Taco Bell’s mobile strategy was to partner with the ride-hailing
company Lyft and create a setting in its mobile app called “Taco
mode,” allowing passengers to stop at a Taco Bell restaurant
drive-through during the ride. This resulted in an 8 percent
increase in customer weekend visits, following the campaign.
Taco Bell and Netflix Tweet at Each Other
Sources: Amy Gesenhues, “A CMO’s View: Taco Bell’s Chris Brandt Makes Mobile a Priority and It Has Paid Off with Nearly 2M App Downloads,” Marketing Land, January 21, 2015, https://marketingland.com/cmos-view-taco-bells-chris-brandt-talks-mobile-114988, accessed November 21, 2017; http://rsmindex.com/brand-rank.
Recently, Taco Bell has utilized its data-driven approach to
tackle employee turnover at its company. Using statistical analy-
sis along with employee-generated insights, Taco Bell was able
to reduce its employee turnover. Overall, Taco Bell’s recent cam-
paigns have demonstrated the value of adopting analytics and
data-driven strategies, to optimize various corporate goals rang-
ing from reducing employee turnover to maximizing brand cam-
paign performance.
Sources: Amy Gesenhues, “A CMO’s View: Taco Bell’s Chris Brandt
Makes Mobile a Priority and It Has Paid Off with Nearly 2M App
Downloads,” Marketing Land, January 21, 2015, https://marketingland
.com/cmos-view-taco-bells-chris-brandt-talks-mobile-114988, accessed
November 21, 2017; Restaurant Social Media Index, http://rsmindex
.com/brand-rank, accessed November 7, 2018; Genevieve Douglas,
“Taco Bell Tackles Turnover Through Data Analytics,” Bloomberg BNA,
May 16, 2017, https://www.bna.com/taco-bell-tackles-m73014451006/,
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344 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
ESTABLISHING A BRAND EQUITY MANAGEMENT SYSTEM Brand tracking studies, as well as brand audits, can provide a huge reservoir of information
about how best to build and measure brand equity. To get the most value from these research
efforts, firms need proper internal structures and procedures to capitalize on the usefulness of
the brand equity concept and the information they collect about it. Although a brand equity
measurement system does not ensure that managers will always make good decisions about the
brand, it should increase the likelihood they do, and, if nothing else, decrease the likelihood
of bad decisions.
Embracing the concept of branding and brand equity, many firms constantly review how
they can best factor it into the organization. Interestingly, perhaps one of the biggest threats
to brand equity comes from within the organization, and the fact that too many marketing
managers remain on the job for only a limited period of time. As a result of these short-term
assignments, marketing managers may adopt a short-term perspective, leading to an over-
reliance on quick-fix sales-generating tactics such as line and category extensions, sales
promotions, and so forth. Because these managers lack an understanding and appreciation
of the brand equity concept, some critics maintain, they are essentially running the brand
“without a license.”
To counteract these and other potential forces within an organization that may lead to ineffec-
tive long-term management of brands, as we noted in Chapter 2, many firms have made internal
branding a top priority. As part of these efforts, they must put a brand equity management system
into place. A brand equity management system is a set of organizational processes designed to
improve the understanding and use of the brand equity concept within a firm. Three major steps
help to implement a brand equity management system: creating brand charters or bibles, assem-
bling brand equity reports, and defining brand equity responsibilities. The following subsections
discuss each of these steps. Branding Brief 9-3 describes how the Mayo Clinic developed its brand
equity measurement and management system.
accessed November 21, 2017; Robert Williams, “Taco Bell Boosts Store
Traffic with Location-Based Mobile Targeting,” Mobile Marketer, www
.mobilemarketer.com/news/taco-bell-boosts-store-traffic-with-location-
based-mobile-targeting/506103/, accessed November 21, 2017; Mark
Ritson, “Brand Tracking: Try It and You’ll Never Look Back,” Mar-
keting Week, February 5, 2014, www.marketingweek.com/2014/02/05/
brand-tracking-try-it-and-youll-never-look-back/; WARC, “Samsung
Taps Power of ‘True Insights,’” November 6, 2017, www.warc.com/
newsandopinion/news/samsung_taps_power_of_%E2%80%98true_
insights/39554, accessed November 20, 2017; Geoffrey Precourt, “How
MillerCoors Connects in an Explosive Marketing EcoSystem,” Warc,
www.warc.com/content/article/A103223_How_MillerCoors_connects_
in_an_explosive_marketing_ecosystem/103223, accessed 20 November
2017.
Mayo Clinic was founded in the late 1800s by Dr. William
Worral Mayo and his two sons, who later pioneered the “group
practice of medicine” by inviting other physicians to work with
them in Rochester, Minnesota. The Mayos believed that “two
heads are better than one, and three are even better.” From this
beginning on the frontier, Mayo Clinic grew to be a worldwide
leader in patient care, research, and education and became
renowned for its world-class specialty care and medical research.
In addition to the original facilities in Rochester, Mayo later built
clinics in Jacksonville, Florida, and Scottsdale, Arizona, during the
1980s. More than 500,000 patients are cared for in Mayo’s inpa-
tient and outpatient practice annually.
In 1996, Mayo undertook its first brand equity study and
since then has conducted regular, national qualitative and quan-
titative studies. Mayo Clinic has eight values which epitomize
its corporate mission, including respect, compassion, integrity,
healing, teamwork, excellence, innovation, and stewardship. The
commitment to these values has allowed Mayo Clinic to become
one of the most trusted hospital brands in the world. Although
some of these values also characterize other high-quality medical
centers, teamwork or integration and integrity are more nearly
unique to Mayo.
In terms of teamwork or integration, respondents described
Mayo as bringing together a wealth of resources to provide the
BRANDING BRIEF 9-3
Understanding and Managing the Mayo Clinic Brand
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 345
best possible care. They perceived Mayo to be efficient, orga-
nized, harmonious, and creating a sense of participation and
partnership. For example, one person described Mayo as “A well
conducted symphony . . . works harmoniously . . . One person
can’t do it alone . . . Teamwork, cooperation, compatibility.” For
integrity, respondents placed great value on the fact that Mayo
is noncommercial and committed to health and healing over
profit. One participant said, “The business element is taken out
of Mayo . . . Their ethics are higher . . . which gives me greater
faith in their diagnosis.”
Although none of Mayo Clinic’s brand attributes are solely
negative, perceptions of exclusivity pose some specific challenges.
This attribute was sometimes described positively, in perceptions
that Mayo offers the highest quality care and elite doctors, but
inaccurate beliefs that it serves only the rich and famous and the
sickest of the sick were emotionally distancing and made Mayo
appear to be inaccessible.
As these comments suggest, however, one of the main rea-
sons that Mayo Clinic has been successful is how they treat all
their patients. To build their brand, Mayo Clinic keeps the focus
on their patients, even if it does not make sense from a financial
standpoint. This relentless focus on the patient and on quality is
seen throughout the organization, from the heart surgeon down
to the cleaning staff. Not only does the Mayo Clinic speak to their
patients and keep them at the heart of every decision, they also
keep track of patients through their recent alliance with United
Health Group called Optum, which created an open innovation
center to support data-driven research on important health care
issues. A data-driven approach to technology allows Mayo Clinic
to keep track of health care outcomes and costs.23
Another key to Mayo’s success is integration across prac-
tice, education and research. Much of their 600-million-dollar
research budget is funded by the National Institutes of Health.
Their researchers work closely with physicians to understand the
key issues. The patient-centric model of research allows Mayo
clinic to integrate discovery-based research, translational research,
and clinical outcomes research, with a focus on creating solutions
or treatment for patients.
In order to better serve its patient, Mayo Clinic reengineered
their process for caring for those with chronic kidney disease.
They utilized a variety of patient metrics such as hospitalization
rate, patient satisfaction, etc., to measure progress. Further, they
segmented their patients into eight groups based on their behav-
iors, needs, goals, motivations, and expectations. By understand-
ing how these patient types differed in terms of factors such as
their health status, psychological factors, and values, Mayo Clinic
was able to generate novel insights into patient decision-making,
which, in turn, allowed them to develop a new approach. This
new approach to patient management is credited with reducing
hospital stay by 1,000 days between 2011 and 2013. The perso-
nas that they developed helped them identify gaps in their service
delivery to patients.24
The above showcases just one approach that Mayo Clinic
utilizes in understanding its patients. Another way in which they
aim to proactively improve the patient experience is through the
Patient Experience Subcommittee (PES), which is an in-house
resource to provide Mayo Clinic staff with feedback on the
patient experience. This committee is credited with ensuring that
the voice of the Mayo patient is heard throughout the organiza-
tion, and has been instrumental in creating a service-focused cul-
ture through various educational classes and consultations with
departments, health care providers, and care teams. The Patient
Experience Subcommittee (PES) has pioneered service improve-
ment projects within Mayo Clinic that help manage the patient
journey across Mayo Clinic.
Another key to Mayo Clinic’s success is their investment in
digital marketing, which is now nearly two-thirds of their budget.
According to John Weston, Mayo Clinic’s CMO, digital market-
ing allows healthcare organizations to meet consumers where
they are. One example of how they leverage digital marketing
is their ability to connect patients with useful content. By using
their extensive library of online content, Mayo Clinic can deliver
relevant content that patients can readily access. By allowing
patients to conduct their online research via one of their doctor-
approved articles, Mayo establishes a bond with its patients as a
trustworthy brand.25
Mayo Clinic also utilizes social media to promote health edu-
cation and literacy. This allows Mayo Clinic to provide informa-
tion to consumers on health care questions that arise, thereby
allowing them to gain access to information.26 Mayo Clinic’s
YouTube channel has 1.75 million followers on Twitter and more
than 1,000,000 Facebook followers. Mayo also offers blogs and
podcasts surrounding different types of diseases to offer support
to their patients and updated information based on the latest
scientific evidence. Additionally, Sharing Mayo Clinic is a blog
which allows patients and employees to tell stories about their
Mayo Clinic experience.
Mayo Clinic knows the importance and value of its brand
and carefully monitors and manages its image and equity.
Source: Used by permission of Mayo Foundation for Medical Education and Research. All rights reserved.
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346 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Mayo Clinic’s brand strength is evident in the percentage of
patients who are loyal to the brand, and willing to refer the brand
to others. Ninety-five percent of Mayo Clinic patients indicated
that they would recommend and praise the clinic to others, and
that each speaks to more than 40 people. By converting patients
into evangelists for the brand, Mayo Clinic has found an alterna-
tive to traditional advertising—its patients do the advertising.27
From its research, Mayo Clinic understands that its brand
“is precious and powerful.” Mayo realized that, while it had an
overwhelmingly positive image, it was vital to develop guidelines
to protect the brand. In 1999, the clinic created a brand man-
agement infrastructure to be the “institutional clearinghouse for
ongoing knowledge about external perceptions of Mayo Clinic
and its related activities.” Mayo Clinic also established guidelines
for applying the brand to products and services. Its brand man-
agement measures work to ensure that the clinic preserves its
brand equity, as well as allowing Mayo to continue to accom-
plish its mission: “To inspire hope and contribute to health and
well-being by providing the best care to every patient through
integrated clinical practice, education and research.”
Sources: Thanks to Mayo Clinic’s John La Forgia, Kent Seltman, Scott
Swanson, and Amy Davis for assistance and cooperation, including inter-
views in October 2011; The Mayo Clinic, www.mayoclinic.org; “Mayo
Clinic Brand Management,” internal document, 1999; Leonard L. Berry
and Neeli Bendapudi, “Clueing in Customers,” Harvard Business Review
81, no. 2 (February 2003): 100–106; Paul Roberts, “The Agenda—Total
Teamwork,” Fast Company, April 1999, 148; Leonard L. Berry and Kent
D. Seltman, Management Lessons from Mayo Clinic: Inside One of the
World’s Most Admired Service Organizations (New York: McGraw Hill,
2008); Max Nisen, “Mayo Clinic CEO: Here’s Why We’ve Been The
Leading Brand in Medicine for 100 Years,” Business Insider, February
23, 2013, www.businessinsider.com/how-mayo-clinic-became-the-best-
brand-in-medicine-2013-2, accessed November 12, 2017; Sandhya Pruthi,
Dawn Marie R. Davis, Dawn L. Hucke, Francesca B. Ripple, Barbara S.
Tatzel, James A. Dilling, Paula J. Santrach, Jeffrey W. Bolton, and John
H. Noseworthy, “Vision, Mission, and Values: From Concept to Execu-
tion at Mayo Clinic,” Patient Experience Journal 2, no. 2 (2015): 169–
173; Bloom Creative, “5 Key Things That Make Mayo Clinic a Marketing
Machine,” July 11, 2016, http://bloomcreative.com/5-key-things-that-
make-mayo-clinic-a-marketing-machine/, accessed November 12, 2016;
Joan Justice, “The Big Brand Theory: How the Mayo Clinic Became the
Gold Standard for Social Media in Healthcare,” May 21, 2013, www
.socialmediatoday.com/content/big-brand-theory-how-mayo-clinic-
became-gold-standard-social-media-healthcare, accessed November 12,
2017; Mark Schaefer, “Lessons from a Horrible Social Media Strategy,”
May 20, 2012, www.businessesgrow.com/2012/05/20/lessons-from-a-
horrible-social-media-strategy/, accessed November 12, 2017; Leonard
L. Berry and Kent D. Seltman, “Building a Strong Services Brand: Les-
sons from Mayo Clinic.” Business Horizons 50 (3) (2007): 199–209.
Brand Charter or Bible The first step in establishing a brand equity management system is to formalize the company
view of brand equity into a document, the brand charter, or brand bible as it is sometimes called,
that provides relevant guidelines to marketing managers within the company as well as to key
marketing partners outside the company such as marketing research suppliers or ad agency staff.
This document should crisply and concisely do the following:
Define the firm’s view of branding and brand equity and explain why it is important.
Describe the scope of key brands in terms of associated products and the manner by which
they have been branded and marketed (as revealed by historical company records as well as the
most recent brand audit).
Specify what the actual and desired equity is for brands at all relevant levels of the brand
hierarchy, for example, at both the corporate and the individual product level (as outlined in
Chapter 12). The charter should define and clarify points-of-parity, points-of-difference, and the
brand mantra.
• Explain how brand equity is measured in terms of the tracking study and the resulting brand
equity report (described shortly).
• Suggest how marketers should manage brands with some general strategic guidelines, stress-
ing clarity, consistency, and innovation in marketing thinking over time.
• Outline how to devise marketing programs along specific tactical guidelines, satisfying dif-
ferentiation, relevance, integration, value, and excellence criteria. Guidelines for specific
brand management tasks such as advertising campaign evaluation and brand name selection
may also be offered.
• Specify the proper treatment of the brand in terms of trademark usage, design considerations,
packaging, and communications. As these types of instructions can be long and detailed, it is
often better to create a separate brand or corporate identity style manual or guide to address
these more mechanical considerations
• Although parts of the brand charter may not change from year to year, the firm should nev-
ertheless update it on an annual basis to provide decision makers with a current brand profile
and to identify new opportunities and potential risks for the brand. As marketers introduce
new products, change brand programs, and conduct other marketing initiatives, they should
reflect these adequately in the brand charter. Many of the in-depth insights that emerge from
brand audits also belong in the charter.
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 347
Skype’s brand bible, for example, outlines the branding and image of its products and ser-
vices.28 The document clearly states how Skype wants to be viewed by consumers, how the firm
uses its branding to achieve that, and why this is important. It also explains how Skype’s logo of
clouds and the vivid blue color are designed to make clean lines and foster a creative and simple
look. The brand bible explains the “dos and don’ts” of marketing Skype’s products and services
and the dangers for the company image of working outside the brand guidelines.
Brand Equity Report The second step in establishing a successful brand equity management system is to assemble
the results of the tracking survey and other relevant performance measures for the brand into
a brand equity report or scorecard to be distributed to management on a regular basis (weekly,
monthly, quarterly, or annually). Recall how “analytic dashboards” were described above as a
way of combining brand metrics with overall performance metrics. Much of the information
relevant to the brand equity report can be derived from such analytic dashboards. The brand equity
report attempts to summarize the contents of analytic dashboard information, with a view to aid
decision-making.29
Contents. The brand equity report should describe what is happening with the brand as well as
why it is happening. It should include all relevant internal measures of operational efficiency and
effectiveness and external measures of brand performance and sources and outcomes of brand
equity.30
In particular, one section of the report should summarize consumers’ perceptions of key
attribute or benefit associations, preferences, and reported behavior as revealed by the tracking
study. Another section of the report should include more descriptive market-level information
such as the following:
• Product shipments and movement through channels of distribution
• Retail category trends
• Relevant cost breakdowns
• Price and discount schedules where appropriate
• Sales and market share information broken down by relevant factors (such as geographic
region, type of retail account, or customer)
• Profit assessments
These measures can provide insight into the market performance component of the brand value
chain. Management can compare them to various frames of reference—performance last month,
quarter, or year—and color code them green, yellow, or red, depending on whether the trends
are positive, neutral, or negative, respectively. Internal measures might focus on how much time,
money, and labor was being spent on various marketing activities.31
Skype’s brand bible
provides important
guidelines about how the
brand should look and
behave.
Source: Skype
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348 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Brand Equity Responsibilities To develop a brand equity management system that will maximize long-term brand equity, man-
agers must clearly define organizational responsibilities and processes with respect to the brand.
Brands need constant, consistent nurturing to grow. Weak brands often suffer from a lack of disci-
pline, commitment, and investment in brand building. In this section, we consider internal issues
of assigning responsibilities and duties for properly managing brand equity, as well as external
issues related to the proper roles of marketing partners. The Science of Branding 9-2 describes
some important principles in building a brand-driven organization.
Internal branding doesn’t always receive as much time, money,
or effort as external branding programs receive. But although
it may require significant resources, it generates a number of
benefits. Internal branding creates a positive and more produc-
tive work environment. It can also be a platform for change
and help foster an organization’s identity. For example, KPMG’s
“Purpose Program” launched in 2014, which asked employees
to provide entries addressing the “meaning” that their job pro-
vided to them. The company received nearly 42,000 entries via
its employee intranet, with staff creating posters that included a
personal testimonial relaying the “meaning” they derived from
their job including “I advance science” to “I help farms grow.”
The program was a success, and the company went on to have
its most profitable year in its 118-year history.
Branding expert Scott Davis offers a number of insights into
what it takes to make a brand-driven organization. According
to Davis, for employees to become passionate brand advocates,
they must understand what a brand is, how it is built, what
their organization’s brand stands for, and what their role is in
delivering on the brand promise. Formally, he sees the process
of helping an organization’s employees assimilate the brand as
three stages:
1. Hear it: How do we best get it into their hands?
2. Believe it: How do we best get it into their heads?
3. Live it: How do we best get it into their hearts?
Davis also argues that six key principles should guide the
brand assimilation process within an organization, offering the
following examples.
1. Make the brand relevant. Each employee must understand
and embrace the brand meaning. Nordstrom, whose brand
relies on top-notch customer service, empowers sales associ-
ates to approve exchanges without manager approval.
2. Make the brand accessible. Employees must know where
they can get brand knowledge and answers to their brand-
related questions. Ernst & Young launched “The Branding
Zone” on its intranet to provide employees easy access to
information about its branding, marketing, and advertising
programs.
3. Reinforce the brand continuously. Management must
reinforce the brand meaning with employees beyond the
initial rollout of an internal branding program. Southwest
Airlines continually reinforces its brand promise of “a symbol
of freedom” through ongoing programs and activities with
a freedom theme.
4. Make brand education an ongoing program. Provide
new employees with inspiring and informative training. Ritz-
Carlton ensures that each employee participates in an inten-
sive orientation called “The Gold Standard” that includes
principles to improve service delivery and maximize guest
satisfaction.
5. Reward on-brand behaviors. An incentive system to
reward employees for exceptional support of the brand strat-
egy should coincide with the roll-out of an internal branding
program. Prior to its merger with United, Continental Airlines
rewarded employees with cash bonuses each month that the
airline ranked in the top five of on-time airlines.
6. Align hiring practices. Human resources and marketing
must work together to develop criteria and screening proce-
dures to ensure that new hires are good fits for the company’s
brand culture. Pret A Manger sandwich shops has such a
carefully honed screener that only 20 percent of applicants
end up being hired.
Davis also emphasizes the role of senior management in driving
internal branding, noting that the CEO ultimately sets the tone
and compliance with a brand-based culture and determines
whether proper resources and procedures are put into place.
THE SCIENCE OF BRANDING 9-2
Maximizing Internal Branding
Southwest Airlines demonstrates how important it is to
strengthen your internal brand as it has a positive impact on
subsequent customer service.
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Overseeing Brand Equity. To provide central coordination, the firm should establish a posi-
tion responsible for overseeing the implementation of the brand charter and brand equity reports,
to ensure that product and marketing actions across divisions and geographic boundaries reflect
their spirit as closely as possible and maximize the long-term equity of the brand. A natural place
to house such oversight duties and responsibilities is in a corporate marketing group that has a
senior management reporting relationship.
Scott Bedbury, who helped direct the Nike and Starbucks brands during some of their most
successful years, is emphatic about the need for “top-down brand leadership.”32 He advocates
the addition of a chief brand officer (CBO) who reports directly to the CEO of the company
and who:
• Is an omnipresent conscience whose job is to champion and protect the brand—the way it
looks and feels—both inside and outside the company. The CBO recognizes that the brand is
the sum total of everything a company does and strives to ensure that all employees under-
stand the brand and its values, creating “brand disciples” in the process.
• Is an architect and not only helps build the brand but also plans, anticipates, researches,
probes, listens, and informs. Working with senior leadership, the CBO helps envision not
just what works best for the brand today but also what can help drive it forward in the
future.
• Determines and protects the voice of the brand over time by taking a long-term (two to
three years) perspective. The CBO can be accountable for brand-critical and corporate-wide
activities such as advertising, positioning, corporate design, corporate communications, and
consumer or market insights.
Bedbury also advocates periodic brand development reviews (full-day meetings quarterly, or
even half-day meetings monthly) for brands in difficult circumstances. As part of a brand develop-
ment review, he suggests the following topics and activities:33
• Review brand-sensitive material: For example, review brand strength monitors or tracking stud-
ies, brand audits, and focus groups, as well as less formal personal observations or “gut feelings.”
• Review the status of key brand initiatives: Because brand initiatives include strategic thrusts to
either strengthen a weakness in the brand or exploit an opportunity to grow the brand in a new
direction, customer perceptions may change, and marketers therefore need to assess them.
• Review brand-sensitive projects: For example, evaluate advertising campaigns, corporate
communications, sales meeting agendas, and important human resources programs (recruit-
ment, training, and retention that profoundly affect the organization’s ability to embrace and
project brand values).
• Review new product and distribution strategies with respect to core brand values: For exam-
ple, evaluate licensing the brand to penetrate new markets, forming joint ventures to develop
new products or brands, and expanding distribution to nontraditional platforms such as large-
scale discount retailers.
• Resolve brand positioning conflicts: Identify and resolve any inconsistencies in positioning
across channels, business units, or markets.
Even strong brands need careful watching to prevent managers from assuming that it is acceptable
to “make one little mistake” with brand equity or to “let it slide.” A number of top companies
like Colgate-Palmolive, Canada Dry, Quaker Oats, Pillsbury, Coca-Cola, and Nestlé Foods have
created brand equity gatekeepers for some or all of their brands at one time.34
One of senior management’s important roles is to determine marketing budgets and decide
where and how to allocate company resources within the organization. The brand equity man-
agement system must be able to inform and provide input to decision makers so that they can
recognize the short-term and long-term ramifications of their decisions for brand equity. Decisions
about which brands to invest in, and whether to implement brand-building marketing programs
Sources: Scott M. Davis, Building the Brand-Driven Business: Opera-
tionalize Your Brand to Drive Profitable Growth (San Francisco, CA:
Jossey-Bass, 2002); Scott M. Davis, “Building a Brand-Driven Organi-
zation,” in Kellogg on Branding, eds. Alice M. Tybout and Tim Calkins
(Hoboken, NJ: John Wiley & Sons, 2005); Scott M. Davis, The Shift: The
Transformation of Today’s Marketers into Tomorrow’s Growth Leaders
(San Francisco, CA: Jossey-Bass, 2009); Becki Hall, “5 Ways to Build
Your Internal Branding Strategy,” June 23, 2016, www.interact-intranet
.com/5-ways-build-internal-branding-strategy/, accessed November 25,
2016.
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350 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
or leverage brand equity through brand extensions instead, should reflect the current and desired
state of the brand as revealed through brand tracking and other measures.
Organizational Design and Structures. The firm should organize its marketing function to
optimize brand equity. Several trends have emerged in organizational design and structure that
reflect the growing recognition of the importance of the brand and the challenges of managing
brand equity carefully. For example, an increasing number of companies are embracing brand
management. Companies from more and more industries—such as the automobile, health care,
pharmaceutical, and computer software and hardware industries—are introducing brand managers
into their organizations. Often, they have hired managers from top packaged-goods companies,
adopting some of the same brand marketing practices as a result.
Interestingly, packaged-goods companies, such as Procter & Gamble, continue to evolve the
brand management system. Procter & Gamble’s marketing directors became brand directors, with
four functions including brand management, consumer and marketing knowledge, communica-
tions and design—thus, creating a “single-point responsibility for the strategies, plans and results
for the brands.”35 With category management, manufacturers offer retailers advice about how to
best stock their shelves. An increasing number of retailers are also adopting category manage-
ment principles. Although manufacturers functioning as category captains can improve sales,
experts caution retailers to exercise their own insights and values to retain their distinctiveness
in the marketplace.
Many firms are thus attempting to redesign their marketing organizations to better reflect the
challenges faced by their brands. At the same time, because of changing job requirements and
duties, the traditional marketing department is disappearing from a number of companies that
are exploring other ways to conduct their marketing functions through business groups, multi-
disciplinary teams, and so on.36 In the context of the digital revolution, with its emphasis on data
analytics and hypertargeting, many companies have reorganized their marketing departments to
become more agile and data-driven.37
For example, Clorox made the following changes to adapt to the digital revolution in marketing:
(1) it increased its investment in digital media and analytics; (2) it partnered with digital advertising
agencies; and (3) it changed its marketing organization to allow for faster reaction to marketplace
changes.38 Further, the skills needed to succeed in marketing are changing with a greater emphasis
on understanding of how data can be structured and used in order to succeed in the digital world.
The goal in these new organizational structures and new marketing skills is to improve inter-
nal coordination and efficiencies as well as external focus on retailers and consumers, in the
fast-changing digital era. Although these are laudable goals, clearly one of the challenges with
these new designs is to ensure that brand equity is preserved and nurtured, and not neglected due
to a lack of oversight. With a multiple-product, multiple-market organization, the difficulty often
lies in making sure that both product and place are in balance. As in many marketing and brand-
ing activities, achieving the proper balance is the goal, in order to maximize the advantages and
minimize the disadvantages of both approaches.
Managing Marketing Partners. Because the performance of a brand also depends on the
actions taken by outside suppliers and marketing partners, firms must manage these relationships
carefully. Increasingly, firms have been consolidating their marketing partnerships and reducing
the number of their outside suppliers. As noted above with regard to Clorox, a number of com-
panies are consolidating their advertising with a single digital advertising agency (e.g., Clorox
has partnered with FCB and McGarryBowen), with a significant expertise across multiple social
media and digital channels.
Factors like cost efficiencies, organizational leverage, and creative diversification affect the
number of outside suppliers the firm will hire in any one area. From a branding perspective, one
advantage of dealing with a single major supplier such as an ad agency is the greater consistency
in understanding and treatment of a brand that can result.
Other marketing partners can also play an important role. For example, Chapter 5
described the importance of channel members and retailers in enhancing brand equity and
the need for cleverly designed push programs. One important function of having a brand
charter or bible is to inform and educate marketing partners so that they can provide more
brand-consistent support.
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 351
DISCUSSION QUESTIONS
1. What do you see as the biggest challenges in qualitative brand research? What do you think
are some of the critical success factors for this type of research?
2. Pick a brand. See if you can assemble a digital brand asset inventory for it, by consulting
various social media channels (e.g., Facebook, Instagram, Twitter). What does your exercise
reveal about the consistency of the brand’s presence across its multiple touchpoints?
REVIEW
A brand equity measurement system is defined as a set of research procedures designed to provide
timely, accurate, and actionable information for marketers regarding brands so that they can make
the best possible tactical decisions in the short run as well as strategic decisions in the long run.
Implementing a brand equity measurement system involves three steps: conducting brand audits,
designing brand tracking studies, and establishing a brand equity management system. Further,
with the advent of the digital revolution, a brand’s digital assets must be considered in creating and
assessing the brand inventory. Continuous tracking systems which also utilize the vast troves of
available social media data can also be leveraged to generate deeper insights on an ongoing basis.
A brand audit is a consumer-focused exercise to assess the health of the brand, uncover its
sources of brand equity, and suggest ways to improve and leverage its equity. It requires under-
standing brand equity from the perspective of both the firm and the consumer. The brand audit
consists of two steps: the brand inventory and the brand exploratory.
The purpose of the brand inventory is to provide a complete, up-to-date profile of how all
the products and services sold by a company are marketed and branded. Profiling each product or
service requires us to identify the associated brand elements as well as the supporting marketing
program. The brand exploratory is research activity directed to understanding what consumers
think and feel about the brand to identify sources of brand equity.
Brand audits can be used to set the strategic direction for the brand. As a result of this strategic
analysis, a marketing program can be put into place to maximize long-term brand equity. Tracking
studies employing quantitative measures can then be conducted to provide marketers with current
information as to how their brands are performing on the basis of a number of key dimensions
identified by the brand audit.
Tracking studies involve information collected from consumers on a routine basis over time
and provide valuable tactical insights into the short-term effectiveness 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.
Three major steps must occur as part of a brand equity management system. First, the com-
pany view of brand equity should be formalized into a document, the brand charter. This document
serves a number of purposes: It chronicles the company’s general philosophy with respect to brand
equity; summarizes the activity and outcomes related to brand audits, brand tracking, and so forth;
outlines guidelines for brand strategies and tactics; and documents proper treatment of the brand.
The charter should be updated annually to identify new opportunities and risks and to fully reflect
information gathered by the brand inventory and brand exploratory as part of any brand audits.
Second, the results of the tracking surveys and other relevant outcome measures should be
assembled into a brand equity report that is distributed to management on a regular basis (monthly,
quarterly, or annually). The brand equity report should provide descriptive information as to what
is happening to a brand as well as diagnostic information as to why it is happening. These reports
are often being displayed in marketing dashboards for ease of review. Marketing analytic dash-
boards are increasingly being used to help with continuous tracking of a brand’s performance.
Finally, senior management must be assigned to oversee how brand equity is treated within the
organization. The people in that position would be responsible for overseeing the implementation of the
brand charter and brand equity reports to make sure that, as much as possible, product and marketing
actions across divisions and geographic boundaries are performed in a way that reflects the spirit of the
charter and the substance of the report to maximize the long-term equity of the brand.
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352 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
3. Consider the Starbucks tracking survey presented in Branding Brief 9-1. What might you do
differently? What questions would you change or drop? What questions might you add? How
might this tracking survey differ from those used for other products?
4. Can you develop a tracking survey for the Mayo Clinic? How might it differ from the Star-
bucks’ tracking survey?
5. Critique the Rolex brand audit in Brand Focus 9.0. How do you think it could be improved?
For over a century, Rolex has remained one of the most rec-
ognized and sought-after luxury brands in the world. In 2017,
the BrandZ Top 100 Most Valuable Global Brands (which is a
ranking by Kantar Millward Brown, or KMB), the world’s most
valuable watch brand is Rolex, which has an estimated brand
value of $8.053 billion.39 The estimate is based on a complicated
formula combining financial information and consumer surveys.
KMB interviews three million consumers in more than 50 global
markets about 100,000 different brands. It uses data from Bloom-
berg and Kantar Worldpanel to analyze companies’ financial and
business performance.
To be clear, Rolex is not among KMB’s Top 100 brands. (A
brand needed a value of at least $11.3 billion to make that list.)
Rolex appears in the report on the BrandZ Luxury Top 10 list,
where it holds the #5 position (see table below). Rolex is the only
one of the top 10 luxury brands whose sole product is watches.
No other watches-only brand is included in the BrandZ report.
A thorough audit can help pinpoint opportunities and chal-
lenges for Rolex, whose brand equity has been historically strong,
as much is at stake.
“The name of Rolex is synonymous with quality. Rolex—
with its rigorous series of tests that intervene at every
stage—has redefined the meaning of quality.”
—www.rolex.com
BACKGROUND
History
Rolex was founded in 1905 by a German named Hans Wilsdorf
and his brother-in-law, William Davis, as a watch-making com-
pany, Wilsdorf & Davis, with headquarters in London, England.
Wilsdorf, a self-proclaimed perfectionist, set out to improve the
mainstream pocket watch right from the start. By 1908, he had
created a timepiece that kept accurate time but was small enough
to be worn on the wrist. That same year, Wilsdorf trademarked
the name “Rolex” because he thought it sounded like the noise
a watch made when it was wound. Rolex was also easy to pro-
nounce in many different languages.
In 1912, Rolex moved its headquarters to Geneva,
Switzerland, and started working on improving the reliability of
its watches. Back then, dust and moisture could enter the watch
case and cause damage to the movement or internal mechanism
of the watch. As a result, Wilsdorf invented a screw crown and
waterproof casebook mechanism that revolutionized the watch
industry. In 1914, the Rolex wristwatch obtained the first Kew
“A” certificate after passing the world’s toughest timing test,
which included testing the watch at extreme temperature levels.
Twelve years later, Wilsdorf developed and patented the now-
famous Oyster waterproof case and screw crown. This mechanism
became the first true protection against water, dust, and dirt.
To generate publicity for the watch, jewelry stores displayed fish
tanks in their windows with the Oyster watch completely sub-
merged in it. The Oyster was put to the test on October 7, 1927,
when Mercedes Gleitze swam the English Channel wearing one.
She emerged 15 hours later with the watch functioning perfectly,
much to the amazement of the media and public. Gleitze became
the first of a long list of “ambassadors” that Rolex has used to
promote its wristwatches.
Over the years, Rolex has pushed innovation in watches to
new levels. In 1931, the firm introduced the Perpetual self-wind-
ing rotor mechanism, eliminating the need to wind a watch. In
1945, the company invented the first watch to display a number
date at the 3 o’clock position and named it the Datejust. In 1953,
Rolex launched the Submariner—the first diving watch that was
water-resistant and pressure-resistant to 100 meters. The sporty
watch appeared in various James Bond movies in the 1950s and
became an instant symbol of prestige and durability.
For decades, Swiss-made watches owned the middle and
high-end markets, remaining virtually unrivaled until the invention
of the quartz watch in 1969. Quartz watches kept more accu-
rate time, were less expensive to make, and quickly dominated
the middle market. Within 10 years, quartz watches made up
approximately half of all watch sales worldwide.40 Joe Thompson,
editor of Modern Jeweler, a U.S. trade publication, explained,
“By 1980, people thought the mechanical watch was dead.”41
Rolex proved the experts wrong. The company would not
give in to the quartz watch rage. In order to survive, however,
Rolex was forced to move into the high-end market exclusively—
leaving the middle to the quartz people—and create a strategy
to defend and build its position there. More recently, the watch
industry has undergone a significant change with the introduc-
tion of smart watches, e.g., Apple Watch, which combine the
functionality of a watch with many features of a smartphone.
Although Rolex is seen as the most valuable luxury brand of
watches, Apple watches has a larger sales revenue than Rolex
watches.42
Private Ownership
Rolex is a privately owned company and has been controlled by
only three people in its 100-year history. Before Wilsdorf died,
Sample Rolex Brand Audit
BRAND FOCUS 9.0
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 353
he set up the Hans Wilsdorf Foundation, ensuring that some of
the company’s income would go to charity, and that control of
the company lay with the foundation.43 This move was a critical
step toward the long-term success of Rolex as a high-end brand.
Over the years, many luxury brands have been forced to affiliate
with conglomerates in order to compete, but by staying an inde-
pendent entity, Rolex has remained focused on its core business.
André Heiniger, managing chairman of Rolex through the 1980s,
explained, “Rolex’s strategy is oriented to marketing, maintaining
quality, and staying out of fields where we are not prepared to
compete effectively.”
Brand Portfolio
Rolex includes several sub-brands of wristwatches, called “collec-
tions”; each has a subset of brands (see Figure 9-7).
• The Oyster Perpetual Collection includes the “traditional”
Rolex wristwatch, and has eight sub-brands that are differen-
tiated by features and design. The Perpetual Collection targets
affluent men and women.
• The Professional Collection targets specific athletic and adven-
turer user groups through its features and imagery.
• The Cellini Collection focuses on formal occasions through its
elegant designs, and encompasses seven sub-brands. These
watches incorporate fashion and style features like colored
leather bands and an extensive use of diamonds.
In addition to these collections, Rolex owns a separate “fighter”
brand called Tudor, developed in 1946 to stave off competition
from mid-range watches such as Tag Heuer, Citizen, and Rado.
Tudor has its own range of family brands, or collections, namely
Prince, Princess, Monarch, and Sport, each of which encompasses
a number of sub-brands. Tudor watches are sold at own-brand
specialty stores and through the network of exclusive Rolex deal-
ers. Although they are no longer for sale in the United States,
there are many outlets in Europe and Asia. Tudor targets younger
consumers and offers watches at a lower price range. The brand
is distinctly separate, and the Rolex name does not appear on
Tudor watches.
Brand Inventory
Rolex’s success as the largest single luxury watch brand can
be credited to several factors. The company not only produces
extremely high-quality timepieces, but also tightly controls how
its watches are sold, ensuring high demand and premium prices.
In addition, Rolex’s sophisticated marketing strategy has created
an exclusive and premium brand that many aspire to own. The
brand inventory will describe each of these factors in more depth.
FIGURE 9-7
Rolex Product
Portfolio
Rolex
Oyster Perpetual • Air-King • Datejust • Datejust Turn-O-Graph • Datejust II • Day-Date • Day-Date II • Lady-Datejust • Lady-Datejust Pearlmaster • Datejust Special Edition
Oyster Professional • Explorer • Explorer II • GMT Master II • Submariner • Submariner Date • Yacht-Master • Yacht-Master II • Cosmograph Daytona • Deepsea • Milgauss
Cellini • Cellinium • Cellissima • Classic • Danaos • Cestello • Orchid • Prince
Rolex’s brand portfolio includes a wide range of luxury
wristwatches called “collections,” which provide a number
of options to the consumer.
Source: geogphotos/Alamy Stock Photo
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354 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Brand Elements
Rolex’s most distinguishable brand element is its Crown logo.
Trademarked in 1925, the Crown made its appearance on the
watches in 1939. The logo has undergone few revisions, keeping
its signature five-point crown intact over the years. Rolex watches
feature the name “Rolex” on the dial, a tradition dating to 1926.
This development initially helped increase brand recognition.
Many Rolex watches also have a distinct look, including a big
round face and wide wrist band.
Product
Throughout the years, Rolex timepieces have maintained the
high quality, durability, and prestige on which the company built
its name. In particular, the firm has maintained a keen focus on
delivering a highly accurate watch of superior craftsmanship, using
only the finest premium materials such as gold, platinum, and
jewels. It continually works on improving the functionality of its
watches with better movements and new, sophisticated features.
As a result, Rolex watches are complex mechanisms compared to
most mass-produced watches. A quartz watch, for example, has
between 50 and 100 parts; a Rolex Oyster chronometer has 220.44
Each Rolex watch consists of 10 unique features identified as
the company’s “10 Golden Rules:”
1. A waterproof case
2. The Perpetual rotor
3. The case back
4. The Oyster case
5. The winding crown
6. The finest and purest materials
7. Quality control
8. Rolex self-winding movement
9. Testing from the independent Controle Official Suisse des
Chronometres
10. Rolex testing
The company does not license its brand or produce any other
product besides watches. Its product portfolio is clear, concise,
and focused.
Rolex spends more time and money than any other watch
company fighting counterfeiters. Today, it is often hard to spot the
differences between a $25 counterfeit and a $10,000 authentic
Rolex watch. The global counterfeiting industry is said to be valued
at $461 billion dollars, and Rolex (along with Nike, Ray-Ban and
Louis Vuitton) are among the brands with the most knockoffs.45
Pricing
By limiting production to approximately 2,000 watches a day, Rolex
keeps consumer demand high and prices at a premium. Prices
start around $2,500 for the basic Oyster Perpetual and can reach
$200,000, depending on the specific materials used such as steel,
yellow gold, or platinum. Scarcity also helps positively influence the
resale value of Rolex watches. One report indicated that “almost
all older Rolex models are valued above their initial selling price.”46
Distribution
Rolex carefully monitors how its timepieces are sold, distribut-
ing them only through its approximately 60,000 “Official Rolex
Dealers” worldwide. Official dealers must meet several criteria,
including a high-end image, adequate space, attractive location,
and outstanding service. In addition, a large secondary market
exists for Rolex, both through online auction sites such as eBay
and at live auctions run by Christie’s, and Sotheby’s.
Communications
Rolex’s marketing and communications strategy strives to create a
high-quality, exclusive brand image. The company associates itself
with “ambassadors”—established artists, top athletes, rugged
adventurers, and daring explorers—to help create this imagery.
Rolex also sponsors various sports and cultural events as well as
philanthropy programs to help align with targeted demographics
as well as create positive associations in consumers’ minds.
Advertising. Rolex is the number-one watch advertiser in
the world. In 2015, the firm spent over $56 million on advertising,
more than any other watch brand.47 One of the company’s larg-
est expenditures is for magazine advertising. Rolex’s print ads are
often simple and austere, usually featuring one of its many brand
ambassadors or a close-up photo of one of its watches with the
tagline “Rolex. A Crown for Every Achievement.” Rolex does not
advertise extensively on television but does sponsor some events
that are televised.
More recently, Rolex has begun using digital marketing tech-
niques to connect with its customers, although its efforts have
been very measured and carefully thought out. Rolex started
a Facebook page, and has adopted a content marketing strat-
egy with a careful emphasis on providing high-quality content,
rather than focus on quantity of content.48 Previously, it also had
launched a YouTube channel in 2012 and used it as a platform to
launch in-house documentaries about topics of interest to its con-
sumers including Himalayan expeditions and deep-sea missions to
investigate the polar ice caps. The brand also used social media
platforms (e.g., Facebook) to communicate quirky features that
are typical of the Rolex brand. For example, Rolex launched a “Did
You Know” series to explain why Rolex uses IIII, the “Clockmak-
er’s Four,” instead of IV. These communications on social media
were aimed at maintaining the interest of a loyal customer base
along with clarifying the brand’s values to its customers.
Ambassadors. Rolex’s celebrity endorsers are continuously
added and dropped depending on their performance. These
ambassadors fall into four categories: athletes, artists, explorers,
and yachtsmen (see Figure 9-8). Aligning with acclaimed artists
symbolizes the pursuit of perfection. Association with elite sports
figures is meant to signify the company’s quest for excellence. Its
support of sailing events—for example, highlights the company’s
core values: excellence, precision, and team spirit.49 Explorers also
test the excellence and innovation of Rolex’s watches at extreme
conditions. Rolex ambassadors have scaled Mount Everest, bro-
ken the speed of sound, reached the depths of the ocean, and
traveled in space. A print ad will usually feature one ambassador
and one specific watch, with the goal of targeting a very specific
demographic or consumer group.
In 2011, much to the surprise of industry experts, Rolex
signed golfer Tiger Woods as a Rolex ambassador. Rolex’s spon-
sorship marked the golfer’s first celebrity endorsement since
2009. After Tiger Woods’ reputation fell following a sex scandal,
Rolex also signed on other brand ambassadors, including profes-
sional golfers and star athletes such as Jason Day, Phil Mickelson,
and Arnold Palmer, among others.50
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 355
FIGURE 9-8
2011 Rolex Ambassadors
Artists Cecilia Bartoli Michael Buble Placido Domingo Gustavo Dudamel Renee Fleming Sylvie Guillem Jonas Kaufmann Diana Krall Yo-Yo Ma Anoushka Shankar Bryn Terfel Rolando Villazon Yuja Wang Royal Opera House Teatro Alla Scalla Wiener Philharmoniker
Explorers David Doubilet Sylvia Earle Alain Hubert Jean Troillet Ed Viesturs Chuck Yeager Setting Out to Conquer the World Deepsea Under the Pole The Deep The Deepest Dive
Yachting Robert Scheidt Paul Cayard Rolex Sydney Hobart Maxi Yacht Rolex Cup Rolex Fastnet Race Rolex Farr 40 World Championship Rolex Swan Cup
Equestrian Rodrigo Pessoa Gonzalo Pieres, Jr.
Golfers Paul Casey Luke Donald Ricky Fowler Retief Goosen Charles Howell Trevor Immelman Martin Kaymer Matteo Manassero Phil Mickelson Jack Nicklaus Lorena Ochoa Arnold Palmer Gary Player Adam Scott Annika Sorenstam Camilo Villegas Tom Watson U.S. Open Championship The Open Championship The Ryder Cup The President’s Cup Evian Masters The Solheim Cup
Racing Sir Jackie Stewart Tom Kristensen Rolex 24 at Daytona Goodwood Revival 24 Hours at Le Mans
Tennis Roger Federer Justine Henin Ana Ivanovic Zheng Jie Juan Martín del Potro Li Na Jo-Wilfried Tsonga Caroline Wosniacki Wimbledon Australian Open Monte-Carlo Rolex Masters Shanghai Rolex Masters
Skiing Hermann Maier Lindsay Vonn Carlo Janka The Hahnenkamm Races
Sports and Culture. Rolex sponsors a variety of elite ath-
letic and cultural events to reinforce the same messages, values,
and associations as it does through its ambassador endorsements.
These include a quest for excellence, pursuit of perfection, team-
work, and ruggedness. Rolex sponsors sporting events in golf
(U.S. Open Championship, the Open Championship, and the
Ryder Cup), tennis (Wimbledon and the Australian Open), ski-
ing (the Hahnenkamm Races), racing (Rolex 24 at Daytona), and
equestrian events.
Rolex also sponsors several sailing races, including the Rolex
Sydney, Rolex Fastnet Race, and Maxi Yacht Rolex Cup. The com-
pany has partnered with extreme exploration expeditions, includ-
ing The Deepest Dive and Deepsea Under the Pole. It is a major
contributor to establishments such as the Royal Opera House in
London and the Teatro alla Scala in Milan to align with a more
cultural audience.
Philanthropy. Rolex gives back through three established
philanthropic programs:
1. The Awards for Enterprise program (www.rolexawards.com/)
supports individuals whose work focuses on benefiting their
communities and the world. These projects are focused on
science and health, applied technology, exploration and dis-
covery, the environment, and cultural heritage.51
2. The Young Laureates Programme (www.rolexawards.com/40/
laureates-2016) is part of the Awards for Enterprise program,
providing support for outstanding innovators between the
ages of 18 and 30.52
3. The Rolex Mentor and Protégé Arts Initiative (www.rolexmen-
torprotege.com/) seeks out extraordinarily gifted young artists
around the world and pairs them with established masters.
Young artists have been paired with accomplished filmmak-
ers, dancers, artists, composers, and actors.53
BRAND EXPLORATORY
Consumer Knowledge
Rolex has successfully leveraged its history and tradition of excel-
lence along with innovation to become the most powerful and
recognized watchmaker in the world. Some positive consumer
brand associations for Rolex might be the following: sophisti-
cated, prestigious, exclusive, powerful, elegant, and high quality.
Some negative brand associations that some consumers may link
to the brand could include flashy or snobby. Figure 9-9 displays a
hypothetical Rolex mental map.
In one report by the Luxury Institute research group in New
York, consumers had positive attitudes in terms of purchase intent
toward Rolex. Wealthy people said they were more likely to buy a
Rolex than any other brand for their next watch. The Rolex brand
was far more recognizable (84 percent knew it) than Bulgari (39
percent) and even Cartier (63 percent), although several rivals
outranked Rolex for perceived quality and exclusivity.54
A 2008 Mintel survey on the watch industry revealed that
“women are still likely to view watches as an accessory, with many
buyers choosing their watch based on looks alone. However, at
the top end of the luxury market, there is a growing number of
women who are interested in mechanical watches. The study
also found that women are increasingly choosing androgynous
or unisex watches.”55
Many older, affluent people place a high value on owning a
Rolex, whether new or collectible. In 2017, at a New York auction
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356 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
house Phillips, a bidder agreed to pay $17.8 million for a Rolex
Daytona that used to belong to actor Paul Newman, setting a
new world record for a wristwatch sold at auction. The watch was
given to Newman by his wife, at the time when he was filming
an auto racing movie called “Winning.”56
While the brand and product line seem to resonate well with
older, wealthy individuals, Rolex struggles somewhat to connect
with younger consumers. In a NPD Group poll, 36 percent of
people under the age of 25 did not wear a watch.57 Another
study by Piper Jaffray revealed that 59 percent of teenagers said
they never wear a watch, and 82 percent said they did not plan to
buy one in the next six months. The advent of smartwatches, and
the entry of Apple Watch into the fray in 2015 has certainly given
the traditional watch industry a lot to be concerned about. With
an approximate price of $400, a smartwatch offers many benefits
to a consumer that traditional watches do not offer, such as the
ability to monitor health and fitness metrics via the smartwatch,
communications and messaging, as well as access to mobile apps.
Brand Resonance Pyramid
The Rolex brand resonance model pyramid (see Chapter 3) is
equally strong on the left-hand and right-hand sides. There is
great synergy between the two sides of the pyramid; the func-
tional and emotional benefits Rolex strives to deliver are in har-
mony with consumers’ imagery and feelings about the brand.
The pyramid is also strong from bottom to top, enjoying the
highest brand awareness of any luxury brand as well as high
repeat purchase rates and high customer loyalty. Rolex has suc-
cessfully focused on both the superior product attributes and
the imagery associated with owning and wearing a Rolex. Figure
9-10 highlights some key aspects of the Rolex brand resonance
pyramid.
Competitive Analysis
Rolex has many competitors in the $26.5 billion watch industry;
however, only a few brands compete in the very high-end mar-
ket.58 Through its pricing and distribution strategies, Rolex has
positioned itself as a high-end luxury watch brand. On the lower
end of the spectrum, it competes with companies such as TAG
Heuer and OMEGA, and on the high end with brands such as
Patek Philippe, maker of the world’s most expensive wristwatch.
TAG Heuer. A leader in the luxury watch industry, the Swiss
firm TAG Heuer distinguishes itself by focusing on extreme chro-
nograph precision in its watches and on sports and auto-racing
sponsorship in its advertising. Founded by Edouard Heuer in
1876, TAG Heuer has been a mainstay in the luxury watch busi-
ness. In 1887, the firm created the first oscillating pinion, a tech-
nology that significantly improved the chronograph industry and
is still used in many of its watches today. In 1895, it developed
and patented the first water-resistant case for pocket watches.
TAG Heuer expanded into the United States in 1910, introduced
a chronograph wristwatch in 1914, and has continued to focus
on chronograph innovation ever since.
TAG’s image and positioning is inextricably connected to
chronograph precision. Its timepieces were the official stop-
watches of the Olympic Games in 1920, 1924, and 1928. The
firm was a Ferrari team sponsor of Formula 1 from 1971 to 1979
and was part of the TAG-McLaren racing team from 1985 to
2002. It was also the official timekeeper of the F-1 race series
for much of the 1990s and early 2000s.59 TAG Heuer has spon-
sored numerous Americas Cup teams and other yacht racing
teams over the years, and has also sponsored the English Pre-
mier League football
TAG Heuer uses officially licensed retailers to sell its watches
both in stores and online. These licensed retailers range from
exclusive jewelers to department stores such as Nordstrom and
Macy’s. The watchmaker generates brand awareness through
brand ambassadors and sponsoring sporting events and adver-
tises extensively in magazines. In 1999, TAG Heuer was purchased
by luxury goods conglomerate LVHM.
OMEGA. Founded in 1848 by Louis Brandt, OMEGA has long
prided itself on the precision of its watches and timing devices.
It built what was Amelia Earhart’s watch of choice during one of
her transatlantic flights and has been involved in aviation and ath-
letic timing ever since. OMEGA was the time equipment selected
for the 1936 Winter Olympics, which saw the first use of syn-
chronized chronographs. By 1937, the company had launched
its first waterproof wristwatch, and in 1967, it invented the first
underwater touchpad timing equipment, which was used in
Olympic swimming competitions. OMEGA watches accompanied
the expedition to locate the exact position of the North Pole,
and boarded the Apollo 11 mission to become the first and only
FIGURE 9-9
Rolex Mental Map
• Counterfeited, sold on the street • Frivolous purchase • Flashy and pretentious
• Tennis • Golf • Sailing • Racing • Equestrian • Explorers
• Successful • Luxury • Classic • Prestige • Rugged • Durable • Status symbol
• Exclusively watches • Expensive • Precise • Innovative • Premium materials: gold/platinum • Crown logo • Exceptional customer service
• Older • Wealthy • High class • Primarily masculine • Ambassadors: athletes, musicians, artists
Sports
Negative
Performance Image
People
Rolex
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 357
watch ever to land on the moon. OMEGA is now owned by watch
conglomerate Swatch Group.
Like Rolex and TAG Heuer, OMEGA employs ambassadors
to generate brand awareness, including athletes Michelle Wei,
Sergio Garcia, astronaut Buzz Aldrin, and actor Daniel Craig.
Since 1995, OMEGA has been the official watch of the James
Bond film franchise.
OMEGA watches are offered in both women’s and men’s
styles in four different collections: Globemaster, Constellation,
Seamaster, Speedmaster, and De Ville. Prices vary greatly even
within individual collections. Watches in the De Ville collection
range from $1,650 to more than $100,000.
Patek Philippe. In 1839, Antoine Norbert de Patek and
François Czapek started a Swiss-based watch company built
upon 10 values: independence, innovation, tradition, quality
and workmanship, rarity, value, aesthetics, service, emotion, and
heritage. After several name changes during its formative years,
the company was finally named Patek Philippe. The innovator of
many technologies found in today’s high-end watch, it represents
the absolute pinnacle of luxury timepieces. In particular, the firm
prides itself on creating many of the world’s most complicated
watches through innovations with split-second chronograph and
perpetual date technology.
Unlike other leading luxury watchmakers, Patek Philippe does
not rely on event sponsorship or brand ambassadors to gener-
ate name recognition. However, since 1851, the firm has made
watches for royalty throughout Europe. Its watches are only sold
through authorized retailers, of which there are 600 worldwide.
In 1996, the brand started its “Generations” campaign, building
on its values of heritage and tradition and featuring the tagline,
“You Never Actually Own a Patek Philippe, You Merely Look After
It for the Next Generation.”
Patek Philippe evaluates every authorized dealer’s storefront
to ensure that it meets the watchmaker’s quality standards. It
also separates itself from other watchmakers on price, with its
least expensive non-customized watch retailing at $11,500 and
its most expensive at over $600,000.
STRATEGIC RECOMMENDATIONS
Positioning
Figure 9-11 summarizes some positioning analysis and possible
points-of-parity and points-of-difference, as described below.
Points-of-Parity. Rolex is similar to other watchmakers in
the high-end luxury watch market on several levels. They all make
their watches in Switzerland, which is renowned for superior
craftsmanship in watch making, and they all deliver high qual-
ity. All pride themselves on their attention to detail and ongoing
innovation in the watch industry.
Points-of-Difference. Rolex separates itself from the com-
petition in several ways. One, Rolex watches have a distinct look
with their Crown logo, big face, and wide band. Two, Rolex has
kept a strategically tight control on its distribution channel and
production levels, creating a sense of prestige, importance, and
exclusivity in the minds of consumers. Three, it has kept the brand
pure, remaining focused only on watches and never licensing its
name. Through careful selection of event sponsorships and brand
ambassadors, Rolex has cut through the clutter, resonated with
consumers around the world, and maintained an air of prestige.
FIGURE 9-10
Rolex Brand Resonance
Pyramid
Resonance
Judgments Feelings
Performance Imagery
Salience
Extremely High Quality:
The best watches in the world. Maximum quality, innovation, and design.
True Luxury Product: Hand-crafted timepieces
made from premium materials. Perpetual
self-winding technology. Official crown logo.
Exceptional customer service. Holds value well.
Ultimate Social Status: Extremely loyal
consumers. High repeat-purchase rate. Much affiliation and
attachment. Part of elite society.
Exclusive and Self-Rewarding:
Feelings of success and high social status.
Social approval and self-respect.
Classic and Achievement Image:
Elite luxury image through sports and
cultural ambassadors. Status symbol.
Classic heritage.
High Awareness:
Most commonly recalled
luxury watch in the world;
more depth than breadth.
FIGURE 9-11
Possible Rolex Brand Positioning
• Swiss watchmaker
• Durable
• Fine materials
• Quality craftsmanship
• Accurate
• Attractive
• Innovative products
• Unique appearance
Big face; wide wrist band
• Iconic crown logo
• Exclusive, prestigious imagery
• Rich history and heritage
• Enduring premium value
Points-of-Parity
Brand Mantra: “Classic Designs, Timeless Status”
Points-of-Difference
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358 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Brand Mantra. Rolex has been extremely successful in build-
ing a global name through clever marketing and communications,
without compromising the integrity of the brand. It has nurtured
the belief that acquiring a Rolex represents a milestone in one’s
life and has built a well-known brand recognized for its elegance
and status throughout the entire world. A brand mantra that
captures these ideas might be, “Classic Designs, Timeless Status.”
TACTICAL RECOMMENDATIONS
The Rolex brand audit proved that Rolex is a very strong brand
with significant brand equity. It also identified a few opportunities
and challenges:
Leverage the Company’s Independent, Continuous Heritage and Focus
• Rolex is the largest and most successful watch company in the
world. As a result, many consumers don’t realize it is privately
owned and competes against major conglomerates such as
TAG Heuer’s parent company, LVMH, and OMEGA’s parent
company, Swatch Group. While being privately owned is a
good thing for many reasons, it also brings up several chal-
lenges. For example, Rolex has to compete against companies
that are 10 times its size. Larger companies have lower labor
costs, wider distribution, and significant advertising synergies.
• Rolex may want to leverage and promote the fact that in some
ways it has to work harder to succeed. It is doing what it
has done for 100 years—making durable, reliable, premium
watches on its own. Due to the currently popular anti-Wall-
Street vibe, this positioning may resonate well with consumers.
Leverage the Company’s Elite Craftsmanship and Innovation
• Research from the Luxury Institute group suggested that con-
sumers do not consider Rolex the top brand in quality and
exclusivity. History has proved that Rolex watches are, in fact,
leaders in both craftsmanship and innovation, and Rolex may
want to run a campaign focused more on these aspects.
Connect with the Female Consumer
• Women make up the majority of jewelry and watch pur-
chases. However, as Mintel’s 2008 study revealed, women
are more and more interested in purchasing unisex mechani-
cal watches rather than feminine-styled watches. This is a
great opportunity for Rolex, whose watches are primarily
masculine in design. The firm could move away from its
decorative, jeweled watches and introduce more powerful,
gender-neutral watches. Its 2009 Oyster Perpetual Datejust
Rolesor 36 mm is one example—robust, with large utilitar-
ian numbers, and waterproof to a depth of 100 meters.60
However, its floral dial design and diamond-set bezel possibly
give it an unnecessary feminine angle.
• Rolex may want to tweak its female ambassador list to
coincide with a more unisex product line. Women who
have succeeded in a male-dominated environment such as
Condoleezza Rice or Katie Couric could be powerful brand
endorsers.
Attack the Online Counterfeit Industry
• Counterfeits damage the company’s brand equity and present
a huge risk to the brand. The boom in e-commerce has taken
counterfeit Rolexes from the street corner to the Internet,
where fakes can reach far more consumers. Consequently,
the age-old problem of counterfeiting is a bigger threat than
ever before. To maintain its limited distribution, Rolex does
not authorize any of its watches to be sold on the Internet. In
order to combat the online sale of counterfeits, Rolex might
consider building an exclusive online store, or an exclusive
distribution site to which all official e-retailers must link. In
fact, Rolex dedicates extensive resources to fight the illegal
use of the brand, including sponsoring the International Anti-
Counterfeiting Coalition and suing companies that allow the
sale of counterfeit Rolexes.
Use Marketing to Reach Younger Consumers
• Research has shown that younger consumers do not value
watches the same way older generations did. As a result, Rolex
should be researching the questions: How will prestige be
defined in the twenty-first century? Who or what symbolizes
prestige, ruggedness, precision? Will the same formula work
for the millennial generation as they age and move into the
Rolex target market? As noted previously, the introduction of
smartwatches has given the traditional watch industry a jolt.
Rolex needs to consider how best it will incorporate some of
these features of smartwatches. Alternatively, Rolex may want
to expand its brand to include a variety of fashion products
beyond watches, so as to minimize its reliance on traditional
watches alone.
Reach Consumers Using Digital and Social Media Channels
• Unlike many other brands, Rolex has adopted a more care-
ful wait-and-watch approach with regard to its use of digital
marketing techniques. This was probably wise given that it
wanted to ensure that its efforts on the digital front would not
diminish its legacy or its loyal fans. However, with marketing
increasingly relying on digital marketing, Rolex needs to make
some dramatic changes in its approach and reach, particularly
to reach younger audiences.
Communicate Long-Term Value
• Rolex competes for a share of the luxury buyer’s wallet with
a host of other types of goods, such as clothes, shoes, and
handbags. Many are less durable over time than a Rolex
watch and are susceptible to falling out of fashion. Rolex
should leverage its superior value retention—both in its
resale value and in its “heirloom” quality—in order to bet-
ter compete for luxury spending with brands outside its
category.
• Swiss luxury watch competitor Patek Philippe used print
advertising to communicate the heirloom quality of its
watches. Rolex could pursue a similar approach, perhaps
using its more visible ambassadors, to communicate its own
heirloom quality.
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CHAPTER 9 • DEVELOPING A BRAND EQUITY MEASUREMENT AND MANAGEMENT SYSTEM 359
NOTES
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2. Patrick LaPointe, Marketing by the Dashboard Light— How to Get More Insight, Foresight, and Accountability from Your Marketing Investment (New York: Associa- tion of National Advertisers, 2005).
3. Forbes and Neustar, “Marketing Accountability,” https:// cmo-practice.forbes.com/wp-content/uploads/2017/10 /Forbes- Marketing-Accountability-Executive- Summary-10.2.17.pdf, accessed July 10, 2018.
4. Clyde P. Stickney, Roman L. Weil, Katherine Schipper, and Jennifer Francis, Financial Accounting: An Intro- duction to Concepts, Methods, and Uses (Mason, OH: Southwestern Cengage Learning, 2010).
5. Phillip Kotler, William Gregor, and William Rogers, “The Marketing Audit Comes of Age,” Sloan Manage- ment Review 18, no. 2 (Winter 1977): 25–43.
6. Laurel Wentz, “Brand Audits Reshaping Images,” Ad Age International 67, no. 37 (September 1996): 38–41.
7. Grand Ogilvy Winner, “Pizza Turnaround: Speed Kills. Good Taste Counts,” Journal of Advertising Research 51, no. 3 (September 2011): 463–466; Seth Stevenson, “Like Cardboard,” Slate, January 11, 2010; Ashley M. Heher, “Domino’s Comes Clean with New Pizza Ads,” Associated Press, January 11, 2010; Bob Garfield, “Domino’s Does Itself a Disservice by Coming Clean About Its Pizza,” Advertising Age, January 11, 2010; James F. Peltz, “Domino’s Pizza Stock Is Up 5,000% Since 2008. Here’s Why,” Los Angeles Times, May 15, 2017.
8. Thomas Hobbs, “Domino’s Pizza: We Have a Much Clearer Identity than Many of Our Fast-Food Rivals,” Marketing Week, March 23, 2016, www .marketingweek.com/2016/03/23/dominos-pizza-our- fast-food-rivals-have-lost-their-sense-of-identity/.
9. Private correspondence with Chris Grams and John Adams from Red Hat.
10. Stefan Deeran, “Content Marketing 101: Auditing Your Digital Assets,” Huffington Post, June 17, 2013, www .huffingtonpost.com/stefan-deeran/content-marketing- 101-aud_b_3093146.html.
11. Sidney J. Levy, “Dreams, Fairy Tales, Animals, and Cars,” Psychology and Marketing 2, no. 2 (Summer 1985): 67–81.
12. Deborah Roeddder John, Barbara Loken, Kyeongheui Kim, and Alokparna Basu Monga, “Brand Concept Maps: A Methodology for Identifying Brand Asso- ciation Networks,” Journal of Marketing Research 43, no. 4 (November 2006): 549–563.
13. Expert Commentator, “What Should an Online Brand Audit Include,” Smart Insights, September 30, 2014, www.smartinsights.com/online-brand-strategy/ brand-development/brand-audit/.
14. Keith Quesenberry, “Conducting a Social Media Audit,” Harvard Business Review, accessed November 23, 2017, https://hbr.org/2015/11/conducting-a-social- media-audit.
15. John Roberts, professor of marketing, Australian National University, personal correspondence, June 23, 2011.
16. WARC, “McDonald’s Wins Back Millennials,” WARC, October 17, 2016, www.warc.com/NewsAndOpinion/ News/37580.
17. Matt Ariker, Alejandro Diaz, Christine Moorman, and Mike Westover, “Quantifying the Impact of Marketing Analytics,” Harvard Business Review, November 5, 2015, https://hbr.org/2015/11/quantifying-the-impact- of-marketing-analytics.
18. Ibid. 19. Referenced in Koen Pauwels, (2014), “It’s Not the
Size of the Data—It’s How You Use It: Smarter Mar- keting with Analytics and Dashboards,” HarperCollins Publishers.
20. Ibid. 21. Ibid. 22. Matt Ariker, Alejandro Diaz, Christine Moorman, and
Mike Westover, “Quantifying the Impact of Marketing Analytics,” Harvard Business Review, November 5, 2015, https://hbr.org/2015/11/quantifying-the-impact- of-marketing-analytics.
23. Max Nisen, “Mayo Clinic CEO: Here’s Why We’ve Been the Leading Brand in Medicine for 100 Years,” Business Insider, February 23, 2013, www .businessinsider.com/how-mayo-clinic-became-the- best-brand-in-medicine-2013-2.
24. Sandhya Pruthi, Dawn Marie R. Davis, Dawn L. Hucke, Francesca B. Ripple, Barbara S. Tatzel, James A. Dilling, Paula J. Santrach, Jeffrey W. Bolton, and John H. Noseworthy, “Vision, Mission, and Values: From Concept to Execution at Mayo Clinic,” Patient Experi- ence Journal 2, no. 2 (2015): 169–173.
25. Bloom Creative, “5 Key Things That Make Mayo Clinic a Marketing Machine,” Bloom Creative, July 11, 2016, http://bloomcreative.com/5-key-things-that-make- mayo-clinic-a-marketing-machine/.
26. Joan Justice, “The Big Brand Theory: How the Mayo Clinic Became the Gold Standard for Social Media in Healthcare,” Social Media Today, May 21, 2013, www.socialmediatoday.com/content/big-brand-theory- how-mayo-clinic-became-gold-standard-social-media- healthcare.
27. Leonard L. Berry and Kent D. Seltman, “Building a Strong Services Brand: Lessons from Mayo Clinic,” Business Horizons 50, no. 3, (2007): 199–209.
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28. Skype, “Skype Brand Book,” Skype 2017, https://secure .skypeassets.com/content/dam/scom/pdf/skype_brand_ guidelines.pdf.
29. Joel Rubinson, “Brand Strength Means More Than Market Share,” paper presented at the ARF Fourth Annual Advertising and Promotion Workshop, New York, 1992.
30. Tim Ambler, Marketing and the Bottom Line, 2nd ed. (London: FT Prentice Hall, 2004).
31. Michael Krauss, “Marketing Dashboards Drive Better Decisions,” Marketing News, 36, no. 16 (October 2005): 7.
32. Scott Bedbury, A New Brand World (New York: Viking Press, 2002).
33. Ibid. 34. Betsy Spethman, “Companies Post Equity Gatekeep-
ers,” Brandweek, May 2, 1994, 5. 35. Michael Lee, “Does P&G’s Reorganized Marketing
Department Go Far Enough?, Forbes, July 8, 2014, https://www.forbes.com/sites/michaellee/2014/07/08/ does-pgs-reorganized-marketing-department-go-far- enough/#5a4f3fac5e88, accessed July 11, 2018.
36. The Economist (US), “Death of the Brand Manager (Consumer-Goods Firms Re-engineering of Market- ing Departments),” The Economist, April 9, 1994, https://www.highbeam.com/doc/1G1-15110919.html, accessed November 7, 2018.
37. Steve Olenski, “Why a Major Brand Felt the Need to Change Its Marketing Department,” Forbes, July 18. 2016, https://www.forbes.com/sites/steveolenski /2016/07/18/why-a-major-brand-felt-the-need-to- change-its-marketing-department/#57b3015915fa.
38. Ibid. 39. Joe Thompson, “The World’s Most Valuable
Watch Brand,” Bloomberg, October 2, 2017, www.bloomberg.com/news/articles/2017-10-02/ rolex-is-the-world-s-most-valuable-watch-brand.
40. David Liebeskind, “What Makes Rolex Tick?,” Stern Business, Fall/Winter 2004, http://w4.stern.nyu.edu/ sternbusiness/fall_winter_2004/rolex.html, accessed July 11, 2018.
41. Peter Passell, “Watches That Time Hasn’t Forgotten,” The New York Times, November 24, 1995, https://www .nytimes.com/1995/11/24/business/watches-that-time- hasn-t-forgotten.html, accessed November 7, 2018.
42. Joe Thompson, “The World’s Most Valuable Watch Brand,” Bloomberg, October 2, 2017, www.bloomberg .com/news/articles/2017-10-02/rolex-is-the-world-s- most-valuable-watch-brand.
43. Gene Stone, The Watch (New York: ABRAMS, 2006). 44. David Liebeskind, “What Makes Rolex Tick?” Stern
Business, Fall/Winter 2004, https://w4.stern.nyu.edu/ sternbusiness/fall_winter_2004/rolex.html, accessed November 7, 2018.
45. Alana Petroff, “The ‘Fakes’ Industry Is Worth $461 Billion,” CNN, April 18, 2016, http://money.cnn.com/2016/04/18/ news/economy/fake-purses-shoes-economy-counterfeit- trade/index.html.
46. Ibid. 47. Español Pycck nn̆ , “Who Are the Biggest Spenders in
the Watch World?” Europa Star WorldWatchWeb, July 2015, www.europastar.com/news/1004088088-who- are-the-biggest-spenders-in-the-watch-world.html.
48. Eli Epstein, “Rolex: How a 109-Year-Old Brand Thrives in the Digital Age,” Mashable, accessed November 25, 2017, http://mashable.com/2014/04/17/rolex-marketing- strategy/#dAzYZRIgMPqa.
49. ROLEX, “History of Rolex,” https://www.rolex.com/ rolex-history.html, accessed November 7, 2018.
50. Instagram photo, www.instagram.com/p/-bS4kDmA43/. 51. ROLEX, “History of Rolex,” https://www.rolex.com/
rolex-history.html, accessed November 7, 2018. 52. Ibid. 53. Ibid. 54. Christina Binkley, “Fashion Journal: Celebrity Watch:
Are You a Brad or a James?” The Wall Street Journal, January 11, 2007, D1.
55. Jemima Sissons, “Haute Couture Takes on Horlogerie: Fashion’s Big Guns Continue to Impress in the Battle for Women’s Wrists,” The Wall Street Journal, March 19, 2010.
56. Rob McLean and Jethro Mullen, “Most Expensive Wristwatch Ever Auctioned Just Fetched $17.8 mil- lion,” CNN, October 27, 2017, http://money.cnn .com/2017/10/27/news/paul-newman-rolex-auction- record/index.html.
57. Harry Hurt, “The 12-Watches-a-Year Solution,” New York Times, July 1, 2006, C5.
58. Women’s Wear Daily, July 2005, https://wwd.com; Federation of the Swiss Watch Industry, http://www .fhs.swiss/eng/homepage.html.
59. F1 Scarlet Pit Crew, “History of TAG Heuer in Formula 1,” F1Scarlet, http://www.f1scarlet.com/ historyoftag_ f1.html, accessed November 7, 2018.
60. Jemima Sissons, “Haute Couture Takes On Horlogerie: Fashion’s Big Guns Continue to Impress in the Battle for Women’s Wrists,” The Wall Street Journal (Online), March 19, 2010.
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361
Learning Objectives
After reading this chapter, you should be able to
1. Describe effective qualitative research techniques for tapping into consumer brand knowledge.
2. Identify effective quantitative research techniques for measuring brand awareness, image, responses, and relationships.
3. Outline how big data can help with understanding brand perceptions and brand positioning.
4. Explain the role of social media monitoring “control rooms” as a marketing research tool.
5. Profile and contrast some popular brand equity models.
Measuring Sources of Brand Equity: Capturing Customer Mind-Set 10
Marketers develop new
products based on a
variety of inputs from
consumers, derived from
both quantitative and
qualitative marketing
research.
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362 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Understanding the current and desired brand knowledge structures of consumers is vital to effec-
tively building and managing brand equity. Ideally, marketers would be able to construct detailed
“mental maps” to understand exactly what exists in consumers’ minds—all their thoughts, feel-
ings, perceptions, images, beliefs, and attitudes toward different brands. These mental blueprints
would then provide managers with insights to develop a solid brand positioning with the right
points-of-parity and points-of-difference and the strategic guidance to help them make good brand
decisions. Unfortunately, such brand knowledge structures are not easily measured because they
reside only in consumers’ minds.
Nevertheless, effective brand management requires us to thoroughly understand the con-
sumer. Often a simple insight into how consumers think of or use products and the particular
brands in a category can help create a profitable change in the marketing program. That is why
many large companies conduct exhaustive research studies (or brand audits, as described in Chap-
ter 9) to learn as much as possible about consumers.
A number of detailed, sophisticated research techniques and methods now exist to help mar-
keters better understand consumer knowledge structures. A host of primary and secondary data
sources exist online. Many industry or company studies can be accessed. Surveys can be efficiently
distributed and collected. This chapter highlights some of the important considerations critical to
the measurement of brand equity.1 Figure 10-1 outlines general considerations in understanding
consumer behavior, and Branding Brief 10-1 describes the lengths to which marketers have gone
in the past to learn about consumers.
According to the brand value chain, sources of brand equity arise from the customer mind-set.
In general, measuring sources of brand equity requires that the brand manager fully understand
how customers shop for and use products and services and, most important, what customers know,
think, and feel about and act toward various brands. In particular, measuring sources of customer-
based brand equity requires us to measure various aspects of brand awareness and brand image
that can lead to the differential customer response making up brand equity.
Consumers may have a holistic view of brands that is difficult to divide into component parts.
Many times we can isolate perceptions and assess them in greater detail. The remainder of this
chapter describes qualitative and quantitative approaches to identifying potential sources of brand
equity—that is, capturing the customer mind-set.
PREVIEW
FIGURE 10-1
Understanding Consumer
Behavior
Source: Based on a list from George Belch and Michael Belch, Advertising and Com- munication Management, 3rd ed. (Homewood, IL: Irwin, 1995).
Who buys our product or service? Who makes the decision to buy the product? Who influences the decision to buy the product? How is the purchase decision made? Who assumes what role? What does the customer buy? What needs must be satisfied? Why do customers buy a particular brand? Where do they go or look to buy the product or service? When do they buy? Any seasonality factors? What are customers’ attitudes toward our product? What social factors might influence the purchase decision? Does the customers’ lifestyle influence their decisions? How is our product perceived by customers? How do demographic factors influence the purchase decision?
QUALITATIVE RESEARCH TECHNIQUES There are many different ways to uncover the types of associations linked to the brand and their
corresponding strength, favorability, and uniqueness. Qualitative research techniques often iden-
tify possible brand associations and sources of brand equity. These are relatively unstructured
measurement approaches that permit a range of both questions and answers and so can often be
a useful first step in exploring consumer brand and product perceptions.
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 363
Because the consumer behavior we observe can differ from the
behavior consumers report in surveys, useful marketing insights
sometimes emerge from unobtrusively observing consumers
rather than talking to them. For example, Hoover became suspi-
cious when people claimed in surveys that they vacuumed their
houses for an hour each week. To check, the company installed
timers in certain models and exchanged them for the same mod-
els in consumers’ homes. The timers showed that people actually
spent only a little over half an hour vacuuming each week. One
researcher analyzed household trash to determine the types and
quantities of food people consumed, finding that people do not
have a very good idea of how much and what types of food
they eat. Similarly, much research has shown that people report
they eat healthier food than would appear to be the case if you
opened their cabinets!
The right behavioral insights can have important marketing
implications. DuPont commissioned marketing studies to uncover
personal pillow behavior for its Dacron polyester unit, which sup-
plies filling to pillow makers and sells its own Comforel brand
(now part of INVISTA). One challenge: people don’t give up their
old pillows. Thirty-seven percent of one sample described their
relationship with their pillow as like “an old married couple,”
and an additional 13 percent characterized their pillow like a
“childhood friend.” The researchers found that people fell into
distinct groups in terms of pillow behavior: stackers (23 percent),
plumpers (20 percent), rollers or folders (16 percent), cuddlers
(16 percent), and smashers, who pound their pillows into a more
comfy shape (10 percent). Women were more likely to plump,
while men were more likely to fold. The prevalence of stackers
led the company to sell more pillows packaged as pairs, as well
as to market different levels of softness or firmness.
Much of this type of research has its roots in ethnography,
the anthropological term for the study of cultures in their natural
surroundings. The intent behind these in-depth, observational
studies is for consumers to drop their guard and provide a more
realistic portrayal of who they are rather than who they would
like to be. On the basis of ethnographic research that uncovered
consumers’ true feelings, ad campaigns have been created for
various brands.
For example, Benylin’s “Take a Benylin Day” was an ad cam-
paign developed based on a key customer insight that having a
cold really makes the consumer feel bad enough, but trying to
fight through it and getting to work can just make them feel even
worse. Many cough medicines were advertising their medicines
to ensure their customers were back at work when they were
really looking to take time off to recover. Benylin used this key
customer insight and designed an ad campaign giving consumers
“permission” to take the day off and rest.
Another interesting campaign inspired by a key observational
insight with customers was when the U.K.-based mobile com-
pany Three designed an ad campaign HolidaySpam, based on a
customer insight into how people behave while on vacation. It
featured customers talking about their vacations and featuring an
apology to those receiving photos of sandy beaches and gorgeous
sunsets (called holiday spam by some)2 from friends vacationing
in sunny places. The ad featured the mobile company Three’s
offer allowing customers to use their mobile phones abroad at
BRANDING BRIEF 10-1
Digging Beneath the Surface to Understand Consumer Behavior
DuPont commissioned a marketing study to learn about dif-
ferent “pillow behaviors”. This study resulted in a redesigning
of pillows to meet the needs of different types of consumers.
Benylin’s “Take a Benylin Day” ad campaign was the result
of a key customer insight that taking a day off from work to
recover from a cough actually made consumers feel better.
Intel used in-depth insights from ethnographic research to
make technology more accessible. Intel’s China Home
Learning PC is an example of this.
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364 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
no extra cost. This campaign became a viral success, garnering a
90 percent increase in social conversation volume.
In another example of ethnographic research, Intel utilized
ethnographic insights to develop new collaborations to make
technology more accessible. For instance, Dr. Genevieve Bell,
Intel’s anthropologist “tech intellectual,” interviewed Chinese
parents who were frustrated with the distractions computers
created in their children’s school work. Bell helped develop a
“China Home Learning PC” that gave parents a key to prevent
games. Additionally, upon digging up the contents of people’s
cars around the world, she found that many people were ignor-
ing the technology already built into their cars. Based on that
research, Intel has collaborated with Jaguar and Toyota to develop
better ways for consumers to sync their devices to the built-in
technology in their automobiles.
Sources: Russell Belk, ed., Handbook of Qualitative Research Method in
Marketing (Northampton, MA: Edward Elgar Publishing, 2006); Eric J.
Arnould and Amber Epp, “Deep Engagement with Consumer Experience:
Listening and Learning with Qualitative Data,” in The Handbook of Mar-
keting Research: Uses, Misuses, and Future Advances, eds. Rajiv Grover
and Marco Vriens (Thousand Oaks, CA: Sage Press, 2006): 51–58; Jennifer
Chang Coupland, “Invisible Brands: An Ethnography of Households and
the Brands in Their Kitchen Pantries,” Journal of Consumer Research 32,
no. 1 (June 2005): 106–118; John Koten, “You Aren’t Paranoid If You Feel
Someone Eyes You Constantly,” The Wall Street Journal, March 29, 1985,
p. 1, 22; Susan Warren, “Pillow Talk: Stackers Outnumber Plumpers;
Don’t Mention Drool,” The Wall Street Journal, January 8, 1998, B1;
Natasha Singer, “Intel’s Sharp-Eyed Social Scientist,” The New York
Times, February 15, 2014, www.nytimes.com/2014/02/16/technology/
intels-sharp-eyed-social-scientist.html?mcubz=0, accessed October 5,
2017; Lorna Keane, “5 Ad Campaigns Inspired by Powerful Consumer
Insights,” April 3, 2017, http://blog.globalwebindex.net/marketing/
powerful-consumer-insights/, accessed October 7, 2017; Graham Robertson,
“How to Find Amazing Consumer Insights to Help your Brand,” http://
beloved-brands.com/2013/11/126/consumer-insight/, November 12, 2013,
accessed October 5, 2017; Video of three campaign ads can be seen here:
www.youtube.com/watch?v=1a1cL4TIMMc&feature=youtu.be
www.youtube.com/watch?v=Wz7YbGCeWPA&feature=youtu.be.
Qualitative research has a long history in marketing. Ernest Dichter, one of the early pio-
neers in consumer psychoanalytic research, first applied these research principles in a study
for Plymouth automobiles in the 1930s.3 His research revealed the important—but previously
overlooked—role that women played in the automobile purchase decision. Based on his consumer
analysis, Plymouth adopted a new print advertising strategy that highlighted a young couple gaz-
ing admiringly at a Plymouth automobile under the headline “Imagine Us in a Car Like That.”
Dichter’s subsequent work had an important impact on a number of different ad campaigns.4
Some of his assertions were fairly controversial. For example, he equated convertibles with
youth, freedom, and the secret wish for mistresses; argued that women used Ivory soap to wash
away their sins before a date; and maintained that baking was an expression of femininity and
pulling a cake or loaf out of an oven for women was “in a sense like giving birth.” His suggested
tagline “Putting a Tiger in the Tank” for Exxon resulting in a long-running and successful ad
campaign, however.5
This section next reviews several qualitative research techniques for identifying sources
of brand equity such as brand awareness, brand attitudes, and brand attachment. These tech-
niques also can identify outcomes of brand equity such as price elasticities, brand choice, and
preference.
Free Association The simplest and often the most powerful way to profile brand associations is free association
tasks, in which subjects are asked what comes to mind when they think of the brand, without
any more specific probe or cue than perhaps the associated product category. Examples include:
“What does the Rolex name mean to you?” or “Tell me what comes to mind when you think of
Rolex watches.” Marketers can use the resulting associations to form a rough mental map for the
brand (see Figure 10-2 for a sample mental map for State Farm).
Marketers use free association tasks mainly to identify the range of possible brand associa-
tions in consumers’ minds, but free association may also provide some rough indication of the
relative strength, favorability, and uniqueness of brand associations.6 Coding free association
responses in terms of the order of elicitation—whether they are early or late in the sequence—at
least gives us a rough measure of their strength.7 For example, if many consumers mention “fast
and convenient” as one of their first associations when given “McDonald’s restaurants” as a probe,
then the association is probably a relatively strong one and likely able to affect consumer deci-
sions. Associations later in the list may be weaker and thus, more likely to be overlooked during
consumer decision-making. Comparing associations with those elicited for competitive brands
can also tell us about their relative uniqueness. Finally, we can discern even favorability, to some
extent, by how consumers phrase their associations.
Answers to free-association questions help marketers clarify the range of possible associa-
tions and assemble a brand profile.8 To better understand the favorability of associations, we can
ask consumers follow-up questions about the favorability of associations they listed or, more
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 365
generally, what they like best about the brand. Similarly, we can ask them follow-up questions
about the uniqueness of associations they listed or, more generally, about what they find unique
about the brand. Useful questions include the following:
1. What do you like best about the brand? What are its positive aspects or advantages?
2. What do you like least about the brand? What are its negative aspects or disadvantages?
3. What do you find unique about the brand? How is it different from other brands?
These simple, direct measures can be extremely valuable for determining core aspects of a
brand image. To elicit more structure and guidance, consumers can be asked further follow-up
questions about what the brand means to them in terms of classic journalism “who, what, when,
where, why, and how” questions:
1. Who uses the brand? What kind of person?
2. What types of situations do they use the brand?
3. When and where do they use the brand?
4. Why do people use the brand? What do they get out of using it?
5. How do they use the brand? What do they use it for?
Guidelines. The two main issues to consider in conducting free association tasks are what
types of probes to give to subjects, and how to code and interpret the resulting data. In order not
to bias results, it is best to move from general considerations to more specific considerations, as
we illustrated earlier. Thus, ask consumers first what they think of the brand as a whole without
reference to any particular category, followed by specific questions about particular products and
aspects of the brand image.
Consumers’ responses to open-ended probes can be either oral or written. The advantage of
oral responses is that subjects may be less deliberate and more spontaneous in their reporting.
In terms of coding the data, divide the protocols that each consumer provides into phrases and
aggregate them across consumers in categories. Because of their more focused nature, responses
to specific probes and follow-up questions are naturally easier to code.
The Science of Branding 10-1 below describes an approach to assembling brand associations
using social media data and computer-science-based network and language-processing techniques.
FIGURE 10-2
Sample State Farm
Mental Map
Source: Logo used with permission of State Farm.
Top-of-the-line insurance
Around a long time
Safe
Responsive
Convenient
Reputable
Fast settlements
Personal service
”Good Neighbors”
Agents who are part of my neighborhood
Red color
Good home and auto insurance
Reliable
Dependable
Good reputation
Conservative
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366 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
The increased availability of large quantities of user-generated
data (e.g., reviews, ratings, and comments in online discussion
forums) from digital and online channels has spurred consider-
able interest in applying text-mining methods to generate insights
that are relevant to marketing. For example, Lee and Bradlow
analyzed reviews for digital cameras between 2004 and 2008 to
uncover consumer-defined product attributes. Netzer, Feldman,
Goldenberg, and Fresko used data from an online discussion
forum subjected to text-mining algorithms to better understand
the market structure and to construct a brand positioning map.
Tirunillai and Tellis applied natural language processing
approaches from computer science to analyze product reviews
from 15 firms over a four-year period to generate key inferences
regarding consumer satisfaction and quality and its underlying
dimensions.
Another interesting approach to developing brand position-
ing involves analyzing “tags” or keywords generated by users to
describe the content of online discussions and articles. Nam and
Kannan utilized these user-generated social tags as proxies for
diverse concepts and associations that were connected to a given
brand. Research has also examined how to classify brands into dif-
ferent groups based on the unique language features associated
with a given brand in social media.
Using a technique called Differential Language Analysis,
Swaminathan, Schwartz, and Hill conducted a large-scale analy-
sis of messages on Twitter. Their approach helped to identify dif-
ferent clusters of words (or topics) linked to brands as a way of
determining unique language features associated with brands. In
addition to text, Liu, Dzyabura, and Mizik and other researchers
have also begun examining how images contained in social media
can be analyzed effectively to generate deeper insights into brand
associations and brand positioning.
As data availability and computational social science-based
methods become increasingly important, all of these different
approaches hold great promise to marketers and marketing
researchers going forward.
Sources: Nikolay Archak, Anindya Ghose, and Panagiotis G. Ipeirotis. “Deriv-
ing the Pricing Power of Product Features by Mining Consumer Reviews,”
Management Science 57, no. 8 (August 2011): 1485–1509; Abhishek Borah
and Gerard J. Tellis, “Halo (Spillover) Effects in Social Media: Do Product
Recalls of One Brand Hurt or Help Rival Brands?” Journal of Marketing
Research, 53, no. 2 (April 2016): 143–160; Thomas Y. Lee and Eric T. Bra-
dlow, “Automated Marketing Research Using Online Customer Reviews,”
Journal of Marketing Research, 48, no. 5 (2011): 881–894; Liu Liu, Daria
Dzyabura, and Natalie Mizik, “Visual Listening In: Extracting Brand Image
Portrayed on Social Media,” revised October 1, 2018, https://ssrn.com/
abstract=2978805 or http://dx.doi.org/10.2139/ssrn.2978805, accessed
November 11, 2018; Hyoryung Nam, Yogesh V. Joshi, and P. K. Kannan,
“Harvesting Brand Information from Social Tags,” Journal of Marketing, 81,
no. 4: 88–108; Oded Netzer, Ronen Feldman, Jacob Goldenberg, and Moshe
Fresko, “Mine Your Own Business: Market-Structure Surveillance Through
Text Mining,” Journal of Marketing Science, 31, no. 3 (May 2012): 521–543;
Seshadri Tirunillai and Gerard J. Tellis, “Mining Marketing Meaning from
Online Chatter: Strategic Brand Analysis of Big Data Using Latent Dirich-
let Allocation,” Journal of Marketing Research, 51, no. 4 (August 2014):
463–479; Vanitha Swaminathan, Andy Schwartz, and Shawndra Hill “The
Language of Brands in Social Media,” working paper, 2016; Anbang Xu,
Yuheng Hu, David Gal, Rama Akkiraju, and Vibha Sinha, “Modeling Brand
Personality with Social Media,” working paper, 2018.
THE SCIENCE OF BRANDING 10-1
Using Text Mining to Uncover Brand Associations and Positioning
Projective Techniques For marketers to succeed in uncovering the sources of brand equity, they must profile consum-
ers’ brand knowledge structures as accurately and completely as possible. Unfortunately, under
certain situations, consumers may feel that it would be socially unacceptable or undesirable to
express their true feelings—especially to an interviewer they do not even know! As a result, they
may find it easier to fall back on stereotypical, pat answers they believe would be acceptable or
perhaps even expected by the interviewer.
Consumers may be particularly unwilling or unable to reveal their true feelings when mar-
keters ask about brands characterized by a preponderance of imagery associations. For example,
it may be difficult for consumers to admit that a certain brand name product has prestige and
enhances their self-image. They may instead refer to some particular product feature as the reason
they like or dislike the brand. Or they may simply find it difficult to identify and express their true
feelings when asked directly, even if they attempt to do so. For either of these reasons, it might
be impossible to obtain an accurate portrayal of brand knowledge structures without some rather
unconventional research methods.
Projective techniques are diagnostic tools to uncover the true opinions and feelings of consum-
ers when they are unwilling or otherwise unable to express themselves on these matters.9 Marketers
present consumers with an incomplete stimulus and ask them to complete it, or they give consumers
an ambiguous stimulus and ask them to make sense of it. The idea is that in the process consumers
will reveal some of their true beliefs and feelings. Thus, projective techniques can be especially
useful when deeply rooted personal motivations or personally or socially sensitive subjects are at
issue. In a Rorschach test, experimenters present ink blots to subjects and ask them what the ink
blots remind them of; these tests can be used to assess the memories that a person has on a topic.10
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 367
Projective techniques have a long history in marketing, beginning with the motivation
research of the late 1940s and 1950s.11 A classic example is an experiment exploring hidden
feelings toward instant coffee conducted by Mason Haire in the late 1940s, summarized in Brand-
ing Brief 10-2.12 Although projective techniques do not always yield results as powerful as in that
example, they often provide useful insights that help to assemble a complete picture of consumers
and their relationships with brands. Many kinds of projective techniques are possible. We highlight
a few here.13
One of the most famous applications
of psychographic techniques was made
by Mason Haire in the 1940s. The pur-
pose of the experiment was to uncover
consumers’ true beliefs and feelings
toward Nescafé instant coffee.
The impetus for the experiment was
a survey conducted to determine why
the initial sales of Nescafé instant coffee
were so disappointing. The majority of
the people who reported they did not
like the product stated that the reason
was the flavor. On the basis of consumer
taste tests, however, Nescafé’s manage-
ment knew consumers found the taste
of instant coffee acceptable when they
didn’t know what type of coffee they
were drinking. Suspecting that consum-
ers were not expressing their true feel-
ings, Haire designed a clever experiment
to discover what was really going on.
Haire set up two shopping lists con-
taining the same six items. Shopping List
1 specified Maxwell House drip ground
coffee, whereas Shopping List 2 speci-
fied Nescafé instant coffee, as follows:
Shopping List 1 Shopping List 2
Pound and a half of hamburger
Pound and a half of hamburger
2 loaves Wonder bread 2 loaves Wonder bread
Bunch of carrots Bunch of carrots
1 can Rumford’s Baking Powder
1 can Rumford’s Baking Powder
Maxwell House coffee (drip ground)
Nescafé instant coffee
2 cans Del Monte peaches 2 cans Del Monte peaches
5 lbs. potatoes 5 lbs. potatoes
Two groups of matched subjects were each given one of the lists
and asked to “Read the shopping list. Try to project yourself into the
situation as far as possible until you can more or less characterize
the woman who bought the groceries.” Subjects then wrote a brief
description of the personality and character of that person.
BRANDING BRIEF 10-2
Once Upon a Time . . . You Were What You Cooked
Marketers of Nescafé used a novel psychographic technique to help uncover consum-
ers’ true feelings and thoughts about the brand, by comparing the brand to percep-
tions of its competitor Maxwell House.
After coding the responses into frequently mentioned cat-
egories, Haire found that two starkly different profiles emerged:
List 1 (Maxwell House)
List 2 (Nescafé)
Lazy 4% 48%
Fails to plan household purchases and schedules well
12% 48%
Thrifty 16% 4%
Not a good wife 0% 16%
Haire interpreted these results as indicating that instant cof-
fee represented a departure from homemade coffee and tradi-
tions with respect to caring for one’s family. In other words, at
that time, the “labor-saving” aspect of instant coffee, rather than
being an asset, was a liability in that it violated consumer tradi-
tions. Consumers were evidently reluctant to admit this fact when
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368 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Completion and Interpretation Tasks. Classic projective techniques use incomplete or
ambiguous stimuli to elicit consumer thoughts and feelings. One approach is “bubble exercises,”
which depict different people buying or using certain products or services. Empty bubbles, as
in cartoons, are placed in the scenes to represent the thoughts, words, or actions of one or more
of the participants. Marketers then ask consumers to “fill in the bubble” by indicating what they
believe is happening or being said in the scene. The stories and conversations told this way can
be especially useful for assessing user and usage imagery for a brand.
Comparison Tasks. Another useful technique is comparison tasks, in which we ask consumers
to convey their impressions by comparing brands to people, countries, animals, activities, fabrics,
occupations, cars, magazines, vegetables, nationalities, or even other brands.14 For example, we
might ask consumers, “If Dannon yogurt were a car, which one would it be? If it were an animal,
which one might it be? Looking at the people depicted in these pictures, which ones do you think
would be most likely to eat Dannon yogurt?” In each case, we would ask a follow-up question
about why subjects made the comparison they did. The objects people choose to represent the
brand and their reasons can provide glimpses into the psyche of the consumer with respect to a
brand, particularly useful in understanding imagery associations. By examining the answers to
probes, researchers may be better able to assemble a rich image for the brand, for example, iden-
tifying key brand personality associations.
Zaltman Metaphor Elicitation Technique One interesting approach to better understand how consumers view brands is the Zaltman Meta-
phor Elicitation Technique (ZMET).15 ZMET is based on a belief that consumers often have sub-
conscious motives for their purchasing behavior. “A lot goes on in our minds that we’re not aware
of,” said former Harvard Business School professor Gerald Zaltman. “Most of what influences
what we say and do occurs below the level of awareness. That’s why we need new techniques to
get at hidden knowledge—to get at what people don’t know they know.”
To access this hidden knowledge, he developed the Zaltman Metaphor Elicitation Technique.
As described in its U.S. patent, ZMET is “a technique for eliciting interconnected constructs
that influence thought and behavior.” The word construct refers to “an abstraction created by the
researcher to capture common ideas, concepts, or themes expressed by customers.” For example,
the construct “ease of use” might capture the statements “simple to operate,” “works without
hassle,” and “you don’t really have to do anything.”
ZMET stems from knowledge and research from varied fields such as cognitive neuroscience,
neurobiology, art critique, literary criticism, visual anthropology, visual sociology, semiotics, art
therapy, and psycholinguistics. The technique is based on the idea that most social communica-
tion is nonverbal and, as a result, approximately two-thirds of all stimuli received by the brain
are visual. Using ZMET, Zaltman teases out consumers’ hidden thoughts and feelings about a
particular topic, which often can be expressed best using metaphors.
Zaltman argues that metaphors can be very useful to us in that they are “the representation of
one thing in terms of another [and can] often help us express the way we feel about or view a par-
ticular aspect of our lives.” ZMET focuses on surface, thematic, and deep metaphors. Some common
deep metaphors include transformation, container, journey, connection, and sacred and profane.
A ZMET study starts with a group of participants who are asked in advance to think about the
research topic at hand and collect a set of images from their own sources (the Internet, magazines,
catalogs, and family photo albums) that represent their thoughts and feelings about the research topic.
asked directly but were better able to express their true feelings
when asked to project to another person.
The strategic implications of this new research finding were
clear. Based on the original survey results, the obvious position-
ing for instant coffee with respect to regular coffee would have
been to establish a point-of-difference on “convenience” and a
point-of-parity on the basis of “taste.” Based on the projective
test findings, however, it was obvious that there also needed to
be a point-of-parity on the basis of user imagery. As a result, a
successful ad campaign was launched that promoted Nescafé
coffee as a way for housewives to free up time so they could
devote additional time to more important household activities!
Sources: Mason Haire, “Projective Techniques in Marketing Research,”
Journal of Marketing 14, no. 5 (April 1950): 649–652; J. Arndt, “Haire’s
Shopping List Revisited,” Journal of Advertising Research 13, no. 5
(1973): 57–61; George S. Lane and Gayne L. Watson, “A Canadian Rep-
lication of Mason Haire’s ‘Shopping List’ Study,” Journal of the Academy
of Marketing Science 3, no. 1 (December 1975): 48–59; William L. Wilkie,
Consumer Behavior, 3rd ed. (New York: John Wiley and Sons, 1994).
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 369
The participants bring these images with them for a personal one-
on-one 2-hour interview with a trained ZMET interviewer, who
uses advanced interview techniques to explore the images with
the participant and reveal their deep ideas, archetypes, themes,
and emotions through a “guided conversation.”
The interview consists of a series of steps, each with a
specific purpose in mind:
1. Storytelling: Exploring individual visual metaphors
2. Expand the Frame: Expanding the metaphoric meaning of
images
3. Sensory Metaphor: Eliciting metaphors about the research
topic from each sensory modality
4. Vignette: Using the mind’s eye to create a short story about
the research topic
5. Digital Image: Integrating the images to create a visual
summary of the research topic
Once the participants’ interviews have been completed, researchers identify key themes or con-
structs, code the data, and assemble a consensus map of the most important constructs. Quantitative
analyses of the data can provide information for advertising, promotions, and other marketing decisions.
The Zaltman Metaphor Elicitation Technique (ZMET) has been applied in a variety of dif-
ferent ways, including as a means to help understand consumers’ images of brands, products, and
companies. Marketers can employ ZMET for a variety of consumer-insight research topics. ZMET
is useful in understanding consumers’ images of brands, products, companies, brand equity, prod-
uct concepts and designs, product usage and purchase experiences, life experiences, consumption
context, and attitudes toward business.
An interesting case study involves Cisco Systems’ use of ZMET to research how IT profes-
sionals and business decision makers viewed the brand. The purpose of the study was to find out
if these segments had an emotional connection to a seemingly rational brand and service. ZMET
was used to uncover deeper answers to the question, “What are your thoughts and feelings about
Cisco Systems and its role in your life?” As it turned out, there were strong emotional connections
to the brand including the peace-of-mind and calmness of knowing that Cisco was there for you,
but also the anxiety and fear of what could happen if there were no longer a Cisco. Cisco used
the deep metaphor of “connection” to highlight the positive emotions that the brand delivered to
customers. Much like the archetypical “father figure,” customers felt safe and protected by Cisco,
even if much of what Cisco provided was unseen behind the Internet infrastructure. This discovery
contributed to the development of a rebranding initiative around Cisco as “The Human Network,”
helping to bring an emotional face to the network product and services from the company. The
rebranding led to significant increases in brand recognition and brand value.
Neural Research Methods Taking ZMET one step further to dig even deeper into the subconscious, some marketing research-
ers are bypassing any verbal response from consumers to literally get inside the minds of con-
sumers through various neural research methods. Neuromarketing is the study of how the brain
responds to marketing stimuli, including brands.16 For example, some firms are applying sophis-
ticated techniques such as EEG (electroencephalogram) technology to monitor brain activity and
better gauge consumer responses to marketing. Still others use functional magnetic resonance
imaging (fMRI) to track the brain’s blood flow to understand how participants in the research are
responding to various stimuli. Although more expensive than EEG—for example, a single fMRI
can cost $1,000 per machine per hour—fMRI can help researchers get deeper insights into how the
brain responds to various outside stimuli.17 For example, PayPal used neuromarketing research to
redesign their ad campaign and focused on speed and convenience, rather than safety and security.
Neurological research has been applied many other ways in marketing.18 Companies such as
Campbell’s Soup and Frito-Lay have used neuromarketing to understand consumer responses to
packaging, including color, fonts, and images. Frito-Lay discovered that the types of bags used
in packaging could impact consumer responses. Based on this research, they replaced their shiny
bags with matte bags. Frito-Lay also used neuromarketing to get inside the minds of consumers as
Cisco’s Human Network Campaign was developed based on
research—conducted using ZMET—into consumers’ thoughts
and feelings about Cisco Systems and its role in their lives.
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370 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
FIGURE 10-3
Application of ZMET to
Intimate Apparel Market
Coordinated
Aggravation
Expense Sexy
Physical comfort
Achievement
Anger
Concern Emotionally comfortable
Emotional freedom
Acceptance by others
Feel thin
Attractive to others
Self- confidence
Physical imprison-
ment
Happy Elegant
Project self-image
= Destination construct
= Originator construct
= Connector construct
Obligatory wearing
Quality garment
Physical control
Garment attributes
Variety of design
they reacted to Cheetos cheese-flavored snacks. Scanning the brains of a carefully chosen group
of consumers revealed that their most powerful responses were to the product’s messy outer coat-
ing. The research study’s insight led to an award-winning ad campaign, which made the orange
coating of Cheetos the focus of the ad campaign.19
Neuromarketing has also been used to measure the type of emotional response consumers
exhibit when presented with marketing stimuli. For instance, marketers have studied how market-
ing actions can influence the neural representation of experienced pleasantness or pleasure.20 Oth-
ers have explored how neuromarketing can help answer marketing questions that cannot be readily
solved through traditional marketing methods. For example, marketers could expose consumers to
a commercial and then measure consumers’ responses using blood oxygenation level-dependent
measurement.21 Neurological research has shown that people activate different regions of the brain
in assessing the personality traits of people than they do when assessing brands.
One major research finding to emerge from neurological consumer research is that many
purchase decisions appear to be characterized less by the logical weighing of variables and more
“as a largely unconscious habitual process, as distinct from the rational, conscious, information-
processing model of economists and traditional marketing textbooks.” Even basic decisions, such
as the purchase of gasoline, seem to be influenced by brain activity at the subrational level.
Given the complexity of the human brain, however, many researchers caution that neurologi-
cal research should not form the sole basis for marketing decisions. These research activities have
not been universally accepted.
The measurement devices to
capture brain activity can be
highly obtrusive, such as with
skull caps studded with elec-
trodes, creating artificial expo-
sure conditions. Others question
whether they offer unambiguous
implications for marketing strat-
egy. Brian Knutson, a professor
of neuroscience and psychology
at Stanford University, com-
pares the use of EEG to “stand-
ing outside a baseball stadium
and listening to the crowd to
figure out what happened.”
PayPal used neuromarketing research to redesign their ad
campaign and focused on speed and convenience rather than
safety and security.
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 371
Brand Personality and Values As defined in Chapter 2, brand personality is the human characteristics or traits that consumers
can attribute to a brand. We can measure it in different ways. Perhaps the simplest and most direct
way is to solicit open-ended responses to a probe such as the following:
If the brand were to come alive as a person, what would it be like? What would it do? Where
would it live? What would it wear? Who would it talk to if it went to a party (and what would
it talk about)?
If consumers have difficulty getting started in their descriptions, an easily understood example
or prompt serves as a guide. For example, if Campbell’s Soup were to be described as a person,
one possible response might be as follows:22
Mrs. Campbell is a rosy-cheeked and plump grandmother who lives in a warm, cozy house
and wears an apron as she cooks wonderful things for her grandchildren.
Other means are possible to capture consumers’ points of view. For example, marketers can
give consumers a variety of pictures or a stack of magazines
and ask them to assemble a profile of the brand. Ad agencies
often conduct “picture sorting” studies to clarify who are typi-
cal users of a brand.
As Chapter 3 noted, brand personality and user imagery
may not always agree. When USA Today was first introduced,
a research study exploring consumer opinions of the newspaper
indicated that the benefits readers and nonreaders perceived
were highly consistent. Perceptions of the USA Today brand
personality—as colorful, friendly, and simple—were also
highly related. User imagery, however, differed dramatically:
Nonreaders viewed a typical USA Today reader as a shallow
“air head”; readers, on the other hand, saw a typical USA
Today reader as a well-rounded person interested in a variety
of issues. Based on these findings, an advertising campaign was
introduced to appeal to nonreaders that showed how prominent
people endorsed the newspaper.23
The Big Five. We can assess brand personality more definitively through adjective checklists
or ratings. Stanford’s Jennifer Aaker conducted a research project that provides an interesting
glimpse into the personality of some well-known brands, as well as a methodology to examine the
personality of any one brand. Based on an extensive data collection of ratings of 114 personality
traits on 37 brands in various product categories by more than 600 individuals representative of
the U.S. population, she created a brand personality scale that reflected the following five factors
(with underlying facets) of brand personality:24
1. Sincerity (down-to-earth, honest, wholesome, and cheerful)
2. Excitement (daring, spirited, imaginative, and up-to-date)
3. Competence (reliable, intelligent, and successful)
4. Sophistication (upper class and charming)
5. Ruggedness (outdoorsy and tough).
Figure 10-4 depicts the specific trait items that make up the Aaker brand personality scale.
Respondents in her study rated how descriptive each personality trait was for each brand according
to a seven-point scale (1 = not at all descriptive; 7 = extremely descriptive). Aaker averaged responses
to provide summary measures. Some brands tend to be strong on one particular factor; some brands
like Nike are high on more than one factor; some brands score poorly on all factors.
Brand personality has been shown to impact brand outcomes in various ways. A meta-analysis of
brand personality research aimed to connect the various dimensions of brand personality with different
outcome measures including brand attitudes and commitment. The researchers found that sincerity
and competence dimensions were more impactful on brand attitude and commitment; excitement and
ruggedness had the weakest impact. Further, they found brand personality exerted the greatest impact
on brands in the maturity stage of their life cycle compared with brands in an early life-cycle stage.25
A consumer research study of USA Today revealed stark dif-
ferences in user imagery among readers and non-readers, even
though perceptions of the brand’s personality were consistent.
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372 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Ethnographic and Experiential Methods More than ever, researchers are working to improve the effectiveness of their qualitative
approaches, as well as to go beyond traditional qualitative techniques to research consumers in
their natural environment.26 The rationale is that no matter how clever the research design, con-
sumers may not be able to fully express their true selves as part of a formalized research study.
By tapping more directly into consumers’ actual home, work, or shopping behaviors, researchers
might be able to elicit more meaningful responses.27 As markets become more competitive and
many brand differences are threatened, any insight that helps to support a stronger brand position-
ing or create a stronger link to consumers is valuable (see Branding Brief 10-3).
FIGURE 10-4
Brand Personality Scale
Measures
Down- to-earth
down-to-earth family-oriented
small-town
Honest
honest sincere
real
Wholesome
wholesome original
Cheerful
cheerful sentimental
friendly
Daring
daring trendy
exciting
Spirited
spirited cool
young
Imaginative
imaginative unique
Up-to-date
up-to-date independent contemporary
Reliable
reliable hard-working
secure
Intelligent
intelligent technical corporate
Successful
successful leader
confident
Upper-class
upper-class glamorous
good-looking
Charming
charming feminine smooth
Outdoorsy
outdoorsy masculine western
Tough
tough rugged
Factors
Facets
Excitement Competence Sophistication RuggednessSincerity
Traits
Consumer research plays a significant role in uncovering infor-
mation valuable to consumer-focused companies. David Taylor,
the founder of the Brand Gym consultancy, cautions that not all
findings from consumer research can be considered insights. He
defines insight as “a penetrating, discerning understanding that
unlocks an opportunity.”
According to Taylor, an insight holds far more potential than a
finding. Using Microsoft as an example, Taylor draws the contrast
between the finding that “people need to process more and more
information and data” and the insight that “information is the
key to power and freedom.” This insight might help Microsoft
develop products that appeal to a larger consumer base than if
the company relied solely on the finding.
Taylor developed a set of criteria to evaluate insights:
• Fresh: An insight might be obvious and, in fact, be over-
looked or forgotten as a result. Check again.
• Relevant: An insight when played back to other target con-
sumers should strike a chord.
• Enduring: By building on a deep understanding of consum-
ers’ beliefs and needs, a true consumer insight should have
the potential to remain relevant over time.
• Inspiring: All the team should be excited by the insight and
see different but consistent applications.
Insights can come from consumer research such as
focus groups, but also from using what Taylor describes
as the “core insight drills.” A sample of these drills
follows:
• How could the brand or category do more to help improve
people’s lives?
• What do people really value in the category? What would
they not miss?
• What conflicting needs do people have? How can these trad-
eoffs be solved?
• What bigger market is the brand really competing in from a
consumer viewpoint? What could the brand do more of to
better meet these higher-order needs?
• What assumptions do people make about the market that
could be challenged?
• How do people think the product works, and how does it
work in reality?
• How is the product used in reality? What other products are used
instead of the brand, where the brand could do a better job?
These drills can help companies unearth consumer insights that
lead to better products and services, and ultimately, to stronger
brands.
Source: David Taylor, “Drilling for Nuggets: How to Use Insight to Inspire
Innovation,” Brand Strategy, March 2000. Used with permission of Brand
Strategy, www.brandstrategy.co.uk.
BRANDING BRIEF 10-3
Making the Most of Consumer Insights
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 373
We’ve noted that much of this type of research has its roots in ethnographic research origi-
nally used by anthropologists. Ethnographic research uses “thick description” based on participant
observation. In marketing, the goal of ethnographic research is to extract and interpret the deep
cultural meaning of events and activities through various research techniques such as consumer
immersion, site visits, shop-alongs, embedded research, and so on.28
Advocates of the ethnographic approach have sent researchers to consumers’ homes in the
morning to see how they approach their days, given business travelers digital cameras and diaries
to capture their feelings when in hotel rooms, and conducted “beeper studies” in which partici-
pants are instructed to write down what they are doing when they are paged or texted.29
Marketers such as Procter & Gamble seek consumers’ permission to spend time with them in
their homes to see how they actually use and experience products. Some of the many other compa-
nies that have used ethnographic research to study consumers include Best Western (to learn how
seniors decide when and where to shop), Moen (to observe over an extended time how customers
really use their shower devices), and Intel (to understand how people use mobile communications
in moving around a city).30 A comprehensive ethnographic research study for JCPenney on their
wedding registry resulted in a complete makeover at all levels.31 The Branding Brief 10-4 below
describes how a technique of ethnography applied to digital environments (i.e., netnography, can
be beneficial to brands).
In addition to the business-to-consumer applications of ethnography and netnography, busi-
ness-to-business firms can also benefit from company visits that help to cement relationships and
supplement research efforts. Technology firms—such as Hewlett-Packard—use cross-functional
customer visits as a market research tool to gain a competitive advantage. Figure 10-5 offers
advice from one expert on the subject, Ed McQuarrie, about best practices for an outbound or
inbound customer visit.32
Recently, with our social interactions increasingly taking place
in digital environments, an ethnographic technique for digital
environments called netnography has become popular as a mar-
keting research tool. Two types of data can be gathered to con-
duct research in online forums: (1) the actual communications in
online communities, and (2) researchers’ observations regarding
interactions among community members.
Netnography involves six stages, as follows: (1) developing a
research plan; (2) establishing entrée; (3) collecting and triangulating
data; (4) analyzing and interpreting data; (5) ensuring ethical stan-
dards; and (6) reporting on research finding and associated insights.
One application of netnography to Starbucks Coffee was
conducted by the company, NetBase. It resulted in various inter-
pretations of the brand based on comments posted on various
Web sites. Positive themes which emerged included its vari-
ants, the instant coffee, the taste of coffee, and the stimulant
effects of coffee. An example comment was “I love Starbucks;
it’s so yummy! When I grow up, I want my bedroom to smell like
Starbucks coffee!” In contrast, negative themes revolve around
its premium pricing, its taste, and poor quality. Other negative
themes include side effects and the coffee house experience.
There are some pros and cons of netnography. Like ethnog-
raphy, netnography studies human behavior in a descriptive way.
Similar to ethnographic methods, netnography also utilizes mul-
tiple approaches, can be adapted to varying contexts, and can
provide deep insights due to its immersive nature. Netnography
has certain benefits over other qualitative research tools—such
as focus groups or in-depth interviews—in that it is less obtrusive
and is conducted at a lower cost.
However, one downside of netnographic approaches is it is
limited to research pertaining to digital environments, and there-
fore, is not applicable to consumers who do not have access or
do not participate in social media. The findings may be subject to
biases that are typical of online research conducted on consumers
who have self-selected themselves into a study, and therefore,
must be carefully scrutinized for sample selection biases. Never-
theless, there is certainly supporting evidence that ethnography
applied to online forums (i.e., netnography) can yield valuable
insights to brands and companies.
Sources: Robert V. Kozinets, Netnography: Doing Ethnographic Research
Online (Thousand Oaks, CA: Sage Publications, 2010); Robert V. Kozinets,
“The Field Behind the Screen: Using Netnography for Marketing Research
in Online Communities,” Journal of Marketing Research 39, no. 1 (2002):
61–72; Hope Ngyuyen, “Starbucks Netnography,” January 4, 2012, www
.netbase.com/blog/starbucks-netnography/, accessed October 8, 2017. Gigi
DeVault, “Netnography: Obtaining Social Media Insight,” February 28, 2017,
www.thebalance.com/investigate-social-media-like-an-anthropologist-
2297153, accessed November 6, 2017. Daiuchuu Ginga, “In the Footsteps
of Kozinets: Towards a New Netnographic Taxonimization,” Journal of
Internet Appreciation, (2013): 418–419; Robert V. Kozinets (1998), “On
Netnography Initial Reflections on Consumer Research Investigations
of Cyberculture,” in Advances in Consumer Research, Volume 25, eds.
Joseph Alba and Wesley Hutchinson (Provo, UT: Association for
Consumer Research, 1998), 366–371.
BRANDING BRIEF 10-4
Netnography as a Digital Research Technique
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374 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
The show Undercover Boss is an American television series in which a person who is a
senior-level executive goes undercover as an entry-level employee in an effort to uncover problems
or issues with the company. Similarly, service companies often employ mystery shoppers, paid
researchers who pose as customers to learn about the service experience provided by a company.
Sometimes the results can be eye-opening. When the president of Office Depot decided to pose
as a mystery shopper himself, he found that employees were spending too much time keeping
stores clean and well-stocked and not enough time building relationships with customers. As a
result, the company reduced the size of stores, retrained and incentivized employees to focus
more on customers, and added other products and services that customers wanted that were not
currently available.33
Through the years, companies have changed the way they gain customer insights. Microsoft
employs ethnographic research with in-depth studies of consumer online search attitudes and
behavior. Observing consumers inside and outside the home in a series of research studies, the
company learned of changes over time in the way consumers explore and learn about new things
online. The German company Miele used ethnographic research to uncover how consumers who
suffered from allergies engaged in constant cleaning of their homes. They designed a vacuum
cleaner with a traffic-light indicator to show when a surface is dust-free.34
Lead users of a product are of special research importance to many consumers. Many firms
ask online groups of their most progressive consumers to give feedback via instant messages or
chat rooms. Alternatively, companies may design contests to generate new product design ideas
from their most engaged consumers. This type of consumer-designed product or ad campaign has
become a popular way by which companies engage their customers. For example, Frito-Lay has
introduced several flavors for its Lay’s potato chip brand based on the annual “Do Us a Flavor”
contest, which enlists chip fans to identify new flavors. The three finalist flavors in 2017 included
Everything Bagel, Fried Green Tomatoes, and Tacos.35 Another company, Procter & Gamble, has
a number of innovations that resulted from its customer insights, as we outline in the Branding
Brief 10-5 below.
Despite its many advantages, two of the more significant downsides to ethnographic research
are that it is time-consuming and expensive. Compact video cameras make capturing participants’
words and actions easier, and short films are often part of the research output that is reported
to help bring the research to life.36 Moreover, because it is based on subjective interpretation,
multiple points of view may prevail. Every research method, however, has its advantages and
disadvantages.37
FIGURE 10-5
Tips for Conducting
Good Customer Visits
1. Send an advance letter of confirmation with an agenda so customers
know what to expect and can be prepared.
2. Send small cross-functional teams.
3. Select customers according to a plan and visit at least a dozen.
4. Don’t keep going back to the same small group of favorite customers.
5. Interview people at each site who represent each stage of the purchasing decision.
6. Get support from local account management.
7. Use a two- to three-page discussion guide in outline form.
8. Assign roles to team members (moderator, listener, note taker, etc.).
9. Use open-ended questions.
10. Don’t ask customers to give solutions—get them to identify problems.
11. Don’t talk too much and don’t show off your expertise.
12. Probe deeper by using follow-up questions.
13. Debrief immediately.
14. Highlight verbatim quotes in reports.
15. A summary report should emphasize big news and be organized by major themes.
16. Archive the report online with other marketing research and intelligence.
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 375
Qualitative research techniques are a creative means of ascertaining consumer perceptions
that may otherwise be difficult to uncover. The range of possible qualitative research techniques
is limited only by the creativity of the marketing researcher.
However, qualitative research also has its drawbacks. The in-depth insights that emerge have
to be tempered by the realization that the samples are often very small and may not necessarily
generalize to broader populations. Moreover, given the qualitative nature of the data, there may
be questions of interpretation. Different researchers examining the same results from a qualitative
research study may draw different conclusions.
QUANTITATIVE RESEARCH TECHNIQUES Although qualitative measures are useful in identifying the range of possible associations with a
brand and some initial insights into their strength, favorability, and uniqueness, marketers often
want a more definitive portrait of the brand to allow them to make more confident and defensible
strategic and tactical recommendations.
Some say qualitative research strives to uncover and discover, while quantitative research
aims to prove or disprove. Whereas qualitative research typically elicits some type of verbal
response from consumers, quantitative research typically employs various types of scale ques-
tions from which researchers can draw numerical representations and summaries.
Quantitative measures of brand knowledge can help to more definitively assess the depth
and breadth of brand awareness; the strength, favorability, and uniqueness of brand associations;
the positivity of brand judgments and feelings; and the extent and nature of brand relationships.
Quantitative measures are often the primary ingredient in tracking studies that monitor brand
knowledge structures of consumers over time, as we discussed in Chapter 9.
Procter & Gamble has learned the value of combining quanti-
tative with qualitative data in managing its brands. When P&G’s
baby care group was receiving quantitative and qualitative infor-
mation that was contradictory about its Pampers diaper brand,
P&G collected qualitative data to shed further light on why there
was consumer attrition, by following 12 mothers. Participants
in the study had to answer questions about their diaper chang-
ing behaviors, and what products they bought. The moms com-
pleted shopping assignments, answered surveys and uploaded
pictures on various sizes. Based on nearly 600 pages of consumer
feedback, they found that the lack of good diaper fit sometimes
caused moms to switch to a different brand or adapt to a much
larger size. Based on this insight, P&G was able to create a new
diaper size and improve their communications regarding diaper
sizes on their packaging.
P&G’s blockbuster product Swiffer is also the result of a cus-
tomer insight derived from ethnographic methods. Through quali-
tative research, P&G understood the value of a clean home to
the consumer. Many homeowners viewed their clean floors as a
reflection of themselves, and therefore, exerted a lot of their time
and effort on this household chore. To conduct their research, a
team of researchers entered 18 homes to understand the process
of mopping and cleaning. They found that more than half the
time that was devoted to this household chore was being used to
clean the mop itself. This insight led to the design of the Swiffer.
By using disposable cloths at the end of a broom, the Swiffer prod-
uct eliminates the need for cleaning the mop. The Swiffer product
was a huge blockbuster hit for P&G, and the case study helps
demonstrate the value of qualitative insight to developing new
products that solve a real customer problem.
Sources: Elise Dupre, “P&G Solves Diaper Dilemma with Qualita-
tive Research,” November 26, 2013, www.dmnews.com/dataanalytics/
pg-solves-diaper-dilemma-with-qualitative-research/article/322357/,
accessed October 8, 2017; Jo Bowman, “The Rise of People-Watching
Research Carried Out by Brands,” September 1, 2016, www.raconteur
.net/business/the-rise-of-people-watching-research-carried-out-by-brands,
accessed October 8, 2017; Eric Butterman “Mopping the Floor with the
Status Quo,” December 2012, www.asme.org/engineering-topics/articles/
product-planning/mopping-floor-the-status-quo, accessed October 8, 2017.
BRANDING BRIEF 10-5
How P&G Innovates Using Qualitative Research Data
P&G’s blockbuster product, Swiffer, is the result of a customer
insight derived from qualitative marketing research.
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376 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Brand Awareness Recall that brand awareness is related to the strength of the brand in memory, as reflected by con-
sumers’ ability to identify various brand elements like the brand name, logo, symbol, character,
packaging, and slogan under different conditions. Brand awareness describes the likelihood that
a brand will come to mind in various situations, and the ease with which it does so given distinct
types of cues.
Marketers use several measures of awareness of brand elements.38 Choosing the right one is a
matter of knowing the relative importance of brand awareness for consumer behavior in the category
and the role it plays in the success of the marketing program, as we discussed in Chapter 2. Let’s
look at some of these awareness issues.
Recognition. Brand recognition requires consumers to identify the brand under a variety of
circumstances and can rest on the identification of any of the brand elements. The most basic rec-
ognition test gives consumers a set of individual items visually or orally and asks them whether
they think they have previously seen or heard of these items. To provide a more sensitive test,
it is often useful to include decoys or lures—items consumers could not possibly have seen. In
addition to “yes” or “no” responses, consumers can also rate how confident they are in their
recognition of an item.
Other, somewhat subtler, recognition measures test perceptually degraded versions of the
brand, which are masked or distorted in some way or shown for an extremely brief duration.
For example, we can test brand name recognition with missing letters. Figure 10-6 tests your
ability to recognize brand names with less than full information. These subtler measures may be
particularly important for brands that have a high level of recognition, in order to provide more
sensitive assessments.39
Brand recognition is especially important for packaging, and some marketing researchers
have used creative means to assess the in-store visibility of package design. As a starting point,
they consider the benchmark or “best case” of the visibility of a package when a consumer
(1) with 20–20 vision, (2) is face-to-face with a package, (3) at a distance of less than five feet,
and (4) under ideal lighting conditions.
A key question then is whether the package design is robust enough to be still recognizable
if one or more of these four conditions are not present. Because shopping is often not conducted
under ideal conditions, such insights are important. For example, many consumers who wear eye-
glasses do not wear them when shopping in a supermarket. Is the package still able to effectively
communicate to consumers under such conditions?
FIGURE 10-6
Don’t Tell Me, It’s On the
Tip of my Tongue
A brand name with a high level of awareness will be recognized under less than ideal conditions. Consider the following list of incomplete names (i.e., word fragments). Which ones do you recognize? Compare your answers to the answer key in the footnote to see how well you did.
1. D _ _ N E _ 2. K O _ _ K 3. D U _ A C _ _ _ 4. H Y _ T _ 5. A D _ _ L 6. M _ T _ E L 7. D _ L T _ 8. N _ Q U _ L 9. G _ L L _ T _ _ 10. H _ _ S H _ Y 11. H _ L L _ _ R K 12. M _ C H _ _ I N 13. T _ P P _ R W _ _ E 14. L _ G _ 15. N _ K _
Answers: (1) Disney; (2) Kodak; (3) Duracell; (4) Hyatt; (5) Advil; (6) Mattel; (7) Delta; (8) NyQuil; (9) Gillette; (10) Hershey; (11) Hallmark; (12) Michelin; (13) Tupperware; (14) Lego; (15) Nike.
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 377
Research methods using tachistoscopes (T-scopes) and eye tracking techniques exist to test
the effectiveness of alternative package designs according to a number of specific criteria:
• Degree of shelf impact
• Impact and recall of specific design elements
• Perceived package size
• Copy visibility and legibility
• Distance at which the package can first be identified
• Angle at which the package can first be identified
• Speed with which the package can be identified.
These additional measures can provide more sensitive measures of recognition than simple
“yes” or “no” tasks. By applying these direct and indirect measures of brand recognition, mar-
keters can determine which brand elements exist in memory, and, to some extent, the strength of
their association. One advantage that brand recognition measures have over recall measures is the
chance to use visual recognition. It may be difficult for consumers to describe a logo or symbol in
a recall task; it’s much easier for them to assess the same elements visually in a recognition task.
Nevertheless, brand recognition measures provide only an approximation of potential recal-
lability. To determine whether consumers will actually recall the brand elements under various
circumstances, we need measures of brand recall.
Recall. To demonstrate brand recall, consumers must retrieve the actual brand element from
memory when given some related probe or cue. Thus, brand recall is a more demanding memory
task than brand recognition because consumers are not just given a brand element and asked to
say whether they have seen or heard it before.
Different measures of brand recall are possible depending on the type of cues provided to
consumers. Unaided recall on the basis of “all brands” provided as a cue is likely to identify only
the very strongest brands. Aided recall uses various types of cues to help consumer recall. One
possible sequence of aided recall might use progressively narrower cues—such as product class,
product category, and product type labels—to provide insight into the organization of consumers’
brand knowledge structures.
For example, if recall of the Porsche 911—a high-performance German sports car—in non-
German markets were of interest, recall probes could begin with all cars and move to more and
more narrowly defined categories, such as sports cars, foreign sports cars, or even high-perfor-
mance German sports cars. Marketers could ask consumers: When you think of foreign sports
cars, which brands come to mind?
Other types of cues can help measure brand recall. For example, marketers can ask about
product attributes (When you think of chocolate, which brands come to mind?) or usage goals (If
you were thinking of having a healthy snack, which brands come to mind?). Often, to capture the
breadth of brand recall and to assess brand salience, we might need to examine the context of the
purchase decision or consumption situation, such as different times and places. The stronger the
brand associations to these nonproduct considerations, the more likely it is that consumers will
recall them when given those situational cues.
When combined, measures of recall based on product attribute or category cues and situ-
ational or usage cues indicate breadth and depth of recall. We can further distinguish brand recall
according to the order as well as the latency or speed of recall. In many cases, people will recog-
nize a brand when it is shown to them and will recall it if they are given a sufficient number of
cues. Thus, potential recallability is high. The more important issue is the salience of the brand:
Do consumers think of the brand under the right circumstances, for example, when they could be
either buying or using the product? How quickly do they think of the brand? Is it automatically
or easily recalled? Is it the first brand they recall?
Corrections for Guessing. Any research measure must consider the issue of consumers mak-
ing up responses or guessing. That problem may be especially evident with certain types of aided
awareness or recognition measures for the brand. Spurious awareness occurs when consumers
erroneously claim they recall something they really don’t and that may not even exist.
From a marketing perspective, the problem with spurious awareness is that it may send
misleading signals about the proper strategic direction for a brand. For example, Oxtoby-Smith
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378 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
reported that one of its clients was struggling with a 5 percent market share even though 50 percent
of survey respondents reported they were aware of the brand. On the surface, it would seem a
good idea to improve the image of the brand and attitudes toward it in some way. Upon further
examination, marketers determined that spurious awareness account for almost half the survey
respondents who reported brand awareness, suggesting that a more appropriate solution to the true
problem would be first to build awareness to a greater degree. Marketers should be sensitive to
the possibilities of misleading signals because of spurious brand awareness, especially with new
brands or ones with plausible-sounding names.
Strategic Implications. The advantage of aided recall measures is that they yield insight into
how brand knowledge is organized in memory and what kind of cues or reminders may be neces-
sary for consumers to be able to retrieve the brand from memory. Understanding recall when we
use different levels of product category specificity as cues is important, because it has implications
for how consumers form consideration sets and make product decisions.
For example, again consider the Porsche 911. Assume consumer recall of this particular car
model was fairly low when all cars were considered but very high when foreign sports cars were
considered. In other words, consumers strongly categorized the Porsche 911 as a prototypical
sports car but tended to think of it in only that way. If that were the case, for more consumers
to entertain the possibility of buying a Porsche 911, we might need to broaden the meaning of
Porsche so that it has a stronger association to cars in general. Of course, such a strategy risks
alienating existing customers who had been initially attracted by the purity and strong identifica-
tion of the Porsche 911 as a sports car. The choice of an appropriate strategy would depend on
the relative costs and benefits of targeting the two different segments.
The point is that the category structure that exists in consumers’ minds—as reflected by
brand recall performance—can have profound implications for consumer choice and marketing
strategy. The insights gleaned from measuring brand recall are also valuable for developing brand
identity and integrated marketing communication programs, as we showed in Chapters 4 and 6.
For example, we can examine brand recall for each brand element to explore the extent to which
any one of these (name, symbol, or logo) suggests any other. Are consumers aware of all the dif-
ferent brand elements and how they relate?
We also need a complete understanding of brand image, as covered in the following section.
Brand Image One vitally important aspect of the brand is its image, as reflected by the associations that consum-
ers hold for it. It is useful for marketers to make a distinction between lower-level considerations,
related to consumer perceptions of specific performance and imagery attributes and benefits, and
higher-level considerations related to overall judgments, feelings, and relationships. There is an
obvious connection between the two levels, because consumers’ overall responses and relation-
ship with a brand typically depend on perceptions of specific attributes and benefits of that brand.
This section considers some issues in measuring lower-level brand performance and imagery
associations.
Beliefs are descriptive thoughts that a person holds about something (for instance, that
a particular software package has many helpful features and menus and is easy to use).40
Brand association beliefs are those specific attributes and benefits linked to the brand and its
competitors.
In Chapter 2, we provided a structured set of measures to tap into performance and
imagery associations. The qualitative research approaches we described earlier are useful in
uncovering the different types of specific brand associations making up the brand image. To
better understand their potential ability to serve as the basis for brand positioning and how
they might contribute to brand equity, we can assess belief associations by one or more of
the three key dimensions—strength, favorability, and uniqueness—making up the sources of
brand equity.
As a first cut, we can use open-ended measures that tap into the strength, favorability, and
uniqueness of brand associations, as follows:
1. What are the strongest associations you have to the brand? What comes to mind when you
think of the brand? (Strength)
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 379
FIGURE 10-7
Example of Brand
Association Ratings
1. To what extent do you feel the following product characteristics are descriptive of Lipton iced tea (where 1 = strongly disagree and 7 = strongly agree)?
convenient refreshing and thirst quenching real and natural good tasting contemporary and relevant used by young professionals
2. How good or bad is it for iced tea to have the following product characteristics (where 1 = very bad and 7 = very good)?
convenient refreshing and thirst quenching real and natural good tasting contemporary and relevant used by young professionals
3. How unique is Lipton iced tea in terms of the following product characteristics (where 1 = not at all unique and 7 = highly unique)?
convenient refreshing and thirst quenching real and natural good tasting contemporary and relevant used by young professionals
2. What is good about the brand? What do you like about the brand? What is bad about the
brand? What do you dislike about the brand? (Favorability)
3. What is unique about the brand? What characteristics or features does the brand share with
other brands? (Uniqueness)
To gain more specific insights, we could rate these belief associations according to strength,
favorability, and uniqueness, as Figure 10-7 illustrates with Lipton iced tea. Indirect tests also can
assess the derived importance and favorability of these brand associations (through multivariate
regression techniques).
Other Approaches. A more complicated quantitative technique to assess overall brand
uniqueness is multidimensional scaling or perceptual maps. Multidimensional scaling (MDS)
is a procedure for determining the perceived relative images of a set of objects, such as prod-
ucts or brands. MDS transforms consumer judgments of similarity or preference into distances
represented in perceptual space. For example, if Brands A and B are judged by respondents
to be the most similar of a set of brands, the MDS algorithm will position Brands A and B so
that the distance between them in multidimensional space is smaller than the distance between
any other two pairs of brands. Respondents may base their similarity between brands on any
basis—tangible or intangible.41
Figure 10-8 displays a hypothetical perceptual map of restaurants in a particular market.
Segment 1 is more concerned with health than taste and is well targeted by Brand B; segment 2
is more concerned with taste and is well targeted by Brand C. Brand A is trapped in the middle.
It either must improve taste to provide a healthy alternative to Brand C for segment 2, or it must
improve healthiness to prove a tastier alternative to Brand B for segment 1.
The next section outlines recent developments in social media listening, as companies have
built sophisticated algorithms to understand how social media can provide clues about consum-
ers’ thoughts and perceptions. This provides a way of measuring and monitoring brand image by
leveraging social media conversations, which can be accessed by brand marketers on a continuous
basis at a relatively low cost.
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380 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
SOCIAL MEDIA LISTENING AND MONITORING Social media monitoring is a fast-growing and increasingly specialized area of marketing research.
Firms use social media monitoring services to track brand and product mentions across various
online social media sources, such as online social networking platforms exemplified by Facebook
and Twitter, as well as blogs and online discussion forums. These services typically provide firms
with two types of brand-level time series data: volume, which counts the number of times a given
brand (or keyword, more generally) is mentioned in various social media sources, and valence,
which quantifies the extent to which these brand mentions are positive or negative (i.e., sentiment)
and is indicative of the liking toward the brand.
A summary of key statistics associated with a brand is often referred to as a dashboard, which may
consist of the following: (1) number of engagements (e.g., Facebook Likes or Twitter Re-tweets) of brand
messages across various social media platforms; (2) sentiment (positive versus negative) associated with
social media messages; (3) topics that are related to a brand; (4) lists of keywords that are associated
with a brand. This information is further contextualized by examining trends over time or contrasting
these across a brand’s key competitors.42 Figure 10-9 provides an example of a social media dashboard.
FIGURE 10-8
Hypothetical Restaurant
Perceptual Map
Flavorful
Less Flavorful
Less Healthy Healthy
Brands: A, B and C
Customer Segments Ideal Points: 1 and 2
C
A B
2 1
FIGURE 10-9
Social Media Dashboard
A social media dashboard offers a quick snapshot of a brand’s social media presence and can be a useful tool
for managing a digital brand.
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 381
The social monitoring and listening industry has evolved to include several well-known
players such as Crimson Hexagon, Oracle’s Social Cloud, Sysomos, Salesforce’ Social Cloud,
and BrandWatch.43 These companies offer social media monitoring services and social media
analytics to brand marketers to enable them to keep track of social media conversations sur-
rounding their brands. Compared to traditional marketing research methods for tracking brands
over time (e.g., surveys), social media monitoring data has the advantage of being observational
and unobtrusive and also tends to be cheaper to collect. The obvious disadvantage is that direct
probes and queries are not possible as is possible with other methods like focus groups or
surveys. The Branding Brief 10-6 below describes how one leading brand—Gatorade—uses
its social listening facility to keep track of consumers’ thoughts and perceptions regarding the
brand and its marketing.
Gatorade’s Social Media Command Center inside its Chicago
headquarters is often seen as one of the prime examples of how
a marketer can utilize social media listening tools to improve their
marketing and brand strategy. The company has partnered with
Crimson Hexagon for its social monitoring, and its control room
features six big monitors and displays some data visualizations.
The visualizations could present information such as the number
of tweets that are relevant to Gatorade, the key terms that con-
sumers are using in conjunction with the brand name, and the
trending topics relevant to athletes and sports nutrition-linked
topics. The monitors also display the key topics that are being
discussed on various blogs and summarizes the sentiment linked
to the brand itself.
The listening center allows the brand to optimize their
landing page and ensure that followers see the most rele-
vant content, a tactic which enabled the brand to increase its
engagement by 250 percent. Other important ways by which
Gatorade uses its listening center includes: (1) identifying key
concerns that customers may have and ensuring these con-
cerns are addressed; (2) improving the accuracy of the target-
ing of promotional offers and measuring their effectiveness; and
(3) examining the impact of different advertising campaigns.
Broader trends relevant to sports nutrition may also emerge
from understanding and tracking customer conversations rel-
evant to the brand.
It was because of the listening center that they caught on to
the key customer insight that the song that was used in a Gatorade
commercial, “Evolve,” generated a lot of customer interest, so
much so, customers were asking on social media “Where can I
get that song?” In response, Gatorade made the song (by David
Banner) available for a free download on their Web site, thereby
generating more traffic to it. This type of quick response was
possible because of the social listening platform, which provided
continuous feedback on what customers were thinking and talk-
ing about. The listening center has also helped Gatorade identify
customer service issues and resolve them quickly.
The need for social listening is particularly acute as Gatorade
has invested in various novel and unconventional advertising
campaigns (e.g., using virtual reality and augmented reality). For
example, in 2015, Gatorade used virtual reality to allow fans to
experience hitting a baseball into the stands from the perspective
of major baseball star player, Bryce Harper. The user is placed in
the position of waiting for a final throw to come in, and they get
to experience the rush that comes with clubbing a home run. The
ad uses YouTube 360 which allows viewers to explore different
angles of videos by dragging their mouse.
BRANDING BRIEF 10-6
Gatorade’s Social Media Command Center
The social monitoring and listening industry consists of a
number of leading companies such as Crimson Hexagon,
which provide a number of services to assist brands in listen-
ing to customers on social media channels.
Salesforce Social Cloud is an important tool for social
media listening.
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382 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Along a similar vein, in partnership with Snapchat, the
Gatorade digital dunk was another innovation that Gatorade
experimented with to generate social media buzz and raise
awareness. “We figured with the success we had last year,
why not give it another try with a little bit of a twist,” said
Kenny Mitchell, head of consumer engagement at Gatorade.
The campaign allowed users to superimpose a Gatorade bath
over their video selfies using Snapchat’s library of animated
filters. The campaign—which took place during the run-up
to the 2017 Super Bowl—featured Serena Williams and other
celebrities, and garnered a staggering 165 million impressions.
The campaign also allowed Gatorade to reach audiences on
Snapchat on a massive scale, with an interactive experience
that was tied specifically to Gatorade. With Gatorade experi-
menting with novel augmented reality and social media-based
campaigns, it is no wonder that its social listening offers the
brand a good way of keeping track of whether Gatorade’s
campaigns are a hit or a miss.
Sources: Adam Ostrow, “Inside Gatorade’s Social Media Command
Center,” Mashable.com, June 15, 2010, http://mashable.com/2010/06/15/
gatorade-social-media-mission-control/#BrTi2hww28qZ, accessed
October 17, 2017; Fiona Saluk, “Taking a Look at the Most Impres-
sive Command Centers,” January 23, 2015, www.brandwatch.com/blog/
taking-look-impressive-command-centers/, accessed October 17, 2017;
Garett Sloane, “Gatorade Is Reprising the Super Bowl Dunk on Snapchat,”
February 3, 2017, http://adage.com/article/special-report-super-bowl/
gatorade-reprising-super-bowl-dunk-snapchat/307844/, accessed
October 17, 2017; E.J. Schultz, “Gatorade Lets Viewers Step Up to Bat with
Virtual Reality Campaign,” AdAge, September 16, 2015, http://adage.com/
article/digital/gatorade-puts-viewers-bat-virtual-reality-campaign/
300384/, accessed October 31, 2017; Kenny Mitchell, Head of Customer
Engagement, Gatorade, personal correspondence, October 5, 2017.
Gatorade’s Social Media Command Center offers continuous feedback to managers on what customers
are thinking or talking about.
As we described above with regard to social media monitoring, the communications environ-
ment has shifted and customers are engaged in conversations with each other, to a larger degree
than ever before. With the proliferation of social media and digital communications options, one
concern of brand marketers everywhere is understanding the return-on-investment (ROI) of each
communication channel. We describe this focus on attribution modeling in the Branding Brief 10-7.
Brand Responses The purpose of measuring more general, higher-level considerations is to find out how consumers
combine all the more specific, lower-level considerations about the brand in their minds to form
different types of brand responses and evaluations. Chapter 2 provided examples of measures of
key brand judgments and feelings. Here we delve into more detail.
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 383
Purchase Intentions. Another set of measures closely related to brand attitudes and consider-
ation looks at purchase intentions and focus on the likelihood of buying the brand or of switching
to another brand.44 Research in psychology suggests that purchase intentions are most likely to
be predictive of actual purchase when there is correspondence between the two in the following
dimensions:45
• Action (buying for own use or to give as a gift)
• Target (specific type of product and brand)
• Context (in what type of store based on what prices and other conditions)
• Time (within a week, month, or year).
With the proliferation of consumer touchpoints based on
social media and digital channels, marketers are increasingly inter-
ested in understanding the return-on-investment of social media
and digital marketing. Which social media channels have contrib-
uted most to awareness, engagement or sales? This focus—called
attribution modeling—has been defined by Google’s Analytics
software as “the rule, or set of rules, that determines how credit
for sales and conversions is assigned to touchpoints in conversion
paths.” Allocating credit across multiple touchpoints is a signifi-
cant problem for marketers.
There are three broad challenges involved in attribution mod-
eling. One challenge is how to make attributions regarding the
offline impact of online marketing and advertising activities, and
vice versa. To illustrate this, imagine evaluating the return-on-
investment of paid search advertising. The volume of search for a
given brand depends on consumers’ interest in the brand name;
however, the search queries may be driven by offline marketing
efforts including television advertising, magazine advertising or
outdoor ads. Therefore, it is challenging to disentangle the impact
of paid advertising alone from the indirect impact of these other
forms of marketing and promotions.
A second challenge is assigning attributions for marketing
efforts across multiple devices, including laptops, smartphones,
and televisions. Such cross-device shopping involving more than
one device accounts for nearly 40 percent of all e-commerce
transactions. For example, one digital marketer of a large online
clothing retailer may examine their online transactions by device
and find that many of their purchases are resulting from desktop
computers. However, a more careful look at activities preceding
the last click might show that consumers typically used a tablet or
smartphone to browse for clothes earlier in the path-to-purchase,
before completing the purchase on a desktop computer. This type
of cross-device behavior can add a layer of complexity into media
planning and buying yet is critically important to the planning
process. Understanding the intricacies of the cross-device behav-
ior of consumers can help ensure the success of digital marketing
campaigns.
The third challenge with attribution models is to ensure accu-
rate evaluation of the effectiveness of different digital marketing
channels (social, display, YouTube, referral, e-mail, search, others)
in contributing to conversions. Many standard analytics packages
such as Google Analytics or SiteCatalyst are used to identify the
path length and portfolio of media options that are responsible
for driving conversions. However, assigning credit to each media
option can still be a challenging issue. The most common ways
of attributing conversions are by using first-touch or last-touch
methods. First-touch attribution models assign credit to the first
touch point that initiated an interaction. In contrast, last-touch
attribution models give credit to the touch point and interaction
driving the ultimate conversion. For example, the Last Interac-
tion model in Google Analytics assigns credit to the final touch-
points (i.e., clicks) that immediately precede sales or conversions.
Another option is linear attribution, which splits the contribu-
tion for a given conversion equally across all channels. The issue
with linear attribution is that it does not take into consideration
the varying impacts of the different touchpoints in the path-to-
purchase. More complex attribution models, while increasing
accuracy, may also be more time-consuming and data-intensive.
Given these challenges, coming up with accurate and easy-to-use
attribution models may continue to be the Holy Grail of digital
marketers for many years to come.
Sources: Kohki Yamaguchi, “3 Challenges of Attribution Modeling: The
Bad, the Bad and the Ugly,” September 25, 2014, https://marketingland
.com/3-challenges-attribution-modeling-bad-bad-ugly-101257,
accessed November 7, 2017; Criteo, “The State of Mobile Com-
merce,” September 13, 2016, www.criteo.com/resources/mobile-
commerce-report/, accessed November 7, 2017; Google Support, Analytics
Help, “Attribution Modeling Overview,” https://support.google.com/
analytics/answer/1662518?hl=en, accessed October 11, 2017; Avinash
Kaushik, “Multi-Channel Attribution Modeling: The Good, Bad and
Ugly Models,” Occam’s Razor, August 12, 2013, https://www.kaushik
.net/avinash/multi-channel-attribution-modeling-good-bad-ugly-
models/, accessed November 11, 2018; Eva Anderl, Ingo Becker,
Florian Von Wangenheim, and Jan Hendrik Schumann, “Mapping the
Customer Journey: Lessons Learned from Graph-Based Online Attri-
bution Modeling,” International Journal of Research in Marketing
33, no. 3 (2016): 457–474; P. K. Kanna, Werner Reinartz, and Peter C.
Verhoef, “The Path to Purchase and Attribution Modeling: Introduction
to Special Section,” International Journal of Research in Marketing 33,
no. 3 (2016): 449–456.
BRANDING BRIEF 10-7
Understanding Attribution Modeling
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384 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
In other words, when asking consumers to forecast their
likely purchase of a product or a brand, we want to specify
exactly the circumstances—the purpose of the purchase, the
location of the purchase, the time of the purchase, and so
forth. For example, we could ask consumers:
“Assume your refrigerator broke down over the next
weekend and could not be inexpensively repaired. If you
went to your favorite appliance store and found all the
different brands competitively priced, how likely would
you be to buy a General Electric refrigerator?”
Consumers could indicate their purchase intention on an 11-point probability scale that ranges
from 0 (definitely would not buy) to 10 (definitely would buy).
Likelihood to Recommend. Bain’s Frederick Reichheld suggests there is only one customer
question that really matters: “How likely is it that you would recommend this product or service
to a friend or colleague?” According to Reichheld, a customer’s willingness to recommend results
from all aspects of a customer’s experience.46
Reicheld uses answers to this question to create what he calls a Net Promoter Score (NPS).
Specifically, in a survey, customers are asked to rate their likelihood to recommend on a 0–10-
point scale. Marketers then subtract detractors (those who gave a 0–6) from promoters (those
who gave a 9 or 10) to arrive at the NPS score. Customers who rate the brand with a 7 or 8 are
deemed passively satisfied and are not included. A typical set of NPS scores falls in the 10–30
percent range, but world-class companies can score over 50 percent. Some firms with top NPS
scores include Tesla Motors (80 percent), USAA (89 percent), Apple (77 percent), Amazon (61
percent), Intel (52 percent), and Jeep (59 percent).47
Several companies have seen benefits from adopting NetPromoter scores as a means of track-
ing brand health. When the European unit of GE Healthcare overhauled its call center and put more
specialists in the field, GE Healthcare’s Net Promoter scores jumped 10–15 points. BearingPoint
found clients who gave it high Net Promoter scores showed the highest revenue growth. When Intuit
applied Net Promoter to its TurboTax product, feedback revealed dissatisfaction with the software’s
rebate procedure. After Intuit dropped the proof-of-purchase requirement, sales jumped 6 percent.
Despite its simplicity and the anecdotal evidence surrounding its merits, no conclusive study
exists to prove the superiority of NPS over other available metrics for tracking customer experi-
ences and satisfaction. NPS is certainly not without its limitations. Some have argued that NPS may
be increased by sacrificing other aspects such as firm profitability.48 Others have argued that more
diagnostic information is needed to unpack a low NPS score.49 Regardless of these stated limitations,
it can be worthwhile using NPS as part of a broader set of actions taken by a company to ensure
advocacy by their promoters, and to promote an organizational culture which is customer-centric.
Brand Relationships Chapter 2 characterized brand relationships in terms of brand resonance and offered possible
measures for each of the four key dimensions: behavioral loyalty, attitudinal attachment, sense of
community, and active engagement. This section includes additional considerations with respect
to each of those four dimensions. Figure 10-10 displays a scale that, although originally developed
by its authors to measure overall brand engagement, could easily be adapted to measure brand
FIGURE 10-10
A Brand Engagement Scale
Source: David Sprott, Sandor Czellar, and Eric Spangenberg, “The Importance of a General Measure of Brand Engagement on Market Behavior: Development and Validation of a Scale,” Journal of Marketing Research 46, no. 1 (February 2009): 92–104.
1. I have a special bond with the brands I like.
2. I consider my favorite brands to be part of myself.
3. I often feel a personal connection between my brands and me.
4. Part of me is defined by important brands in my life.
5. I feel as if I have a close personal connection with the brands I most prefer.
6. I can identify with important brands in my life.
7. There are links between the brands that I prefer and how I view myself.
8. My favorite brands are an important indication of who I am.
Tesla rates very high on
a key metric of customer
satisfaction called Net
Promoter Score, which
captures a customer’s
willingness to recom-
mend a product to a
friend.
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 385
resonance by replacing mentions of brands with a specific
brand. For example, instead of saying, “I have a special bond
with the brands I like,” it could say, “I have a special bond
with my Saab automobile,” and so on.
Behavioral Loyalty. To capture reported brand usage and
behavioral loyalty, we could ask consumers several questions
directly. Or we could ask them what percentage of their last
purchases in the category went to the brand (past purchase history), and what percentage of their
planned next purchases will go to the brand (intended future purchases). For example, the market-
ers or brand managers of Duracell batteries might ask the following questions:
• Which brand of batteries do you usually buy?
• Which brand of batteries did you buy last time?
• Do you have any batteries on hand? Which brand?
• Which brands of batteries did you consider buying?
• Which brand of batteries will you buy next time?
These types of questions can provide information about brand attitudes and usage for Dura-
cell, including potential gaps with competitors and the names of other brands that might be in the
consideration set at the time of purchase.
Marketers can make their measures open-ended, force consumers to choose one of two
brands, or offer multiple choice or rating scales. They can compare the answers with actual mea-
sures of consumer behavior to assess whether consumers are accurate in their predictions. For
example, if 30 percent of consumers reported, on average, that they thought they would take their
vitamins daily over the next two weeks, but only 15 percent of consumers reported two weeks
later that they had done so during that period, then Centrum brand managers might need to devise
strategies to better convert intentions to actual behavior.
In a business-to-business setting, Narayandas advocates analyzing sales records, talking to
sales teams, and conducting surveys to assess where customers stand on a “loyalty ladder.”50
Attitudinal Attachment. Several different approaches have been suggested to measure the
second component of brand resonance—brand attachment.51 Some researchers like to character-
ize it in terms of brand love.52 One study proposed a brand love scale that consists of 10 items:
(1) This is a wonderful brand; (2) This brand makes me feel good; (3) This brand is totally awe-
some; (4) I have neutral feelings about this brand (reverse-coded item); (5) This brand makes me
very happy; (6) I love this brand; (7) I have no particular feelings about this brand (reverse-coded
item); (8) This brand is a pure delight; (9) I am passionate about this brand; and (10) I am very
attached to this brand.53
Another study found 11 dimensions that characterized brand love:54
1. Passion (for the brand).
2. Duration of the relationship (the relationship with the brand exists for a long time).
3. Self-congruity (congruity between self-image and product image).
4. Dreams (the brand favors consumer dreams).
5. Memories (evoked by the brand).
6. Pleasure (that the brand provides to the consumer).
7. Attraction (feel toward the brand).
8. Uniqueness (of the brand and/or of the relationship).
9. Beauty (of the brand).
10. Trust (the brand has never disappointed).
11. Declaration of affect (feel toward the brand).
One promising approach defines brand attachment in terms of two underlying constructs—
brand-self connections and brand prominence—where each of those two dimensions has two
subdimensions, suggesting the following sets of measures:55
1. Brand-Self Connection
a. Connected: “To what extent do you feel that you are personally connected to (brand)?”
b. Part of Who You Are: “To what extent is (brand) part of you and who you are?”
Duracell batteries can
measure brand loyalty
and usage by asking con-
sumers various questions
about the brands they
typically buy and the
ones that they intend to
purchase in the future.
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386 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
2. Brand Prominence
a. Automatic: “To what extent are your thoughts and feelings toward (brand) often auto-
matic, coming to mind seemingly on their own?”
b. Naturally: “To what extent do your thoughts and feelings toward (brand) come to you
naturally and instantly?”
Sense of Community. Although measuring behavioral loyalty and attitudinal attachment may
require a fairly structured set of questions, both sense of community and active engagement could
call for more varied measures because of their diverse set of issues.
One interesting concept that has been proposed with respect to the community is social cur-
rency, developed by brand consultants Vivaldi Partners. They define social currency as “the extent
to which people share the brand or information about the brand as part of their everyday social
lives at work or at home.” Figure 10-11 displays the different dimensions that make up the social
currency concept according to Vivaldi Partners.
Active Engagement. According to the brand resonance model, active engagement for a brand
is defined as the extent to which consumers are willing to invest their own personal resources—
time, energy, money, and so on—on the brand beyond those resources expended during the
purchase or consumption of the brand.
For example, in terms of engagement, in-depth measures could explore word-of-mouth
behavior, online behavior, and so forth. For online behavior, measures could explore the extent
of customer-initiated versus firm-initiated interactions, the extent of learning and teaching by
the customer versus by the firm, the extent of customers teaching other customers, and so on.56
The key to such metrics is the qualitative nature of the consumer-brand interaction and how
well it reflects the intensity of feelings. One mistake many firms made in the early days of the
Internet was to put too much emphasis on “eyeballs” and “stickiness”—the number and duration
of page views at a Web site, respectively. The depth of the underlying brand relationships of the
customers making those visits, however, and the manner in which those relationships manifest
themselves in brand-beneficial actions, will typically be more important.
Accordingly, researchers are attempting to determine the brand value of different online
and social media activities.57 For example, how important is a “like” from a user on Facebook?
One firm estimated that bringing a user on as a fan could be worth between 44 cents and $3.60
in equivalent media value from increased impressions generated from the Facebook newsfeed.
Critics of the study, however, pointed out that not all fans are created equal.58
Several different specific approaches have been suggested to measure brand engagement. The
Science of Branding 10-2 provides a detailed breakdown of the concept.
Fournier’s Brand Relationship Research. Boston University’s Susan Fournier argues that
brands can and do serve as viable relationship partners, and she suggests a reconceptualization
of the notion of brand personality within this framework.59 Specifically, she maintains that the
everyday execution of marketing mix decisions constitutes a set of behaviors enacted on the
FIGURE 10-11
Vivaldi Partners Social
Currency Model
Source: Used with permis- sion from Erich Joachimst- haler at Vivaldi Partners.
What share of your brand users recognizes and stirs buzz?
Conversation Customers proactively talk about a brand.
How many act as disciples and stand up for your brand?
Advocacy Customers are willing to tell others about a brand or recommend it further.
How many feel they exchange fruitful information with others?
Information The more information customers have about a brand, the more likely they are to develop preferences for the brand.
What share of users has a sense of community?
Affiliation Value of brand is closely related to sense of community it creates among other like-minded people.
How much value do consumers derive from interacting with others?
Utility Social exchange with others involving a brand is an integral part of people’s lives.
How many of your users can identify with other users?
Identity Customers develop strong sense of identity and ability to express themselves to others by using a brand.
Dimension Key Question Value of Dimension
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 387
Recall that we defined and outlined a model for online brand
engagement in Chapter 7. There are several different ways to think
of brand engagement. Actual brand engagement is the activities
with which the consumer currently is engaged with the brand and
is typically what is measured with the brand resonance model.
Two other approaches provide interesting contrasts. Ideal brand
engagement is the activities the brand consumer wishes they could
do with the brand. Market brand engagement is the activities the
consumer believes other consumers are doing with the brand.
Market brand engagement will be closely related to measures
of brand momentum—how much progress the brand appears to
be making with consumers in the marketplace. Both sets of mea-
sures deal with consumer perceptions of how other consumers
are connecting to a brand.
Measures of actual brand engagement can take two forms—
more general, macro measures or more specific, micro measures.
Macro measures focus on the types of resources expended, for
example:
Time: “It is worth spending more time on the brand (or going
out of the way for it).”
Energy: “It is worth investing extra effort on the brand.”
Money: “It is worth spending more money on the brand.”
Micro sets of measures focus on specific categories of brand-
related activities. These activities fall into three categories depend-
ing on whether they relate to: (1) collecting brand information, (2)
participating in brand marketing activities, or (3) interacting with
other people and having a sense of community. Here are some
possible questions.
Collecting Brand Information
I like learning about this brand.
If this brand has any new products or services, I tend to notice it.
If I see a newspaper or magazine article about this brand, I
tend to read it.
If I hear a TV or radio story about this brand, I tend to listen to it.
If I see a news story online about this brand, I tend to open
and read it.
I like to visit this brand’s Web site.
I like to read online blogs about this brand.
Participating in Brand Marketing Activities
If I notice an ad for this brand, I tend to pay attention to it.
If I notice a sales promotion from this brand, I tend to pay
attention to it.
If I get something in the mail from this brand, I tend to open
it.
If this brand sponsors a sports, entertainment or arts event,
I tend to notice it.
If I see a billboard or any outdoor type ad for this brand, I
tend to notice it.
If this brand has a display or demonstration in the store, I
tend to notice it.
If this brand shows up in a movie or television show, I tend
to notice it.
If I get a chance to sample one of this brand’s new products,
I tend to try it.
I like to buy licensed products from this brand.
Interacting with Other People
I like to talk to others about this brand.
I like to talk to people at work about this brand.
I like to talk to my friends and family about this brand.
I like to seek out others who use this brand.
I have joined or would like to join an online community with
other users of this brand.
I have joined or would like to join an online community with
others who like this brand.
I have joined or would like to join an online community with
people from the company who makes this brand.
I am active in a loyalty program for this brand.
I tend to notice when other people are using this brand.
These are only some representative examples of the types
of survey measures that could be employed to assess brand
engagement. Depending on the category and circumstances,
a variety of other questions could be devised and fruitfully
applied.
THE SCIENCE OF BRANDING 10-2
Understanding Brand Engagement
part of the brand. These actions trigger a series of inferences regarding the implicit contract
that appears to guide the engagement of the consumer and brand, and, hence, the type of rela-
tionship formed.
Brand personality as conceptualized within this framework describes the relationship role
enacted by the brand in its partnership capacity. For example, if the brand expresses behaviors
that signal a commitment to the consumer, and further, if it sends gifts as symbols of affection,
the consumer may infer a courtship or marriage type of engagement with the brand.
Fournier identifies a typology of 15 different relationship types characterizing consumers’
engagement with brands (see Figure 10-12). Fournier argues that this relationship role view of
brand personality provides more actionable guidance to managers who wish to create and manage
M10_KELL4969_05_GE_C10.indd 387 03/05/19 9:16 AM
388 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
their brand personalities in line with marketing actions than does the trait-based view, which iden-
tifies general personality tendencies that might or might not be connected to marketing strategies
and goals.
Fournier has conducted fascinating research that reframes the conceptualization and mea-
surement of brand strength strictly in relationship terms. It defines a brand’s strength in terms
of the strength, depth, and durability of the consumer-brand relational bond using the multi-
faceted concept of brand relationship quality, or BRQ. Extensive validation work supported a
multifaceted hierarchical structure for the BRQ construct that includes six main dimensions of
FIGURE 10-12
A Typology of
Consumer-Brand
Relationships
Karen’s husband’s preferred brands (e.g., Mop‘n Glo, Palmolive, Hellman’s); Karen’s Esteé Lauder, imposed through gift-giving; Jean’s use of Murphy’s Oil Soap as per manufacturer recommendation.
Karen and her household cleaning brands.
Vicki’s switch to regional Friend’s Baked Beans brand from favored B&M brand left behind; Jean’s loyalty to DeMoulas salad dressing brand left behind by client at the bar.
Jean and virtually all her cooking, cleaning, and household appliance brands; Karen and Gatorade.
Karen and Reebok running shoes; Vicki and Crest or Ivory.
Vicki and her stable of shampoos, perfumes, and lingerie brands.
Vicki’s preferences for Tetley tea or Karen’s for Ban, Joy, and Miracle Whip, all of which were inherited through their mothers.
Karen’s use of Comet, Gateway, and Success Rice.
Arranged marriage: Nonvoluntary union imposed by preferences of third party. Intended for long-term, exclusive commitment.
Casual friend/buddy: Friendship low in affect and intimacy, characterized by infrequent or sporadic engagement and few expectations of reciprocity or reward.
Marriage of convenience: Long-term, committed relationship precipitated by environmental influence rather than deliberate choice, and governed by satisfying rules.
Committed partnership: Long-term, voluntarily imposed, socially supported union high in love, intimacy, trust, and commitment to stay together despite adverse circumstances. Adherence to exclusivity rules expected.
Best friendship: Voluntary union based on reciprocity principle, the endurance of which is ensured through continued provision of positive rewards. Characterized by revelation of true self, honesty, and intimacy. Congruity in partner images and personal interests common.
Compartmentalized friendship: Highly specialized, situationally confined, enduring friendship characterized by lower intimacy than other friendship forms but higher socio-emotional rewards and interdependence. Easy entry and exit.
Kinship: Nonvoluntary union with lineage ties.
Rebound relationship: Union precipitated by desire to replace prior partner, as opposed to attraction to replacement partner.
Jean and Jell-O pudding.
Vicki and her Musk scent brands.
Karen and Mary Kay; Vicki and Soft ‘n Dry.
Vicki’s trial-size shampoo brands.
Karen and her husband’s brands, postdivorce; Jean and her other-recommended-but-rejected brands (e.g., ham, peanut butter, sinks).
Karen and Southern Bell, Cable Vision. Vicki and Playtex, a bra for large-breasted women.
Karen and the Tootsie Pops she sneaks at work.
Childhood friendship: Infrequently engaged, affective relation reminiscent of childhood times. Yields comfort and security of past self.
Courtship: Interim relationship state on the road to committed partnership contract.
Dependency: Obsessive, highly emotional, selfish attractions cemented by feeling that the other is irreplaceable. Separation from other yields anxiety. High tolerance of other’s transgressions results.
Fling: Short-term, time-bounded engagement of high emotional reward. Devoid entirely of commitment and reciprocity demands.
Enmity: Intensely involving relationship characterized by negative affect and desire to inflict pain or revenge on the other.
Enslavement: Nonvoluntary relationship union governed entirely by desires of the relationship partner.
Secret affair: Highly emotive, privately held relationship considered risky if exposed to others.
Relationship Form Case Examples
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 389
relationship strength, many with important subfacets. The main facets are (1) interdependence,
(2) self-concept connection, (3) commitment, (4) love/passion, (5) intimacy, and (6) brand
partner quality.
Fournier argues that these facets and their subfacets (such as trust within the partner qual-
ity facet or consumer-to-firm and firm-to-consumer intimacy) have superior diagnostic value
over competing strength measures, and she suggests they have greater managerial utility in their
application. In her experience, BRQ measures have been successfully incorporated in brand
tracking studies, where they provide profiles of brand strength versus competitors, useful ties to
marketplace performance indicators, and specific guidance for the enhancement and dilution of
brand equity through managerial actions in the marketplace. Although brand relationship quality
shares some characteristics with brand resonance, it provides valuable additional perspectives
and insights.
The six main facets of brand relationship quality are as follows:
• Interdependence: The degree to which the brand is ingrained in the consumer’s daily course
of living, both behaviorally (frequency, scope, and strength of interactions) and cognitively
(longing for and preoccupation with anticipated brand interactions). At its extremes, interde-
pendence becomes dependency and addiction.
• Self-concept connection: The degree to which the brand delivers on important identity concerns,
tasks, or themes, thereby expressing a significant part of the self-concept, both past (including
nostalgic references and brand memories) and present, and personal as well as social. In its
extreme form, self-connection reflects the integration of concepts of brand and self.
• Commitment: Dedication to continued brand association and betterment of the relationship,
despite circumstances foreseen and unforeseen. Commitment is not defined solely by sunk
costs and irretrievable investments that pose barriers to exit.
• Love or passion: Affinity toward and adoration of the brand, particularly concerning other
available alternatives. Love includes the belief that the brand is irreplaceable and uniquely
qualified as a relationship partner.
• Intimacy: A sense of deep familiarity with and understanding of both the essence of the
brand as a partner in the relationship and the nature of the consumer-brand relationship
itself. Intimacy is a two-dimensional concept: the consumer develops an intimate knowledge
of the brand, and also feels a sense of intimacy exhibited on the part of the brand toward the
individual as a consumer.
• Partner quality: Perceived partner quality involves a summary judgment of the caliber of the
role enactments performed by the brand in its partnership role.
COMPREHENSIVE MODELS OF CONSUMER-BASED BRAND EQUITY The customer-based brand equity model presented in this text provides a comprehensive, cohesive
overview of brand building and brand equity. Other researchers and consultants have also put forth
consumer-based brand equity models that share some of the same principles and philosophy as
the CBBE model, although developed differently. Brand Focus 10.0 presents a detailed account
of arguably the most successful and influential industry branding model, Young and Rubicam’s
Brand Asset Valuator.
According to the brand value chain, sources of brand equity arise from the customer mind-set. In
general, measuring sources of brand equity requires that the brand manager fully understand how
customers shop for and use products and services, and, most important, what customers know,
think, and feel about various brands. In particular, measuring sources of customer-based brand
equity requires measuring various aspects of brand awareness and brand image that lead to the
customer response that creates brand equity.
REVIEW
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390 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
DISCUSSION QUESTIONS
1. Pick two competing brands and use the free association technique to create a mental map of
them. What differences can you discern between them?
2. Run an experiment to see whether you can replicate Mason Haire’s instant coffee experiment
(see Branding Brief 10-2). Do the same attributions still hold? If not, can you replace coffee
with a brand combination from another product category that would produce pronounced
differences?
3. Pick a product category. Can you profile the brand personalities of the leading brands in the
category using Aaker’s brand personality inventory?
4. Describe how social media data can be utilized in understanding brand perceptions.
5. Describe how social media monitoring is changing how brands can monitor consumers’
thoughts and perceptions regarding a brand. What are the implications of this trend for brand
management as a whole?
6. Describe what attribution modeling is. Why is it important in today’s communication
environment?
7. Think of your brand relationships. Can you find examples of brands that fit into Fournier’s
different categories?
FIGURE 10-13
Summary of Qualita-
tive and Quantitative
Measures
I. Qualitative Research Techniques
Free association Adjective ratings and checklists Projective techniques Photo sorts Bubble drawings Story telling Personification exercises Role playing Experiential methods
II. Quantitative Research Techniques
A. Brand Awareness Direct and indirect measures of brand recognition Aided and unaided measures of brand recall B. Brand Image Open-ended and scale measures of specific brand attributes and benefits Strength Favorability Uniqueness Overall judgments and feelings Overall relationship measures Intensity Activity
This chapter described both qualitative and quantitative approaches to measure consumers’
brand knowledge structures and identify potential sources of brand equity—that is, measures to
capture the customer mind-set. Qualitative research techniques are a means to identify possible
brand associations. Quantitative research techniques are a means to better approximate the breadth
and depth of brand awareness; the strength, favorability, and uniqueness of brand associations; the
favorability of brand responses; and the nature of brand relationships. Because of their unstructured
nature, qualitative measures are especially well-suited to provide an in-depth glimpse of what brands
and products mean to consumers. To obtain more precise and generalizable information, however,
marketers typically use quantitative scale measures. We reviewed some novel approaches to brand
monitoring that have become available thanks to the proliferation of social media channels. As
machine learning algorithms become more sophisticated, many of the existing approaches may be
supplanted with brand image analyses based on widely available, low-cost, social media data.
Figure 10-13 summarizes some of the different types of measures that were discussed in the
chapter.
M10_KELL4969_05_GE_C10.indd 390 03/05/19 9:16 AM
CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 391
This appendix summarizes the Brand Asset® Valuator (BAV),
originally developed by Young & Rubicam, now overseen and
expanded by The BAV Group.60 It is the world’s largest database
of consumer-derived information on brands. The BAV model is
developmental in that it explains how brands grow, how they get
into trouble, and how they recover.
The BAV measures brands on four fundamental measures
of brand equity plus a broad array of perceptual dimensions.*
It provides comparative measures of the equity value of thou-
sands of brands across hundreds of different categories, as
well as a set of strategic brand management tools for plan-
ning: brand positioning, brand extensions, joint branding
ventures, and other strategies designed to assess and direct
brands and their growth. The BAV is also linked to financial
metrics and is used to determine a brand’s contribution to a
company’s valuation.
Since 1993, the BAV has researched nearly 1,200,000 consumers
in 52 countries, enabling BAV to identify truly global brand trends.
Consumers’ perceptions of approximately 56,000 brands have been
collected across the same set of 75 dimensions, including 48 image
attributes, usage, consideration, and cultural and customer values.
These elements are incorporated into a specially developed set of
brand loyalty measures.
The BAV represents a unique brand equity research tool.
Unlike most conventional brand image surveys that adhere to a
narrowly defined product category, respondents evaluate brands in
a category-agnostic context. Brands are percentile ranked against
all brands in the study for each brand metric. Thus, by comparing
brands across as well as within categories, the BAV can draw the
broadest possible conclusions about how consumer-level brand
equity is created and built—or lost. In the United States, data
has been collected quarterly from an 18,000-person panel, which
enables the identification and analysis of short-term branding
trends and phenomena.
Four Pillars
There are four key components of brand health in BAV (see Figure
10-14), referred to as “Brand Pillars.” Each pillar is derived from
various measures that relate to different aspects of consumers’
brand perceptions. Taken together, the four pillars trace the pro-
gression of a brand’s development.
• Energized Differentiation measures the degree to which
a brand is seen as different from others, and captures the
brand’s direction and momentum. This is a necessary condition
for profitable brand building. It relates to pricing power and
is often the key brand pillar in explaining valuation multiples
like market value to sales.
• Relevance measures the appropriateness of the brand to con-
sumers and the overall size of a brand’s potential franchise or
penetration.
• Esteem measures how well the brand is regarded and respected—
in short, how well it’s liked. Esteem is related to loyalty.
• Knowledge measures how intimately familiar consumers
are with a brand and is related to the saliency of the brand.
Interestingly, high knowledge is inversely related to a brand’s
potential.
Relationship Among the Pillars
Examining the relationships between these four dimensions—a
brand’s “pillar patterns”—reveals much about a brand’s current
Young & Rubicam’s Brand Asset Valuator
BRAND FOCUS 10.0
FIGURE 10-14
Four Pillars Assess Brand Health, Development, and Momentum
BRAND EQUI TY P I LLARS
ENERGIZED DIFFERENTIATION RELEVANCE ESTEEM KNOWLEDGE
Unique Meaning Appropriateness Regard Understanding
Relates to margins, loyalty, cultural currency Relates to market penetration Relates to perception of quality & respect Relates to consumer experience
BRAND STRENGTH Future Growth Potential
BRAND STATURE Current Operating Value
* In Chapter 11, we discuss five BAV dimensions, with energy being listed as a separate dimension. Young and Rubicam has combined energy and differentiation dimensions and now call it energized differentiation.
M10_KELL4969_05_GE_C10.indd 391 03/05/19 9:16 AM
392 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
and future status (see Figure 10-15). It is not enough to look at
each brand pillar in isolation; it is the relationships between the
pillars that tell a story about brand health and opportunities. Here
are some key relationships:
• When Energized Differentiation is greater than Relevance, the
brand is standing out and receiving attention in the market-
place. It now has the potential to channel this point of differ-
ence and energy into building meaningfulness for consumers
by driving Relevance.
• But if a brand is more Relevant than Differentiated, this suggests
commoditization. While the brand is appropriate and meaning-
ful within the lives of consumers, it is perceived as interchange-
able with other players in the category. Therefore, consumers
will not go out of their way for this brand, remain loyal to it, or
pay a premium for it, since it lacks that special something we
quantify as Energized Differentiation. Convenience, habit, and
price become drivers of brand choice in this scenario.
• Leadership brands are strong on both pillars, resulting in con-
sumer passion as well as market penetration.
Brands often strive to build awareness, but if the brand’s pil-
lars are not in the proper alignment, then consumer knowledge
of a brand becomes an obstacle that may need to be surmounted
before the brand can continue to build healthy momentum.
• When a brand’s Esteem is greater than its Knowledge, con-
sumers like what they know about the brand so far, and typi-
cally want to find out more, suggesting growth potential.
• However, if a brand’s Knowledge is greater than its Esteem, then
consumers may feel that they know more than enough about
the brand, and they are not interested in getting to know it any
better. In this case, Knowledge is an impediment that the brand
must try to overcome if it wishes to attract more consumers.
The PowerGrid
The Brand Asset® Valuator has integrated the two macro dimen-
sions of Brand Strength (Energized Differentiation and Relevance)
and Brand Stature (Esteem and Knowledge) into a visual analyti-
cal representation known as the PowerGrid (see Figure 10-16).
The PowerGrid depicts the stages in the cycle of brand
development—each with its characteristic pillar patterns—in
successive quadrants.
Brands generally begin their life in the lower left quadrant,
where they first need to develop Relevant Differentiation and
establish their reason for being. Some brands get “stuck” in this
quadrant because of their commodity image or specialized mar-
keting, like Lincoln Financial and Marvin Windows. Most often,
the movement from there is “up” into the top left quadrant.
Increased Differentiation, followed by Relevance, initiates growth
in Brand Strength. These developments occur before the brand
has acquired significant Esteem or is widely known.
This quadrant represents two types of brands. For brands des-
tined for a mass target, like Method, illy, and Apple Pay, this is
the stage of emerging potential. Specialized or narrowly targeted
brands, however, tend to remain in this quadrant (when viewed
from the perspective of a mass audience) and can use their strength
to occupy a profitable niche. This includes brands like Square,
Kimpton, and Snapchat. From the point of view of brand leaders,
new potential competitors will emerge from this quadrant.
The upper right quadrant, the Leadership Quadrant, is popu-
lated by brand leaders—those that have high levels of both Brand
Strength and Brand Stature. Both older and relatively new brands
can be in this quadrant, meaning that brand leadership is truly a
function of the pillar measures, not of longevity. When properly
managed, a brand can build and maintain a leadership position
indefinitely. Examples of brands in the leadership position include
Apple, the NFL, and Disney.
Although declining brand equity is not inevitable, brands for
whom strength has declined (usually driven by declining Ener-
gized Differentiation) can also be seen in this same quadrant.
Brands whose Strength has started to dip below the level of their
Stature display the first signs of weakness, which may well be
masked by their still-buoyant sales and wide penetration. Exam-
ples include such brands as Macy’s, V8, and Visa.
Brands that fail to maintain their Brand Strength—their Rel-
evant Differentiation—begin to fade and move “down” into the
bottom right quadrant. These brands become vulnerable not just
to existing competitors, but also to the depredations of discount
price brands, and they frequently end up being drawn into heavy
and continuous price promotion in order to defend their con-
sumer franchise and market share: American Airlines, Citibank,
ExxonMobil, and Kmart fall into this category.
A PowerGrid can also be used to measure a brand’s equity
among different constituencies. Figure 10-17 depicts The Wall
Street Journal’s brand equity among various usage or demographic
FIGURE 10-15
Pillar Patterns Tell a Story
Source: BrandAsset Consulting. Used with permission.
Price or convenience is the dominant reason to buy.
COMMODITY BRAND
RELE_DIFREL Airbnb
Examples: Examples: Examples:
Examples: Examples: Examples:
TESLA Calphalon SPAM EXXON Bank of America Coca-Cola WalmartMethod
TRADER JOE’S
Kashi TYLENOL Hanes BAND-AID GoogleAppleE_DIF
The brand has captured attention for its uniqueness.
UNREALIZED POTENTIAL
EST KNO
Brand is better liked than known.
DESIRE TO FIND OUT MORE
KNOEST
Brand is better known than liked.
LOOKING FOR BETTER OPTIONS
E_DIF REL
Brand has the full potential to realize its momentum.
CULTURAL ICON
EST KNO
Brand is recognized for its leadership.
CREDIBLE LEADERS
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 393
FIGURE 10-16
Brand Development Cycle as
Illustrated by the PowerGrid
Source: BrandAsset Consulting. Used with permission.
100
D_E R E K
D_E R E K
D_E R E K
D_E R E KD_E R E K
50
0 0 50 100
Commodity or
Eroded
New, Unfocused,
or Unknown
Brand Stature
Esteem and Knowledge
B ra
n d
S tr
en g
th
En er
g iz
ed D
if fe
re n ti
at io
n a
n d
R el
ev an
ce
Niche
yelp amazonkindle
lululemon athletica
BLOCKBUSTER
Google Apple NIKE
Cocla-Cola
UNDER ARMOUR
PUMA
IKEA HBO
VISA
macysbaskin robbinsBR
HOTELS W
method detox your home
The Athlete’s Foot
HUNGRY-MAN
AmericanAirlines
Shell
SpintTime Out New York TV
GUIDE
Citibank
Leadership
Mass Market
cuts including gender, age, income and political views. The Wall
Street Journal is generally an established brand with high Brand
Stature, but depending on the audience, Brand Strength differs.
The Wall Street Journal is more differentiated and relevant among
readers, Republicans, men, and individuals of age 55+ and income
$100K+. This is a powerful tool to identify opportunities and tar-
get audiences for brands.
Significant investigations have been done on relating the BAV
metrics to financial performance and stock price. First, the posi-
tion of a brand on the PowerGrid indicates the level of intangible
value (market value of a brand or company-invested capital) per
dollar of sale. The leadership quadrant produces brands with the
largest intangible value per dollar of sale. Next, through exten-
sive modeling, the BAV has shown that a change in brand assets
impacts stock price. From a macro perspective, two-thirds of
the change in brand assets directly impacts stock price and the
expectation for future returns. One-third of the change in brand
assets impacts current earnings. The importance of brand assets
on stock price and company valuation is highly dependent on the
category or economic sector.
Applying BAV to Google
The best way to understand the BAV model is to apply it to a brand
and category. Google is a dramatic example. Google achieved
leadership status faster than any other brand measured in the
BAV. Google built each brand pillar, beginning with Energized
Differentiation, both quickly and strongly. After rapidly establish-
ing Energized Differentiation, Google built the other three pillars.
It took only three years for Google’s percentile-ranking on all four
pillars to reach the high 90s.
At the same time, AOL began to falter, losing first Energized
Differentiation, then Relevance and Esteem. For a period, AOL’s
Knowledge remained high, but with declining Relevance, eroding
Differentiation and less Esteem, consumers began to lose inter-
est until finally, AOL’s Knowledge pillar followed the other pillars
and began to decline. Figure 10-18 displays the sharp contrast in
brand development between the two.
How has Google developed and maintained brand leader-
ship? From the BAV perspective, there are three main contribut-
ing factors: (1) consistently strong brand attributes that translate
into competitive advantages, (2) successful brand extensions
into new categories, and (3) successful expansion into global
markets building on differentiation to become a leadership
brand.
Competitive Advantages on Brand Attributes
Google’s leadership is supported by competitive advantages on
the key attributes to driving the pillars and loyalty. The BAV uses
48 emotional attributes to see through the eyes of consumers
when considering Google and its competitive set.
As shown in Figure 10-19, Google is stronger than the com-
petitive average on innovative and visionary. These elements
build Google’s Energized Differentiation. Google’s advantage on
trustworthy and helpful helps keep the Relevance pillar strong,
and Google’s strength on reliable and leader supports both the
Relevance and the Esteem pillars.
Successful Category Extensions
Google has done a masterful job of entering new categories with
sub-brands. In many of these categories—such as Google Docs,
Chrome, and Gmail—the Google entrant has become the cat-
egory leader. Most of the sub-brands also have very high Brand
Strength, which helps replenish the Brand Strength of the Google
corporate brand (see Figure 10-20). In this way, the leadership of
the sub-brands helps support the parent brand, a common theme
among strong parent brands with sub-brands.
M10_KELL4969_05_GE_C10.indd 393 03/05/19 9:16 AM
394 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
FIGURE 10-18
Google vs. AOL Brand Development
Source: BrandAsset Consulting. Used with permission.
Niche Leadership
Mass Market
Undeveloped Commodity
B
ra n
d S
T R
E N
G T H
(E n
e rg
iz e d
D if
fe re
n ti
a ti
o n
a n
d R
e le
va n
ce )
0
50
100
0 50 100
Brand STATURE (Esteem and Knowledge)
0
20
40
60
80
100
BRAND EQ UI TY PO W E RG R I D O F G O O G LE AND AO L 2 0 0 1 , 2 0 0 3 , 2 0 0 6 , 2 0 11 , 2 0 1 6
0
20
40
60
80
100
2001
2003
2006
Aol.
Aol.
2011
2016
2001
2003
2006 2011
2016
FIGURE 10-17
Profile of The Wall Street Journal
Source: BrandAsset Consulting. Used with permission.
BRAND EQUI TY POWE RG RI D ( 2 0 1 6 )
Niche
Leadership
Mass Market
Undeveloped Commodity
B ra
n d
S T
R E
N G
T H
(E n
e rg
iz e d
D if
fe re
n ti
a ti
o n
a n
d R
e le
va n
ce )
0
50
100
0 50 100
Brand STATURE (Esteem and Knowledge)
Homeowners
Republicans
Democrats
Age 55+
Age 35–54
Men
Women
Income $100K+
Age < 34
The Wall Street Journal Readers
M10_KELL4969_05_GE_C10.indd 394 03/05/19 9:16 AM
CHAPTER 10 • MEASURING SOURCES OF BRAND EQUITY: CAPTURING CUSTOMER MIND-SET 395
FIGURE 10-20
Google’s Successful New Product Introductions
Source: BrandAsset Consulting. Used with permission.
Niche
Leadership
Mass market
Undeveloped CommodityB ra
n d
S T R
E N
G T H
(E n
e rg
iz e d
D if
fe re
n ti
a ti
o n
a n
d R
e le
va n
ce )
0
50
100
0 50 100
Brand STATURE (Esteem and Knowledge)
FIGURE 10-19
Google’s Top Attributes
Source: BrandAsset Consulting. Used with permission.
GOOGLE ’ S TO P ATTR I BUT E S
0 10 20 30 40
Leader
Reliable
Helpful
Trustworthy
Visionary
Innovative
Competitive Average Google
Energized Differentiation
Relevance
Relevance & Esteem
DRIVER OF…
M10_KELL4969_05_GE_C10.indd 395 04/06/19 7:43 AM
396 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
FIGURE 10-21
Google Is Consistently a Global Brand Leader
Source: BrandAsset Consulting. Used with permission.
Authentic Daring
Down-to-Earth
Helpful High Performance
Innovative
Best Brand Down-to-Earth
Helpful
Trustworthy Up-to-Date Dynamic
Leadership
Mass Market
70
100
100Brand STATURE (Esteem and Knowledge)
Best Brand Distinctive
Down-to-EarthRELIABLE INTELLIGENTB
ra n
d S
T R
E N
G T H
(E n
e rg
iz e d
D if
fe re
n ti
a ti
o n
a n
d R
e le
va n
ce )
The significant strength of Google’s image profile has made
entrance into new categories easier. Google does not face the
entrance issues that weaker brands have when their image pro-
files are not robust enough to create differentiation in the new
category, a key condition for a successful extension.
Successful Global Expansion
The Brand Asset® Valuator (BAV) metrics uniquely gauge the
nature of international marketing opportunities. The BAV shows
global brands must build consistently strong Brand Strength,
Brand Stature, and meaning in each market. Specifically, finan-
cial analysis of global brands has shown that brands that have
consistently high Brand Strength and consistently high common
meaning will deliver better margin growth rates and are more
efficient at producing higher pretax margins.
Google has achieved leadership status in global markets the
same way it achieved leadership status in the United States—by
quickly outperforming competitors on Brand Strength and Brand
Stature. In all countries recently surveyed, Google is a super-
leadership brand on the PowerGrid (see Figure 10-21). Reviewing
the key imagery across countries shows that Google ranks consis-
tently high on reliable and intelligent, according to consumers in
each local market. This is true consistency and a great strategic
base from which to build.
Summary
There is much commonality between the basic BAV model and
the brand resonance model. The four factors in the BAV model
can easily be related to specific components of the brand reso-
nance model:
• BAV’s Differentiation relates to brand superiority.
• BAV’s Relevance relates to brand consideration.
• BAV’s Esteem relates to brand loyalty.
• BAV’s Knowledge relates to brand resonance.
Note that brand awareness and familiarity are handled
differently in the two approaches. The brand resonance frame-
work maintains that brand salience, and breadth and depth
of awareness is a necessary first step in building brand equity.
The BAV model treats familiarity more effectively—almost in
a warm feeling or friendship sense—and thus see it as the
last step in building brand equity, more akin to the resonance
component itself.
The main advantage of the BAV model is that it provides rich
category-agnostic descriptions and profiles across a large number
of brands. It also provides focus on four key branding dimensions.
It provides a brand landscape in which marketers can see where
their brands stand relative to other prominent brands in many
different markets.
The descriptive nature of the BAV model does mean, how-
ever, that there is potentially less insight as to exactly how a brand
could rate highly on specific attributes. Because the measures
underlying the four pillars have to be relevant across a very dis-
parate range of product categories, the measures (and, conse-
quently, the pillars) tend to be abstract in nature and not related
directly to product attributes and benefits, or more specific
marketing concerns. Nevertheless, the BAV model represents a
landmark study regarding its ability to enhance marketers’ under-
standing of what drives top brands and where their brands fit in
a vast brandscape.
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 397
NOTES
1. Some leading textbooks in this area are J. Paul Peter and Jerry C. Olson, Consumer Behavior and Marketing Strategy, 8th ed. (Homewood, IL: McGraw-Hill/Irwin, 2007); Wayne D. Hoyer and Deborah J. Mac Innis, Con- sumer Behavior, 5th ed. (Mason, OH: SouthWestern, 2010); and Michael R. Solomon, Consumer Behavior: Buying, Having, and Being, 9th ed. (Upper Saddle River, NJ: Prentice Hall, 2011).
2. Videos of Three UK’s campaign ads can be seen here: Three UK, “TV Ad | Prepare yourself for #holidays- pam; Austrialia | Three” YouTube video, 1:00, posted by “Three UK,” January 17, 2015, http://www.youtube .com/watch?v=1a1cL4TIMMc&feature=youtube.; Three UK, “TV Ad | We’re sorry for #holidayspam | Three” YouTube video, 1:00, posted by “Three UK,” July 4, 2014, www.youtube.com/watch?v=Wz7YbGCeWPA& feature=youtube.
3. John Motavalli, “Probing Consumer Minds,” Adweek, December 7, 1987, 4–8.
4. Ernest Dichter, Handbook of Consumer Motivations (New York: McGraw-Hill, 1964).
5. The Economist, “Retail Therapy: How Ernest Dichter, An Acolyte of Sigmund Freud, Revolutionised Market- ing,” The Economist, December 17, 2011, 120, https:// www.economist.com/christmas-specials/2011/12/17/ retail-therapy, accessed November 11, 2018.
6. H. Shanker Krishnan, “Characteristics of Memory Associations: A Consumer-Based Brand Equity Per- spective,” International Journal of Research in Mar- keting 13, no. 4 (October 1996): 389–405; Geraldine R. Henderson, Dawn Iacobucci, and Bobby J. Calder, “Using Network Analysis to Understand Brands,” in Advances in Consumer Research 29, eds. Susan M. Broniarczyk and Kent Nakamoto (Valdosta, GA: Asso- ciation for Consumer Research, 2002): 397–405.
7. J. Wesley Hutchinson, “Expertise and the Structure of Free Recall,” in Advances in Consumer Research 10, eds. Richard P. Bagozzi and Alice M. Tybout (Ann Arbor, MI: Association of Consumer Research, 1983): 585–589; see also Chris Janiszewski and Stijn M. J. van Osselaer, “A Connectionist Model of Brand—Qual- ity Associations,” Journal of Marketing Research 37, no. 3 (August 2000): 331–350.
8. Yvan Boivin, “A Free Response Approach to the Mea- surement of Brand Perceptions,” International Journal of Research in Marketing 3, no. 1 (1986): 11–17; Jef- frey E. Danes, Jeffrey S. Hess, John W. Story, and Keith Vorst, “On the Validity of Measuring Brand Images by Rating Concepts and Free Associations,” Journal of Brand Management, (2012) 19, 289–303, http://www .academia.edu/4641496/On_the_validi ty_of_ measuring_brand_images_by_rating_concepts_and_ free_associations, accessed November 11, 2018.
9. Jean Bystedt, Siri Lynn, and Deborah Potts, Moderating to the Max (Ithaca, NY: Paramount Market Publishing, 2003).
10. For an application in marketing, see Kathryn A. Braun- LaTour, Michael S. LaTour, and George M. Zinkhan,
“Using Childhood Memories to Gain Insight into Brand Meaning,” Journal of Marketing 71, no. 2 (April 2007): 45–60.
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12. Mason Haire, “Projective Techniques in Marketing Research,” Journal of Marketing 14, no. 5 (April 1950): 649–656. Interestingly, a follow-up study conducted several decades later suggested that instant coffee users were no longer perceived as psychologically different from drip grind users. See Frederick E. Webster Jr. and Frederick Von Pechmann, “A Replication of the ‘Shop- ping List’ Study,” Journal of Marketing 34, no. 2 (April 1970): 61–63.
13. Sydney J. Levy, “Dreams, Fairy Tales, Animals, and Cars,” Psychology and Marketing 2, no. 2 (1985): 67–81.
14. Jeffrey Durgee and Robert Stuart, “Advertising Symbols and Brand Names That Best Represent Key Product Meanings,” Journal of Consumer Marketing 4, no. 3 (1987): 15–24.
15. Gerald Zaltman and Robin Higie, “Seeing the Voice of the Customer: Metaphor-Based Advertising Research,” Journal of Advertising Research (July/August 1995): 35–51; Daniel H. Pink, “Metaphor Marketing,” Fast Company, March 31, 1998, https://www.fastcompany .com/33672/metaphor-marketing, accessed November 11, 2018; Gerald Zaltman, “Metaphorically Speak- ing,” Marketing Research 8, no. 2 (Summer 1996): 13–20, https://www.hbs.edu/faculty/Pages/item .aspx?num=4106; Gerald Zaltman, “How Customers Think: Essential Insights into the Mind of the Market,” Harvard Business School Press (2003); Wendy Melillo, “Inside the Consumer Mind: What Neuroscience Can Tell Us About Marketing,” Adweek, January 16, 2006, https://www.adweek.com/brand-marketing/inside- consumer-mind-83549/, accessed November 11, 2018; Torsten Ringberg, Gaby Odekerken-Schröder, and Glenn L. Christensen, “A Cultural Models Approach to Segmenting Consumer Recovery Expectations,” Journal of Marketing 71, no. 3 (July 2007): 194–214; Gerald Zaltman and Lindsay Zaltman, Marketing Metaphoria: What Deep Metaphors Reveal About the Minds of Con- sumers (Boston: Harvard Business School Press, 2008).
16. For some provocative research, see Carolyn Yoon, Angela H. Gutchess, Fred M. Feinberg, and Thad A. Polk, “A Functional Magnetic Resonance Imaging Study of Neural Dissociations between Brand and Person Judg- ments,” Journal of Consumer Research 33, no. 1 (June 2006): 31–40; Samuel M. McClure, Jian Li, Damon Tomlin, Kim S. Cypert, Latané M. Montague, and P. Read Montague, “Neural Correlates of Behavioral Preference for Culturally Familiar Drinks,” Neuron 44, no. 2 (October 2004): 379–387; Hilke Plassmann, Caro- lyn Yoon, Fred M. Feinberg, and Baba Shiv, “Consumer Neuroscience,” in Wiley International Encyclopedia of Marketing, Volume 3: Consumer Behavior, eds. Richard P. Bagozzi and Ayalla Ruvio (West Sussex, UK: John
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398 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Wiley, 2010). Martin Lindstrom, Buyology: Truth and Lies About Why We Buy (New York: Doubleday, 2008).
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19. Adam Penenberg, “NeuroFocus Uses Neuromarket- ing to Hack Your Brain,” Fast Company, September 8, 2011, www.fastcompany.com/1769238/neurofocus- uses-neuromarketing-hack-your-brain.
20. Nick Lee, Amanda J. Broderick, and Laura Chamber- lain, “What Is ‘Neuromarketing’? A Discussion and Agenda for Future Research,” International Journal of Psychophysiology 63, no. 2 (2007): 199–204; Hilke Plassman, John O’Donerty, Baba Shiv, and Antonio Rangel, “Marketing Actions Can Modulate Neural Representations of Experienced Pleasantness,” PNAS Proceedings 105, no. 3, (2007): 1050–1054.
21. Dan Ariely and Gregory S. Berns “Neuromarketing: The Hope and Hype of Neuroimaging in Business,” Nature, 11, no. 4 (April 2010): 284–292.
22. Jennifer Aaker, “Dimensions of Brand Personality,” Jour- nal of Marketing Research 34, no. 8 (1997): 347–356.
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24. Jennifer Aaker, “Dimensions of Brand Personality.” See also Jennifer Aaker, “The Malleable Self: The Role of Self-Expression in Persuasion,” Journal of Marketing Research 36, no. 2 (1999): 45–57; Joseph T. Plummer, “Brand Personality: A Strategic Concept for Multinational Advertising,” in Marketing Educators’ Conference (New York: Young & Rubicam, 1985): 1–31.
25. Martin Eisend and Nicola E. Stokburger-Sauer, “Brand Personality: A Meta-analytic Review of Antecedents and Consequences,” Marketing Letters 24, no. 3 (2013): 205–216.
26. Gil Ereaut and Mike Imms, “‘Bricolage’: Qualita- tive Market Research Redefined,” Admap, Issue 434 (December 2002): 16–18.
27. Jennifer Chang Coupland, “Invisible Brands: An Ethnography of Households and the Brands in Their Kitchen Pantries,” Journal of Consumer Research 32, no. 1 (June 2005): 106–118; Mark Ritson and Richard Elliott, “The Social Uses of Advertising: An Ethno- graphic Study of Adolescent Advertising Audiences,” Journal of Consumer Research 26, no. 3 (December 1999): 260–277.
28. Donna Kelly and Michael Gibbons, “Ethnography: The Good, the Bad, and the Ugly,” Journal of Medical Marketing 8, no. 4 (2008): 279–285; Caroline Hayter Whitehill, “Introduction to IJMR Special Issue on Eth- nography,” International Journal of Market Research 49, no. 6 (November 2007): 687–689.
29. Melanie Wells, “New Ways to Get into Our Heads,” USA Today, March 2, 1999, B1–B2.
30. Gerry Kermouch, “Consumers in the Mist,” Business Week, February 26, 2001, 92–94, https://www.bloomberg .com/news/articles/2001-02-25/consumers-in-the-mist, accessed November 11, 2018; Alfred Hermida, “Bus Ride to the Future,” BBC, December 3, 2011, http:// news.bbc.co.uk/2/hi/sci/tech/1684773.stm, accessed November 11, 2018.
31. Eric J. Arnould and Amber Epp, “Deep Engagement with Consumer Experience: Listening and Learning with Qualitative Data,” in The Handbook of Marketing Research: Uses, Misuses, and Future Advances, eds. Rajiv Grover and Marco Vriens (Thousand Oaks, CA: Sage Press, 2006): 51–58.
32. Edward F. McQuarrie, “Taking a Road Trip,” Marketing Management 3 (Winter 1995): 9–21; Edward F. McQuarrie, Customer Visits: Building a Better Market Focus, 3rd ed. (Armonk, NY: M. E. Sharpe, 2008); Edward F. McQuarrie, “How to Conduct Good Customer Visits: 16 Tips from Ed McQuarrie,” The Management Roundtable, http://events.roundtable.com/Event_Center/ CustomerVisits/GoodCustomerVisits-McQuarrieTips .pdf, accessed November 11, 2018.
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34. David Burrows, “How to Use Ethnography for In-Depth Consumer Insight,” Marketing Week, May 9, 2014, www.marketingweek.com/2014/05/09/how-to-use- ethnography-for-in-depth-consumer-insight/.
35. Pauline Lacsamana, “Lay’s Introduces 3 New Chip Flavors in ‘Do Us a Flavor’ Contest,” The Daily Meal.com, July 21, 2017, www.thedailymeal.com/news/eat/lay-s- introduces- 3-new-chip-flavors-do-us-flavor-contest/072117.
36. Russell W. Belk and Robert V. Kozinets, “Videography in Marketing and Consumer Research,” Qualitative Market Research 8, no. 2 (2005): 128–142.
37. Louella Miles, “Market Research: Living Their Lives,” CampaignLive, December 11, 2003, https://www .campaignlive.com/article/market-research-living- lives/197919, accessed November 11, 2018.
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39. For an interesting related topic, see Henrik Hagtvedt, “The Impact of Incomplete Typeface Logos on Perceptions of the Firm,” Journal of Marketing 75, no. 3 (July 2011): 86–93.
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CHAPTER 10 • MEASURING SOURCES OF BRAND EqUITY: CAPTURING CUSTOMER MIND-SET 399
40. Philip Kotler and Kevin Lane Keller, Marketing Manage- ment: Analysis, Planning, Implementation, and Control, 14th ed. (Upper Saddle River, NJ: Prentice Hall, 2012).
41. Joseph F. Hair Jr., Rolph E. Anderson, Ronald Tatham, and William C. Black, Multivariate Data Analysis, 4th ed. (Englewood Cliffs, NJ: Prentice Hall, 1995); James Lattin, Douglas Carrol, and Paul Green, Analyzing Multivariate Data, 5th ed. (Pacific Grove, CA: Duxbury Press, 2003).
42. Brandon Olson, “How to Monitor Multiple Social Media Metrics in a Single Dashboard,” Social Media Examiner, August 8, 2016, www.socialmediaexaminer .com/how-to-monitor-multiple-social-media-metrics- in-a-single-dashboard, accessed July 14, 2018.
43. Jill Bowers, “The Best Social Media Monitoring of 2017,” Top Ten Reviews, December 18, 2017, www.toptenreviews.com/services/internet/best-social- media-monitoring/socialclout-review/.
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45. Icek Ajzen and Martin Fishbein, Understanding Atti- tudes and Predicting Social Behavior (Englewood Cliffs, NJ: Prentice Hall, 1980); Vicki G. Morwitz, Joel Steckel, and Alok Gupta, “When Do Purchase Inten- tions Predict Sales?” International Journal of Fore- casting 23, no. 3, (2007): 347–364; Pierre Chandon, Vicki G. Morwitz, and Werner J. Reinartz, “Do Inten- tions Really Predict Behavior? Self-Generated Validity Effects in Survey Research,” Journal of Marketing 69, no. 2 (April 2005): 1–14.
46. Fred Reichheld, Ultimate Question: For Driving Good Profits and True Growth (Cambridge, MA: Harvard Business School Press, 2006); Jena McGregor, “Would You Recommend Us?” BusinessWeek, 71, no. 3 January 30, 2006, 94–95; Kathryn Kranhold, “Client-Satisfaction Tool Takes Root,” The Wall Street Journal, Eastern Edition, July 10, 2006, B3; Timothy L. Keiningham, Bruce Cooil, Tor Wallin Andreassen, and Lerzan Aksoy, “A Longitudinal Examination of Net Promoter and Firm Revenue Growth,” Journal of Marketing 71, no. 3 (July 2007): 39–51; Neil A. Morgan and Lopo Leotte Rego, “The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Business Performance,” Marketing Science 25, no. 5 (September– October 2006): 426–439; Timothy L. Keiningham, Lerzan Aksoy, Bruce Cooil, and Tor W. Andreassen, “Linking Customer Loyalty to Growth,” MIT Sloan Management Review 49, no. 4 (Summer 2008): 51–57.
47. NPS Benchmarks, Net Promoter Score, “Companies,” https://npsbenchmarks.com/companies, accessed November 11, 2018.
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50. Das Narayandas, “Building Loyalty in Business Mar- kets,” Harvard Business Review 83, no. 9 (September 2005): 131–138.
51. For a more general discussion of consumer attachment, see Susan S. Kleine and Stacy M. Baker, “An Integrative Review of Material Possession Attachment,” Academy of Marketing Science Review 8, no. 4 (2004): 1–39; Rosellina Ferraro, Jennifer Edson Escalas, and James R. Bettman, “Our Possessions, Our Selves: Domains of Self-Worth and the Possession-Self Link,” Journal of Consumer Psychology 21, no. 2 (2011): 169–177.
52. See, for example, Lars Bergkvist and Tino Bech-Larsen, “Two Studies of Consequences and Actionable Ante- cedents of Brand Love,” Journal of Brand Management 17, no. 7 (June 2010): 504–518.
53. Barbara A. Carroll and Aaron C. Ahuvia, “Some Ante- cedents and Outcomes of Brand Love,” Marketing Let- ters 17, no. 2 (2006): 79–89.
54. Rajeev Batra, Aaron Ahuvia, and Richard P. Bagozzi, “Brand Love,” Journal of Marketing 76, no. 2 (March 2012): 1–16, https://www.ama.org/publications/Journal OfMarketing/documents/jm.09.0339_web_appendix.pdf, accessed November 11, 2018.
55. C.W. Park, Deborah J. Macinnis, Joseph Priester, Andreas B. Eisingerich, and Dawn Iacobucci, “Brand Attachment and Brand Attitude Strength: Conceptual and Empirical Differentiation of Two Critical Brand Equity Drivers,” Journal of Marketing 74, no. 6 (November 2010): 1–17.
56. Vikas Mittal and Mohanbir S. Sawhney, “Managing Customer Retention in the Attention Economy,” work- ing paper, University of Pittsburgh, 2001.
57. For a broad overview, Brittany Darwell, “2011: The Year in Facebook Advertising,” Adweek, December 28, 2011, https://www.adweek.com/digital/the-year- in-facebook-advertising/; “Digital Marketing: Special Advertising Section,” Adweek, October 28, 2011.
58. Jon Bruner, “What’s a ‘Like’ Worth?,” Forbes, August 8, 2011,Vol. 188, Issue 2, 28–30; Brian Morrisey, “Value of a ‘Fan’ on Social Media: $3.60,” Adweek, April 13, 2010, accessed July 14, 2018, https://www.adweek .com/digital/value-fan-social-media-360-102063/ http://www.vitrue.com.
59. Susan M. Fournier, “Consumers and Their Brands: Developing Relationship Theory in Consumer Research,” Journal of Consumer Research 24, no. 4 (March 1998): 343–373; Susan M. Fournier, Susan Dobscha, and David G. Mick, “Preventing the Prema- ture Death of Relationship Marketing,” Harvard Busi- ness Review 76, no. 1 (January–February 1998): 42–51; Susan M. Fournier and Julie L. Yao, “Reviving Brand Loyalty: A Reconceptualization Within the Framework of Consumer–Brand Relationships,” International Jour- nal of Research in Marketing 14, no. 5 (1997): 451–472; Susan Fournier, “Lessons Learned About Consumers’ Relationships with Their Brands,” in Handbook of Brand Relationships, eds. Joseph Priester, Deborah MacInnis, and C. W. Park (New York: Society for Con- sumer Psychology and M.E. Sharp, 2009), 5–23; Susan Fournier, Michael Breazeale, Marc Fetscherin, and T. C. Melewar, eds., Consumer–Brand Relationships: Theory and Practice (London: Routledge Taylor & Francis Group, 2012).
60. This section greatly benefited from helpful and insight- ful contributions by Michael Sussman, Anne Rivers, and Eunjin Koh.
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400
Intel uses a price premium approach to track
its brand strength relative to competition.
Learning Objectives
After reading this chapter, you should be able to
1. Recognize the multidimensionality of brand equity and the importance of multiple methods to measure it.
2. Contrast different comparative methods to assess brand equity.
3. Explain the basic logic of how conjoint analysis works.
4. Review different holistic methods for valuing brand equity.
5. Describe the relationship between branding and finance.
Measuring Outcomes of Brand Equity: Capturing Market Performance11
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CHAPTER 11 • MEASURING OUTCOMES OF BRAND EQUITY: CAPTURING MARKET PERFORMANCE 401
Ideally, to measure brand equity, we would create a “brand equity index”—one easily calculated
number that summarizes the health of the brand and completely captures its brand equity. Just as
a thermometer measuring body temperature provides only one indication of how healthy a person
is, so does any one measure of brand equity provide only one indication of the health of a brand.
Brand equity is a multidimensional concept, and complex enough to require many different types
of measures. Applying multiple measures increases the diagnostic power of marketing research
and the likelihood that managers will better understand what is happening to their brands, and,
perhaps more important, why.1
In arguments suggesting that researchers should employ multiple measures of brand equity,
writers have drawn interesting comparisons between measuring brand equity and assessing the
performance of an aircraft in flight or a car on the road; for example:
The pilot of the plane has to consider a number of indicators and gauges as the plane
is flown. There is the fuel gauge, the altimeter, and a number of other important
status indicators. All of these dials and meters tell the pilot different things about
the health of the plane. There is no one gauge that summarizes everything about
the plane. The plane needs the altimeter, compass, radar, and the fuel gauge. As the
pilot looks at the instrument cluster, he has to take all of these critical indicators
into account as he flies.2
The dashboard of a car or the gauges on the plane, which together measure its health while being
driven or flown, are analogous to the multiple measures of brand equity necessary to assess the
health of a brand.
The preceding chapter described different approaches to measuring brand knowledge struc-
tures and the customer mind-set that marketers can use to identify and quantify potential sources
of brand equity. By applying these measurement techniques, we should gain a good understanding
of the depth and breadth of brand awareness; the strength, favorability, and uniqueness of brand
associations; the positivity of brand responses; and the nature of brand relationships for their
brands. As we described in Chapters 1 and 2, a product with positive brand equity can enjoy the
following six important customer-related benefits:
1. Perception of better product or service performance
2. Greater loyalty and less vulnerability to competitive marketing actions and marketing
crises
3. Larger margins and more inelastic responses to price increases and elastic responses to price
decreases
4. Greater trade cooperation and support
5. Increased marketing communication effectiveness
6. Opportunity for successful licensing and brand extension.
The customer-based brand equity model maintains that these benefits, and the ultimate value
of a brand, depend on the underlying components of brand knowledge and sources of brand equity.
As Chapter 10 described, we can measure these individual components; however, to provide more
direct estimates, we still must assess their resulting value in some way. This chapter examines
measurement procedures to assess the effects of brand knowledge structures on these and other
measures that capture market performance for the brand.3
First, we review comparative methods, which are meant to better assess the effects of con-
sumer perceptions and preferences on consumer response to the marketing program and the spe-
cific benefits of brand equity. Next, we look at holistic methods, which attempt to estimate the
overall or summary value of a brand.4 Some of the interplays between branding and financial
considerations are included in Brand Focus 11.0.
PREVIEW
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402 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
T-MOBILE
Deutsche Telecom invested much time and money in building its T-Mobile mobile communication brand.
However, in the United Kingdom, the company leased or shared its network lines with competitor Virgin
Mobile. As a result, the audio quality of the signal that a T-Mobile customer received in making a call should
have been virtually identical to the audio quality of the signal for a Virgin Mobile customer. After all, the
same network was being used to send the signal. Despite that fact, research showed that Virgin Mobile
customers rated their signal quality significantly higher than did T-Mobile customers. The strong Virgin brand
image appeared to cast a halo over its different service offerings, literally causing consumers to change their
impressions of product performance.6
COMPARATIVE METHODS Comparative methods are research studies or experiments that examine consumer attitudes and
behavior toward a brand to directly estimate specific benefits arising from having a high level of
awareness and strong, favorable, and unique brand associations. There are two types of compara-
tive methods.
• Brand-based comparative approaches use experiments or analyses in which one group of
consumers responds to an element of the marketing program or some marketing activity when
it is attributed to the target brand, and another group responds to that same element or activity
when it is attributed to a competitive or fictitiously named brand.
• Marketing-based comparative approaches use experiments or analyses in which consumers
respond to changes in elements of the marketing program or marketing activity for the target
brand or competitive brands.
The brand-based approach holds the marketing program fixed and examines con-
sumer response based on changes in the brand identification, whereas the marketing-based
approach holds the brand fixed and examines consumer response based on changes in the
marketing program. We will look at each of these two approaches in turn and then describe
conjoint analysis as a technique that, in effect, combines the two.
Brand-Based Comparative Approaches Competitive brands can be useful benchmarks in brand-based comparative approaches.
Although consumers may interpret marketing activity for a fictitiously named or
unnamed version of the product or service in terms of their general product category
knowledge, they may also have a particular brand, or exemplar, in mind. This exem-
plar may be the category leader or some other brand that consumers feel is representa-
tive of the category, like their most preferred brand. Consumers may make inferences
to supply any missing information based on their knowledge of this particular brand.
Thus, it may be instructive to examine how consumers evaluate a proposed new adver-
tising campaign, new promotion offering, or new product when it is also attributed to
one or more major competitors.
Applications. The classic example of the brand-based comparative approach is blind
testing research studies in which different consumers examine or use a product with or
without brand identification. Invariably, differences emerge. For example, in one small-
sample study conducted by Business Insider, people were asked to “blind test” different
brands of cheap, inexpensive beer. To much surprise, on this unbranded basis, it was
Natural Light (“Natty Light”), the cheapest beer tested, that actually received the highest
rating amongst the participants.5
One natural application of the brand-based comparative approach is product purchase
or consumption research for new or existing products, as long as the brand identification
can be hidden in some way for the “unbranded” control group. Brand-based comparative
approaches are also useful to determine brand equity benefits related to price margins
and premiums.
In a blind test of different types
of inexpensive beers, “Natty
Light” was the surprising winner,
even though it was the most
inexpensive beer that was tested.
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Virgin Mobile customers rated their signal quality significantly higher than did
T-Mobile customers, even though the same network was used, indicating the
power of Virgin Mobile’s brand equity.
Critique. The main advantage of a brand-based comparative approach is that because it holds all
aspects of the marketing program fixed for the brand, it isolates the value of a brand in a very real
sense. Understanding exactly how knowledge of the brand affects consumer responses to prices,
advertising, and so forth is extremely useful in developing strategies in these different areas. At
the same time, we could study an almost infinite variety of marketing activities, so what we learn
is limited by the number of different applications we examine.
Brand-based comparative methods are particularly applicable when the marketing activ-
ity under consideration represents a change from past marketing activities of the brand, for
example, a new sales or trade promotion, ad campaign, or proposed brand extension. If the
marketing activity under consideration is already strongly identified with the brand—such as
an ad campaign that has been running for years—it may be difficult to attribute some aspect of
the marketing program to a fictitiously named or unnamed version of the product or service in
a believable fashion.
Thus, a crucial consideration with the brand-based comparative approach is the realism we
can achieve in the experiment or analyses. For example, brand-based comparative approaches
may highlight the particular product characteristics enough to make them more salient than they
would otherwise be, thus distorting the results. An alternative is the marketing-based comparative
approach, which is described next.
Marketing-Based Comparative Approaches Marketing-based comparative approaches hold the brand fixed and examine consumer response
based on changes in the marketing program.
Applications. There is a long academic and industry tradition of exploring price premiums
using marketing-based comparative approaches. In the mid-1950s, Edgar Pessemier developed
a dollar-metric measure of brand commitment that relied on a step-by-step increase in the price
difference between the brand normally purchased and an alternative brand.7 To reveal brand-
switching and loyalty patterns, Pessemier plotted the percentage of consumers who switched from
their regular brand as a function of the brand price increases.
Some marketing research suppliers have adopted variations of this approach to derive similar
types of demand curves, and many firms now try to assess price sensitivity and willingness-
to-pay thresholds for different brands.8 For example, Intel would routinely survey computer
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404 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
shoppers to find out how much of a discount they would require before switching to a personal
computer that did not have an Intel microprocessor in it (say, an AMD chip) or, conversely,
what premium they would be willing to pay to buy a personal computer that did have an Intel
microprocessor in it.
We can apply marketing-based comparative approaches in other ways, assessing consumer
response to different advertising strategies, executions, or media plans through multiple test
markets. For example, IRI’s electronic test markets and similar research methodologies can
permit tests of different advertising weights or repetition schedules as well as ad copy tests. By
controlling for other factors, we can isolate the effects of the brand and product. One increas-
ingly common example of the marketing-based comparative approach online is A/B testing. With
A/B testing, digital marketers utilize split testing of different versions of a marketing program
or activity—for example, two different versions of a Web site, Version A and Version B. Visitors
to a Web site can be shown either Web page A or B, and the version with a better conversion
rate is selected.
Marketers can also explore potential brand extensions by collecting consumer evaluations of
a range of concept statements describing brand extension candidates. For example, the results of
a consumer survey conducted at one time examined reactions to hypothetical extensions of the
Planters nuts brand. Contrasting those extensions provides some indication of the equity of the
brand. Figure 11-1 displays the results of a consumer survey conducted at one time to examine
reactions to hypothetical extensions of the Planters nuts brand. Contrasting those extensions pro-
vides some indication of the equity of the brand.
In this example, the survey results suggested that consumers expected any Planters brand
extension to be nut-related. Appropriate product characteristics for a possible Planters brand
extension seemed to be crunchy, sweet, salty, spicy, and buttery. In terms of where in the store con-
sumers would have expected to find new Planters products, the snack and candy sections seemed
most likely. On the other hand, consumers did not seem to expect to find new Planters products
in the breakfast food aisle, bakery product section, refrigerated section, or frozen food section.
Consistent with these survey results, Planters sells a variety of nuts (cashews, peanuts, pistachios,
almonds, and mixed nuts) which are marketed as delicious-tasting and nutritious snacks. Planters
has also added dessert-inspired mixes—such as Planters chocolate peanut butter brownie mix—to
its snack offerings, thereby combining its perceived associations with both snack and candy aisles
within a store.
Critique. The main advantage of the marketing-based comparative approach is ease of imple-
mentation. We can compare virtually any proposed set of marketing actions for the brand. At the
Digital marketers test different versions of a marketing program using A/B
testing and the version with a better conversion rate is selected.
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FIGURE 11-1
Reactions to Proposed
Planters Extensions
Average Scale Rating* Proposed Extensions
10 Peanuts
9 Snack mixes, nuts for baking
8 —
7 Pretzels, chocolate nut candy, caramel corn
6 Snack crackers, potato chips, nutritional granola bars
5 Tortilla chips, toppings (ice cream/dessert)
4 Lunchables/lunch snack packs, dessert mixes (cookie/cake/brownie)
3 Ice cream/ice cream bars, toppings (salad/vegetable)
2 Cereal, toaster pastries, Asian entrees/sauces, stuffing mix, refrigerated dough, jams/jellies
1 Yogurt
*Consumers rated hypothetical proposed extensions on an 11-point scale anchored by 0 (definitely would not expect Planter’s to sell it) and 10 (definitely would expect Planter’s to sell it).
same time, the main drawback is that it may be difficult to discern whether consumer responses
to changes in the marketing stimuli are being caused by brand knowledge or by more generic
product knowledge. In other words, it may be that for any brand in the product category, consum-
ers would be willing to pay certain prices, accept a particular brand extension, and so forth. One
way to determine whether consumer response is specific to the brand is to conduct similar tests
of consumer response with competitive brands. A statistical technique well-suited to do just that
is described next.
Conjoint Analysis Conjoint analysis is a survey-based multivariate technique that enables marketers to profile the
consumer decision process concerning products and brands.9 Specifically, by asking consumers to
express preferences or choose among a number of carefully designed product profiles, research-
ers can determine the trade-offs consumers are making between various brand attributes, and the
importance they are attaching to them.10
Each profile consumers see is made up of a set of attribute levels chosen on the basis of
experimental design principles to satisfy certain mathematical properties. The value consum-
ers attach to each attribute level, as statistically derived by the conjoint formula, is called a part
worth. We can use the part worth in various ways to estimate how consumers would value a new
combination of the attribute levels. For example, one attribute is the brand name. The part worth
for the brand name attribute reflects its value.
One classic study of conjoint analysis, reported by Green and Wind, examined consumer
evaluations of a spot-remover product on five attributes: package design, brand name, price,
Good Housekeeping Seal, and money-back guarantee.11 These same authors also applied conjoint
analysis in a landmark research study to arrive at the design that became the Courtyard by Marriott
hotel chain.12 Conjoint analysis has since been applied in a variety of industries ranging from bar
soaps to lawn chemicals, to cameras, and to apartment design. It has also been used in the design
of health insurance policies and hotel design.13
Applications. Conjoint analysis has a number of possible applications. In the past, the Ogilvy
& Mather advertising agency used a brand and price trade-off methodology as a means of assess-
ing advertising effectiveness and brand value.14 Brand and price trade-off is a simplified version
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406 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
of conjoint measurement with just two variables—brand and price. Consumers make a series of
simulated purchase choices between different combinations of brands and prices. Each choice
triggers an increase in the price of the selected brand, forcing the consumer to choose between
buying a preferred brand and paying less. In this way, consumers reveal how much their brand
loyalty is worth, and, conversely, which brands they would relinquish for a lower price. Academic
researchers have employed conjoint techniques to show how extendible brand names are, to
evaluate the effectiveness of corporate image programs and to identify relevant attributes driving
consumer preferences.15
Critique. The main advantage of the conjoint-based approach is that it allows us to study
different brands and different aspects of the product or marketing program (product composi-
tion, price, distribution outlets, and so on) simultaneously. Thus, we can uncover information
about consumers’ responses to different marketing activities for both the focal and competing
brands.
One of the disadvantages of conjoint analysis is that marketing profiles may violate consum-
ers’ expectations based on what they already know about brands. Thus, we must take care that
consumers do not evaluate unrealistic product profiles or scenarios. It can also be difficult to
specify and interpret brand attribute levels, although some useful guidelines have been put forth
to more effectively apply conjoint analysis to brand positioning.16
HOLISTIC METHODS We use comparative methods to approximate the specific benefits of brand equity. Holistic
methods place an overall value on the brand in either abstract utility terms or concrete finan-
cial terms. Thus, holistic methods attempt to “net out” various considerations to determine
the unique contribution of the brand. The residual approach examines the value of the brand
by subtracting consumers’ preferences for the brand—based on physical product attributes
alone—from their overall brand preferences. The valuation approach places a financial value
on brand equity for accounting purposes, mergers and acquisitions, or other such reasons. After
an example from Liz Claiborne, we’ll look at each of these approaches.
Similar to Liz Claiborne, it is not unusual for brand names to trade hands multiple times
over their lifetime. Each time there is a potential bidder, the potential acquirer may subject the
brand to a major valuation exercise, using one of the many approaches suggested in this chapter.
The goal of these valuation estimates is to ensure that a fair price is paid to the target firm to
acquire the brand name.
Conjoint analysis was applied to arrive at the design that became the Courtyard
by Marriott hotel chain.
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CHAPTER 11 • MEASURING OUTCOMES OF BRAND EQUITY: CAPTURING MARKET PERFORMANCE 407
Kate Spade, initially known as Liz Claiborne Inc., rebranded itself and was
later acquired by Coach.
LIZ CLAIBORNE
A company that found great success selling popular fashions to working women in the 1980s—generat-
ing $2 billion in annual sales by the early 1990s—Liz Claiborne found itself in serious trouble two decades
later when sales started to cool. A brand transformation that eliminated some slower-selling older lines to
focus on younger customers failed to turn the business around. Aging core customers deserted the brand,
and department stores began to replace it with their own private labels. The company was posting annual
losses by 2006, and sales dropped by half over the next five years. Management decided to retrench in 2011
and focus its resources on its faster-selling brands—Kate Spade, Lucky Brand Jeans, and Juicy Couture. The
Claiborne and Monet brands were sold to JCPenney for $288 million, and as part of the sales agreement,
Liz Claiborne was given one year to change its name. The firm was making another financial bet on a new
brand strategy it hoped would prove successful, while JCPenney was betting there was life left in the Liz
Claiborne brand.17 Liz Claiborne subsequently rebranded its company as Kate Spade & Company in 2012,
and was later acquired by Coach in 2017 for $2.4 billion.18
Residual Approaches The rationale behind residual approaches is the view that brand equity is what remains of
consumer preferences and choices after we subtract physical product effects. The idea is
that we can infer the relative valuation of brands by observing consumer preferences and
choices if we take into account as many sources of measured attribute values as possible.
Several researchers have defined brand equity as the incremental preference over and above
what would result without brand identification. In this view, we can calculate brand equity
by subtracting preferences for objective characteristics of the physical product from overall
preference.19
Scanner Panel. Some researchers have focused on the analysis of brand value based on data
sets from supermarket scanners of consumer purchases. In an early study, Kamakura and Russell
proposed a measure that employs consumer purchase histories from supermarket scanner data
to estimate brand equity through a residual approach.20 Specifically, their model explains the
choices observed from a panel of consumers as a function of the store environment (actual
shelf prices, sales promotions, displays), the physical characteristics of available brands, and a
residual term dubbed brand equity. By controlling for other aspects of the marketing mix, they
estimate that aspect of brand preference that is unique to a brand and not currently duplicated
by competitors.
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408 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
More recently, a variation proposed by Ailawadi, Lehmann, and Neslin employs actual retail
sales data to calculate a “revenue premium” as an estimate of brand equity by calculating the dif-
ference in revenues between a brand and a generic or private label in the same category.21 Sriram,
Balachandar, and Kalwani similarly use store-level scanner data to track brand equity and key
drivers of brand equity over time.22
Choice Experiments. Swait, Erdem, and colleagues have proposed a related approach to mea-
suring brand equity with choice experiments that account for brand names, product attributes,
brand image, and differences in consumer sociodemographic characteristics and brand usage.23
They define the equalization price as the price that equates the utility of a brand to the utilities
that could be attributed to a brand in the category where no brand differentiation occurred. We
can consider equalization price a proxy for brand equity.24
Multi-Attribute Attitude Models. Srinivasan, Park, and Chang have proposed a compre-
hensive residual methodology to measure brand equity based on the multi-attribute attitude
model.25 Their approach reveals the relative sizes of different bases of brand equity by dividing
brand equity into three components: brand awareness, attribute perception biases, and nonat-
tribute preference.
• The attribute-perception based component of brand equity is the difference between sub-
jectively perceived attribute values and objectively measured attribute values. Objectively
measured attribute values come from independent testing services such as Consumer Reports
or acknowledged experts in the field.
• The nonattribute preference component of brand equity is the difference between subjec-
tively perceived attribute values and overall preference. It reflects the consumers’ overall
appraisal of a brand that goes beyond the utility of individual product attributes.
The researchers also incorporate the effects of enhancing brand awareness and preference on
consumer pull and the brand’s availability. They propose a survey procedure to collect information
for estimating these different perception and preference measures.
Dillon and his colleagues have presented a model for decomposing attribute ratings of a brand
into two components: (1) brand-specific associations, meaning features, attributes, or benefits that con-
sumers link to a brand, and (2) general brand impressions based on a more holistic view of a brand.26
Critique. Residual approaches provide a useful benchmark for interpreting brand equity,
especially when we need approximations of brand equity or a financially oriented perspective
on it. The disadvantage of residual approaches is that they are most appropriate for brands
with a lot of product-related attribute associations, because these measures are unable to dis-
tinguish between different types of nonproduct-related attribute associations. Consequently,
the residual approach’s diagnostic value for strategic decision-making in other cases is limited.
Generally, residual approaches take a fairly static view of brand equity by focusing on con-
sumer preferences. This contrasts sharply with the process view advocated by the customer-based
brand equity framework. The brand-based and marketing-based comparative approaches stress
looking at consumer response to the marketing of a brand and attempting to uncover the extent to
which that response is affected by brand knowledge.
This distinction is also relevant for the issue of separability in brand valuation that vari-
ous researchers have raised. For example, imagine that a brand becomes known for provid-
ing extraordinary customer service because of certain policies and favorable advertising,
publicity, or word-of-mouth (e.g., Singapore Airlines, Ritz Carlton hotels). These favorable
perceptions of customer service and the attitudes they engender could create customer-based
brand equity by affecting consumer response to a price policy (consumers would be willing to
pay higher prices), a new ad campaign (consumers would accept an ad illustrating customer
satisfaction), or a brand extension (customers would become interested in trying a new type
of retail outlet).
Valuation Approaches Based on several different analyses, a widely held belief is that much of the corporate value
of many companies are wrapped up in the value of their brands. One estimate suggests that
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CHAPTER 11 • MEASURING OUTCOMES OF BRAND EQUITY: CAPTURING MARKET PERFORMANCE 409
Company Brand Value (in $ billions)* Total Value (in $ billions)** Brand Value as a Percentage of Overall Value
Apple 184.1 868.88 21%
Google 141.7 729.1 19%
Microsoft 79.9 659.9 12%
Coca-Cola 69.7 195.5 36%
Amazon 64.7 563.5 11%
Samsung # 56.2 300 19%
Toyota 50.3 188.2 27%
Facebook 48.2 420.8 11%
Mercedes 47.8 79.3 60%
IBM 46.8 142 33%
*Source: Data are for 2017; http://interbrand.com/best-brands/best-global-brands/2017/ranking/
**Source: Market capitalization information based on data from CRSP Monthly
# Samsung market capitalization converted to US currency from South Korean won
Table 11–1 Brand Value as a Percentage of Firms’ Market Value*
Apple is the most valuable brand name in the world.
$8 trillion or nearly half of the $17.9 trillion market capitalization of the S&P 500 index is on
account of intangible assets.27 Furthermore, brands are an important component of these intan-
gible assets and may account for 30 percent or more of the stock market value of companies in
the S&P 500.28
A survey done by the World Economic Forum reinforced this idea of the importance of
brands—roughly three-fifths of CEOs of global corporations believe that their corporate brand
and reputation represents more than 40 percent of their company’s market’s capitalization.29
Table 11-1 demonstrates the role of brand value as a percentage of the overall value of a firm,
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410 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
based on 2017 data. As can be seen, there are wide variations in the percentages of valuation
accounted for by brand names; however, it also supports the idea that brands are a key source of
value to a firm.
The recognition of the important role of brand names has spurred much research on
valuation. The ability to put a specific price tag on a brand’s value is useful for a number of
reasons:
• Mergers and acquisitions: Both to evaluate possible purchases as well as to facilitate disposal.
• Brand licensing: Internally for tax reasons and to third parties.
• Fund-raising: As collateral on loans or for sale or leaseback arrangements; to establish to
current and future investors how the firm’s efforts have resulted in valuation creation, as
demonstrated by the valuations of the brands owned by the firm.
• Brand portfolio decisions: To develop the brand strategy of a portfolio of brands based on
their brand valuation.
• Internal resource allocation decisions and understanding the return on investment (ROI):
Capital allocation decisions within a firm could revolve around the valuations of different
brands. The valuation of brand names could help in establishing the return on investment of
marketing expenditures.
To help illuminate the issues relating to the valuation of brands, we first provide a brief overview
of the issues relevant to the accounting of the firm’s assets.
Accounting Background. The assets of a firm can be either tangible or intangible. Tangible
assets include property, plant, and equipment; current assets (inventories, marketable securities,
and cash); and investments in stocks and bonds. We can estimate the value of tangible assets using
accounting book values and reported estimates of replacement costs.
Intangible assets are any factors of production or specialized resources that permit the
company to earn cash flows in excess of the return on tangible assets. In other words, intangible
assets augment the earning power of a firm’s physical assets. They are typically lumped under
the heading of goodwill and include things such as patents, trademarks, and licensing agree-
ments, as well as softer considerations such as the skill of the management team and customer
relations.
In an acquisition, the goodwill item often includes a premium paid to gain control, which,
in certain instances, may even exceed the value of tangible and intangible assets. Brand assets
are intangible assets and are governed by the same accounting principles that involve report-
ing of intangible assets. Paradoxically, in the United States, brands developed in-house are not
valued explicitly in the balance sheet; however, brand acquisitions are reported on the balance
sheet because there is a defined cost of purchase associated with an acquired brand, which can
be reported as an expense. This contributes to an anomaly in accounting for brands, such that
brands acquired from outside via a merger or acquisition are explicitly recognized on the balance
sheet, whereas internally developed brands are ignored. The Financial Accounting Standards
Board (FASB) standards in the United States (and International Accounting Standards as well)
state that,
Expenditure on internally generated brands . . . cannot be distinguished from the cost of devel-
oping the business as a whole. Therefore, such items are not recognized as intangible assets.
It is worth comparing how intangible assets are viewed by the FASB (in its Generally
Accepted Accounting Principles or GAAP) in the United States relative to International Financial
Reporting Standards. In the United States, based on GAAP, intangible assets are recognized at fair
market value and nothing more. In contrast, International Financial Reporting Standards (IFRS)
takes into account future economic benefits that could be derived from intangible assets.30 This
fundamental difference in philosophy provides the basis for why brands as intangible assets are
viewed differently in the United States and overseas.
Compounding the lack of guidance from the accounting standards boards is the fact that the
valuation of brands itself can be complicated and challenging for a variety of reasons. First, brand
valuations are based at least in part on consumers’ perceptions, which can be notoriously fickle
and difficult to measure. Second, brands are one among many intangible assets of a firm, and the
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P&G’s acquisition of Gillette showcases the importance
of brand valuation, as well as difficulties associated with
reporting a brand’s value on the balance sheet.
valuation of brands could vary based on assumptions driving the
methodology and the relative value of other intangible assets (e.g.,
patents, goodwill, etc.).
A third reason why brands are not reported on the balance
sheet is that brand value on balance sheets may be subject to
impairment.31 In the event of negative publicity or loss of reputa-
tion, such impairment could be difficult to quantify and reconcile
on the balance sheet. Accountants have been reluctant to revise
the brand value that is reported on the balance sheet, resulting in
a phenomenon which has been called the “moribund effect.”32
As an example, Gillette was acquired by P&G for $24 billion in
2005. However, its brand value has not changed since the acqui-
sition, even though P&G’s overall market capitalization has
changed significantly since the acquisition.
In the United States, according to the FASB, private com-
panies can amortize goodwill for book purposes, over a 10-year
period, or less (i.e., over their useful life). This policy requires a
test for impairment on an annual basis (called the goodwill impair-
ment test). It has been noted that the FASB cannot allow brand
equity in financial reporting because of the “absence of verifiable
costs, inability to verify a certain transaction or series of transac-
tions (lagged effect of advertising), and uniqueness of each intan-
gible brand and resulting difficulty in establishing criteria for
relevancy and reliability.”33 Despite these concerns, valuation has
tremendous managerial significance, and there have been many
significant efforts to quantify the value of brands.
Historical Perspectives. Brand valuation’s more recent past
started with Rupert Murdoch’s News Corporation, which included a valuation of some of its
magazines on its balance sheets in 1984, as permitted by Australian accounting standards. In the
United Kingdom, Grand Metropolitan was one of the first British companies to place a monetary
value on the brands it owned and to put that value on its balance sheet. British firms used brand
values to boost their balance sheets and have argued that this effort helps bring their shareholder
funds nearer to the market capitalization of the firm. Certain other countries (including Canada,
Germany, and Japan) have permitted some or all of the goodwill (including that arising from brand
names) in an acquisition to be deducted for tax purposes.
General Approaches. In determining the value of a brand in an acquisition or merger, firms
can choose from three main approaches: the cost, market, and income approaches.34
The cost approach maintains that brand equity is the amount of money that would be required
to reproduce or replace the brand (including all costs for research and development, test marketing,
advertising, etc.). One common criticism of approaches relying on historical or replacement cost is that
they reward past performance in a way that may bear little relation to future profitability—for example,
many brands with expensive introductions have been unsuccessful. On the other hand, for brands that
have been around for decades (such as Heinz, Kellogg’s, and Chanel), it would be virtually impossible
to find out what the investment in brand development was—and largely irrelevant as well.
It is also obviously easier to estimate costs of tangible assets than intangible assets, but the
latter often may lie at the heart of brand equity. Similar problems exist with a replacement cost
approach; for example, the cost of replacing a brand depends a great deal on how quickly the
process would occur and what competitive, legal, and logistical obstacles might be encountered.
According to the second approach, the market approach, we can think of brand equity as the
present value of the future economic benefits to be derived by the owner of the asset. In other
words, it is the amount an active market would allow so that the asset would exchange between a
willing buyer and willing seller. The main problems with this approach are the lack of open market
transactions for brand name assets, and the fact that the uniqueness of brands makes extrapolating
from one market transaction to another problematic.
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412 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
The third approach to determining the value of a brand, the income approach, argues that
brand equity is the discounted future cash flow from the future earnings stream for the brand.
Three such income approaches are as follows:
1. Capitalizing royalty earnings from a brand name (when these can be defined)
2. Capitalizing the premium profits that are earned by a branded product (by comparing its
performance with that of an unbranded product)
3. Capitalizing the actual profitability of a brand after allowing for the costs of maintaining it
and the effects of taxation.
For example, as an example of the first income approach, brand consultancy Brand Finance
uses a Royalty Relief methodology for brand valuation. Their approach is based on the premise
that brand value can be thought of in terms of what a company avoids in paying a license fee from
actually owning the trademark. Their rationale is that such an approach has much credibility with
accountants, lawyers, and tax experts because it calculates brand values on the basis of comparable
third-party transactions. They use the publicly available information to estimate future, post-tax
royalties of a brand, and thus, its net present value and overall brand value.35 We next describe
some of the major and influential valuation approaches.
BRAND VALUATION: A REVIEW OF MAJOR APPROACHES There have been many approaches suggested by academic researchers to systematically value
brands. One seminal academic research study proposed a technique for estimating a firm’s brand
equity derived from financial market estimates of brand-related profits.36 The methodology
defined brand equity as the incremental cash flows accruing to branded products over and above
the cash flows that would result from the sale of unbranded products. This fundamentally assumed
that the market value of the firm’s securities would provide an unbiased estimate of the future
cash flows attributable to all the firm’s assets. Further, brand equity was regarded as an intangible
asset contributing to firm value. By taking into consideration factors such as the age of the brand,
order of entry in the category, and current and past advertising share, the approach was able to
estimate brand equity. Aside from such academic approaches, there are a few well-established
brand valuation approaches that derive from industry, and we review three of them here. All three
approaches—Interbrand, BrandZ, and Brand Finance—combine brand equity measurement and
financial valuation in deriving estimates of brand value. A detailed description of these brand
valuation approaches is given next.
Interbrand One of the leading brand valuation firms is Interbrand. Recall that we provided a list of the most valu-
able global brands according to Interbrand in Table 11-1. Interbrand’s approach takes into account dif-
ferent ways in which a brand benefits an organization both internally and externally—from attracting
and retaining talent to delivering on customer expectations. There are three key components of Inter-
brand’s brand value assessment: (1) financial forecast, (2) role of brand; and (3) strength analysis.37
Financial Forecast. The basic principle underlying this step is that the worth of brands—like
any other asset owned by a firm or the firm’s overall value—can be calculated based on the esti-
mates of the present value of its future cash flows. For each of the segments identified as important
to a brand, the valuation process involves identifying and forecasting the net revenues (or potential
cash flows). The calculation of economic profit involves three further adjustments to the net rev-
enues generated by a brand: (1) operating costs, to arrive at net operating profit; (2) subtracting
taxes from net operating profit; and (3) subtracting a capital charge to account for the capital used
to generate the brand’s revenues. The economic profit that is calculated is then multiplied by the
role of brand (a percentage, as described below) to determine the branded earnings that contribute
to the valuation total.
Role of Brand. Role of brand measures the portion of the customer decision to purchase that
is attributable to the brand—exclusive of other purchase drivers such as price or product features.
Conceptually, role of brand reflects the portion of demand for a branded product or service that
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CHAPTER 11 • MEASURING OUTCOMES OF BRAND EQUITY: CAPTURING MARKET PERFORMANCE 413
exceeds what the demand would be for the same product or service if it were unbranded. Inter-
brand determines the role of brand in different ways, including primary research, by assessing the
roles of brands across companies within that industry and through an expert panel assessment.
They multiply the percentage for the role of brand by the economic profit of the branded products
or services to determine the amount of branded earnings that contribute to the overall valuation.
Strength Analysis. Brand strength measures the ability of the brand to secure the delivery of
expected future earnings. Brand strength is reported on a scale of 0 to 100 based on an evaluation
across 10 dimensions of internal and external aspects. The internal dimensions include clarity,
commitment, governance, and responsiveness. The external dimensions include authenticity, rel-
evance, differentiation, consistency, presence, and engagement. According to Interbrand, these
10 dimensions combine to provide an assessment of the strength of a brand. Performance in these
dimensions is generally judged relative to other brands in the industry, and relative to other global
brands. The brand strength inversely determines brand risk in terms of a discount rate through a
proprietary algorithm. The key idea is that increases in brand strength can translate into varying
discount rates that could apply to the streams of cash flows. The estimated discount rate is used
to discount branded earnings back to a present value, based on the likelihood that the brand will
be able to withstand challenges and deliver the expected earnings.
BrandZ BrandZ’s approach to brand equity measurement is based on the Meaningfully Different
Framework that suggests that brands can create value if they offer three key benefits: (1) they are
meaningful (they meet customer needs); (2) they are different (they are unique and they set trends);
and (3) they are salient (they are top of mind).38 These benefits translate into power (by increas-
ing sales), premium (by commanding a high price), and potential (by helping to sustain future
growth). Their findings indicate that meaningfully different brands capture significantly higher
volume (five times as much), have a 13 percent price premium, and are more likely to increase
their share of value.39 The key steps in the BrandZ valuation are as follows.
Calculating Financial Value. The first step in the Brand Valuation process is to apportion the
earnings of the corporation across a portfolio of brands. By analyzing financial information from
annual reports and other sources, the Attribution Rate is determined. This approach then multiplies
Corporate Earnings by the Attribution Rate to arrive at Branded Earnings, the amount of Corporate
Earnings attributed to a particular brand. They must then determine prospects for future earnings.
Information supplied by Bloomberg data helps in calculating a Brand Multiple, a component that
assesses future earnings prospects as a multiple of current earnings. BrandZ takes the Branded
Earnings and multiplies that number by the Brand Multiple to arrive at the Financial Value.40
BrandZ’s approach to financial
valuation indicates that meaningfully
different brands capture significantly
higher volume, have a price premium,
and are more likely to increase their
share of value.
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414 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
Calculating Brand Contribution. Following the estimate of financial value from the previous
step, the methodology seeks to isolate the value of the brand itself—that intangible asset that exists in
the minds of consumers—from other drivers of in-market or logistical factors that may drive the value
of branded business, such as availability, distribution, or price. This involves calculating the brand
contribution or ability of brand associations in consumers’ minds to deliver sales by predisposing con-
sumers to choose the brand or pay more for it. BrandZ’s approach relies on extensive data collected
on a large sample of consumers worldwide—involving 2 million consumers and more than 10,000
brands—to assess the brands’ perceptions by consumers on a category-by-category and country-by-
country basis.41 As noted previously, the BrandZ approach focuses on three aspects of brands that
they have found make people buy more and pay more for brands: being Meaningful, being Different,
and being Salient. The approach identifies the purchase volume and any extra price premium deliv-
ered by these brand associations. This unique role played by brands is called the Brand Contribution.
Calculating Brand Value. BrandZ uses the calculated Financial Value and multiplies it by
Brand Contribution, which is expressed as a percentage of Financial Value. Brand Value is the
dollar amount a brand contributes to the overall value of a corporation.
Brand Finance Brand Finance’s approach to brand equity measurement is based on the “relief from royalty”
approach.42 With this approach, a brand’s value is based on the royalties that a company would
have paid for licensing that brand from a third party, assuming it was not the brand owner. The net
present value of the projected royalty stream becomes the estimate of brand value. The approach
can be summarized as follows. First, Brand Finance calculates the brand strength on a scale of
1 to 100 using data from the Brand Asset Valuator database (described in Chapter 10), which
results in a Brand Strength Index (or BSI score).43 Second, the methodology involves assessing
the brand royalty rate by applying the BSI score to the royalty rates that apply to a given indus-
try. These industry-specific royalty rates are identified through databases containing comparable
licensing agreements. For example, if the industry royalty rates range between 1 to 5 percent, and
the brand has a strength score of 80 out of 100, the appropriate royalty rate for the brand in this
industry would be 4 percent.44 Third, these royalty rates, when applied to forecasted revenues,
help determine brand value. Revenue forecasts are further generated based on a combination of
historical revenues, equity analyst forecasts as well as economic growth rates. Finally, brand value
is determined by discounting forecasted revenues to net present value terms.
Comparing the Major Brand Valuation Approaches Comparing the three methods, some similarities and differences are worth highlighting.
1. All three approaches are based on some variation of the income-based approach to brand valu-
ation in that they are based on projections of income from brands into the foreseeable future.
Both Interbrand and BrandZ adopt the economic profit method, whereas Brand Finance
adopts the relief from royalty method.
The three major approaches to
brand valuation (Interbrand,
BrandZ, and Brand Finance) rely
on the income-based approach to
brand valuation.
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CHAPTER 11 • MEASURING OUTCOMES OF BRAND EQUITY: CAPTURING MARKET PERFORMANCE 415
2. All three methods compute the present value of projected future earnings based on an
estimate of brand strength and an application of a discount rate, although the specific way
they do so differ. While Interbrand and Brand Finance use a discount rate, BrandZ uses a
brand multiple.
3. All three approaches use available financial and market data and compute the economic
value added. Interbrand assesses the role of brand to extract brand-linked earnings from the
projected income stream. BrandZ isolates the role of brand from other in-market factors that
could influence brand value, and uses extensive consumer research data to understand the
unique brand associations as a key driver of brand value. Brand Finance extracts brand earn-
ings by applying brand strength to the royalty rates appropriate to a given sector.
4. The types of data used to measure brand perceptions vary across the three approaches. Inter-
brand’s brand strength score relies on data collected from consumers over a sample of global
brands. BrandZ’s approach relies heavily on consumer research collected across a large sam-
ple of consumers and over a large number of brands. Brand Finance’s methodology relies
on brand strength data derived from Brand Asset Valuator. It also utilizes secondary data to
determine royalty rates.45
Despite having some similarities in their approaches, the three methods have enough differ-
ences to produce some fairly significant differences in estimates of brand value for the same brand,
causing considerable criticism regarding the validity of these approaches. The comparisons of the
three valuation approaches for a sample of 68 brands for which real financial transaction data was
available revealed significant anomalies, with all approaches overestimating value by nearly two
or three times.46 Further, these approaches are also inconsistent with each other. A comparison
of the three approaches—and the variations in their assessments of brand value—for five major
brands are shown in Table 11-2.
Why are these discrepancies so high, and why do inconsistencies exist across the approaches?
With a proliferation of different methodologies and definitions, sometimes the underlying assump-
tions made by the approaches could contribute to variations. Sampling variations and types of
brands that are incorporated could tilt the valuations across the approaches. For example, one criti-
cism of Interbrand is that its approach is limited to large, high-profile brands with multinational
operations. According to the criteria indicated by Interbrand, in order to be included in the study,
brands must be global—that is, 30 percent of the brand’s revenue must be from outside of the
brand’s home region, and it must have a presence in emerging markets.47 Brand Finance’s valu-
ations are based on “relief from royalty” approach, and can, therefore, be applied to brands for
which some information on royalties is available. BrandZ considers smaller, low-profile brands,
and those operating in a single country. BrandZ covers retailer brands and sector-wise rankings,
allowing for easy comparison across competitors.
At the heart of much of the criticism of all brand valuation approaches is the issue of separa-
bility that we identified earlier. An Economist editorial put it this way: “Brands can be awkward
to separate as assets. With Cadbury’s Dairy Milk, how much value comes from the name Cad-
bury? How much from Dairy Milk? How much merely from the product’s (replicable) contents
or design?”48 To draw a sports analogy, extracting brand value may be as difficult as determining
the value of the coach to a team’s performance. And the way a brand is managed can have a large
effect, positive or negative, on its value.
In summary, brand valuation and the brands on the balance sheet debate are controversial
subjects. There is no one universally agreed-upon approach.49 Many marketing experts feel it
Interbrand BrandZ Brand Finance
Google 133,252 245,581 109,470
Apple 178,119 234,671 107,141
Amazon 50,338 139,286 106,396
Coca-Cola 73,102 78,142 31,885
Toyota 53,580 28,660 46,255
Table 11–2 Comparisons of Brand Values in 2016 ($ millions)
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416 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
is impossible to reduce the richness of a brand to a single, meaningful number, and that any
formula that tries to do so is an abstraction and arbitrary. To mitigate some of these issues,
ISO 10668 was established as a “meta-standard” specified by the International Organization
for Standardization (ISO) to develop standard procedures and methods of measuring brand
value, and was first published in September 2010.50 Also, to address some of the criticisms
and limitations surrounding brand valuations, the Marketing Accountability Standards Board
(MASB) has been established, and one of its goals is to develop a single, unified approach to
brand valuation. The Science of Branding 11-1 describes the goals and brand valuation approach
of the MASB next.
Separating the value of a brand from related assets may be as difficult a task as
separating the value of a sports coach from the value of the entire team.
The Marketing Accountability Standards Board (MASB) is an
initiative launched in 2007 by both industry professionals and
academics. The goal of the MASB is to increase the contribution
of the marketing function within an organization by proposing
standards for marketing performance measurement and to iden-
tify processes that would link marketing activities with financial
performance.
One of the MASB’s projects involves creating an established
set of standards for brand valuation. The organization con-
ducted an 18-month tracking study in which it brought together
leading academics, marketing, and finance practitioners from
various companies. The study of 120 brands helped identify a
key brand strength metric, and showed how to link this measure
to market share and cash flows. The brand strength—measured
using brand preference—explained 77 percent of the varia-
tion in unit shares across 120 brands. According to the MASB
researchers, the estimate of market share can be transformed
into brand valuation by multiplying the share with price, and
making assumptions about the cost of production and category
size/category penetration. The model, which links consumer
brand strength to financial performance, is based on the fol-
lowing assumptions:
1. Brand strength drives market share.
2. Market share drives velocity (the flow of money into a business).
3. Velocity and market share together determine operating cash
flow.
4. Real options (the ability to leverage a brand’s strength across
categories and countries) together with operating cash flow
drive brand value.
In summary, according to the MASB, brand preference drives the
net present value of a brand’s cash flows, and the value of a brand is
driven by the preference towards the brand—that is, the percent of
consumers who choose the brand across a set of competitors. In line
with this idea, Professor David Stewart, previously the chair of MASB,
noted that linking brand choice or preference to metrics—such as
market share, price premium, and distribution coverage—can help
generate estimates of future operating cash flow, allowing for brand
value estimation. Taken together, MASB’s approach attempts to con-
nect the dots across various factors that drive the value of a brand
by providing a systematic framework to help companies value their
brands. In the future, reporting the brand value on its balance sheet
may be a standard for companies everywhere.
THE SCIENCE OF BRANDING 11-1
Understanding Brand Valuation
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CHAPTER 11 • MEASURING OUTCOMES OF BRAND EQUITY: CAPTURING MARKET PERFORMANCE 417
Sources: Frank Findley, “Brand Investment and Valuation: A New, Empir-
ically-Based Approach,” MASB White Paper & Presentation at ARF
RE!think Conference, March 2016; Jack Neff, “One Marketing Metric
to Rule Them All? Group Believes It Has One. Lengthy Test Across 100
The Marketing Accountability Standards Board (MASB) is an
initiative launched in 2007 by both industry professionals and
academics to develop criteria and implement standards for
marketing performance measurement.
Brands Is a Step Toward Linking Marketing to Cash Flow,” Advertis-
ing Age, November 23, 2015, http://adage.com/article/cmo-strategy/
marketing-accountability-group-finds-simple-metric-predicts-market-
share/301464/, accessed October 29, 2017.
REVIEW
This chapter considered the two main ways to measure the benefits or outcomes of brand equity:
comparative methods (a means to better assess the effects of consumer perceptions and preferences
on aspects of the marketing program) and holistic methods (attempts to come up with an esti-
mate of the overall value of the brand). Figure 11-2 summarizes the different, but complementary,
approaches. Understanding the particular range of benefits for a brand on the basis of comparative
methods may be useful as an input in estimating the overall value of a brand by holistic methods.
Combining these outcome measures with the measures of sources of brand equity from Chapter
10 as part of the brand value chain can provide insight into the effectiveness of marketing actions.
Nevertheless, assessing the return on investment of marketing activities remains a challenge.51
Here are four general guidelines for creating and measuring ROI from brand marketing activities:
1. Spend wisely—focus and be creative. To be able to measure ROI, we need to be earning a
return to begin with! Investing in distinctive and well-designed marketing activities increases
the chance for a more positive and discernible return on investment. 2. Look for benchmarks—examine competitive spending levels and historical company norms.
It is important to get the lay of the land in a market or category in order to understand what we may expect.
3. Be strategic—apply brand equity models. Use models such as the brand resonance model and the brand value chain to provide discipline and a structured approach to planning, implement- ing, and interpreting marketing activity.
4. Be observant—track both formally and informally. Qualitative and quantitative insights can help us understand brand performance.
Perhaps the dominant theme of this chapter and the preceding chapter on measuring sources
of brand equity is the importance of using multiple measures and research methods to capture the
richness and complexity of brand equity. No matter how carefully we apply them, single mea-
sures of brand equity provide at best a one- or two-dimensional view of a brand and risk missing
important dimensions of brand equity. Recall the problems encountered by Coca-Cola from its
overreliance on blind taste tests, described in Branding Brief 1-1.
No single number or measure fully captures brand equity.52 Rather, we should think of the
brand equity as a multidimensional concept that depends on what knowledge structures are present
in the minds of consumers, and what actions a firm takes to capitalize on the potential that these
knowledge structures offer.
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418 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
FIGURE 11-2
Measures of Outcomes of
Brand Equity
Comparative methods: Use experiments that examine consumer attitudes and behavior toward a brand, to more directly assess the benefits arising from having a high level of awareness and strong, favorable, and unique brand associations.
• Brand-based comparative approaches: Experiments in which one group of consumers responds to an element of the marketing program when it is attributed to the brand, and another group responds to that same element when it is attributed to a competitive or fictitiously named brand.
• Marketing-based comparative approaches: Experiments in which consumers respond to changes in elements of the marketing program for the brand or competitive brands.
• Conjoint analysis: A survey-based multivariate technique that enables marketers to profile the consumer buying decision process with respect to products and brands.
Holistic methods: Attempt to place an overall value on the brand in either abstract utility terms or concrete financial terms. Thus, holistic methods attempt to “net out” various considerations to determine the unique contribution of the brand.
• Residual approach: Examines the value of the brand by subtracting out from overall brand preferences consumers’ preferences for the brand based on physical product attributes alone.
• Valuation approach: Places a financial value on the brand for accounting purposes, mergers and acquisitions, or other such reasons.
There are many different sources of, and outcomes from, brand equity, depending on the market-
ers’ skill and ingenuity. Firms may be more or less able to maximize the potential value of a brand
according to the type and nature of their marketing activities. As Wharton’s Peter Fader says:
The actual value of a brand depends on its fit with buyer’s corporate structure and other
assets. If the acquiring company has manufacturing or distribution capabilities that are
synergistic with the brand, then it might be worth paying a lot of money for it. Paul
Feldwick, a British executive, makes the analogy between brands and properties on
the Monopoly game board. You’re willing to pay a lot more for Marvin Gardens if you
already own Atlantic and Ventnor Avenues!53
The customer-based brand equity framework, therefore, emphasizes employing a range of research
measures and methods to fully capture the multiple potential sources and outcomes of brand equity.
DISCUSSION QUESTIONS
1. Choose a product. Conduct a branded and unbranded experiment. What do you learn about
the equity of the brands in that product class?
2. Can you identify any other advantages or disadvantages of the comparative methods?
3. Pick a brand and conduct an analysis similar to that done with the Planters brand. What do
you learn about its extendibility as a result?
4. Go to Interbrand’s Web site (www.interbrand.com). Compare the top 10 brands from the cur-
rent year to the list from the previous year. What brands entered the top 10, and which ones
left the top 10? What contributed to these shifts in brand value? Which brands showed the
most increases or decreases in brand value? Why?
5. Select a brand from Interbrand’s top 100 brand names (one which you know is publicly traded
on a stock exchange). Go to a finance Web site (e.g., Google Finance or Yahoo Finance) and
locate its market capitalization. Determine how much of the brand’s value is as a percentage of its
market capitalization. Describe what this percentage means, and how it relates to brand valuation.
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CHAPTER 11 • MEASURING OUTCOMES OF BRAND EQUITY: CAPTURING MARKET PERFORMANCE 419
Brands can be seen as a key link in a value-creation chain,
beginning with the raw materials and production and ending
in firm value. As described in Chapter 3, brand and brand eq-
uity contribute in different ways to this value chain.54 The cor-
responding brand value chain consists of four components or
stages: (1) What companies do; (2) what customers think and
feel; (3) what customers do; and (4) how financial markets react.
The following is an overview of some of the research that has
been linked to different aspects of this brand value chain.
Brand Quality Information
Information about brand quality helps move stock prices as
it allows investors to gain better knowledge about a firm’s
value that was not captured by accounting measures.55 Aaker
and Jacobson examined the association between yearly stock
returns and yearly brand changes (as measured by EquiTrend’s
perceived quality rating of brand equity for 34 companies, and
the changes in current-term ROI. They found that brand atti-
tude changes were associated with stock return changes, and
the gains in stock returns averaged nearly 30 percent, whereas
declines were linked to average losses of 10 percent in stock
market returns.
Brand quality information can impact the risk of a firm’s stock
returns. There are two types of risk. Idiosyncratic risk refers to
the volatility of stock returns, whereas the systematic risk is the
extent to which a firm’s returns shifts in tandem with the entire
stock market. Bharadwaj and colleagues found that changes in
brand quality are related directly to stock returns, and increases
in quality can lower the idiosyncratic risk associated with a firm.
They tested these findings using a sample of 132 firms from 2000
to 2005. They found that unanticipated changes in quality could
also increase the perceptions of systematic risk.56 This was par-
ticularly true in highly competitive markets and when the firm’s
performance (earnings) in the short-term increases.
Key Takeaways: Information about brand quality moves stock
prices and increases stock market returns; improvements in
quality can lower firm risk or volatility of stock returns (i.e.,
idiosyncratic risk).
Brand Quality and Rating Dispersions
In addition to average quality ratings, a factor worth consider-
ing is how variable the quality ratings are across consumers. To
address this, Xueming Luo and colleagues conducted a large-scale
study of 960 brands from the United States, the United Kingdom,
and Germany, using the Brand Index dataset from YouGov from
2008 to 2011. They uncovered that it was both good and bad
to have dispersion—a Janus-like effect—when it comes to brand
quality rating dispersions.
While rating dispersion can lower the returns associated
with a brand, it can also lower firm risk.57 The maximum
stock returns of 5.6 percent were seen when average ratings
increased while dispersion decreased. Further, an increase in
dispersion (by one standard deviation) could cost an average
firm with $36.9 billion market capitalization, a loss of $2.2
million after 10 days. These findings demonstrate that there
are consequences to average quality ratings as well as the
dispersion (or variance) of those ratings across consumers.
Managers would, therefore, be wise to look at how consumers
are distributed in their quality perceptions of a brand, rather
than to look at the averages alone.
Key Takeaway: Dispersion of brand quality ratings can lower
the stock market returns and lower the risk.
Dimensions of Brand Equity and Stock Market Valuation and Returns
Mizik and Jacobson examined how different dimensions of
brand equity influenced stock market returns. Recall the various
dimensions of brand equity as proposed by Young & Rubicam’s
Brand Asset Valuator (BAV) Model (described in Chapter 10).
Mizik and Jacobson used the BAV dimensions to demonstrate its
effect on a company’s stock market returns. Using a dataset of
890 observations from 1998 to 2004, they found that relevance
and energy dimensions of brand equity significantly impacted
stock market returns.58 They found that relevance had a stronger
impact than energy—a unit increase in relevance contributing to
an 8.2 percent increase in stock returns on average, and a unit
increase in energy contributing to a 6 percent increase in stock
returns. Esteem and knowledge were more directly influential in
accounting measures, and differentiation impacted accounting
performance in a subsequent time-period. In sum, different BAV
brand equity dimensions were shown to have varying roles, with
relevance and energy showing the most effect.59
One key concern of managers is how to value brands, par-
ticularly in a merger and acquisition setting. Sometimes, the
valuation may be seen as excessive. For example, although the
car brand Ferrari was valued at $9.8 billion, some believe that
is overvalued. How much is too much for Ferrari?60 Further,
using brand equity dimensions such as with BAV, can a firm
construct specific multipliers which can improve the accuracy
of valuing a firm?
Research by Mizik and Jacobson on 200 brands belonging
to mono-brand firms (i.e., firms with a single brand accounting
for a majority of the sales) in the years 2000–2006 showed some
interesting patterns. They used an expanded version of BAV with
a fifth dimension of energy included in addition to differentia-
tion, relevance, esteem, knowledge, and energy and showed a
firm could improve the valuation accuracy by about 16 percent,
relative to predictions based on accounting variables (e.g., return
on investment) alone61
Key Takeaways: Dimensions of brand equity—particularly
BAV’s relevance and energy—can increase stock market
returns. Using all dimensions of brand equity can help firms
improve the accuracy with which they conduct valuations,
particularly in the case of mergers and acquisitions where
accurate valuations are the key to success.
Brand Equity and Risk
Rego, Billet, and Morgan examined the role of brand equity on two
types of firm risk—systematic and idiosyncratic (as defined above)
for 252 firms between 2000 and 2006. They found that brand
equity had a substantial impact on lowering idiosyncratic risk, and
Financial Perspectives on Brands and the Brand Value Chain
BRAND FOCUS 11.0
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420 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
also in lowering downside systematic risk. They concluded that
brand equity can lower the risk facing a firm.
Key Takeaway: Brand equity can lower the risk facing a firm.
Negative News (e.g., Recalls) and Performance of Competitors
Borah and Tellis analyzed daily traffic, topic, and sentiment on more
than 1,000 automotive Web sites following recall announcements
for about 16 months. They found that recall events increased
negative chatter even among competitors, particularly in the same
country, and led to a lowering of competitors’ sales as well as stock
market performance. Online chatter surrounding a recall amplified
the negative impact of recalls on sales by nearly 4.5 times.62
Key Takeaway: Negative news about a brand can spill over
and impact closely-related competitors’ perceptions and their
stock market performance as well.
Brand Portfolio Characteristics
Morgan and Rego analyzed how aspects of a brand’s portfolio—
for example, the number of brands owned, number of segments
marketed, how brands compete, and customer perceptions of
quality and price—impact outcomes such as marketing and finan-
cial performance. They conducted this analysis on 72 public firms
over a 10-year period (1994–2003). They looked at the effect on
seven performance outcomes including: (1) consumer loyalty;
(2) market share; (3) marketing efficiency (ratio of advertising spend-
ing to sales; (4) ratio of selling, general, and administrative expenses
to sales; (5) financial performance (Tobin’s q, as defined below);
(6) cash flow; and (7) cash flow variability. They showed that several
portfolio characteristics helped explain the performance outcomes.
For example, larger portfolios of brands can increase financial per-
formance and can reduce cash flow variability. Brand portfolios with
higher quality positioning enjoy higher performance; in contrast,
those with high-price positioning have lower financial performance.
Key Takeaway: The characteristics of the brand’s portfolios
can impact firm performance and stock market outcomes.
Brand Architecture
Research by Rao and colleagues contrasted the impact of three
types of brand architecture strategies (branded house versus
house of brands versus mixed branding) on Tobin’s q, which is
one way of capturing a firm’s stock market performance.63 Tobin’s
q is a forward-looking measure of intangible assets and is mea-
sured as follows:64
Market Value of Equity + Liquidating Value of a Firm's Outstanding Preferred Stock + Debt
Book Value of Total Assets .
A mixed branding strategy is when a firm had both corporate
names for some products (a la branded house) and individual
names for others (a la house of brands).
With their sample, corporate branding had higher Tobin’s q
whereas mixed branding had lower Tobin’s q. One of the key ben-
efits of corporate branding is that it increases the ability of firms
to engage in cross-selling of products within its portfolio, thus,
enhancing the efficiency with which it utilizes its brand name
across a variety of categories. This effect was shown to hold true
in both business-to-business and business-to-consumer contexts,
although it was stronger in a business-to-business setting.
Later research examined the implications of these brand
architecture strategies by examining the effects of a broader
range of branding strategies including sub-branding and
endorsed branding strategies on both stock market returns
as well as stock market risk. This research found that brand
architecture strategies can have significant implications for a
variety of different types of risk associated with a firm and can
be related to impact on reputation, dilution, cannibalization,
and brand stretch.65
Key Takeaway: The type of brand strategy and brand archi-
tecture can influence stock market returns.
Marketing Expenditures
In a review of almost 83 prior studies, Edeling and Fischer exam-
ined how much changes in marketing expenditures and brand
relationships influenced firm value. They found that, on aver-
age, changes in brand relationships were significant in their
impact on firm value.66 Often, marketing managers and finance
managers do not appear to speak the same language or work
towards the same goals. Marketing is focused on sales impact,
whereas finance executives tend to focus on financial outcomes
(e.g., cost of capital). Firms should find ways of connecting
these two functional areas. Researchers Fischer and Himme67
looked at how marketing and financial metrics interact. They
found that advertising increased customer-based brand equity,
which, in turn, impacted how the financial leverage and credit
spread, later contributed to higher financial resources. Therefore,
the researchers concluded that finance and marketing goals are
highly interconnected.
Key Takeaway: Given that finance and marketing goals are
closely related, it may be a good idea for managers to dem-
onstrate the relationships between marketing and finance
goals, to strengthen cross-functional coordination within a
firm.
Brand Extensions
Lane and Jacobson showed that the stock market’s reactions to
brand extension announcements depended a great deal on brand
attitude and familiarity.68 For instance, they found that the stock
market response was most favorable when extensions involved
high-esteem, high-familiarity brands (e.g., Hershey, Coca-Cola)
as well as low-esteem, low-familiarity brands (perhaps because
there was less risk in these extensions). The stock market reac-
tion was unfavorable or even negative for brand extensions when
consumers were highly familiar with the brand but did not have
high regard, or vice versa.
Horsky and Swyngedouw found that name changes for
firms produced positive returns, particularly in industrial goods
sectors or when prior performance was poor; also, researchers
have shown that when firms with high marketing investments
undergo a corporate name change, they experience more rewards
from the stock market reactions.69
Key Takeaway: Stock market reactions to brand extensions
and name changes could vary based on how much prior
brand equity is involved; typically, when prior brand equity is
high, both extensions and name changes could elicit a more
positive reaction from investors.
Brand Alliances and Marketing Agreements
Imagine a marketing agreement between Coca-Cola and Nike,
or a marketing alliance between Apple and Lego for children’s
video games. Such alliances could be seen as positive develop-
ments, and could contribute to higher stock market returns. How-
ever, research has shown that these benefits could vary based
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CHAPTER 11 • MEASURING OUTCOMES OF BRAND EQUITY: CAPTURING MARKET PERFORMANCE 421
on circumstances surrounding the introduction, as well as the
characteristics of the companies themselves.
Research by Swaminathan and Moorman used a sample of
230 marketing alliance announcements in the high-tech industry
(1988–2005 time period).70 They showed that, on average, 1.4 per-
cent positive increase in stock market returns occurs (with an aver-
age capitalization of companies within the sample of $49 billion),
translating to $600 million average increase in firm value, following
announcements of marketing alliances. They also showed the posi-
tive role of networks of alliance partners in strengthening outcomes.
When a firm announcing an alliance had a strong network of previ-
ous partners, those alliance networks could also profit from a given
marketing alliance. For example, when Angry Birds and Star Wars
announced a new video game, the new customers may also purchase
other video games of Angry Birds, thus benefiting the network as
a whole.
Research by Cao and Sorescu71 focused on co-branded part-
nerships and the impact on the firm’s value. They found that, on
average, the stock market reaction to the announcement of co-
branded products are 1 percent. Also, when firms enter into co-
branded agreements,72 the consistency of the brand image of the
two partners, whether or not the agreement was exclusive to the
partners, and how innovative the product was, could strengthen
the value of co-branded partnerships.
Key Takeaways: Investors are generally positive when a firm
enters into a marketing alliance or co-branded partnership.
However, these stock market returns could vary based on
characteristics of networks surrounding a given firm, exclu-
sivity of the partnership, and how innovative the products of
the partnership may be.
Brand Mergers and Brand Acquisitions
Research typically examine conditions surrounding brand acquisi-
tions or brand mergers which either increase the stock market
reaction or weaken it. Newmeyer, Swaminathan, and Hulland
examined this issue using a dataset of 138 acquisitions over a
20-year period. They found that the stock market returns, on aver-
age, increased 1.2 percent to announcements of both brand and
product acquisitions. Brand acquisitions, in general, had higher
returns than product acquisitions without explicit mention of brand
names being acquired. Also, they showed that when both target
and acquirer had strong marketing capabilities, and when brand
portfolio diversity was high, the value of the target firm’s brands
was higher.73 The more related a target and acquirer firm’s product
offerings were, the higher the value a brand acquisition had.74
When firms acquire brands whose price and quality position-
ing is higher than their existing portfolio, then the acquirer can
see stronger benefits regarding stock market returns.75 Wiles,
Morgan, and Rego investigated brand acquisitions and disposals
over a 15-year period between 1994 and 2008. Their findings
indicated that acquirers’ abnormal returns were, on average,
.75 percent (approximately $137 million in shareholder value),
whereas, disposals were around .88 percent of additional abnor-
mal stock returns ($283 million dollars on average in shareholder
value). This is perhaps one reason why luxury brand acquisitions
have been popular, with Coach acquiring Kate Spade and Michael
Kors acquiring Jimmy Choo.76 Or perhaps entering a higher price
point using an internally developed brand name is a challeng-
ing task, and therefore, acquisitions of these types of brands are
viewed positively by investors.
Key Takeaways: Both acquisitions of brands and disposals
are big events from an investors’ standpoint. Under the right
conditions, both could strengthen the stock market value of
the acquirer or target firm.
Brand Equity and Customer Acquisition or Retention
Using the traditional four pillars of BAV (differentiation, relevance,
esteem and knowledge), Stahl, Heitmann, Lehmann, and Neslin77
examined its relationship with customer acquisition, customer
retention, and the lifetime value associated with customers for a
set of automobile brands. Their findings showed that differentia-
tion is a very key element, leading to higher customer profitability
and lower acquisition and retention rates. Thus, differentiation
could be a double-edged sword. The other dimension of knowl-
edge has a strong and positive impact on customer acquisition,
customer retention, and customer profitability.
Key Takeaway: Brand equity dimensions could enhance
customer retention and acquisition, along with customer
profitability.
Marketing Expenditures on Social Media and Consumer Mind-Set Metrics
Research has also explored how social media expenditures impact
shareholder value through its impact on customer mind-set met-
rics such as brand awareness, purchase intent, and customer
satisfaction. Earned social media was found to impact brand
awareness and purchase intent but not customer satisfaction;
owned social media impacted brand awareness and customer
satisfaction. Both purchase intent and customer satisfaction, in
turn, were found to influence shareholder value.78
Other research by DeVries, Gensler, and Leeflang showed the
relative impact of traditional advertisements and social media ads
on Facebook and consumer-to-consumer conversations on brand
building and customer acquisition. Firm performance was shown
to be optimal when companies leveraged traditional advertising
for brand building and customer acquisition and leveraged social
media to improve the impact of traditional ads.79
Key Takeaway: Marketing expenditures can impact firm per-
formance and stock market valuation through its impact on
brands and customers.
NOTES
1. C. B. Bhattacharya and Leonard M. Lodish, “Towards a System for Monitoring Brand Health,” Marketing Science Institute Working Paper Series (00–111) (July 2000).
2. Richard F. Chay, “How Marketing Researchers Can Har- ness the Power of Brand Equity,” Marketing Research 3, no. 2 (1991): 10–30.
3. For an interesting approach, see Martin R. Lautman and Koen Pauwels, “Metrics That Matter: Identifying the Importance of Consumer Needs and Wants,” Journal of Advertising Research 49, no. 3 (September 2009): 339–359.
4. Peter Farquhar and Yuji Ijiri have made several other distinctions in classifying brand equity measurement
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422 PART IV • MEASURING AND INTERPRETING BRAND PERFORMANCE
procedures. Peter H. Farquhar, Julia W. Han, and Yuji Ijiri, “Recognizing and Measuring Brand Assets,” Marketing Science Institute Report 28, no. 2 (1991): 91–119. They describe two broad classes of measurement approaches to brand equity: separation approaches and integration approaches. Separation approaches view brand equity as the value added to a product. Farquhar and Ijiri cat- egorize separation approaches into residual methods and comparative methods. Residual methods determine brand equity by what remains after subtracting physical product effects. Comparative methods determine brand equity by comparing the branded product with an unbranded prod- uct or an equivalent benchmark. Integration approaches, on the other hand, typically define brand equity as a com- position of basic elements. Farquhar and Ijiri categorize integration approaches into association and valuation methods. Valuation methods measure brand equity by its cost or value as an intangible asset for a particular owner and intended use. Association methods measure brand equity in terms of the favorableness of brand evaluations, the accessibility of brand attitudes, and the consistency of brand image with consumers. The previous chapter described techniques that could be considered association methods. This chapter considers techniques related to the other three categories of methods.
5. Darren Weaver, “We Did a Blind Taste Test of Bud, Coors, Miller and Natty Light—Here’s the Verdict,” Business Insider, December 31, 2016, http://www . businessinsider.com/blind-taste-test-bud-coors-miller- natty-light-beers-2016-12.
6. Julian Clover, “Virgin Connects Mobile Network with Orange,” Broadband TV News, October 10, 2011, https:// www.broadbandtvnews.com/2011/10/10/virgin- connects- mobile-network-with-orange/; Chris Martin, “Virgin Media Mobile Customers Will Get Orange Network Coverage,” The Inquirer, October 7, 2011, https://www .theinquirer.net/inquirer/news/2115502/virgin-media- mobile-customers-orange- network-coverage.
7. Edgar Pessemier, “A New Way to Determine Buying Deci- sions,” Journal of Marketing 24, no. 2 (1959): 41–46.
8. Björn Höfer and Volker Bosch, “Brand Equity Measure- ment with GfK Price Challenger, Yearbook of Market- ing and Consumer Research 5 (2007): 21–39.
9. Paul E. Green and V. Srinivasan, “Conjoint Analysis in Consumer Research: Issues and Outlook,” Journal of Consumer Research 5, no. 2 (1978): 103–123; Paul E. Green and V. Srinivasan, “Conjoint Analysis in Marketing: New Developments with Implications for Research and Practice,” Journal of Marketing 54, no. 4 (1990): 3–19; David Bakken and Curtis Frazier, “Conjoint Analysis: Understanding Consumer Decision Making,” Chapter 15 in Handbook of Marketing Research: Uses, Misuses, and Future Advances, eds. Rajiv Grover and Marco Vriens (Thousand Oaks, CA: Sage Publications, 2006): 288–311.
10. For more details, see Betsy Sharkey, “The People’s Choice,” Adweek 30 (November 27, 1989): 6–10.
11. Paul E. Green and Yoram Wind, “New Ways to Measure Consumers’ Judgments,” Harvard Business Review 53 (July–August 1975): 107–117.
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13. V. R. Rao, Applied Conjoint Analysis (Berlin: Springer Science & Business Media, 2014).
14. Max Blackstone, “Price Trade-Offs as a Measure of Brand Value,” Journal of Advertising Research 30, no. 4 (August/September 1990): RC3–RC6.
15. Arvind Rangaswamy, Raymond R. Burke, and Terence A. Oliva, “Brand Equity and the Extendibility of Brand Names,” International Journal of Research in Marketing 10, no. 1 (March 1993): 61–75. See also Moonkyu Lee, Jonathan Lee, and Wagner A. Kamakura, “Consumer Evaluations of Line Extensions: A Conjoint Approach,” Advances in Consumer Research, Vol. 23 (Ann Arbor, MI: Association of Consumer Research, 1996), 289–295; Howard Barich and V. Srinivasan, “Prioritizing Market- ing Image Goals under Resource Constraints,” Sloan Management Review, 34, no. 4 (Summer 1993): 69–76; Sebastián Maldonado, Ricardo Montoya, and Richard Weber, “Advanced Conjoint Analysis Using Feature Selection Via Support Vector Machines,” European Jour- nal of Operational Research 241, no. 2 (2015): 564–574.
16. Marco Vriens and Curtis Frazier, “The Hard Impact of the Soft Touch: How to Use Brand Positioning Attributes in Conjoint,” Marketing Research (Summer 2003): 23–27.
17. Nicholas Rubino, Letter to the Editor, “McComb Played a Bad Hand Well,” The Wall Street Journal, October 20, 2011, https://www.wsj.com/articles/SB1000142405297 0204479504576639272311225918, accessed November 15, 2018; Dana Mattioli, “Liz Claiborne Must Say Adieu to Liz,” The Wall Street Journal, October 13, 2011, https:// www.wsj.com/articles/SB1000142405297020391430457 6626711202553884, accessed November 15, 2018.
18. Noah Kirsch, “Why Kate Spade Won’t See a Penny of the $2.4 Billion Sale to Coach,” Forbes, May 8, 2017, www.forbes.com/sites/noahkirsch/2017/05/08/why- kate-spade-wont-see-a-penny-of-the-2-4-billion-sale- to-coach/#64b52b5f5b2b.
19. V. Srinivasan, “Network Models for Estimating Brand- Specific Effects in Multi-Attribute Marketing Models,” Management Science 25, no. 1 ( January 1979): 11–21; V. Srinivasan, Chan Su Park, and Dae Ryun Chang, “An Approach to the Measurement, Analysis, and Pre- diction of Brand Equity and Its Sources,” Management Science 51, no. 9 (September 2005): 1433–1448.
20. Wagner A. Kamakura and Gary J. Russell, “Measuring Brand Value with Scanner Data,” International Journal of Research in Marketing 10, no. 1 (1993): 9–22.
21. Kusum Ailawadi, Donald R. Lehmann, and Scott A. Neslin, “Revenue Premium as an Outcome Measure of Brand Equity,” Journal of Marketing 67, no. 4 ( October 2003): 1–17. See also Avi Goldfarb, Qiang Lu, and Sridhar Moorthy, “Measuring Brand Value in an Equilibrium Framework,” Marketing Science 28, no. 1 (January–February 2009): 69–86; C. Whan Park, Deborah J. MacInnis, Xavier Dreze, and Jona- than Lee, “Measuring Brand Equity: The Marketing Surplus & Efficiency (MARKSURE)–Based Brand Equity Measure,” in Brands and Brand Management: Contemporary Research Perspectives, eds. Barbara Loken, Rohini Ahluwalia, and Michael J. Houston (London: Taylor and Francis Group Publishing, 2010), 159–188.
22. S. Sriram, Subramanian Balachander, and Manohar U. Kalwani, “Monitoring the Dynamics of Brand Equity
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CHAPTER 11 • MEASURING OUTCOMES OF BRAND EQUITY: CAPTURING MARKET PERFORMANCE 423
Using Store-level Data,” Journal of Marketing 71, no. 2 (April 2007): 61–78.
23. Joffre Swait, Tülin Erdem, Jordan Louviere, and Chris Dubelar, “The Equalization Price: A Measure of Consumer-Perceived Brand Equity,” International Jour- nal of Research in Marketing 10, no. 1 (1993): 23–45; Tülin Erdem and Joffre Swait, “Brand Equity as a Sig- naling Phenomenon,” Journal of Consumer Psychology 7, no. 2 (1998): 131–157; Tülin Erdem, Joffre Swait, and Ana Valenzuela, “Brands as Signals: A Cross- Country Validation Study,” Journal of Marketing 70, no. 1 (January 2006): 34–49; Joffre Swait and Tülin Erdem, “Characterizing Brand Effects on Choice Set Formation and Preference Discrimination Under Uncer- tainty,” Marketing Science 26 (September–October 2007): 679–697.
24. See also Eric L. Almquist, Ian H. Turvill, and Kenneth J. Roberts, “Combining Economic Analysis for Breakthrough Brand Management,” Journal of Brand Management 5, no. 4 (1998): 272–282.
25. V. Srinivasan, Chan Su Park, and Dae Ryun Chang, “An Approach to the Measurement, Analysis, and Prediction of Brand Equity and Its Sources,” Management Science 51, no. 9 (September 2005): 1433–1448. See also Chan Su Park and V. Srinivasan, “A Survey-Based Method for Measuring and Understanding Brand Equity and Its Extendability,” Journal of Marketing Research 31, no. 2 (May 1994): 271–288; see also Na Woon Bong, Roger Marshall, and Kevin Lane Keller, “Measuring Brand Power: Validating a Model for Optimizing Brand Equity,” Journal of Product and Brand Management 8, no. 3 (1999): 170–184; Randle Raggio and Robert P. Leone, “Producing a Measure of Brand Equity by Decomposing Brand Beliefs into Brand and Attribute Sources,” in “Brand Equity Measurement: Concepts and Applications,” ICFAI Press, 2007.
26. William R. Dillon, Thomas J. Madden, Amna Kirmani, and Soumen Mukherjee, “Understanding What’s in a Brand Rating: A Model for Assessing Brand and Attribute Effects and Their Relationship to Brand Equity,” Journal of Mar- keting Research 38, no. 4 (November 2001): 415–429.
27. Vipal Monga, “Accounting’s 21st Century Challenge: How to Value Intangible Assets,” The Wall Street Journal, March 21, 2016, www.wsj.com/articles/ accountings-21st-century-challenge-how-to-value- intangible-assets-1458605126.
28. The Economist, “What Are Brands For?,” The Econo- mist, August 30, 2014, www.economist.com/news/ business/21614150-brands-are-most-valuable-assets-many- companies -possess-no-one-agrees-how-much-they.
29. Margaret Molloy, “Brand Counts: Strategic Metrics Bear Out Clear Value,” CMO, September 2, 2016, www.cmo.com/opinion/articles/2016/9/1/why- brand-counts.html#gs.foOqu0w.; Alexander Brigham, “Your Brand Reputational Value Is Irreplaceable. Protect It!”, Forbes, February 1, 2010, www.forbes .com/2010/02/01/brand-reputation-value-leadership- managing-ethisphere.html.
30. Intuit Firm of the Future Team, “Top 10 Differences Between IFRS and GAAP Accounting,” https://www .firmofthefuture.com/content/top-10-differences- between-ifrs-and-gaap-accounting/, accessed November 15, 2018; The International Financial Reporting Standards
Foundation (IFRS), “IAS 38 Intangible Assets,” https:// www.ifrs.org/issued-standards/list-of-standards/ias-38- intangible-assets/, accessed November 15, 2018.
31. An impaired asset is one whose market value is lower than that listed on the company’s balance sheet.
32. Roger Sinclair and Kevin Lane Keller, “Brand Value, Accounting Standards, and Mergers and Acquisitions: ‘The Moribund Effect,’” Journal of Brand Manage- ment,24 (2) (2017), doi:10.1057/s41262-016-0025-1.
33. Vince Howe, William H. Sackley, Frederika Spencer, David Mautz, and Justin Freed, “‘Accounting’ for Brand Equity—Value Relevance and Reliability: A Marketing and FASB Dilemma,” Society for Marketing Advances Proceedings, November 2013, http://bit.ly/2rirB1I).
34. Lew Winters, “Brand Equity Measures: Some Recent Advances,” Marketing Research 3, no. 4 (December 1991): 70–73; Gordon V. Smith, Corporate Valuation: A Business and Professional Guide (New York: John Wiley & Sons, 1988), 70–73.
35. Brand Finance, http://www.brandfinance.com, accessed November 15, 2018.
36. Investors put capital into a company to ensure it can operate on a day-to-day basis. This money does not come free, as investors expect a return on their invest- ment. While accountants are happy to accept the differ- ence between revenue and expenses as the company’s profit, economists believe that true profit is accounting profit less the expected return on the company’s capital employed: the investors’ funds.
37. Interbrand, “Best Global Brands,” https://www.interbrand .com, accessed November 15, 2018.
38. Ken Schept, “Brandz Top 100 Most Valuable Brands 2017,” Brandz, accessed October 29, 2017, http://brandz .com/admin/uploads/files/BZ_Global_2017_Report.pdf.
39. MB Global, “Meaningfully Different Framework,” http://www.millwardbrown.com/Mb-Global/What- We-Do/Brand/Brand-Equity/Meaningfully-Different- Framework, accessed November 15, 2018.
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41. Ibid. 42. R. Harish, “Brand Valuation—A Comparative Study of
the Methods Adopted by Interbrand, Millward Brown and Brand Finance,” working paper.
43. BrandFinance, “Global 500 2017: The Annual Report on the World’s Most Valuable Brands,” http:// brandfinance.com/images/upload/global_500_2017_ locked_website.pdf, accessed November 15, 2018.
44. Brand Finance, “Explanation of the Methodology,” http://brandirectory.com/methodology, accessed November 15, 2018.
45. R. Harish, “Brand Valuation—A Comparative Study of the Methods Adopted by Interbrand, Millward Brown and Brand Finance,” working paper.
46. Mark Ritson, “Brand Valuations Do Not Always Tell the Full Story,” Marketing Week, September 29, 2011, www .marketingweek.co.uk/sectors/industry/brand-valuations- do-not-always-tell-the-full-story/3030524.article.; Mark Ritson, “What Is the Point of Brand Valuations If Those Doing the Valuing Are So Off Target,” Marketing Week, April 22, 2015, www.marketingweek.com/2015/04/22/
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what-is-the-point-of-brand-valuations-if-those-doing- the-valuing-are-so-off-target/.
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49. For example, brand characteristics have been shown to improve brand valuation accuracy. See Natalie Mizik and Robert Jacobson, “Valuing Branded Businesses,” Journal of Marketing 73, no. 6 (November 2009): 137–153.
50. International Organization for Standardization, Tech- nical Committee, “Brand Valuation: Requirements for Monetary Brand Valuation,” https://www.iso.org/ standard/46032.html, accessed November 15, 2018.
51. Koen Pauwels and Martin Lautman, “What Is Important? Identifying Metrics That Matter,” Journal of Advertising Research 49, no. 3 (September 2009), 339–359.
52. For an interesting empirical application, see Manoj K. Agarwal and Vithala Rao, “An Empirical Comparison of Consumer-Based Measures of Brand Equity,” Mar- keting Letters 7, no. 3 (1996): 237–247.
53. Fader, course notes. 54. Kevin Lane Keller and Donald R. Lehmann, “Brands
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55. David A. Aaker and Robert Jacobson, “The Financial Information Content of Perceived Quality,” Journal of Marketing Research 31, no. 2 (1994): 191–201.
56. Sundar G. Bharadwaj, Kapil R. Tuli, and Andre Bonfrer, “The Impact of Brand Quality on Shareholder Wealth,” Journal of Marketing 75, no. 5 (2011): 88–104.
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58. As noted previously, the BAV dimensions previously included energy and differentiation as separate dimen- sions. They have since been combined into a single dimension called energized differentiation.
59. Natalie Mizik and Robert Jacobson, “The Financial Value Impact of Perceptual Brand Attributes,” Journal of Marketing Research 45, no. 1 (2008): 15–32.
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66. Alexander Edeling and Marc Fischer, “Marketing’s Impact on Firm Calue: Generalizations from a Meta- analysis,” Journal of Marketing Research 53, no. 4 (2016): 515–534.
67. Marc Fischer and Alexander Himme, “The Financial Brand Value Chain: How Brand Investments Contribute to the Financial Health of Firms.” International Journal of Research in Marketing 34, no. 1 (2017): 137–153.
68. Vicki Lane and Robert Jacobson, “Stock Market Reac- tions to Brand Extension Announcements: The Effects of Brand Attitude and Familiarity.” The Journal of Mar- keting 59, no. 1 (January 1995): 63–77.
69. Dan Horsky and Patrick Swyngedouw, “Does It Pay to Change Your Company’s Name? A Stock Market Perspec- tive,” Marketing Science 6, no. 4 (1987): 320–335; Saim Kashmiri and Vijay Mahajan, “The Name’s the Game: Does Marketing Impact the Value of Corporate Name Changes?” Journal of Business Research 68, no. 2 (2015): 281–290.
70. Vanitha Swaminathan and Christine Moorman, “ Marketing Alliances, Firm Networks, and Firm Value Creation,” Journal of Marketing 73, no. 5 (2009): 52–69.
71. Zixia Cao and Alina Sorescu, “Wedded Bliss or Tainted Love? Stock Market Reactions to the Introduction of Cobranded Products.” Marketing Science 32, no. 6 (2013): 939–959.
72. Ibid. 73. Sundar G. Bharadwaj, Kapil R. Tuli, and Andre Bonfrer,
“The Impact of Brand Quality on Shareholder Wealth,” Journal of Marketing 75, no. 5 (2011): 88–104.
74. Casey E. Newmeyer, Vanitha Swaminathan, and John Hulland, “When Products and Brands Trade Hands: A Framework for Acquisition Success,” Journal of Mar- keting Theory and Practice 24, no. 2 (2016): 129–146.
75. Michael A. Wiles, Neil A. Morgan, and Lopo L. Rego, “The Effect of Brand Acquisition and Disposal on Stock Returns,” Journal of Marketing 76, no. 1 (2012): 38–58.
76. Paula N. Danziger, “Luxury Brand Mergers and Acqui- sitions Set to Explode,” Forbes, August 16, 2017, https:// www.forbes.com/sites/pamdanziger/2017/08/16/ luxury-brand-mergers-and-acquisitions-set-to- explode/#6c2d820d9c0f, accessed November 15, 2018.
77. Florian Stahl, Mark Heitmann, Donald R. Lehmann, and Scott A. Neslin, “The Impact of Brand Equity on Customer Acquisition, Retention, and Profit Margin,” Journal of Marketing 76, no. 4 (2012): 44–63.
78. Anatoli Colicev, Ashwin Malshe, Koen Pauwels, and Peter O’Connor, “Improving Consumer Mind- Set Metrics and Shareholder Value through Social Media: The Different Roles of Owned and Earned,” Journal of Marketing 82, no. 1 (2017); Dominique M. Hanssens and Koen H. Pauwels. “Demonstrat- ing the Value of Marketing,” Journal of Marketing 80, no. 6 (2016): 173–190; Koen Pauwels, Zeynep Aksehirli, and Andrew Lackman. “Like the Ad or the Brand? Marketing Stimulates Different Electronic Word-of-Mouth Content to Drive Online and Offline Performance,” International Journal of Research in Marketing 33, no. 3 (2016): 639–655.
79. Lisette de Vries, Sonja Gensler, and Peter S. H. Leeflang, “Effects of Traditional Advertising and Social Messages on Brand-Building Metrics and Customer Acquisition,” Journal of Marketing 81, no. 5 (2017): 1–15.
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425
Luxury brands such
as Gucci are adopting
a careful approach to
extending their brands,
after early strategic
moves highlighted the
pitfalls of extending into
too many categories.
Learning Objectives
After reading this chapter, you should be able to
1. Define the key components of brand architecture.
2. Define a brand-product matrix.
3. Outline the principles of a good brand portfolio.
4. Assemble a basic brand hierarchy for a brand.
5. Describe how a corporate brand is different from a product brand.
6. Explain the role of brand architecture in strengthen- ing a brand’s value and a firm’s performance.
7. Understand how sustainability initiatives, corporate social responsibility and green marketing can enhance a brand.
Designing and Implementing Brand Architecture Strategies 12
PART V G R O W I N G A N D S U S TA I N I N G B R A N D E Q U I T Y
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426 PART V • GROWING AND SUSTAINING BRAND EQUITY
Parts II, III, and IV of this book examined strategies for building and measuring brand equity. Part V takes a broader perspective and considers how to sustain, nurture, and grow brand equity under various situations and circumstances.
The successful launch of new products and services is of paramount importance to firms’ long-term financial prosperity. Firms must maximize brand equity across all the different brands and products and services they offer. The brand architecture strategy determines which brand elements they apply to their new and existing products and services. It is the means that help consumers understand those products and services and organize them in their minds.
Many firms employ complex brand architecture strategies that are reflected in brand names which consist of multiple brand-name elements (e.g., Canon EOS 5D Mark IV camera), and each element may signify an important aspect of the brand’s architecture. What is the best way to characterize a firm’s brand architecture strategy? What guidelines exist for choosing the right combinations of brand names and other brand elements to best manage brand equity across the entire range of a firm’s products?
We begin by outlining a three-step process to develop an effective brand architecture strategy. We next describe two important strategic tools—brand portfolios and brand hierarchies—that, by defining various relationships among brands and products, help characterize and formulate brand architecture strategies. We then consider corporate branding strategies. After outlining corporate image dimensions, we examine three specific issues in managing a corporate brand: corporate social responsibility, corporate image campaigns, and corporate name changes. Brand Focus 12.0 devotes special attention to the topic of corporate social responsibility and its important role in a successful brand strategy.
PREVIEW
DEVELOPING A BRAND ARCHITECTURE STRATEGY The firm’s brand architecture strategy helps marketers determine which products and ser- vices to introduce, and which brand names, logos, symbols, and so forth to apply to new and existing products. As we describe later, it defines both the brand’s breadth or boundar- ies and its depth or complexity. Which different products or services should share the same brand name? How many variations of that brand name should we employ? The role of brand architecture is twofold:
• To clarify brand awareness: Improve consumer understanding and communicate similarity and differences between individual products and services.
• To improve brand image: Maximize transfer of equity between the brand and individual products and services to improve trial and repeat purchase.
An overview of the chapter is given in Figure 12-1. We outline the key ideas in this chapter across three specific themes, which are core to devel-
oping a brand architecture strategy. These are the following:
Step 1: Defining brand potential in terms of a market footprint Step 2: Identifying brand extension opportunities or selecting the product and service extensions that will allow the brand to achieve that potential, and Step 3: Branding new products and services including deciding on the branding elements and positioning.
Although we introduce all three topics here, this chapter concentrates on insights and guide- lines into the first and third topics. Chapter 13 exclusively focuses on the second topic and how to launch successful brand extensions. The Science of Branding 12-1 describes a useful tool to help depict brand architecture strategies for a firm.
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 427
FIGURE 12-1
A Map of Brand Archi-
tecture Strategies and
Decisions
Brand vision
Defining brand potential
Identifying extensions
Specifying brand elements
Levels
Design principles
Corporate Branding
Brand boundaries
Brand positioning
Brand Hierarchies
Brand Portolio
Developing a Brand Architecture Strategy
Brand Architecture
To characterize the brand architecture strategy of a firm, one
useful tool is the brand–product matrix, a graphical represen-
tation of all the brands and products sold by the firm. The matrix
(or grid) has the firm’s brands as rows and the corresponding
products as columns (see Figure 12-2).
• The rows of the matrix represent brand–product relation-
ships. They capture the firm’s brand-extension strategy in
terms of the number and nature of products sold under its
different brands. A brand line consists of all products—origi-
nal as well as line and category extensions—sold under a
particular brand. Thus, a brand line is one row of the matrix.
We want to judge a potential new product extension for a
brand on how effectively it leverages existing brand equity
from the parent brand to the new product, as well as how
effectively the extension, in turn, contributes to the equity of
the parent brand.
• The columns of the matrix represent product–brand rela-
tionships. They capture the brand portfolio strategy in terms
of the number and nature of brands to be marketed in each
category. The brand portfolio is the set of all brands and
brand lines that a particular firm offers for sale to buyers in a
particular category. Thus, a brand portfolio is one column of
the matrix. Marketers design and market different brands to
appeal to various market segments.
We can characterize a firm’s brand architecture strategy
according to its breadth (in terms of brand–product relation-
ships and brand extension strategy) and its depth (in terms of
product–brand relationships and the brand portfolio or mix). For
example, a brand architecture strategy is both deep and broad if
the firm has a large number of brands, many of which have been
extended into various product categories.
Several other terms are useful to understanding how to char-
acterize the brand architecture strategies of a firm.
• A product line is a group of products within a product cate-
gory that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed
through the same type of outlets, or fall within given price
ranges. A product line may include different brands, a single
family brand, or individual brand that has been line extended.
Campbell’s makes a variety of different soup products, vary-
ing in flavor, type, sizes, and so on.
• A product mix (or product assortment) is the set of all
product lines and items that a particular seller makes avail-
able to buyers. Thus, product lines represent different sets
of columns in the brand–product matrix that, in total, make
up the product mix. In addition to soup, Campbell’s sells
tomato sauces, salsa, vegetable juices, and cookies and
crackers.
• A brand mix (or brand assortment) is the set of all brand
lines that a particular seller makes available to buyers. Camp-
bell’s brand lines include Prego, Pace, V8, and Pepperidge
Farm.
THE SCIENCE OF BRANDING 12-1
The Brand–Product Matrix
FIGURE 12-2
Brand-Product Matrix
1
A
B
M
Brands
Products
2 . . . . .
. N
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428 PART V • GROWING AND SUSTAINING BRAND EQUITY
Crayola’s brand meaning has broadened over time through various brand
extensions, and it is summarized as “colorful arts and crafts for kids.”
Step 1: Defining Brand Potential The first step in developing an architecture strategy is to define the brand potential by considering three important characteristics:
A. Brand vision B. Brand boundaries C. Brand positioning
Articulating the Brand Vision. Brand vision is management’s view of the brand’s long-term potential. It is influenced by how well the firm is able to recognize the current and possible future
brand equity. Many brands have latent brand equity that is never realized because the firm is unable or unwilling to consider all that the brand could and should become.
A key aspect of a changing brand archi- tecture is the shifting boundaries of the brand, and many brands have transcended their initial market boundaries to become much more. This is also a key takeaway from various examples of large compa- nies and brands that have redefined their boundaries. We will subsequently describe how Nestlé modified its architecture to keep up with changes taking place in the marketplace. Another example, Starbucks has at times discussed transforming itself from a coffee company to more of a life- style company, offering a broader range of products. While Starbucks has successfully transitioned beyond coffee, some of its
A firm, such as Campbell’s, has to make strategic decisions
about how many different product lines it should carry (the
breadth of the product mix), as well as how many variants to
offer in each product line (the depth of the product mix).
Understanding the brand–product matrix and developing
the right brand architecture strategy is key to success for many
large firms. In defining a company’s “market footprint,” there
are three decisions that a firm has to make. This involves deciding
what areas of the business and associated target segments will
receive focus, how to tailor brand architecture to suit the needs
of the predefined target market, and how to divest areas of the
business that are not selected as focus areas. As an example of
these strategic decisions, consider Nestlé—the biggest producer
of food in the world, with more than 90 billion Swiss Francs in
revenue and 2 to 4 percent growth rate in 2016. Nestlé evolved
its organization and architecture as follows:
• Defining (and Redefining) Areas of Focus: Nestlé’s areas of
focus have changed over time, although it has retained many
of its core businesses throughout its history. Recently, the com-
pany decided to focus more on products relating to consumer
health and well-being, thus adopting a narrower product
mix to offer to its customers. To support this strategic focus,
Nestlé’s brand mix comprised of brand names such as Opti-
source, Novasource, and Isosource, which offered nutritional
supplements to individuals being treated for various ailments.
• Customizing Brands Based on Target Market: Nestlé’s brand
mix changes based on the type of market it serves, and may
feature unique brands to appeal to local tastes in foreign
markets. For example, Nestlé India features Nestlé Everyday
with six natural spice flavors—including cardamom, ginger,
black pepper, clove, cinnamon, and bay leaf—that are suited
to Indian consumer tastes. In China, Nestlé Yiyang introduced
a milk powder with added ingredients to appeal to China’s
aging population.
• Divestments of Nonfocal Areas: A key part of adapting the
brand architecture include strategically divesting businesses
that are not contributing to growth of the overall company,
as Nestlé recently has done with its confectionary business.
Overall, Nestlé has had success with managing its brand architec-
ture by continually adapting its product and brand mix over time
to stay abreast of changes in the marketplace.
Sources: Phillip Kotler and Kevin Lane Keller, Marketing Manage- ment, 14th ed. (Upper Saddle River, NJ: Prentice Hall, 2012); Beth Kowitt, “Nestle: Tailoring Products to Local Niches,” Fortune, July 2, 2010, http://archive.fortune.com/2010/07/02/news/companies/ nestle_ refreshes_brand.fortune/index.htm, accessed November 20, 2018; Ralph Atkins, “Nestle Sales Growth Continues to Fall Short,” Financial Times, October 20, 2016, www.ft.com/content/abce2c4e-99bb-3c74- 86cc-7cd0bed19b3a; Phillip Kotler and Kevin Lane Keller, Marketing Management, 14th ed. (Upper Saddle River, NJ: Prentice Hall, 2012); Bloomberg, “Nestle Launches YIYANG Powder to Target China’s Ageing Population,” May 31, 2017, www.business-standard.com/article/interna- tional/nestle-launches-yiyang-powder-to-target-china-s-ageing-popula- tion-117053101870_1.html, accessed November 19, 2018.
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 429
more-removed extensions have been unsuccessful (e.g., beer and wine sales through its stores, Teavana tea),1 and may have cost the company loss of shareholder value. Perhaps in recognition of its risk, Starbucks has reverted to a greater focus on its core business of coffee and coffee experiences. The issue with Starbucks was the extension beyond coffee and a coffeehouse culture and experience did not entirely succeed within the parameters of the existing brand.
Sometimes, marketers adopt a sequential approach to extending their brand, thereby gradually expanding brand meaning. For example, Crayola, known for its crayons, first sought to expand its brand meaning by making some fairly direct brand extensions into other drawing and color- ing implements, such as markers, pencils, paints, pens, brushes, and chalk. The company further expanded beyond coloring and drawing into arts and crafts with extensions such as Crayola Chalk, Crayola Clay, Crayola Dough, Crayola Glitter Glue, and Crayola Scissors. These exten- sions established a new brand meaning for Crayola as “colorful arts and crafts for kids.” Crayola says its brand essence is to find the “what if” in each child. The Branding Brief 12-1 on Google summarizes its brand architecture dilemma as it extended beyond search engines.
Google is a prominent technology brand, but began primar-
ily as a search engine and has dominated the search industry
for more than a decade, overcoming strong competition from
Yahoo!, Microsoft’s Bing, and so on. Google’s proprietary search
algorithm was at the heart of its success as a search engine. How-
ever, Google’s footprint now encompasses various sub-brands
that are linked to the corporate brand name (such as Google
Earth, Google Maps, and Google Play), as well as a long list of
individual brands that have resulted from various acquisitions.
In 2016, Google unveiled a series of products that included a
Google-branded smartphone, a virtual-reality headset, a voice-
activated home assistant, and a Wi-Fi router.
Google’s brand architecture has utilized a hybrid approach. In
addition to the corporate branded house (BH) approach, Google
also simultaneously employed a portfolio comprising many differ-
ent brand names, which we later define as a “house of brands
(HOB)” strategy, where the Google brand itself is not a part of the
brand name (such as with Nest, Calico, and Fiber). As the brand
moved beyond its core business and began exploring various risky
ventures, the brand name’s lack of relevancy across these dispa-
rate areas became a challenge.
In 2016, Google reorganized itself by creating a new parent
company, Alphabet. The creation of Google’s parent company
Alphabet made sense as it allowed Google to work in disparate
areas—such as driverless cars and curing diseases using separate
company names and entities—without compromising the mean-
ing of the Google brand name. The infographic summarizes the
timeline of Google’s evolution into a technology megabrand.
In line with its rapid growth across diverse areas, Google
remains one of the most successful technology brands in history.
Its success across many product lines has helped strengthen the
value of the Google brand name. As of 2017, Interbrand listed
Google as the second largest brand globally with a brand value
of $141.7 billion.
Sources: Marty Swant, “Google Debuts New Hardware, Including Smart- phone and VR Headset, With AI at the Core.” Adweek, accessed October 04, 2016. http://www.adweek.com/digital/google-debuts-tv-spots-new-smart- phone-and-virtual-reality-headset-173894/; K@W Strategic Management, “A
BRANDING BRIEF 12-1
Google: Expanding Beyond Search
Google Brand Architecture
My Account Maps
You Tube Play News
Gmail Drive Calendar
Google+ Translate Photos
Search
Tale of Two Brands: Yahoo’s Mistakes vs. Google’s Mastery” Knowledge@ Wharton, February 23, 2016, accessed April 17, 2017. http://knowledge .wharton.upenn.edu/article/a-tale-of-two-brands-yahoos-mistakes-vs- googles-mastery/; Marketwatch, “Yahoo! vs. Google Signals Return of the Portal Wars,” Marketwatch: Technology 3, no. 7: 8. Business Source Com- plete, EBSCOhost (accessed April 16, 2017); Lauren Johnson, “Here’s Everything You Need to Know About Mobile Payments.” Adweek, March 05, 2015, accessed May 02, 2017. http://www.adweek.com/digital/heres- everything-you-need-know-about-mobile-payments-163269/; Martin Reeves, “Google Couldn’t Survive with One Strategy,” https://hbr.org/2015/08/ google-couldnt-survive-with-one-strategy, August 18, 2015, accessed April 23, 2017; Ian Morris, “Google Is Sitting on a Timebomb with Its Nest Disaster,” Forbes, April 6, 2016, accessed April 23, 2017; 2015, Jonathan Gordon, “How Google Breaks Through” McKinsey Quarterly, February 2015; Nicholas Carlson, “A List of Products Larry Page Has Google Working On
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430 PART V • GROWING AND SUSTAINING BRAND EQUITY
Without a clear understanding of its current equity, however, it is difficult to understand what a brand could be built on. As shown previously with the many changes that took place in the case of the Google brand, a good strategy has to account for the past as well as the future by articulat- ing a sufficiently broad vision for the brand. Brand vision obviously needs to be aspirational, so the brand has room to grow and improve in the future, yet it cannot be unobtainable. The trick is to strike the right balance between what the brand is and what it could become, and to identify the right steps to get it there.
Fundamentally, brand vision relates to the higher-order purpose of the brand, based on keen understanding of consumer aspirations and brand truths. It transcends the brand’s physical prod- uct category descriptions and boundaries. P&G’s legendary former CMO Jim Stengel maintains
Other Than Search, Such as Spoons,” September 22, 2014, Business Insider, http://www.businessinsider.com/a-list-of-google-products-2014-9, accessed July 14, 2018; Wikipedia, “List of Google Products,” https://en.wikipedia.
org/wiki/List_of_Google_products; Kevin Lane Keller, “The Branding Logic Behind Google’s Creation of Alphabet,” July 5, 2017; http://interbrand.com/ best-brands/best-global-brands/2017/ranking/.
Google Timeline
The duo incorporate their business after a $100,000 investment from a Silicon Valley
investor, and Google is officially born. 1998
2000
2004
2006
2008
2015
2017
2010
2007
2005
2002
1999
1995 Larry Page and Sergoy Brin meet at Stanford
University and begin working on their idea of a universal search engine in their dorms.
Google outgrows its office garage space and moves into an official office with eight
employees. Shortly after, the company receives $25 million in venture capital and moves to
Mountain View, the global headquarters site to this day.
Google partners with AOL. Google News launches for
the first time with over 4,000 sources.
Google becomes the largest search engine with the first billion URL index. AdWords launches later in the year.
Gmail launches. Google also goes public for the first time with shares standing at $85.
Later in the year, Google announces its partnership with libraries and universities
to begin digitally scanning books.
Google Earth, Google Maps, and Google Analytics launch.
Google introduces the first video advertisements to
YouTube. AdSense for mobile usage is also launched.
The Nexus One, Google's first mobile device, launches. The company also launches a website
that shows government requests concerning user data. This marks a push for user
privacy from the company.
With over 60,000 employees in 50 different countries around the world,
Google continues to push the boundaries on how business is done.
Google acquires the web- based video-sharing site,
YouTube.
Google surprises the public with the launch of a new web
browser, Chrome. The company also finalizes its
acquisition of DoubleClick, an online advertising agency.
Alphabet, a newly created holding company, is revealed to include all of
Google's core business.
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 431
that successful brands have clear ideals—such as “eliciting joy, enabling connection, inspiring exploration, evoking pride, or impacting society”—and a strong purpose of building customer loyalty and driving revenue growth.2
Defining the Brand Boundaries. Some of the world’s strongest brands, such as General Electric (GE), Virgin, and Apple, have been stretched across multiple categories. Defining brand boundar-
ies thus means—based on the brand vision and positioning—identifying the products or services
the brand should offer, the benefits it should supply, and the needs it should satisfy.
Although many product categories may seem to be good candidates for a brand extension, as
we will develop in Chapter 13, marketers would be wise to heed the “Spandex Rule” espoused
by Scott Bedbury, former advertising vice president for Nike and marketing vice president for
Starbucks: “Just because you can . . . doesn’t mean you should!” Marketers must evaluate extend-
ing their brand carefully and launch new products selectively.
A broad brand is one with an abstract positioning that is able to support a higher-order promise
applicable in multiple product settings. It often has a transferable point-of-difference, thanks to a
widely relevant benefit supported by multiple reasons-to-believe or supporting attributes. For example,
Delta Faucet Company has taken its core brand associations—stylish and innovative—and success-
fully expanded the brand from faucets to a variety of kitchen and bathroom products and accessories.
Nevertheless, all brands have boundaries. It would be very difficult for Delta Faucet to intro-
duce a car, tennis racquet, or lawnmower. Japanese carmakers Honda, Nissan, and Toyota chose
to introduce their luxury brands in North America under new brand names, Acura, Infiniti, and
Lexus, respectively. Even considering its own growth, Nike chose to purchase Cole Haan to sell
into the dressier, more formal shoe market.
To improve market coverage, companies target different segments with multiple brands in
a portfolio. They have to be careful to not over-brand, however, or attempt to support too many
brands. The trend among many top marketing companies in recent years has been to focus on
fewer, stronger brands. Each should be clearly differentiated and appeal to a sizable enough market
segment to justify its marketing and production costs.
Crafting the Brand Positioning. Brand positioning puts some specificity into a brand vision.
Chapter 2 reviewed brand positioning considerations in detail; the four key ingredients are: (1)
competitive frame of reference, (2) points-of-difference, (3) points-of-parity, and (4) brand mantra.
The brand mantra, in particular, can be very useful in establishing product boundaries or brand guard-
rails. It should offer rational and emotional benefits and be sufficiently robust to permit growth, rel-
evant enough to drive consumer and retailer interest, and differentiated enough to sustain longevity.
Step 2: Identifying Brand Extension Opportunities Determining the brand vision, boundaries, and positioning in Step 1 helps define the brand potential
and provides a clear sense of direction for the brand. Step 2 is to identify new products and services
to achieve that potential through a well-designed and implemented brand extension strategy.
A brand extension is a new product introduced under an existing brand name. We differenti-
ate between line extensions, new product introductions within existing categories (Tide Pods or
Tide Total Care laundry detergent), and category extensions, new product introductions outside
existing categories (Tide Dry Cleaners retail outlets).
It is important to carefully plan the optimal sequence of brand extensions to achieve brand
potential. The key is to understand equity implications of each extension in terms of points-of-
parity and points-of-difference. By adhering to the brand promise and growing the brand carefully
through little steps, marketers can ensure that brands cover a lot of ground.
For example, through a well-planned and well-executed series of new product introductions in
the form of category extensions over a 25-year period, Nike evolved from a company selling running,
tennis, and basketball shoes to mostly males between the ages of 12 and 29 in North America in the
mid-1980s, to a company now selling athletic shoes, clothing, and equipment across a range of sports
to men and women of all ages in virtually all countries. It also has embraced technology to improve fit-
ness, by co-branding with Apple to introduce the Nike+iPod activity tracking device and mobile app.
Launching a brand extension is harder than it might seem. Given that the vast majority of new
products are extensions, and the vast majority of new products fail, the clear implication is that too
many brand extensions fail. An increasingly competitive marketplace will be even more unforgiv-
ing to poorly positioned and marketed extensions in the years to come. To increase the likelihood
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432 PART V • GROWING AND SUSTAINING BRAND EQUITY
of success, marketers must be rigorous and disciplined in their analysis and development of brand extensions. Chapter 12 provides detailed guidelines for successful brand extension strategies.
Step 3: Specifying Brand Elements for Branding New Products and Services The final step in developing the brand architecture is to decide on the specific brand elements to use for any particular new product or service associated with the brand. New products and services must be branded in a way to maximize the brand’s overall clarity and understanding to consumers and customers. What names, looks, and other branding elements are to be applied to the new and existing products for any one brand?
One way we can distinguish brand architecture strategies is by looking at whether a firm is employing an umbrella corporate or family brand for all its products, known as a branded house, or a collection of individual brands all with different names, known as a house of brands.
• Firms largely employing a BH strategy include many business-to-business industrial firms, such as SAP, Siemens, Oracle, and Goldman Sachs.
• Firms largely employing a HOB strategy include consumer product companies, such as Procter & Gamble, Unilever, and ConAgra.
The reality is that most firms adopt a strategy somewhere between these two end points, often employing various types of sub-brands. Sub-brands are an extremely popular form of brand exten- sion in which the new product carries both the parent brand name and a new name (Apple iPad, Ford Fusion, and American Express Blue card).
A good sub-branding strategy can tap associations and attitudes about the company or fam- ily brand as a whole, while also allowing for the creation of new brand beliefs to position the extension in the new category. For example, Hershey’s Kisses taps into the quality, heritage, and familiarity of the Hershey’s brand, but at the same time has a much more playful and fun brand image. Similarly, FedEx imbues its various sub-brands with separate identities and unique color schemes (see the figure). As noted previously, Google has also a variety of sub-brands that it has launched over the years (as shown in the figure).
Sub-brands play an important brand architecture role by signaling to consumers to expect similarities and differences in the new product. To realize these benefits, however, sub-branding typically requires significant investments and disciplined and consistent marketing to establish the proper brand meanings with consumers. In the absence of such financial commitments, marketers may be well advised to adopt the simplest brand hierarchy possible, such as using a BH approach with the company or a family brand name with product descriptors. Marketers should employ sub-branding only when there is a distinctive, complementary benefit; otherwise, they should just use a product descriptor to designate the new product or service.
Summary The three steps we outlined provide a careful and well-grounded approach to developing a brand architecture strategy. To successfully execute this process, marketers should use brand portfolio analysis for determining brand potential (Step 1), and brand hierarchy analysis for defining brand boundaries and identifying brand elements for branding particular products and services (Steps 2 and 3). We describe both tools next.
BRAND PORTFOLIOS A brand portfolio includes all brands sold by a company in a product category. We judge a brand portfolio by its ability to maximize brand equity: Any one brand in the portfolio should not harm or decrease the equity of the others. Ideally, each brand maximizes equity in combination with all other brands in the portfolio.
Why might a firm have multiple brands in the same product category? The primary reason is market coverage. Although multiple branding was originally pioneered by General Motors, Procter & Gamble is widely recognized as popularizing the practice. P&G became a proponent of multiple brands after introducing its Cheer detergent brand as an alternative to its already suc- cessful Tide detergent, resulting in higher combined product category sales.
Firms introduce multiple brands because no one brand is viewed equally favorably by all the distinct market segments the firm would like to target. Multiple brands allow a firm to pursue various price segments, a variety of distribution channels, different geographic boundaries, and so forth.3
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 433
FIGURE 12-3
Possible Special Roles
of Brands in the Brand
Portfolio
1. To attract a particular market segment not currently being covered by other brands of the firm
2. To serve as a flanker and protect flagship brands 3. To serve as a cash cow and be milked for profits 4. To serve as a low-end entry-level product to attract new customers to the
brand franchise 5. To serve as a high-end prestige product to add prestige and credibility to
the entire brand portfolio 6. To increase shelf presence and retailer dependence in the store 7. To attract consumers seeking variety who may otherwise have switched to
another brand 8. To increase internal competition within the firm 9. To yield economies of scale in advertising, sales, merchandising, and
physical distribution
Marriott International grew to an international hospitality
giant from its humble roots as a single root beer stand (started
by John and Alice Marriott in Washington, D.C.), during the
1920s. The Marriotts added hot food to their root beer stand
and renamed their business the Hot Shoppe. As the number
of regional restaurants called Hot Shoppes grew, Marriott
expanded into in-flight catering by serving food on Eastern,
American, and Capital Airlines, beginning in 1937. Hot Shop-
pes subsequently began its food service management business
and later opened its first hotel in Arlington, Virginia, named
the Twin Bridges Marriott Motor Hotel. Hot Shoppes, which
BRANDING BRIEF 12-2
Expanding the Marriott Brand
In designing the optimal brand portfolio, marketers must first define the relevant customer segments. How much overlap exists across segments, and how well can products be cross-sold?4 Branding Brief 12-2 describes how Marriott has introduced different brands and sub-brands to attack different markets.
Other reasons for introducing multiple brands in a category include the following:5
• To increase shelf presence and retailer dependence in the store • To attract consumers seeking variety who may otherwise switch to another brand • To increase internal competition within the firm • To yield economies of scale in advertising, sales, merchandising, and physical distribution
Marketers generally need to trade off market coverage and these other considerations with costs and profitability. A portfolio is too big if profits can be increased by dropping brands; it is not big enough if profits can be increased by adding brands. Brand lines with poorly differentiated brands are likely to be characterized by much cannibalization and require appropriate pruning.6
The basic principle in designing a brand portfolio is to maximize market coverage so that no potential customers are being ignored, but minimize brand overlap so that brands are not compet- ing among themselves to gain the same customer’s approval. Each brand should have a distinct target market and positioning.7
For example, over the last 10 years or so, Procter & Gamble has sought to maximize market coverage and minimize brand overlap by pursuing organic growth from existing core brands rather than introducing a lot of new brands. The company has focused its innovation efforts on its core “billion dollar” brands—those with more than $1 billion in revenue. Numerous successful market-leading brand and line extensions followed, such as Crest whitening products, Tide Pods, Gillette Fusion razors, and Pampers Swaddlers.8
Besides these considerations, brands can play a number of specific roles as part of a brand portfolio. Figure 12-3 summarizes some of them, which we review next.
Flankers. Certain brands act as protective flanker or “fighter” brands.9 The purpose of flanker brands typically is to create stronger points-of-parity with competitors’ brands so that more impor- tant (and more profitable) flagship brands can retain their desired positioning. In particular, as
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434 PART V • GROWING AND SUSTAINING BRAND EQUITY
FIGURE 12-4
Marriott International Portfolio Architecture
Source: Marriott International, Inc. Used with permission.
Brand Category Brands
Iconic Luxury Bvlgari The Ritz‐Carlton The Ritz‐Carlton Destination Club
JW MarriottLuxury
Edition Autograph Collection Renaissance Hotels AC Hotels
Lifestyle | Collections
Marriott Hotels and ResortsSignature
Courtyard SpringHill Suites Fairfield Inn and Suites
Modern Essentials
Residence Inn TownePlace Suites ExecuStay Marriott Executive Apartments
Extended Stay
Marriott Vacation Club Grand Residences
Vacation Clubs
sites to aid them in their lodging decisions (see Figure 12-4;
https://hotel-development.marriott.com/brands-dashboard/). As
2016 approached, the Marriott Hotel’s gross bookings increased
57 percent, totalling more than $3 billion. In 2016, Marriott acquired
Starwood hotels and resorts for $13 billion, thereby becoming the
world’s largest hotel chain. The juxtaposition of Starwood offerings
and Marriott offerings suggests many ways in which the merger
completes the Marriott architecture, although there are opportuni-
ties for some of the hotels within each brand to be merged and
consolidated. Overall, Marriott has approached its brand architec-
ture decisions in a systematic way, ensuring market coverage and
minimizing overlap, which has ensured its success in the industry.
was renamed Marriott Corporation in 1967, grew nationally
and internationally by making strategic acquisitions and enter-
ing new service categories; by 1977, sales topped $1 billion.
In pursuit of more growth, Marriott continued to diversify its
business. Determining that its high penetration in the traditional
hotel market did not offer many opportunities for growth, the com-
pany initiated a segmented marketing strategy by introducing the
moderately priced Courtyard by Marriott brand in 1983. Moderately
priced hotels constituted the largest segment of the U.S. lodging
industry, filled with established competitors such as Holiday Inn,
Ramada, and Quality Inn. Marriott’s research registered the greatest
consumer dissatisfaction in this segment, so Courtyard hotels were
designed to offer travellers greater convenience and amenities, such
as balconies and patios, large desks and sofas, and pools and spas.
Early success with Courtyard prompted Marriott to expand
further. In 1984, the company entered the vacation timeshar-
ing business by acquiring American Resorts Group. The following
year, it purchased Howard Johnson Company, selling the hotels
and retaining the restaurants and rest stops. The first JW Marriott
luxury hotel was opened on Pennsylvania Avenue in Washington,
D.C., as a tribute to the founder.
In 1987, Marriott added three new chains to their portfolio
to target different segments and to fuel growth in the process:
Marriott Suites, full-service suite accommodations; Residence Inn,
extended-stay rooms for business travelers; and Fairfield Inn, an
economy hotel brand.
In 1993, Marriott Corporation split in two, forming Host
Marriott to own the hotel properties, and Marriott International
to manage them and franchise its brands. Marriott International
bought a stake in the Ritz-Carlton luxury hotel group and expanded
again in 1997 by acquiring the Renaissance Hotel Group. The Mar-
riott brand further expanded to include TownePlace Suites, Fair-
field Suites, and Marriott Executive Residences. Marriott added
a new hotel brand in 1998 with the introduction of SpringHill
Suites, which provide moderately priced suites that are 25 percent
larger than standard hotel rooms. The following year, the company
acquired corporate housing specialist ExecuStay Corporation and
formed ExecuStay by Marriott, now a franchise business.
A new century saw new growth. The launch in 2007 of stylish
EDITION hotels put Marriott in the luxury boutique market. Each
property was distinctive and designed by famed hotel developer
Ian Schrager. The Autograph Collection was also introduced in
2011, a diverse collection of high-personality, upper-upscale inde-
pendent hotels. AC Hotels by Marriott was another lifestyle hotel
entry in 2011, an upper-moderate tier brand targeting design-con-
scious younger travellers in Europe with stylish, urban properties.
Today, Marriott International is one of the leading hospital-
ity companies in the world, with 6700 properties in 130 coun-
tries and territories worldwide that brought in almost $17
billion in global revenues in 2017, and a market capitalization of
$35 billion. Marriott’s growth over the years has been aided by
various acquisitions including Protea Hospitality Group (2014),
Delta Hotels and Resorts (2015), and more recently Starwood
Hotels (2016). Marriott International developed a formal brand
architecture that it shared with prospective guests on its Web
Sources: Marriott International, www.marriott.com; Kim Clark, “Lawyers Clash on Timing of Marriott’s Plan to Split,” Baltimore Sun, September 27, 1994, http://articles.baltimoresun.com/1994-09- 27/business/1994270134_1_marriott-corp-host-marriott-marriott- executive, accessed November 20, 2018; Neil Henderson, “Marriott Gambles on Low-Cost, Classy ‘Corporate History,’ “Factbook, n.d; “Suburban Motels,” The Washington Post, June 18, 1994; Neil Hender- son, “Marriott Bares Courtyard Plans,” The Washington Post, June 12, 1984; Elizabeth Tucker, “Marriott’s Recipe for Corporate Growth,” The Washington Post, June 1, 1987; Paul Farhi, “Marriott to Sell 800 Restaurants,” The Washington Post, December 19, 1989; Ste- phane Fitch, “Soft Pillows and Sharp Elbows,” Forbes, May 10, 2004, 66; Associated Press (2016), “ Marriott Closes $13-Billion Purchase of Starwood to Become World’s Largest Hotel Chain,” September 23, 2016, www.latimes.com/business/la-fi-marriott-starwood-20160923-snap- story.html, accessed November 20, 2018.
we noted in Chapter 5, many firms are introducing discount brands as flankers, to better compete with store brands and private labels and to protect their higher-priced brand companions. A good example of such a strategy is when Qantas (in Australia) launched Jetstar airlines as a discount fighter brand to compete with the recently introduced low-priced Virgin Blue airlines—which was meeting with much success—and to protect its flagship premium Qantas brand. Firms have also
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 435
either repositioned existing brands or acquired new brands to serve as flankers within the portfolio. For example, Wyndham hotels purchased Days Inn to appeal to the value segment and recently purchased AmericInn to gain a foothold in the midscale segment of the market.10
Flanker brands can have an important strategic role to play in protecting the main brands, and the lack of flankers can also pose a threat to a core brand. For example, Gillette’s higher-priced razors posed an opportunity for the low-cost Dollar Shave Club—and others—to enter the market at the low end. Dollar Shave Club gained 5 percent market share and cost Gillette significantly in terms of lost sales. The introduction of a flanker brand at a lower price point might have helped the Gillette brand mitigate the competitive threat at the lower end of the market. As an example, P&G repositioned its Luvs diaper brand to serve as a price fighter against private labels and store brands to protect the premium Pampers brand.
In designing fighter brands, marketers walk a fine line. Fighters must not be so attractive that they take sales away from their higher-priced comparison brands or referents. At the same time, if they are connected to other brands in the portfolio in any way (say, through a common brand- ing strategy), they must not be designed so cheaply that they reflect poorly on these other brands.
Cash Cows. Some brands may be kept around despite dwindling sales because they still man- age to hold on to a sufficient number of customers and maintain their profitability with virtually no marketing support. Marketers can effectively milk these cash cows by capitalizing on their reservoir of existing brand equity. For example, even while technological advances have moved much of the sales to streaming, Netflix still offers a DVD service to around 4.3 million diehard fans who prefer to receive a DVD via mail and watch these via DVD players. Contrast this with the 93 million subscribers to the streaming service.11 Netflix does not spend any money in promoting the DVD service. Thus, the DVD business acts as a cash cow with an operating profit of 50 percent. Given the loyalty of DVD subscribers to the format, withdrawing the DVD service does not make economic sense as it may not necessarily switch customers to another type of product, for example, streaming. Therefore, as is typical of a cash cow strategy, Netflix profits more by retaining the traditional DVD business than withdrawing from the business.
Low-End, Entry-Level, or High-End, Prestige Brands. Many brands introduce line exten- sions or brand variants in a certain product category that vary in price and quality. These sub- brands leverage associations from other brands while distinguishing themselves on price and quality. In this case, the end points of the brand line often play a specialized role.
The role of a relatively low-priced brand in the brand portfolio often may be to attract cus- tomers to the brand franchise. Retailers like to feature these traffic builders because they often are able to trade up customers to a higher-priced brand. For example, Verizon Wireless plans allow customers to upgrade their old, sometimes cheaper cell phones to newer versions that are more expensive but still cheaper than retail.
BMW introduced certain models into its 3-series automobiles in part as a means of bringing new customers into its brand franchise, with the hope of moving them up to higher-priced models when they traded their cars in. As the 3 series gradually moved up-market, BMW introduced the 1 series in 2004, which was built on the same production line as the 3 series and priced between the 3 series and the MINI.
On the other hand, the role of a relatively high-priced brand in the brand family is often to add prestige and credibility to the entire portfolio. For example, one analyst argued that the real value to Chevrolet of its Corvette high-performance sports car was “its ability to lure curious customers into showrooms and, at the same time, help improve the image of other Chevrolet cars. It does not mean a hell of a lot for GM profitability, but there is no question that it is a traffic builder.”12 Corvette’s technological image and prestige cast a halo over the entire Chevrolet line.
Summary. Multiple brands can expand coverage, provide protection, extend an image, or fulfill a variety of other roles for the firm. In all brand portfolio decisions, the basic criteria are simple, even though their application can be quite complicated: to minimize overlap and get the most from the portfolio, each brand-name product must have (1) a well-defined role to fulfill for the firm and, thus, (2) a well-defined positioning indicating the benefits or promises it offers consumers. As Chapter 12 reveals, many firms find that due to product proliferation through the years, they now can cut the number of brands and product variants they offer and still profitably satisfy consumers.
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436 PART V • GROWING AND SUSTAINING BRAND EQUITY
BRAND HIERARCHIES A brand hierarchy is a useful means of graphically portraying a firm’s branding strategy by displaying the number and nature of common and distinctive brand elements across the firm’s products, revealing their explicit ordering. It is based on the realization that we can brand a product in different ways depending on how many new and existing brand elements we use and how we combine them for any one product.
For example, a Dell Latitude E7450 computer consists of three different brand name ele- ments, “Dell,” “Latitude,” and “E7450.” Some of these may be shared by many different products; others are limited. Dell uses its corporate name to brand many of its products, but Latitude desig- nates a certain type of computer (“highly secure, manageable and reliable” laptops and notebooks for business users), and E7450 identifies a particular model of Latitude (“a premium thin and light notebook with superior performance and premium features”).
We can construct a hierarchy to represent how (if at all) products are nested with other prod- ucts because of their common brand elements. Figure 12-5 displays a simple characterization of Apple’s brand hierarchy. As the figure shows, a brand hierarchy can include multiple levels.
Dell’s computer models are uniquely identified via a sub-
brand name and a model number which together provide
information about the distinct features of each model.
FIGURE 12-5
Apple Brand Hierarchy
Apple
iPhone
SE
6S
6S+
7
7+
iPod
Shuffle Macbook Series 1
Series 2Air
Pro
iMac
MacMini
MacPro
Touch
Nano
iMac Apple Watch
Apple TV iPad
iPad
Pro
Mini
iCloud iTunes iWork
8
XS
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 437
There are different ways to define brand elements and levels of the hierarchy. Perhaps the simplest representation from top to bottom might be:
1. Corporate or company brand (General Motors) 2. Family brand (Buick) 3. Individual brand (Regal) 4. Modifier (designating item or model) (GS) 5. Product description (midsize luxury sport sedan automobile).
Levels of a Brand Hierarchy Different levels of the hierarchy have different issues, as we review in turn.
Corporate or Company Brand Level. The highest level of the hierarchy technically always consists of one brand—the corporate or company brand. For simplicity, we refer to corporate and company brands interchangeably, recognizing that consumers may not necessarily draw a distinction between the two or know that corporations may subsume multiple companies.
For legal reasons, the company or corporate brand is almost always present somewhere on the product or package, although the name of a company subsidiary may appear instead of the corporate name. For example, Fortune Brands has, over the years, owned many different com- panies, such as Moen, Master Lock, Jim Beam whiskey, Vox vodka, and El Tesoro tequila, but it does not use its corporate name on any of its lines of business.
For some firms such as General Electric and Hewlett-Packard, the corporate brand is virtually the only brand. Conglomerate Siemens’s varied electrical engineering and electronics business units are branded with descriptive modifiers, such as Siemens Mobility. In other cases, the com- pany name is virtually invisible and, although technically part of the hierarchy, receives virtually no attention in the marketing program. Black & Decker does not use its name on its high-end DeWalt professional power tools.
As we detail later, we can think of a corporate image as the consumer associations to the com- pany or corporation making the product or providing the service. Corporate image is particularly relevant when the corporate or company brand plays a prominent role in the branding strategy.
Family Brand Level. At the next-lower level, a family brand, also called a range brand or umbrella brand, is used in more than one product category but is not necessarily the name of the company or corporation. For example, ConAgra’s Healthy Choice family brand appears on a wide spectrum of food products, including packaged meats, soups, pasta sauces, breads, popcorn, and ice cream. Some other notable family brands for companies that generate more than $1 billion in sales include Purina and Kit Kat (Nestlé); Mountain Dew, Doritos, and Quaker Foods (PepsiCo); and Oreo, Cadbury, and Maxwell House (Mondelez International).
Because a family brand may be distinct from the corporate or company brand, company-level associations may be less salient. Most firms typically support only a handful of family brands. If the corporate brand is applied to a range of products, then it functions as a family brand too, and the two levels collapse to one for those products.
Marketers may apply family brands instead of corporate brands for several reasons. As prod- ucts become more dissimilar, it may be harder for the corporate brand to retain any product meaning or to effectively link the disparate products. Distinct family brands, on the other hand, can evoke a specific set of associations across a group of related products.13
Family brands can be an efficient means to link common associations to multiple, but dis- tinct, products. The cost of introducing a related new product can be lower and the likelihood of acceptance higher when marketers apply an existing family brand to a new product.
On the other hand, if the products linked to the family brand and their supporting marketing programs are not carefully considered and designed, the associations to the family brand may become weaker and less favorable. Moreover, the failure of one product may hurt other products sold under the same brand.
Individual Brand Level. Individual brands are restricted to essentially one product category, although multiple product types may differ on the basis of model, package size, flavor, and so forth. For example, in the salty snack product class, Frito-Lay offers Fritos corn chips, Doritos and Tostitos tortilla chips, SunChips multigrain chips, Lays and Ruffles potato chips, and Rold
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438 PART V • GROWING AND SUSTAINING BRAND EQUITY
Gold pretzels. Each brand has had a dominant position in its respective product category within the broader salty snack product class.
The main advantage of creating individual brands is that we can customize the brand and all its supporting marketing activity to meet the needs of a specific customer group. Thus, the name, logo, and other brand elements, as well as product design, marketing communication programs, and pricing and distribution strategies, can all focus on a certain target market. Moreover, if the brand runs into difficulty or fails, the risk to other brands and the company itself is minimal. The disadvantages of creating individual brands, however, are the difficulty, complexity, and expense of developing separate marketing programs to build sufficient levels of brand equity.
Modifier Level. Regardless of whether marketers choose corporate, family, or individual brands, they must often further distinguish brands according to the different types of items or models. A modifier is a means to designate a specific item or model type or a particular version or configuration of the product. Land O’Lakes offers whipped, unsalted, and regular versions of its butter. Yoplait yogurt comes as light, custard style, and original flavors.
Adding a modifier often can signal refinements or differences between brands related to factors such as quality levels (Johnnie Walker Red Label, Black Label, and Gold Label Scotch whiskey), attributes (Wrigley’s Spearmint, Doublemint, Juicy Fruit, and Winterfresh flavors of chewing gum), function (Dockers Relaxed Fit, Classic Fit, Straight Fit, Slim Fit, and Extra Slim Fit pants), and so forth.14 Thus, one function of modifiers is to show how one brand variation relates to others in the same brand family.
Modifiers help make products more understandable and relevant to consumers or even to the trade. They can even become strong trademarks if they are able to develop a unique association with the parent brand—only Uncle Ben’s has “Converted Rice,” and only Orville Redenbacher sells “Gourmet Popping Corn.”15
Product Descriptor. Although not considered a brand element per se, the product descriptor for the branded product may be an important ingredient of branding strategy. The product descrip- tor helps consumers understand what the product is and does and also helps define the relevant competition in consumers’ minds.
In some cases, it may be hard to describe succinctly what the product is, a new product with unusual functions or even an existing product that has dramatically changed. For instance, public libraries are no longer about checking out books or taking a preschooler to story time. A full-service modern public library serves as an educational, cultural, social, and recreational community center.
In the case of a truly new product, introducing it with a familiar product name may facilitate basic familiarity and comprehension, but perhaps at the expense of a richer understanding of how the new product is different from closely related products that already exist.
Yoplait yogurt uses a combination of different brand elements to distinguish
across types and flavors of yogurt.
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 439
Orville Redenbacher’s “Gourmet Popping Corn” demonstrates the value of
using a modifier in a brand name to develop a unique brand association.
Source: Digitalreflections/Shutterstock.
A media darling for much of his company’s
meteoric rise, Reed Hastings, founder and CEO of
Netflix, seemingly could do no wrong. Founded
in 1997, Netflix pioneered the DVD-by-mail cat-
egory, successfully challenging traditional video
stores and driving industry leader Blockbuster
into bankruptcy in the process. Netflix’s bold for-
mula for success included flawless service delivery
combined with a state-of-the-art movie recom-
mendation engine for users. The company even
famously sponsored a contest with a $1 million
prize to anyone who could make its recommen-
dation algorithm work better.
Netflix’s business philosophy was captured
by two credos found on its corporate Web site:
“Avoid ‘barnacles’ that can slow down a fast-
growing business,” and “Make tough deci-
sions without agonizing and focus on great
results rather than process.” Hard-charging
and constantly seeking to innovate, Netflix
dove in head first as streaming technology
evolved online and quickly found a receptive
audience ready to instantaneously download and view videos.
That’s also where the trouble began.
The difference in gross profit margins between mail order (37
percent) and streaming rentals (65 percent) was significant. In part to
better account for these revenue differences, management decided
in April 2011 to split the company into two brands and businesses.
As the first step, customers were told on July 12, 2011, that they
would begin to be charged $7.99 for each form of rental instead of
$9.99 for both forms, in effect, a 60 percent price increase for the
24 million subscribers who wanted to use both physical discs and
BRANDING BRIEF 12-3
Netflix: Evolving a Brand Architecture to Grow the Brand
Netflix’s foray into original programming has resulted in many hit shows such
as Stranger Things.
Designing a Brand Hierarchy Given the different possible levels of a brand hierarchy, a firm has a number of branding options
available, depending on whether and how it employs each level. Designing the right brand hier-
archy is crucial. Branding Brief 12-3 describes how Netflix has made adjustments over time to
adjust its brand architecture to broaden its appeal and enhance profitability.
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440 PART V • GROWING AND SUSTAINING BRAND EQUITY
Brand elements at each level of the hierarchy may contribute to brand equity through their ability to create awareness as well as foster strong, favorable, and unique brand associations and positive responses. The challenge in setting up a brand hierarchy is to decide:
1. The specific products to be introduced for any one brand. 2. The number of levels of the hierarchy to use. 3. The desired brand awareness and image at each level. 4. The combinations of brand elements from different levels of the hierarchy, if any, to use for
any one particular product. 5. The best way to link any one brand element, if at all, to multiple products.
The following discussion reviews these five decisions. Figure 12-6 summarizes guidelines in each of these areas to assist in the design of brand hierarchies.
Specific Products to Introduce. Consistent with discussions in other chapters about what
products a firm should introduce for any one brand, we can note three principles here: that is,
principle of growth, principle of survival, and principle of synergy.
The principle of growth maintains that investments in market penetration or expansion versus
product development for a brand should be made according to ROI opportunities. In other words,
firms must make cost–benefit calculations for investing resources in selling more of a brand’s exist-
ing products to new customers versus launching new products for the brand. As an example, in see-
ing its traditional networking business slow down, Cisco decided to bet big on new Internet video
products. The other two principles address the dynamics of brand extension success, as developed
in great detail in Chapter 13. The principle of survival states that brand extensions must achieve
brand equity in their categories. In other words, “me too” extensions must be avoided. The prin-
ciple of synergy states that brand extensions should also enhance the equity of the parent brand.
Number of Levels of the Brand Hierarchy. Given product boundaries and an extension
strategy in place for a brand, the first decision to make in defining a branding strategy is, broadly,
which level or levels of the branding hierarchy to use. Most firms choose to use more than one
streaming. In an unfortunate coincidence, at roughly the same time,
cable channel Starz very publicly ended negotiations with Netflix to
renew a key online deal to supply movies and TV shows.
Perceiving that they would be paying more for less, custom-
ers were decidedly unhappy. More than 600,000 terminated their
accounts in the following months, catching Netflix off guard.
The company compounded its problems when Hastings
announced that the company’s movies-by-mail service would be
rebranded Qwikster and would add video games to its catalog,
while the Netflix brand would be devoted to streaming video only.
Once again, consumer response was emphatically negative—to the
strategy and even to the new name. After several weeks of negative
criticism and publicity, the company reversed course and announced
that the company would no longer split its services in two.
Although, Netflix’s brand architecture problems slowed down
the momentum the company had achieved in the marketplace, it
was quick to fix the problems as they arose. Soon, the company
stabilized, and analysts were cautiously optimistic that Netflix
would be able to put its problems behind it.
The analysts were proven correct. Despite its missteps regarding
pricing, Netflix has been deliberate and strategic in strengthening
its brand over the years through carefully executed brand exten-
sions. Its foray into original programming represents a successful
strategy, and it has launched numerous shows that have received
critical acclaim and have delivered strong audience numbers. For
instance, one of its hit shows is House of Cards, which was first
released in 2013. The series has been a huge success and went on
to win multiple Primetime Emmy Awards. Netflix also felt this suc-
cess when its stock tripled in value. Netflix also introduced many
original television shows and movies, including Orange is the New
Black and Stranger Things. In 2014 and 2015, Netflix expanded into
several new countries until it became available worldwide in 2016.
Taken together, despite the problematic pricing change,
which threatened to substantially impact the brand and negate
its achievements, Netflix has proven its ability to learn quickly
from failures, by reversing its course when faced with failure. It
has also simultaneously strengthened its brand presence in the
entertainment category through carefully executed brand exten-
sions, which have reaffirmed its position as a strong brand.
Sources: Netflix Media Center, “About Netflix,” https://media.netflix
.com/en/about-netflix, accessed November 20, 2018; Michael V. Cope-
land, “Reed Hastings: Leader of the Pack,” Fortune, December 6, 2010,
121–130; Ronald Grover and Cliff Edwards, “Can Netflix Find Its Future
by Abandoning the Past?,” Bloomberg BusinessWeek, September 22, 2011,
https://www.bloomberg.com/news/articles/2011-09-22/can-netflix-find-
its-future-by-abandoning-the-past, accessed November 20, 2018; Cliff
Edwards and Ronald Grover, “Can Netflix Regain Lost Ground?,” Bloom- berg Businessweek, October 20, 2011, https://www.bloomberg.com/news/
articles/2011-10-19/can-netflix-regain-lost-ground, accessed November
20, 2018; John D. Sutter, “Netflix Whiplash Stirs Angry Mobs—Again,”
CNN, October 10, 2011, https://www.kshb.com/money/business-news/net-
flix-whiplash-stirs-angry-mobs-again, accessed November 20, 2018; Doug
Gross, “Customers Fume Over Netflix Changes,” September 21, 2011,
https://www.cnn.com/2011/09/20/tech/web/netflix-reaction/index.html,
accessed November 20, 2018; Logan Burruss and David Goldman, “Netf-
lix Abandons Plan for Qwikster DVD Service,” October 10, 2011, https://
money.cnn.com/2011/10/10/technology/netflix_qwikster/index.htm,
accessed November 20, 2018; Stu Woo and Ian Sherr, “Netflix Recovers
Subscribers,” The Wall Street Journal, January 26, 2012, https://www
.wsj.com/articles/SB10001424052970203806504577183303393083214,
accessed November 20, 2018.
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 441
FIGURE 12-6
Guidelines for Brand
Hierarchy Decisions
1. Decide on which products are to be introduced.
• Principle of growth: Invest in market penetration or expansion vs. product development according to ROI opportunities.
• Principle of survival: Brand extensions must achieve brand equity in their categories.
• Principle of synergy: Brand extensions should enhance the equity of the parent brand.
2. Decide on the number of levels.
• Principle of simplicity: Employ as few levels as possible.
• Principle of clarity: Logic and relationship of all brand elements employed must be obvious and transparent.
3. Decide on the levels of awareness and types of associations to be created at each level.
• Principle of relevance: Create abstract associations that are relevant across as many individual items as possible.
• Principle of differentiation: Differentiate individual items and brands.
4. Decide on how to link brands from different levels for a product.
• Principle of prominence: The relative prominence of brand elements affects perceptions of product distance and the type of image created for new products.
5. Decide on how to link a brand across products.
• Principle of commonality: The more common elements products share, the stronger the linkages.
PRADA
Miuccia Prada is one of the most highly rated fashion designers worldwide. Prada launched a groundbreak-
ing black nylon handbag with a distinct Prada logo in the early 1990s, and it remains one of the most
iconic and desirable handbags to date. Prada is renowned for its innovative use of textiles; classic cuts that
last beyond a season; demure, ladylike styles; and high-quality finish. It has also consistently invested in
marketing.
Miu Miu, also referred to as Prada’s “little sister,” provides an entry point into the Prada brand and has
consistently enjoyed strong financial results and a positive consumer reaction. Miu Miu was launched to
enable Miuccia Prada to continue to experiment with and communicate her design passions. Consumers
like Miu Miu for its provocative and sensual avant-garde style.
Prada consistently performs in spite of economic downturns and was listed on the Hong Kong stock
exchange in 2011. The company has continued to extend its product range since its inception. It penetrated
the eyewear and fragrances markets in 2000 and launched a mobile phone in 2006. Prada- and Miu Miu–
branded sunglasses are produced under a license agreement by Luxottica Group (LG). Prada perfumes are
produced by the Puig Group. The Prada Group has sold well over 1 million Prada phones in partnership with
LG. In 2017, Prada unveiled its new e-commerce platform in China.
Prada has successfully developed its Miu Miu sub-brand by keeping its appeal and positioning distinct
from the parent Prada label. All Prada products are clearly labeled with the coveted Miu Miu or Prada logo.
In 2017, Prada launched a broad program of pop-up events to support retail activities and to continue
restyling the Prada and Miu Miu stores.
Sources: Prada Group Fact Sheets, March 2012, www.pradagroup.com; Prada 2017 Annual Report, www.pradagroup. com; Prada Case Study, January 2011, www.marketline.com; “Prada to Open 50 New Stores in China in Next 3 Years,” October 5, 2011, www.chinaretailnews.com; www.thinkfashion.com; www.purseholic.com.
level, for two main reasons. Each successive branding level allows the firm to communicate additional, specific information about its products. Thus, developing brands at lower levels of the hierarchy allows the firm flexibility in communicating the uniqueness of its products. At the same time, developing brands at higher levels of the hierarchy is obviously an economical means
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442 PART V • GROWING AND SUSTAINING BRAND EQUITY
of communicating common or shared information and providing synergy across the company’s operations, both internally and externally.
As we noted earlier, the practice of combining an existing brand with a new brand is called sub-branding, because the subordinate brand is a means of modifying the superordinate brand. A sub-brand, or hybrid branding, strategy can also allow for the creation of specific brand beliefs. Prada has successfully launched several distinct sub-brands, all of which offer excellent design and high quality.
Sub-branding thus creates a stronger connection to the company or family brand and all the associations that come along with that. At the same time, developing sub-brands also allows for the creation of brand-specific beliefs. This more detailed information can help customers better understand how products vary and which particular product may be the right one for them.
Sub-brands also help organize selling efforts so that salespeople and retailers have a clear picture of how the product line is organized and how best to sell it. For example, one of the main advantages to Nike of continually creating sub-brands in its basketball line with Air Max Leb- ron, Nike Zoom Kobe, as well as the very popular Jordan line, is to generate retail interest and enthusiasm. These sub-brands have helped Nike retain its leadership position within the athletic footwear market. As of 2016, Nike owned 31 percent of the percent share of the global athletic footwear market,16 and within the basketball category, controls 90 percent of the U.S. market.17
Marketers can employ a host of brand elements as part of a sub-brand, including name, product form, shape, graphics, color, and version. By skillfully combining new and existing brand elements, they can effectively signal the intended similarity or fit of a new extension with its parent brand.
The principle of simplicity is based on the need to provide the right amount of branding infor- mation to consumers—no more and no less. The desired number of levels of the brand hierarchy depends on the complexity of the product line or product mix, and thus on the combination of shared and separate brand associations the company would like to link to any one product.
With relatively simple low-involvement products—such as light bulbs, batteries, and chewing gum—the branding strategy often consists of an individual or perhaps a family brand combined with modifiers that describe differences in product features. For example, for years, GE marketed three main brands of general-purpose light bulbs (Edison, Reveal, and Energy Smart) combined with designations for basic functionality (Standard, Reader, and three-way), aesthetics (soft white and daylight), and performance (40, 60, and 100 watts). With the advent of the LED technological revolu- tion, GE has released a slew of new products, including a new type of light bulb that specializes in lighting for your life and sleep. C by GE is a Smart Bulb that connects with consumers’ smartphones to enable them to control the lighting in the room. The C-Life bulb is specialized for every room in the house, to provide the optimal levels of brightness. C-Sleep, on the other hand, supports the body’s natural sleep cycle by providing dimmer lights. Overall, GE has expanded their brand offerings to include generalized and specialized products for consumers, depending on their needs and wants.18
A complex set of products—such as automobiles, computers, or other durable goods— requires more levels of the hierarchy. Thus, Samsung has family brand names such as Galaxy to denote one set of smartphone products and Gear to denote smartwatches and fitness trackers. A company with a strong corporate brand selling a relatively narrow set of products, such as luxury automobiles, can more easily use nondescriptive alphanumeric product names because consumers strongly identify with the parent brand, as Acura found out.
ACURA
Honda grew from humble origins as a motorcycle manufacturer to become a top automobile import
competitor in the United States. Recognizing that future sales growth would come from more upscale
customers, it set out in the early 1980s to compete with European luxury cars. Since Honda’s image of
dependable, functional, and economical cars did not have the cachet to appeal to this segment, the com-
pany created the new Acura division. However, after meeting initial success, sales began to drop. Research
revealed part of the problem: Acura’s Legend, Integra, and Vigor sub-brand names did not communicate
luxury and order in the product line as well as the alphanumeric branding scheme of competitors BMW,
Mercedes, Lexus, and Infiniti. Honda decided that the strength of the brand should lie in the Acura name.
Thus, despite the fact that it had spent nearly $600 million on advertising Acura sub-brands over the
previous eight years to build their equity, the firm announced a new alphanumeric branding scheme in the
winter of 1995: the 2.5 TL and 3.2 TL (for Touring Luxury) sedan series, the 3.5 RL, the 2.2 CL, and 3.0 CL,
and the RSX series. By 2017, all Acura cars are coded by a three letter combination, an “L” representing
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 443
It is difficult to brand a product with more than three levels of brand names without over- whelming or confusing consumers. A better approach might be to introduce multiple brands at the same level (multiple family brands) and expand the depth of the branding strategy.
Desired Awareness and Image at Each Hierarchy Level. How much awareness and what types of associations should marketers create for brand elements at each level? Achieving the desired level of awareness and strength, favorability, and uniqueness of brand associations may take some time and call for a considerable change in consumer perceptions. Assuming marketers use some type of sub-branding strategy for two or more brand levels, two general principles—relevance and
differentiation—should guide them at each level of the brand knowledge creation process. The principle of relevance is based on the advantages of efficiency and economy. Marketers
should create associations that are relevant to as many brands nested at the level below as pos- sible, especially at the corporate or family brand level. The greater the value of an association in the firm’s marketing, the more efficient and economical it is to consolidate this meaning into one brand linked to all these products.19 For example, Nike’s slogan (“Just Do It”) reinforces a key point-of-difference for the brand—performance—that is relevant to virtually every product it sells.
The more abstract the association, the more likely it is to be relevant in different product settings. Thus, benefit associations are likely to be extremely advantageous because they can cut across many
Acura’s brand name features an alphanumeric branding scheme to distinguish
across multiple luxury models.
Sources: David Kiley, “I’d Like to Buy a Vowel, Drivers Say,” USA Today, August 9, 2000; Fara Werner, “Remaking of a Legend,” Brandweek, April 25, 1994, 23–28; Neal Templin, “Japanese Luxury-Car Makers Unveiling Cheaper Models in Bid to Attract Buyers,” The Wall Street Journal, February 9, 1995; T. L. Stanley and Kathy Tryer, “Acura Plays Numbers Game to Fortify Future,” Brandweek, February 20, 1995, 3; Michelle Krebs, “Acura: Can Style Save Honda’s Luxury Brand,” Edmunds Auto Observer, March 20, 2008; Alan Ohnsman, “Honda Hopes New Acura ILX Helps Keep Gen-Y Out of Lexus, BMW,” Bloomberg News, December 12, 2011; Richard Bremner, “BMW Mulls New Naming Strategies for Car Brands,” www.insideline.com, July 28, 2011; Stefan Constantinescu, “Nokia to Change How They Name Devices Yet Again, Switching to BMW-like 500/600/700 Series Model Numbers,” www.intomobile.com, June 28, 2011.
their line of sedans, a “D” representing their Sport Utility models and an “S” to signify their sport car. All
of these three letter combinations end in an “X”, like the NSX super-car for example. Acura spokesperson
Mike Spencer said, “It used to be that people said they owned or drove a Legend . . . . Now they say they
drive an Acura, and that’s what we wanted.” Introducing new models with new names paid off, and sales
subsequently rose. Although Acura solved its branding problems, a perceived lack of styling has plagued
the brand, and in recent years, the company has struggled to keep up with its luxury compatriots.
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444 PART V • GROWING AND SUSTAINING BRAND EQUITY
product categories. For brands with strong product category and attribute associations, however, it can be difficult to create a brand image robust enough to extend into new categories.
For example, Blockbuster struggled to expand its meaning from “a place to rent videos” to “your neighborhood entertainment center” in hopes of creating a broader brand umbrella with greater relevance to more products. However, Blockbuster did not move to expand its brand mean- ing fast enough as it eventually declared bankruptcy before being acquired via auction by satellite television provider Dish Network in April 2011.20 As of 2017, Blockbuster only had a few stores operating within the United States.
The principle of differentiation is based on the disadvantages of redundancy. Marketers should distinguish brands at the same level as much as possible to ensure consumers and retailers can clearly see the distinctions; otherwise, brand variations can easily get out of control.21 One of the criticisms of marketing at General Motors was that the company had failed to adequately distinguish its family brands of automobiles, perhaps ultimately leading to the demise of the Oldsmobile, Pontiac, and Saturn brands. To better control its inventory and avoid brand prolifera- tion, Procter & Gamble discontinued more than 60 brands, and cash flows improved as a result.22
A flagship product is one that best represents or embodies the brand to consumers. It is often the first product by which the brand gained fame, a widely accepted best seller, or a highly admired or award-winning product. For example, although other products are associated with their brands, flagship products might be soap for Ivory, credit cards for American Express, and cake mix for Betty Crocker.23 A key issue in designing a brand hierarchy is thus choosing which product should be the core or flagship product.
Flagship products play a key role in the brand portfolio in that marketing them can have short-term benefits (increased sales), as well as long-term benefits (improved brand equity). Recently, Viacom announced its intention to unify its efforts around six flagship brands including MTV, Nickelodeon, Nick Jr., Comedy Central, BET, and Paramount.24 Sometimes, combining a few products under a single brand umbrella can offer significant efficiencies—for example, Hershey’s recently announced its masterbrand strategy, in which it would unify all its advertising under the Hershey masterbrand. This is in tune with what Coca-Cola did recently as well with their various Coke variants and their “Taste the Feeling” campaign. Previously, Chrysler put a lot of marketing effort behind selected mod- els when they were hot sellers, even though they made up only 22 percent of the brand’s total sales, because the 300 selected models also appeared to provide a halo over the rest of the Chrysler line. At a time when General Motors sales were declining by 4 percent, Chrysler’s sales shot up 10 percent.25
Combining Brand Elements from Different Levels. If we combine multiple brand elements from different levels of the brand hierarchy, we must decide how much emphasis to give each. For example, if we adopt a sub-brand strategy, how much prominence should we give individual brands at the expense of the corporate or family brand?
Principle of Prominence. The prominence of a brand element is its relative visibility com- pared with other brand elements. Prominence depends on several factors, such as order, size, and appearance, as well as semantic associations. A name is generally more prominent when it appears first, is larger, and looks more distinctive. When a brand like Nike adopts a sub-branded strategy, and combines its corporate family brand name Nike with a new individual brand name like Air Max, the relative emphasis on Nike and Air Max helps either the Nike name as the dominant brand name on packaging or Air Max. If the Air Max is more prominent—for example, Air Max by Nike—it would shift the emphasis to the sub-brand name rather than the family name.
The principle of prominence states that the relative prominence of the brand elements deter- mines which become the primary one(s) and which the secondary one(s). Primary brand elements should convey the main product positioning and points-of-difference. Secondary brand elements convey a more restricted set of supporting associations such as points-of-parity or perhaps an additional point-of-difference. A secondary brand element may also facilitate awareness.
According to the principle of prominence, the more prominent a brand element, the more emphasis consumers will give it in forming their brand opinions. The relative prominence of the individual and the corporate brands will be viewed very literally by consumers, and will therefore affect perceptions and image created for a new product. For example, “Marriott’s Courtyard” would be seen as much more of a Marriott hotel than “Courtyard by Marriott” by virtue of having the corporate name first. With a more prominent corporate or family brand, however, feedback effects will be more evident.
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 445
In some cases, the brand elements may not be explicitly linked at all. In a brand endorsement
strategy, a brand element—often the corporate brand name or logo—appears on the package, signage, or product appearance in some way but is not directly included as part of the brand name. For example, General Mills places its “Big G” logo on its cereal packages, but retains distinct brand names such as Cheerios, Wheaties, and Lucky Charms. The brand endorsement strategy presumably establishes the maximum distance between the corporate or family brand and the individual brands, suggesting that it would yield the smallest transfer of brand associations to the new product but, at the same time, minimize the likelihood of any negative feedback effects.
Branding Strategy Screen. Marketers can use the branding strategy screen displayed in Figure 12-7 to dial up or dial down different brand elements. If a potential new product or service is strongly related to the parent brand such that there is a high likelihood of parent brand equity carryover, and if there is little equity risk, a product descriptor or parent-brand- first sub-brand may make sense.26
On the other hand, if a potential new product or service is more removed from the parent brand such that there is a lower likelihood of parent brand equity carryover, or if there is higher equity risk, then a parent-brand-second sub-brand or even a new brand may be more appropriate. In these latter cases, the parent brand may just be used as an endorser.
These pros and cons help determine whether a BH or HOB is the more appropriate strategy. What consumers know about and want from the brand, and how they will actually use it, are also important.
Linking Brand Elements to Multiple Products. So far, we have highlighted how to apply different brand elements to a particular product—the vertical aspects of the brand hierarchy. Next, we consider how to link any one brand element to multiple products—the horizontal aspects. The principle of commonality states that the more common brand elements products share, the stronger the linkages between them.
The simplest way to link products is to use the brand element as is across them. Adapting the brand, or some part of it, offers additional possibilities for making the connection.
• Hewlett-Packard capitalized on its highly successful LaserJet computer printers to introduce a number of new products using the “Jet” suffix—for example, the DeskJet, PaintJet, ThinkJet, and OfficeJet printers.
• McDonald’s has used its “Mc” prefix to introduce a number of products, such as Chicken McNuggets, Egg McMuffin, and the McRib sandwich.
• Donna Karan’s DKNY brand, Calvin Klein’s CK brand, and Ralph Lauren’s Double RL brand rely on initials.
• Apple uses the i prefix to unify the brand across a range of products such as the iPod, iPhone, and iPad.
We can also create a relationship between a brand and multiple products with common symbols. For example, corporate brands like Nabisco often place their corporate logo more prominently on their products than their name, creating a strong brand endorsement strategy.
FIGURE 12-7
Branding Strategy
Screen
Single Parent Brand
Sub-brand: Parent
Primary
• Parent brand equity highly relevant and differentiating • More opportunities for positive feedback for Parent brand • Little risk of negative feedback to Parent brand
• Parent brand equity less relevant and differentiating • Fewer opportunities for positive feedback for Parent brand • Greater risk of negative feedback to Parent brand
Sub-brand: Parent
Secondary New
Brand
Evaluate optimal equity upside and risk
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446 PART V • GROWING AND SUSTAINING BRAND EQUITY
Finally, it’s often a good idea to logically order brands in a product line to communicate how they are related and to simplify consumer decision making. We can communicate the order through colors (American Express offers Red, Blue, Green, Gold, Platinum, and Black or Centu- rion cards), numbers (BMW offers its 3-, 5-, and 7-series cars), or other means. This strategy is especially important in developing brand migration pathways for customers to switch among the brands offered by the company. The relative position of a brand within a brand line may also affect consumer perceptions and preferences.27 A summary of the various design principles provided in this section is summarized in Table 12-1.
CORPORATE BRANDING Given its fundamental importance in brand architecture, we will go into greater detail on corporate branding. A corporate brand is distinct from a product brand in that it can encompass a much wider range of associations. As detailed in the following paragraphs, a corporate brand name may be more likely to evoke associations of common products and their shared attributes or benefits, people and relationships, programs and values, and corporate credibility.
These associations can have an important effect on the brand equity and market performance of individual products. For example, one research study revealed that consumers with a more favorable corporate image of DuPont were more likely to respond favorably to the claims made in an ad for Stainmaster carpet, and therefore, actually buy the product.28
Building and managing a strong corporate brand, however, can necessitate that the firm keep a high public profile, especially to influence and shape some of the more abstract types of associa- tions. The CEO or managing director, if associated with a corporate brand, must also be willing to maintain a more public profile to help communicate news and information, as well as perhaps provide a symbol of current marketing activities. At the same time, a firm must also be willing to subject itself to more scrutiny and be extremely transparent in its values, activities, and programs. Corporate brands have to be comfortable with a high level of openness.
A corporate brand offers a host of potential marketing advantages, but only if corporate brand equity is carefully built and nurtured—a challenging task. Many marketing winners in the coming years will, therefore, be those firms that properly build and manage corporate brand equity. Branding Brief 12-4 describes a closely related concept—corporate reputation—and how we can look at it from the perspective of consumers and other firms.29
Corporate brand equity is the differential response by consumers, customers, employees, other firms, or any relevant constituency to the words, actions, communications, products, or services provided by an identified corporate brand entity. In other words, positive corporate brand equity occurs when a relevant constituency responds more favorably to a corporate ad campaign,
Design Objective/Goal Principle Definition
Specifying products to introduce Growth Investments made in market or product development should be made according to ROI opportunities.
Specifying products to introduce Survival Brand extensions must achieve brand equity in their categories
Specifying products to introduce Synergy Brand extensions must enhance the equity of the parent brand
Number of levels in hierarchy Simplicity Provide the right amount of branding information at each level in hierarchy, balancing the number of shared and separate associations
Achieving awareness and image at each level Relevance Create associations at each level that are relevant to as many brands nested at the level below
Achieving awareness and image at each level Differentiation Distinguish brands at the same level as much as possible to ensure lack of overlap
Combining elements from different levels Prominence Relative visibility of a brand element determines its importance in consumers' perceptions
Combining elements from different levels Commonality The more common brand elements products share, the stronger the linkages between them.
TABLE 12–1 Summary of Brand Architecture Design Principles
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 447
Two annual surveys offer insights into corporate reputation.
Every year, Fortune magazine conducts a comprehensive survey
of business perceptions of the companies with the best corporate
reputations. The 2017 survey included the 1,500 largest U.S. and
non-U.S. companies in 64 industry groups. Approximately 3,800
senior executives, outside directors, and financial analysts were
asked to select the 10 companies they admired most, regardless
of industry. To create industry lists, respondents rated companies
in their industry on nine criteria: (1) quality of management; (2)
quality of products or services; (3) innovativeness; (4) long-term
investment value; (5) financial soundness; (6) ability to attract,
develop, and keep talented people; (7) responsibility to the com-
munity and the environment; (8) wise use of corporate assets; and
(9) global competitiveness.
Since the 2010 ranking, many of the companies have
changed. Some companies, however, such as Apple, have
remained in the top 10 for years. Fortune’s top 10 most admired
companies from 2017 and their rankings are as follows:
Rank Company Rank Company
1 Apple 6 Alphabet
2 Amazon.com 7 General Electric
3 Starbucks 8 Southwest Airlines
4 Berkshire Hathaway 9 Facebook
5 Disney 10 Microsoft
Another informative survey, the RQ 2017 study of corpo-
rate reputations, conducted each year since 1999 by Harris
Interactive and the Reputation Institute, demonstrated both
the enduring character of corporate reputations but their
ability to change quickly at the same time. Researchers deter-
mine which companies should be rated on the basis of a
preliminary sampling of more than 30,000 members of the
U.S. general public, utilizing the proprietary Harris Poll online
panel. Respondents are asked first to identify the 60 most vis-
ible companies and then to rate them on 20 different attri-
butes that make up the Reputation Quotient (RQ) instrument.
The attributes are then grouped into six different reputation
dimensions: emotional appeal, products and services, social
responsibility, vision and leadership, workplace environment,
and financial performance. The study also includes a number
of questions that help provide a comprehensive understand-
ing of how the public perceived firms’ reputations. The 2017
rankings are as follows:
Rank Company Rank Company
1 Amazon 6 UPS
2 Wegmans 7 Walt Disney
3 Publix 8 Google
4 Johnson & Johnson 9 Tesla
5 Apple 10 3M Company
Sources: Fortune, “World’s Most Admired Companies,” http://fortune .com/worlds-most-admired-companies/, accessed November 20, 2018; “Corporate Reputation Is Politically Polarized: The Reputation of Ameri- ca’s 100 Most Visible Companies,” The Harris Poll, N.D.
BRANDING BRIEF 12-4
Corporate Reputations: The Most Admired U.S. Companies
As noted earlier, two types of brand architecture strategies are
typically used by firms. One is branded house (BH), in which a
single corporate brand name is used across all entities in the port-
folio (e.g., GE, 3M, IBM); house of brands (HOB), wherein dis-
tinct brands not linked to the corporate brand are cultivated for
specific market segments (e.g., P&G with Tide and Cheer); and
a mixed architecture that combines all other alternatives. In one
study, researchers found that BH generated the highest financial
values (using stock market returns) and concluded that markets
might not value HOB appropriately, as investors may underappre-
ciate that a multitude of brands distributes risk over more brands.
Later research examined the implications of these brand
architecture strategies by examining the effects of a broader
range of branding strategies including sub-branding and
endorsed branding strategies on both stock market returns as
well as stock market risk. Their research found that brand archi-
tecture strategies can have significant implications for a variety
of different types of risk associated with a firm and can be
related to impact on reputation, dilution, cannibalization, and
brand stretch. Sub-branding may cause a brand to overextend,
thereby exacerbating the risk associated with a firm. Therefore,
a brand such as FedEx may stand to gain from having a number
of sub-brands, but should also be mindful of potential risks
to the brand name associated with over extension or dilution.
Researchers have also examined how characteristics of a
brand portfolio might impact marketing and financial perfor-
mance of firms, including: (1) number of brands owned; (2) num-
ber of segments in which they are marketed; (3) degree to which
the brands in the firm’s portfolio compete with one another; and
(4) consumer perceptions of the quality and price of the brands
in the firm’s portfolio. This research has shown that these char-
acteristics can have a significant impact on a variety of metrics
capturing a firm’s effectiveness in the market place, its efficiency
of marketing spending, and overall financial performance.
Taken together, managers should be mindful that brand
architecture strategies that they employ may impact the stock
THE SCIENCE OF BRANDING 12-2
Brand Architecture Strategies: House of Brands or Branded House?
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448 PART V • GROWING AND SUSTAINING BRAND EQUITY
3M’s corporate brand name stands for innovation.
FIGURE 12-8
Some Important Corporate Image
Associations
Common Product Attributes, Benefits, or Attitudes Quality Innovativeness
People and Relationships Customer orientation
Values and Programs Concern with environment Social responsibility
Corporate Credibility Expertise Trustworthiness Likability
returns accruing to the firm as well as the volatility and exposure
(i.e., risk) associated with those returns. The BH seems to provide
significant efficiencies that investors value, and this translates into
higher stock market returns. The impact of brand architecture
(e.g., use of sub-branding strategies) on risk to a brand name
also impacts overall stock market risk of a firm. Finally, context
factors (e.g., size of target audiences) should be kept in mind to
assess the impact of a brand on overall firm performance and
stock market valuation. These insights are, in large part, due to
the valuable role of brands in shaping the future potential of a
firm, and the brand architecture strategy can signal to investors
how valuable or risky a firm’s brand assets are.
Sources: Vithala R. Rao, Manoj K. Agarwal, and Denise Dahlhoff. “How Is Manifest Branding Strategy Related to the Intangible Value of a Corpora- tion?,” Journal of Marketing 68, no. 4 (2004): 126–141; Liwu Hsu, Susan Fournier, and Shuba Srinivasan, “Brand Architecture Strategy and Firm Value: How Leveraging, Separating, and Distancing the Corporate Brand Affects Risk and Returns,” Journal of the Academy of Marketing Science 44, no. 2 (2016): 261–280; Neil A. Morgan and Lopo L. Rego, “Brand Portfolio Strat- egy and Firm Performance,” Journal of Marketing 73, no. 1 (2009): 59–74.
a corporate-branded product or service, a corporate-issued PR release, and so on than if the same offering were attributed to an unknown or fictitious company.
A corporate brand can be a powerful means for firms to express themselves in a way that is not tied to their specific products or services. The Science of Branding 12-2 describes how brand architecture decisions can play an important role in firm performance, both in terms of returns from stock market, as well as riskiness of the firm.
Corporate Image Dimensions A corporate image will depend on a number of factors, such as the products a company makes, the actions it takes, and the manner in which it communicates to consumers. This section highlights some of the different types of associations that are likely to be linked to a corporate brand and that can affect brand equity (see Figure 12-8).30
Common Product Attributes, Benefits, or Attitudes. Like individual brands, a corporate or company brand may evoke in consumers a strong association to a product attribute (Hershey with chocolate), type of user (BMW with yuppies), usage situation (Club Med with fun times), or overall judgment (3M with innovation).
If a corporate brand is linked to products across diverse categories, then some of its strongest associations are likely to be those intangible attributes, abstract benefits, or attitudes that span each of the different product categories. For example, companies may be associated with products or services that solve particular problems (Black & Decker), bring excitement and fun to certain activities (Nintendo), are built with the highest quality standards (Motorola), contain advanced or innovative features (Rubbermaid), or represent market leadership (Hertz).
Two specific product-related corporate image associations—high quality and innovation— deserve special attention.
A high-quality corporate image association creates consumer perceptions that a company makes products of the highest quality. A number of different organizations like J.D. Power, Consumer
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 449
Reports, and various trade publications for automobiles rate products. Nowadays, a number of reviews and ratings Web sites provide quality scores for products and services. For example, Yelp and Travelocity provide valuable ratings information for the restaurant and travel sectors, respectively. Quality is one of the most important, if not the most important, decision factors for consumers.
An innovative corporate image association creates consumer perceptions of a company as developing new and unique marketing programs, especially with respect to product introduc- tions or improvements. Keller and Aaker experimentally showed how different corporate image strategies—being innovative, environmentally concerned, or involved in the community—could affect corporate credibility and strategically benefit the firm by increasing the acceptance of brand extensions.31 Interestingly, consumers viewed a company with an innovative corporate image as not only expert but also trustworthy and likable. Being innovative is seen as being modern and up-to-date, investing in research and development, employing the most advanced manufacturing capabilities, and introducing the newest product features.
An image priority for many Japanese companies—from consumer product companies such as Kao to more technically oriented companies such as Canon—is to be perceived as innova- tive.32 Perceived innovativeness is also a key competitive weapon and priority for firms in other countries. Michelin (“A Better Way Forward”) describes how its commitment to the environment, security, value, and driving pleasure has been spurring innovation. Branding Brief 12-5 describes how 3M has developed an innovative culture and image.
People and Relationships. Corporate image associations may reflect characteristics of the employees of the company. Although focusing on employees is a natural positioning strategy for service firms like Southwest Airlines, Avis car rental, and Ritz-Carlton hotels
3M has fostered a culture of innovation and improvisation from
its very beginnings. In 1904, the company’s directors were faced
with a failed mining operation, but they turned the leftover grit
and waste into a revolutionary new product: sandpaper. Today,
3M makes more than 50,000 products, including adhesives,
contact lenses, and optical films. Over the last century, some of
its noteworthy product launches include Scotch masking and
transparent tape, Scotchgard fabric protector, and Post-it Notes.
Each year, 3M launches scores of new products, regularly
ranking among the top 10 U.S. companies each year in patents
received. Under new Chief Technology Officer Ashish Khandpur,
3M has raised their R&D spending budget from 5.5 percent of
revenue in 2012 to 6 percent by 2017, an increase that represents
about $160 million annually. The firm is able to consistently pro-
duce innovations in part because it promotes a corporate environ-
ment that facilitates new discoveries:
• 3M encourages everyone, not just engineers, to become
product champions. The company’s “15 percent time” lets all
employees spend up to 15 percent of their time working on
projects of personal interest. A culture of healthy competition
among highly motivated peers helps 3M innovate and create.
• Each promising new idea is assigned to a multidisciplinary ven-
ture team headed by an executive champion. 3M hands Golden
Step awards each year to the venture teams whose new prod-
ucts earned more than $2 million in U.S. sales or $4 million in
worldwide sales within three years of commercial introduction.
• 3M expects some failures and uses them as opportunities to
learn how to make products that work. It is also very selective
about acquisitions, seeing them as only supplementary to
organic growth and internal innovations and developments.
• Starting in 2010, 3M has introduced social networks into
its innovation process, inviting 75,000 global employees and
more than 1,200 other people to participate in its annual
Markets of the Future brainstorming session. More than 700
new ideas have been generated, leading to nine new markets
for the company to explore.
Some of the innovations that 3M focused on in 2017 include uti-
lizing Information and Communications Technologies (ICTs) to foster
innovation, economic growth, and progress, helping Western Europe
achieve the Industry 4.0 plan which will make the manufacturing
sector more efficient through further computerization, and increasing
sustainability throughout their organization’s infrastructure.
Sources: 3M 2010 Annual Report, www.3m.com; Chuck Salter, “The Nine Passions of 3M’s Mauro Porcini,” Fast Company, October 10, 2011, https://www.fastcompany.com/1777592/nine-passions-3ms- mauro-porcini, accessed November 20, 2018; Kaomi Goetz, “How 3M Gave Everyone Days Off and Created an Innovation Dynamo,” Fast Company Design, February 1, 2011, https://www.fastcompany. com/1663137/how-3m-gave-everyone-days-off-and-created-an- innovation-dynamo, accessed November 20, 2018; Trefis Team, “What Trends Will Ensure Growth for 3M in Western Europe in the Future?,” Forbes, June 9, 2017, accessed June 19, 2017, https://www.forbes.com/ sites/greatspeculations/2017/06/09/what-trends-will-ensure-growth- for-3m-in-western-europe-in-the-future/#6156c5ea1548; Lewis Krauskopf, “3M’s New Technology Chief Has a Bigger Budget, Bigger Goal,” Reuters, June 1, 2015, accessed June 19, 2017, http://www .reuters.com/article/us-3m-research-idUSKBN0OH3BV20150601.
BRANDING BRIEF 12-5
Corporate Innovation at 3M
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450 PART V • GROWING AND SUSTAINING BRAND EQUITY
as well as retailers like L.L.Bean and Nordstrom, manufacturing firms like DuPont and oth- ers have also used it in the past. Their rationale is that the traits that employees exhibit will directly or indirectly influence consumers about the products the firm makes or the services it provides. Conversely, the lack of employee satisfaction could work against a strong corporate image. Recently, the high-flying technology company, Uber, has been the focus of significant controversy because of accusations of a “toxic office culture” in which female employees are allegedly subject to harassment.
Consumers may themselves form more abstract impressions of a firm’s employees, espe- cially in a services setting. One major public utility company was described by customers as “male, 35–40 years old, middle class, married with children, wearing a flannel shirt and khaki pants, who would be reliable, competent, professional, intelligent, honest, ethical, and business-oriented.” On the downside, these same customers also described the utility as “distant, impersonal, and self-focused,” suggesting an important area for improvement in its corporate brand image.
Retail stores also derive brand equity from their employees. For example, from its origins as a small shoe store, Seattle-based Nordstrom has become one of the nation’s leading fashion specialty retailers through a commitment to quality, value, selection, and, especially, service. Legendary for its personalized touch and willingness to go to extraordinary lengths to satisfy its customers, Nordstrom creates brand equity largely through the efforts of its salespeople and the relationships they develop with customers.
Thus, a customer-focused corporate image association creates consumer perceptions of a company as responsive to and caring about its customers. Consumers believe their voice will be heard and that the company has their best interests in mind. Often, this philosophy is reflected throughout the marketing program and communicated through advertising.
Values and Programs. Corporate image associations may reflect company values and pro- grams that do not always directly relate to the products. Firms can run corporate-image ad cam- paigns to describe to consumers, employees, and others their philosophy and actions with respect to organizational, social, political, or economic issues.
For example, many recent corporate advertising campaigns have focused on environmental issues and social responsibility. A socially responsible corporate image association portrays the company as contributing to community programs, supporting artistic and social activities, and generally attempting to improve the welfare of society as a whole. An environmentally concerned
corporate image association projects a company whose products protect or improve the environ- ment and make more effective use of scarce natural resources. We consider corporate responsibil- ity in more detail later, and Brand Focus 12.0 looks at the broader issue of cause marketing, in which British Airways has been a pioneer.
BRITISH AIRWAYS
An innovative cause marketer, British Airways has successfully introduced several noteworthy cause pro-
grams. It first partnered with UNICEF in 1994 for the cleverly titled “Change for Good” campaign, based
on a very simple idea: foreign coins are particularly difficult to exchange at banks and currency exchanges.
So passengers were asked to place any surplus coins—or bills, for that matter—in envelopes provided by
British Airways, which donated them directly to UNICEF. British Airways advertised the program on the
backs of seat cards, during an in-flight video, and with in-flight announcements with such success that
fellow international carriers in the Oneworld Alliance began to participate. In June 2010, the program
was replaced with the Flying Start program. This new program was a partnership with Comic Relief UK,
a successful charity started by comedians whose aim is to “bring about positive and lasting change in
the lives of poor and disadvantaged people.” To publicize the new program, the airlines teamed up with
Guinness World Records for the “Highest Stand-Up Comedy Gig in the World.” Three comedians enter-
tained 75 lucky passengers for a two-and-a-half-hour champagne flight. Flying Start was structured like
Change for Good—donations were collected in-flight as well as online and at Travelex currency exchange
locations in U.K. airports—but had a stronger local angle. The program raised almost $3 million in its
first year, with a goal to “improve the lives of hundreds of thousands of children living in the U.K. and in
some of the poorest countries across the world.”33 In 2017, British Airways was named favorite brand in
the U.K. for the fourth year in a row.34
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 451
British Airways cemented its reputation as a reputable global corporate brand
through various cause-related marketing programs.
Corporate Credibility. A particularly important set of abstract brand associations is corporate credibility. As defined in Chapter 2, corporate credibility measures the extent to which consumers believe a firm can design and deliver products and services that satisfy their needs and wants. It is the reputation the firm has achieved in the marketplace. Corporate credibility—as well as success and leadership—depends on three factors:
1. Corporate expertise: The extent to which consumers see the company as able to competently make and sell its products or conduct its services.
2. Corporate trustworthiness: The extent to which consumers believe the company is motivated to be honest, dependable, and sensitive to customer needs.
3. Corporate likability: The extent to which consumers see the company as likable, attractive, prestigious, dynamic, and so forth.
While consumers who perceive the brand as credible are more likely to consider and choose it, a strong and credible reputation can offer additional benefits.35 L.L.Bean is a company with much corporate credibility.
A highly credible company may be treated more favorably by other external constituencies, such as government or legal officials. It also may be able to attract better-qualified employees and motivate existing employees to be more productive and loyal. As one Shell Oil employee remarked as part of some internal corporate identity research, “If you’re really proud of where you work, I think you put a little more thought into what you did to help get them there.”
A strong corporate reputation can help a firm survive a brand crisis and avert public outrage that could otherwise depress sales or block expansion plans. As Harvard’s Stephen Greyser notes, “Corporate reputation . . . can serve as a capital account of favorable attitudes to help buffer
corporate trouble.”
L.L.BEAN
A brand seen as highly credible, outdoors product retailer L.L.Bean attempts to earn its customers’ trust
every step of the way—by providing pre-purchase advice, secure transactions, best-in-class delivery, and
easy returns and exchanges. Founded in 1912, L.L.Bean backs its efforts with a 100-percent satisfaction
guarantee as well as its Golden Rule: “Sell good merchandise at a reasonable profit, treat your customers
like human beings, and they will always come back for more.” Now a billion-dollar brand that celebrated its
100th anniversary in 2012, the company retains its original image of being passionate about the outdoors
and believing profoundly in honesty, product quality, and customer service.
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452 PART V • GROWING AND SUSTAINING BRAND EQUITY
Summary. Many intangible brand associations can transcend the physical characteristics of products, providing valuable sources of brand equity and serving as critical points-of-parity or points-of-difference.36 Companies have a number of means—indirect or direct—of creating these associations. But they must “talk the talk” and “walk the walk” by communicating to consum- ers and backing up claims with concrete programs that consumers can easily understand or even experience.
Managing the Corporate Brand A number of specific issues arise in managing a corporate brand. Here we consider three: corpo- rate social responsibility, corporate image campaigns, and corporate name changes.
Corporate Social Responsibility. Some marketing experts believe consumers are increas- ingly using their perceptions of a firm’s role in society in their purchase decisions. For example, consumers want to know how a firm treats its employees, shareholders, local neighbors, and other stakeholders or constituents.37 As the head of a large advertising agency put it: “The only sustain- able competitive advantage any business has is its reputation.”38
Consistent with this reasoning, 91 percent of respondents in a large global survey of financial analysts and others in the investment community agreed that a company that fails to look after its reputation will endure financial difficulties. Moreover, 96 percent said the CEO’s reputation was fairly, very, or extremely important in influencing their ratings.39
The realization that consumers and others may be interested in issues beyond product char- acteristics and associations has prompted much marketing activity to establish the proper cor- porate image.40 Some firms are putting corporate social responsibility at the very core of their existence.41 Ben & Jerry’s has created a strong association as a “do-gooder” by using Fair Trade ingredients and donating 7.5 percent of its pre-tax profits to various causes. Its annual Social and Environmental Assessment Report details the company’s main social mission goals and spells out how it is attempting to achieve them.
TOMS Shoes used cause marketing to launch its brand.
L.L.Bean is a credible, trustworthy brand that promises best-in-class service.
TOMS SHOES
When entrepreneur and former reality-show contestant Blake Mycoskie visited Argentina in 2006, he saw
masses of children who suffered health risks and interrupted schooling due to a simple lack of shoes. Once
home, Mycoskie started TOMS Shoes, whose name conveys “Shoes for a Better Tomorrow.” The company
started with a simple vision, provide one pair of shoes to a child in need with every pair purchased. The
shoes themselves are based on the classic alpargata style found in Argentina. They are sold online and
through top retailers such as Whole Foods, Nordstrom, and Neiman Marcus. TOMS’s donated shoes—black,
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 453
Toms Shoes’ “One for One” campaign began in 2006, when the company’s
founder saw that Argentinian children did not have adequate shoes to protect
their feet.
unisex canvas slip-ons with a sturdy sole—can now be found on the feet of more than 35 million children
in developing countries such as Argentina and Ethiopia.42 TOMS also has a strong social media presence
with almost 4 million likes on Facebook. By 2017, Mycoskie has expanded TOMS to giving not only shoes
on a One for One model, but now has campaigns to give the gifts of sight, water, safe birth, and kindness
to those in the developing world.
Brand Focus 12.0 outlines the advantages of cause marketing, the obstacles they face, and how to successfully design a successful campaign, with particular emphasis on green marketing.
Corporate Image Campaigns. Corporate image campaigns are designed to create associa- tions to the corporate brand as a whole; consequently, they tend to ignore or downplay individual products or sub-brands.43 As we would expect, some of the biggest spenders on these kinds of campaigns are well-known firms that use their company or corporate name prominently in their branding strategies, such as Apple, Google, GE, Toyota, British Telecom, IBM, Novartis, and Deutsche Bank.
Corporate image campaigns have been criticized as an ego-stroking waste of time, and they can be easy for consumers to ignore. However, a strong campaign can provide invaluable market- ing and financial benefits by allowing the firm to express itself and embellish the meaning of its corporate brand and associations for its individual products, as Philips did.
PHILIPS
In recent years, Philips has focused on simplifying not only the products it produces, but also how the busi-
ness is run. In November 2013, the brand unveiled a new, streamlined shield logo to keep in line with its
overall outlook of innovation through simplicity. With that redesign, Philips also unveiled its new slogan
“Innovation and You” highlighting the company’s mission of improving people’s lives through meaningful
innovation.44 One of its latest products, Norelco OneBlade, furthers the mission of innovation through sim-
plicity with the slogan, “You only need OneBlade.” To reposition itself as a more consumer-friendly brand,
Philips Consumer Electronics originally launched a global corporate advertising campaign in 2004 that ran
for a number of years. Centered on the company’s new tagline, “Sense and Simplicity,” that replaced the
nine-year-old “Let’s Make Things Better.” The ads showcased innovative Philips products like the Flat TV with
Ambilight, the HDRW720 DVD recorder with built-in hard disk, and the Sonicare Elite toothbrush, all fitting
in effortlessly with users’ sophisticated lifestyles. Philips president and CEO Gerard Kleisterlee described the
repositioning campaign by saying, “Our route to innovation isn’t about complexity—it’s about simplicity,
which we believe will be the new cool.”45
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454 PART V • GROWING AND SUSTAINING BRAND EQUITY
Philips has focused on innovation and simplicity as the two key
pillars of its brand positioning as a consumer-friendly brand.
To maximize the probability of success, however, marketers must clearly define the objec- tives of a corporate image campaign and carefully measure results against them.46 A number of different objectives are possible in a corporate brand campaign:47
• Build awareness of the company and the nature of its business. • Create favorable attitudes and perceptions of company credibility. • Link beliefs that can be leveraged by product-specific marketing. • Make a favorable impression on the financial community. • Motivate present employees and attract better recruits. • Influence public opinion on issues.
In terms of building customer-based brand equity, the first three objectives are particularly critical. A corporate image campaign can enhance awareness and create a more positive image of the corporate brand that will influence consumer evaluations and increase the equity associated with individual products and any related sub-brands. In certain cases, however, the latter three objectives can take on greater importance.48
A corporate image campaign may be useful when mergers or acquisitions transform the company. Consolidation in the financial services industry has caused firms like Zurich and UBS to develop and implement strong corporate branding strategies.
Like product advertising, corporate image campaigns are becoming more creative and often include digital strategies as an integral component. Many of these campaigns include a philan- thropic component to strengthen their appeal to consumers, for example, ConAgra Foods’ cam- paign to end child hunger and Johnson & Johnson’s “Care to Recycle” campaign.
Unlike a corporate image campaign that presents the brand in abstract terms with few, if any, references to specific products, brand line campaigns promote a range of products associated with a brand line. By showing consumers the different uses or benefits of the multiple products offered by a brand, brand line ads or promotions can be particularly useful in building brand awareness, clarifying brand meaning, and suggesting additional usage applications. Sometimes a brand line campaign will emphasize a common thread running through all the products for a brand, as was the case with General Mills.
GENERAL MILLS
In 2004, General Mills elected to make all its cereals with 100 percent whole grains so that each provided at
least half a serving (8 grams) in every bowl. Despite the many benefits of whole grains, including lowered risks
of chronic diseases such as heart disease, certain cancers, and diabetes, only 5 percent of U.S. consumers at
that time got the minimum three daily servings recommended by the U.S. Dietary Guidelines for Americans.
Much consumer confusion existed about what whole grains were and why it mattered. Based on research
showing that consumers read their cereal boxes an average of 2.7 times, General Mills decided to promote the
health benefits of 100 percent whole-grain cereal on all its product packaging, using the U.S. Department of
Agriculture food guide pyramid. An advertising campaign also touted the switch to whole grains. The program
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 455
LANCIA
Chrysler, one of the biggest automobile manufacturers in the United States, had to default on huge debts
due to the economic collapse of 2007–2009, and in 2009, the struggling Chrysler Group was acquired by
Fiat. The first visible results of the acquisition in terms of products were launched in 2011 with facelifted
versions of the Chrysler Town & Country, the Chrysler 200, as well as the next generation of the Chrysler
300. It was decided that these models would be offered in Europe under the Lancia brand, which is also part
of the Fiat brand portfolio. In addition to the genuine Lancia models Ypsilon, Musa, and Delta, the product
range was extended with the Chrysler 300 sold as the new Lancia Thema and the Chrysler Town & Country
as the Lancia Voyager (both models had previously been sold under the Chrysler brand in Europe). The tagline
“New Lancia. Luxury liberated.” shows the aim for Lancia to be the luxury choice in the corresponding car
categories. However, the strategy has faced a backlash—in Europe, neither Chrysler nor Lancia fans have
been very enthusiastic about seeing an American product under the Italian car brand, just with a new logo.51
Corporate Name Changes. Corporate names may have to change for many reasons, but they should be the right reasons pursued in the right way.
Rationale. A merger or acquisition is often the impetus to reevaluate naming strategies and weigh the existing and potential equity of each brand in its new context.52
• A new corporate name arising from a merger or acquisition may be based on some combina- tion of two existing names, if they are strong. For example, when FedEx and Kinko’s merged into a single entity, they created a joint FedExKinko’s brand. J.P. Morgan & Co. and Chase Manhattan Corporation became JPMorgan Chase after their merger.
• If there is an imbalance in brand equity, the firm typically chooses the name with more inherent brand equity and relegates the other to a sub-brand role or eliminates it altogether. When Citicorp merged with Travelers, the latter’s name was dropped, although its familiar red umbrella symbol was retained as part of the new Citigroup brand look. Similarly, United’s name was combined with Continental’s globe logo when those two air carriers merged.
• Finally, if neither name has the desired brand equity, a completely new name can signal new capabilities.
Clearly, there are many nuances to identifying brand names for acquisition, the naming strategy for the newly acquired brand, and significant considerations in managing a newly acquired brand. The Science of Branding 12-3 section, which follows, outlines what researchers have uncovered about brand acquisitions.
met with much success, essentially adding 1.5 billion servings of whole grains to the U.S. diet each year. In 2011,
General Mills partnered with Dr. Travis Stork, host of a popular daytime talk show, to donate 1 million servings
of whole grain to families in need.49 In 2015, General Mills further pledged to remove artificial flavors and colors
from all of its cereals, with a goal of having all-natural ingredients in all its cereals within a two-year period.50
Brand line campaigns must be seen as cohesive and fitting by consumers, as Lancia found out while attempting to develop a brand line umbrella over a rebranded product line.
The world of marketing is rife with examples of brands trading
hands. Building products and brands internally can be slow and
costly, and new product failure rates are high. One important impli-
cation is that a brand has different growth prospects depending
on which firm owns it. This is particularly a concern in a merger
or acquisition context. Many firms acquire brands from external
sources to improve their competitive strength or to establish a
presence in a new market or segment. For example, Estee Lauder
announced that it had acquired By Kilian, a Paris-based prestige
fragrance brand, for an undisclosed sum. Nantucket Nectars, cur-
rently owned by Dr. Pepper Snapple Group, was acquired from
Cadbury Schweppes PLC. Cadbury Schweppes PLC, in turn, had
acquired the brand from Ocean Spray. Some high-profile acquisi-
tions from the past few years are listed in Table 12-2, along with
THE SCIENCE OF BRANDING 12-3
When Brands Trade Hands
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456 PART V • GROWING AND SUSTAINING BRAND EQUITY
the acquisition price. As brand acquisitions are increasing in fre-
quency and scope, a series of academic research papers have
explored issues surrounding such acquisitions.
A key question that arises is whether these acquisitions ben-
efit the acquiring firm by increasing its market share and by add-
ing shareholder value. If so, under what conditions?
Researchers have found that when the acquiring firm’s market-
ing capabilities overall were higher, investors increased how they
valued the brand acquisition. One study collected stock market
data on brand and product acquisition announcements in multiple
business-to-consumer industries over a 20-year-period to see how
shareholders reacted to the announcement of an acquisition. Their
findings implied that managers should carefully consider the nature
of the resources available internally to ensure successful transfer of
brands from the target to the acquiring firm. According to these
researchers, managers should ensure that the following conditions
are present to achieve successful transfer: (1) a strong target brand
with significant brand equity, (2) strong organizational marketing
management capability within the acquiring firm, and (3) a low
level of acquiring firm diversification. The potential for brand name
change is also a factor in the success of an acquisition, as investors
realize that there are significant risks to a brand’s equity when an
acquired brand undergoes a significant name change.
Taken together, brand acquisitions represent a viable alternative
to organic growth, particularly for managers faced with high new
product development costs and high rates of failure. The success
of an acquisition depends a great deal on maintaining focus and
dedicating resources to the acquired brand. Many brands, even after
acquisition, can become neglected or forgotten, especially if the firm
has an expansive set of brands. In addition to focus and resources,
the impact on brand architecture and potential for name change
should be carefully considered along with the acquiring firm’s mar-
keting and brand capabilities to ensure success in acquisitions.
Sources: Kevin Lane Keller and Don Lehmann, “Assessing Brand Poten- tial,” in special issue, “Brand Value and Valuation,” of Journal of Brand Management 17, eds. Randall Raggio and Robert P. Leone (Septem- ber 2009): 6–17; Kevin Lane Keller and David A. Aaker, “The Effects of Sequential Introduction of Brand Extensions,” Journal of Marketing Research 29 (February 1992): 35–50; Randle Raggio and Robert P. Leone, “The Theoretical Separation of Brand Equity and Brand Value: Manage- rial Implications for Strategic Planning,” Journal of Brand Management 14 (May 2007): 380–395; Yana Damoiseau, William C. Black, and Randle D. Raggio, “Brand Creation vs. Acquisition in Portfolio Expansion Strat- egy,” Journal of Product & Brand Management 20, no. 4 (2011): 268–281; Michael A. Wiles, Neil A. Morgan, and Lopo L. Rego, “The Effect of Brand Acquisition and Disposal on Stock Returns,” Journal of Marketing 76, no. 1, (2012): 38–58; S. Cem Bahadir, Sundar G. Bharadwaj, and Rajendra K. Srivastava (2008), “Financial Value of Brands in Mergers and Acquisitions: Is Value in the Eye of the Beholder?,” Journal of Marketing 72 (November) 49–64; Casey Newmeyer, Vanitha Swaminathan, and John Hulland (2016), “When Products and Brands Trade Hands: A Framework for Acquisition Success,” Journal of Marketing Theory and Practice 24 (2), 129–146.
Year Acquirer Target Acquisition Price ($)
2000 General Mills Pillsbury 10.5 billion
2005 Procter & Gamble Gillette 57 billion
2006 Johnson & Johnson Pfizer 16.6 billion
2007 Coca-Cola Vitaminwater 4.1 billion
2010 General Mills Mountain High yogurt 84.8 million
2013 Fairfax Financial Blackberry 5 billion
2016 Microsoft LinkedIn 28.1 billion
TABLE 12–2 Selected List of Major Acquisitions Over the Years
Mergers and acquisitions may necessitate brand name changes, but other factors may also prompt name changes including brand divestitures, leveraged buyouts, or the sale of assets. When Andersen Consulting was allowed to separate from Arthur Andersen following an arbitrator’s rul- ing in 2000, it was required to stop using its old name by the end of the year. After an extensive naming search and rebranding project, the firm was renamed “Accenture”—an employee sugges- tion meant to connote an “accent on the future.” Having a new name proved especially fortuitous when Arthur Andersen was convicted of obstruction of justice in 2002 in the wake of the Enron scandal and ceased to operate as a business. Some residual negative perceptions from Arthur Andersen would likely have transferred to the Andersen Consulting brand.
Significant shifts in corporate strategy may necessitate name changes. U.S. Steel changed its name to USX to downplay the importance of steel and metal in its product mix. Allegheny Airlines changed its name to USAir when it moved from being a regional to a national carrier, and then later to USAirways when it wanted to be seen as an international carrier. Finally, the desire to create distance from scandal can also motivate a name change. A new name cannot repair a company’s damaged reputation, though, and experts advise against making a switch in the midst of bad publicity; otherwise the stigma and suspicion will follow the new name. The Lance Armstrong Foundation changed its name to the Livestrong Foundation to distance itself from its disgraced cyclist former ambassador.
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 457
Guidelines. Although renaming can yield growth opportunities, experts recommend a cautious approach. Name changes are typically complicated, time-consuming, and expensive, and firms should undertake them only when compelling marketing or financial considerations prevail, and a proper supporting marketing program can be put into place. A new corporate name cannot hide product or other deficiencies, and it requires extensive legal and URL vetting to make sure it is available and appropriate. Rebranding campaigns also usually forfeit the brand recognition and loyalty attached to the old name.
Many of the branding issues we discussed in Chapter 4 are relevant in choosing or changing
a corporate name. Given the corporate branding strategy and marketing objectives, firms should
evaluate candidate names in terms of memorability, meaningfulness, likability, protectability,
adaptability, and transferability. If the consumer market is the primary objective, the name may
reflect or be suggestive of certain product characteristics, benefits, or values. Consolidated Foods
Corporation switched to Sara Lee Corporation, Blue Ribbon Sports changed its name to Nike,
Starbucks Coffee to Starbucks, and Apple Computers to Apple. Alternatively, a name change can
help clarify strategic direction for a company. In 2015, Google announced that it would reorganize
under a parent company called Alphabet that would include all of the holding companies linked to
Google under one entity. This also allowed Google to separate the management of its core busi-
nesses from the new ventures that it was launching.
Once the firm has chosen the new name, the substantial task of introducing it to employees,
customers, suppliers, investors, and the public begins—often with the launch of a new marketing
campaign and the opportunity to work with a blank canvas. Corporate rebranding is a time- and
resource-intensive process that demands a company’s total commitment to succeed.
It is also important not to move too fast in rebranding. In updating brand architecture in any
way, the goal is to at least preserve if not actually enhance brand equity as much as possible. For
example, when Macy’s acquired May Department Stores and Chicago retailing icon Marshall
Field’s in August 2005, its rebranding efforts did not resonate well with its customers. Initial reac-
tion to rebranding is almost always negative, simply because people resist change. Sometimes,
however, an especially harsh reception will cause a firm to abandon a new name. Gap tried to
change its logo to give it a modern look. The new logo was criticized for looking too bland, cheap
and tacky. Within a week, Gap reverted to its original look.
When UAL, the parent company of United Airlines, decided a new name was necessary to
reflect the one-stop travel options that resulted from its acquisitions of Hertz car rental and Westin
and Hilton International hotels, it chose the name “Allegis,” a compound of “allegiance” and “aegis.”
Public reaction was decidedly negative. Critics maintained that the name was difficult to pronounce,
sounded pretentious, and had little connection with travel services. Donald Trump, formerly a major
UAL shareholder, said the new name was “better suited to the next world-class disease.” After six
weeks and $7 million in research and promotion expenditures, the company decided to shed its car
rental and hotel businesses and rename the surviving company United Airlines, Inc.53
Over time, though, if properly chosen and handled, new names gain familiarity and acceptance.
Guidelines that encourage uniformity and consistency in the brand’s appearance and usage help make
the implementation effective; these rules should be part of a revised brand charter (see Chapter 8).
BRAND ARCHITECTURE GUIDELINES Brand architecture is a classic example of the art and science of marketing. It is important to
establish rules and conventions and be disciplined and consistent. Yet, at the same time, it is also
important to be flexible and creative. There rarely are pure solutions to a brand architecture chal-
lenge, and no uniform agreement exists on the one type of branding strategy that all firms should
adopt for all products. Even within a firm, hybrid strategies often prevail, and marketers may adopt
various branding strategies for different products.
For example, although Miller has long used its name across its different types of beer, with
various sub-brands like Miller High Life, Miller Lite, and Miller Genuine Draft, it carefully
branded its no-alcohol beer substitute as Sharp’s, its ice beer as Icehouse, and its low-priced beer
as Milwaukee’s Best, with no overt Miller identification. The assumption was that the corporate
family brand name would not be relevant to or valued by the target market in question.
The brand hierarchy may not be symmetric. Corporate objectives, consumer behavior, or
competitive activity may sometimes dictate significant deviations in branding strategy and the
way the brand hierarchy is organized for different products or for different markets.
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458 PART V • GROWING AND SUSTAINING BRAND EQUITY
Brand elements may receive more or less emphasis, or not be present at all, depending on the particular products and markets. For example, in an organizational market segment where the DuPont brand name may be more valuable, that element might receive more emphasis than associated sub- brands. In appealing to a consumer market segment, a sub-brand such as Teflon may be more mean- ingful; thus, it receives relatively more emphasis when DuPont is targeting that market.
In evaluating a brand architecture strategy, we should ask a number of questions, such as:
• For the brand portfolio, do all brands have defined roles? Do brands collectively maximize coverage and minimize overlap?
• For the brand hierarchy, does the brand have extension potential? Within the category? Out- side the category? Is the brand overextended?
• What positive and negative brand equity implications will transfer from the parent brand to indi- vidual products? What feedback exists from the individual products to the parent brands in turn?
• What profit streams result from different branding arrangements? How much revenue does each brand generate? At what cost? What other cross-selling opportunities exist between brands?
In answering these questions and in devising and implementing the optimal brand architecture strategy, marketers should keep the following five guidelines in mind.
1. Adopt a strong customer focus. Recognize what customers know and want, and how they will behave.
2. Create broad, robust brand platforms. Strong umbrella brands are highly desirable. Maximize synergies and flow.
3. Avoid overbranding and having too many brands. For example, high-tech products are often criticized for branding every ingredient, so the overall effect is like a NASCAR race car with logos and decals everywhere.
4. Selectively employ sub-brands. Sub-brands can communicate relatedness and distinctiveness and are a means of complementing and strengthening brands.
5. Selectively extend brands. As Chapter 13 explains, brand extensions should establish new brand equity and enhance existing brand equity.
6. Ensure brand acquisitions mesh well with current brand architecture. Sudden efforts to rebrand an acquisition could have negative consequences which may result in loss of customers.
REVIEW
A key aspect of managing brand equity is adopting the proper branding strategy. Brand names of products typically consist of a combination of different names and other brand elements. A brand architecture strategy for a firm identifies which brand elements a firm chooses to apply across the various products or services it sells. Several tools aid in developing a brand architecture strategy. Combining the brand–product matrix, the brand portfolio, and the brand hierarchy with customer, company, and competitive considerations can help a marketing manager formulate the optimal brand architecture strategy.
The brand–product matrix is a graphical representation of all the firm’s brands and products, with brands as rows and the corresponding products as columns. The rows represent brand–prod- uct relationships and capture the firm’s brand extension strategy. Marketers should judge potential extensions by how effectively they leverage existing brand equity to a new product, as well as how effectively the extension, in turn, contributes to the equity of the existing parent brand. The col- umns of the matrix represent product–brand relationships and capture the brand portfolio strategy in terms of the number and nature of brands to be marketed in each category.
We characterize a brand architecture strategy according to its breadth in terms of brand–prod- uct relationships and brand extension strategy, and its depth in terms of product–brand relation- ships and the brand portfolio or mix. Breadth describes the product mix and which products the firm should manufacture or sell. Depth deals with the brand portfolio and the set of all brands and brand lines that a particular seller offers.
A firm may offer multiple brands in a category to attract different—and potentially mutu- ally exclusive—market segments. Brands also can take on very specialized roles in the portfolio:
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 459
DISCUSSION QUESTIONS
1. Pick a company. As completely as possible, characterize its brand portfolio and brand hier- archy. How would you improve the company’s branding strategies?
2. How do technology companies leverage their brand name, and what key characteristics of their brand architecture do they typically follow? For example, contrast the brand architecture of Google and Yahoo! over the years.
3. Pick your favorite clothing brand. What brand extension opportunities can you identify for it? Which, according to you, would fail?
as flanker brands to protect more valuable brands, as low-end entry-level brands to expand the customer franchise, as high-end prestige brands to enhance the worth of the entire brand line, or as cash cows from which to milk all potentially realizable profits. Companies must be careful to understand exactly what each brand should do for the firm and, more important, what they want it to do for the customer.
A brand hierarchy reveals an explicit ordering of all brand names by displaying the number and nature of common and distinctive brand name elements across the firm’s products. By cap- turing the potential branding relationships among the different products sold by the firm, a brand hierarchy graphically portrays a firm’s branding strategy. One simple representation of possible brand elements, and thus, of potential levels of a brand hierarchy, is (from top to bottom): corpo- rate (or company) brand, family brand, individual brand, and modifier.
In designing a brand hierarchy, marketers should define the number of different levels of brands (generally two or three) and the relative emphasis that brands at different levels will receive when combined to brand any one product. One common strategy to brand a new product is to create a sub-brand, combining an existing company or family brand with a new individual brand. When marketers use multiple brand names, as with a sub-brand, the relative visibility of each brand element determines its prominence. Brand visibility and prominence will depend on factors such as the order, size, color, and other aspects of the brand’s physical appearance. To provide structure and content to the brand hierarchy, marketers must make clear to consumers the specific means by which a brand applies across different products and, if different brands are used for different products, the relationships among them.
In designing the supporting marketing program in the context of a brand hierarchy, marketers must define the desired awareness and image at each level of the brand hierarchy for each product. In a sub-branding situation, the desired awareness of a brand at any level will dictate the relative prominence of the brand and the extent to which associations linked to the brand will transfer to the product. In terms of building brand equity, we should link associations at any one level based on principles of relevance and differentiation. In general, we want to create associations relevant to as many brands nested at the level below as possible and to distinguish any brands at the same level.
Corporate or family brands can establish a number of valuable associations to differentiate the brand, such as common product attributes, benefits, or attitudes; people and relationships; programs and values; and corporate credibility. A corporate image will depend on a number of factors, such as the products a company makes, the actions it takes, and the manner in which it communicates to consumers. Communications may focus on the corporate brand in the abstract or on the different products making up the brand line. Any corporate name changes and rebrand- ing efforts need to be done carefully. In a brand acquisition or merger context, name changes can result in a sudden loss of brand equity. This is true of customers and also investors who tend to pay attention (and accordingly penalize brands) due to the risks inherent in such name changes that take place after an acquisition.
An area of increasing importance for many brands is corporate social responsibility. Firms are becoming more aware of the environmental, economic, and social impact of their words and actions. Many now employ cause-marketing programs designed to align their brands with a cause of importance to their customers. Many consumers are also becoming much more aware of the environmental aspect of the products and services of a firm and how they are produced and disposed.
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460 PART V • GROWING AND SUSTAINING BRAND EQUITY
4. What are some of the product strategies and communication strategies that General Motors could use to further enhance the level of perceived differentiation between its divisions? How can online digital marketing and social media be utilized to strengthen the distinctions across brands within a particular portfolio?
5. Identify a company that has organized its brand architecture using multiple levels in the hierarchy. Review the design principles summarized in Table 12-1, and describe whether the brand architecture successfully follows these design principles. If not, how would you improve the brand architecture?
6. Scan recent news stories for an announcement concerning an acquisition of a brand. Provide a justification for the acquisition from the acquirer’s standpoint. Describe pros and cons of the acquisition.
7. Consider the companies listed in Branding Brief 12-3 as having strong corporate reputa- tions. By examining their Web sites, can you determine why they have such strong corporate reputations?
Corporate Social Responsibility and Brand Strategy
In recent years, a key initiative that many firms have embraced
is the rise of corporate social responsibility (CSR). Fortune 500
companies in the United States and United Kingdom are spend-
ing more than $15 billion on corporate social responsibility ini-
tiatives.54 Many companies—such as Google, Microsoft, Oracle,
Merck, Johnson & Johnson—are particularly well-known for their
CSR activities. CSR activities can increase consumers’ preferences
for a firm’s goods by providing a signal of quality, and it can also
create a halo effect that consumers value.55 This has significant
implications for corporate brand image building as well. However,
before we begin to explore these implications, it is worth defining
what corporate social responsibility is.
At the broadest level, CSR has been defined as the impact of
business behavior on society.56 More specifically, CSR is defined
as “an organization’s obligation to maximize its positive impact
and minimize its negative impact on society.”57 Thus, CSR activi-
ties are broadly defined and encompass several related activities
including cause-related marketing, green marketing, sustainabil-
ity, etc. Many reasons for engaging in CSR have been proposed
previously. Globally, a 2015 Nielsen report suggested that 66
percent are willing to spend more on a brand which engages in
sustainability efforts and 73 percent of millennials were willing
to spend on products engaging in corporate social responsibility
efforts.58 Some reasons why CSR activities improve brand percep-
tions are given in the following list:
• Increasing Legitimacy. CSR provides firms with legitimacy in
consumers’ eyes. Consumers prefer to interact with firms who
have high ethical and moral standards, and brands that incorpo-
rate cause marketing are rewarded with greater awareness and
consideration. For example, Tide detergent incorporated cause
marketing in its “Loads of Hope” program, which was meant
to raise funds for disaster relief. For example, in the wake of
Hurricane Katrina, Tide helped provide loads of clean laundry to
hundreds of New Orleans residents. Tide has expanded the pro-
gram to help in more than 20 natural disasters globally by 2017.
The Tide Loads of Hope Clothing Drive helped collect, renew,
and donate clothing to people in local communities, generat-
ing considerable positive publicity for the Tide detergent and
strengthening the brand’s perceptions in consumers’ eyes.59
• CSR could affect multiple dimensions of credibility, because
consumers may think of a firm willing to invest in CSR as car-
ing more about customers and being more dependable than
CORPORATE SOCIAL RESPONSIBILITY AND BRAND STRATEGY
BRAND FOCUS 12.0
Tide’s “Loads of Hope” program
has helped collect, renew, and
donate clothing to people in local
communities, generating positive
publicity for the Tide brand.
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 461
other firms, at least in a broad sense, as well as being likable
for doing the right things. Whirlpool generated much goodwill
with its “More Than Houses” cause program with Habitat for
Humanity, in which it donated a range and refrigerator for
each new home built. In 16 years, the program has donated
more than $85 million; has more than 8,000 company volun-
teers; and has helped more than 100,000 families.60
• Building brand awareness: Because of the nature of the
brand exposure, CSR programs can be a means of improv-
ing recognition for a brand, although not necessarily recall.
Like sponsorship and other indirect forms of brand-building
communications, most CSR programs may be better suited
to increasing exposure to the brand rather than to tying the
brand to specific consumption or usage situations, because
it can be difficult or inappropriate to include product-related
information. At the same time, repeated or prominent expo-
sure to the brand as a result of the CSR program can facilitate
brand recognition.
• Enhancing brand image: Because most CSR programs do not
include much product-related information, we would not
expect them to have much impact on more functional, perfor-
mance-related considerations. On the other hand, we can link
two types of abstract or imagery-related associations to a brand
via CSR: user profiles—CSR may allow consumers to develop
a positive image of brand users to which they also may aspire
in terms of being kind, generous, and doing good things; and
personality and values—CSR could clearly bolster the sincerity
dimension of a brand’s personality such that consumers would
think of the people behind the brand as caring and genuine.
• Evoking brand feelings: Two categories of brand feelings that
seem particularly applicable to CSR are social approval and self-
respect. In other words, CSR may help consumers justify their
self-worth to others or to themselves. CSR programs may need
to provide consumers with external symbols to explicitly adver-
tise or signal their affiliation to others—for example, bumper
stickers, ribbons, buttons, and T-shirts. They can also give people
the notion that they are doing the right thing and should feel
good about themselves for having done so. External symbols in
this case may not be as important as the creation of “moments
of internal reflection,” during which consumers are able to
experience these feelings. Communications that reinforce the
positive outcomes associated with the cause program—and
how consumer involvement contributed to that success—could
help trigger these types of experiences. To highlight the con-
sumer contribution, it may be necessary to recommend certain
actions or outcomes such as having consumers donate a certain
percentage of income or a designated amount.
• Creating a sense of brand community: CSR and a well-chosen
cause can serve as a rallying point for brand users and a means
for them to connect to or share experiences with other con-
sumers or employees of the company itself.61 One place where
communities of like-minded users exist is online. Marketers
may be able to tap into the many close-knit online groups that
have sprung up around cause-related issues (for instance, med-
ical concerns such as Alzheimer’s disease, cancer, and autism).
The brand might even serve as the focal point or ally for these
online efforts to be seen in a more positive light. One CSR
campaign which went viral is the ALS Ice Bucket Challenge.
ALS ICE BUCKET CHALLENGE
The Ice Bucket Challenge was a campaign involving a unique activity of the dumping of a bucket of ice and water over a person’s head.
This campaign was conducted in 2015 (and also 2016) to promote awareness of the disease amyotrophic lateral sclerosis (ALS, also
known as motor neuron disease and in the United States as Lou Gehrig’s disease) and encourage donations to research. In mid-2014, the
Ice Bucket Challenge was a viral sensation on social media, and many people, celebrities, politicians, and athletes were posting videos
of themselves online and on TV participating in the event. As noted in an article in The New York Times, people shared more than 1.2
million videos on Facebook between June 1 and August 13 and mentioned the phenomenon more than 2.2 million times on Twitter
between July 29 and August 17. Within weeks of the challenge going viral, The New York Times reported that the ALS Association had
received $41.8 million in donations from more than 739,000 new donors from July 29 until August 21, more than double the $19.4
million the association received during the year that ended January 31, 2013. This case illustrates the impact of social media in helping
with socially relevant causes, which may provide valuable insights for companies engaged in CSR initiatives as well.
The ALS “Ice Bucket Challenge” helped raise more that $40 million in donations
and demonstrates the important role of social media in building awareness.
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462 PART V • GROWING AND SUSTAINING BRAND EQUITY
• Eliciting brand engagement: Participating in a cause-related
activity as part of a CSR program for a brand is certainly one
means of eliciting active engagement. As part of any of these
activities, customers themselves may become brand evange-
lists and ambassadors and help communicate about the brand
and strengthen the brand ties of others. A CSR program of
strategic volunteerism, whereby corporate personnel volun-
teer their time to help administer the nonprofit program,
could actively engage consumers with both the cause and
the brand.
Perhaps the most important benefit of cause-related mar-
keting is that by humanizing the firm, it may help consumers
develop a strong, unique bond with the firm that transcends
normal marketplace transactions. A striking success story is
McDonald’s, whose franchises have long been required to stay
close to their local communities. Ronald McDonald House Chari-
ties provides comfort and care to sick children and their fami-
lies by supporting around 365 Ronald McDonald Houses and
50 Ronald McDonald Care Mobiles in communities around the
world and by making grants to other not-for-profit organiza-
tions whose programs help children in need. Ronald McDonald
Houses effectively leverage the company’s Ronald McDonald
character and its identification with children to concretely sym-
bolize the firm’s “do-good” efforts. This well-branded cause
program enhances McDonald’s reputation as caring and con-
cerned for customers.
Designing Cause-Marketing Programs
Cause marketing comes in many forms related to education,
health, the environment, the arts, and so on. Some firms have
used cause marketing very strategically to gain a marketing
advantage.62 Toyota has run corporate advertising for years—
most recently its “Moving Forward” campaign—showing it has
roots in local U.S. communities. For Toyota, this campaign may
go beyond cause marketing to become a means to help create a
vital point-of-parity with respect to domestic car companies on
“country of origin.”
A danger is that the promotional efforts behind a cause-
marketing program could backfire if cynical consumers question
the link between the product and the cause and see the firm
as self-serving and exploitive as a result. To realize brand equity
benefits, firms must brand their cause-marketing efforts in the
right manner. In particular, consumers must be able to make some
kind of connection from the cause to the brand.63 Alternatively,
there is a chance that companies are seen as hypocritical if their
CSR efforts contradict with other negative publicity that the com-
pany is eliciting for neglecting a particular aspect of either their
employees, community or the environment. Researchers have
studied this idea of corporate hypocrisy64 and showed that its
perceptions of hypocrisy could weaken a company’s CSR efforts
by weakening consumers’ attitudes towards the firm.
The hope is that cause marketing strikes a chord with con-
sumers and employees, improving the image of the company and
energizing these constituents to act. With near-parity products,
some marketers feel that a strongly held point-of-difference on
the basis of community involvement and concern may in some
cases be the best way—and perhaps the only way—to uniquely
position a product.
Green Marketing
A special case of cause marketing is green marketing. Although
environmental issues have long affected marketing practices,
especially in Europe, companies are increasingly recognizing
that the environment is an important issue to their customers
and shareholders and, therefore, to their bottom lines. Research
shows the environment is one of the top five issues that youth
care most about.
One survey revealed that two-thirds of leaders of major
brands believe sustainability initiatives were critical to stay com-
petitive. Firms like Kimberly-Clark, HP, and GE stated that it was
a key priority. “For us now, it’s about looking at the full spectrum
of sustainability,” said one senior executive at Kimberly-Clark,
who noted the firm is seeking to generate 25 percent of 2015
net sales from sustainable products in its fast-moving consumer
goods (FMCG) group.65 Here is what GE is doing.
GE
Despite its industrial past, GE views eco-friendly products as a high-growth business. Spurred by environmental concerns voiced by
its customers, GE and CEO Jeffrey Immelt launched Ecomagination in 2005, the name of which is a play on its ongoing corporate
campaign “Imagination at Work.” The initiative focused on how to effectively and efficiently “create, connect to, and use power
and water” and committed $1.5 billion in annual investment to research and technology into cleaner technologies. Some of its goals
were to double GE revenue from sales of products and services that provide environmental advantages, and to reduce greenhouse gas
emissions and improve the energy efficiency of operations. GE built an Ecomagination advertising campaign that targeted business-
to-business customers, investors, employees, and consumers. In a 2011 letter to investors, customers, and other stakeholders to mark
its progress, the company was able to note these achievements in the first five years of the program:
• $5 billion of clean-tech research and development
• $85 billion in revenue from Ecomagination products and solutions
• 22 percent reduction in greenhouse gas emissions
• 30 percent reduction in water use
• $130 million in energy efficiency savings.
GE also launched a Smart Grid initiative— “a vision for a smarter, more efficient, and sustainable electrical energy grid that GE
technology is helping to bring to life.”66 GE’s Ecomagination and Smart Grid initiatives have transformed the company into one of
the world’s top green brands. By investing millions of dollars in initiatives—such as wind and solar power—the company altered its
reputation and became known as a forward-thinking and transparent company that was able to inspire its external stakeholders (e.g.,
customers, investors) and also its customers.67
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 463
GE’s Smarter Grid Initiative has transformed it into one of the world’s top
brands.
On the corporate side, a host of marketing initiatives
have been undertaken by a wide variety of firms with envi-
ronmental overtones. The auto industry is responding to the
dual motivators of concerned consumers and rising oil prices
by introducing gas-saving and emission-reducing hybrid mod-
els. McDonald’s has introduced a number of well-publicized
environmental initiatives through the years, such as moving
to unbleached paper carry-out bags and replacing polystyrene
foam sandwich clamshells with paper wraps and lightweight
recyclable boxes.
From a branding perspective, however, green marketing pro-
grams have not always been entirely successful.68 What obstacles
have they encountered?
Overexposure and Lack of Credibility. So many
companies have made environmental claims that the public
has sometimes become skeptical of their validity. What does
it mean when a product claims it is organic, fair trade, or eco-
friendly? Government investigations into some green claims,
such as the degradability of trash bags, and media reports of
the spotty environmental track records behind others have
only increased consumers’ doubts. This backlash has led many
consumers to consider environmental claims to be marketing
gimmicks.
Efforts to provide consumers with more information have
sometimes only complicated the situation. Hundreds of different
product labels have been introduced, for instance. Seeking to
serve as an environmental leader, Walmart announced a Sustain-
ability Index in 2009 to grade suppliers and products on a range
of environmental and sustainable factors. The company found it
hard to actually implement such a formal rating, however, and
later announced it was committed only to providing more product
information to consumers.69
The challenge is that producing and consuming products
always requires trade-offs—all products, regardless of how
green they appear or claim to be, affect the environment in
some way. To understand the full environmental impact of any
one product, we need to understand the entire production and
consumption process, from raw material inputs to ultimate
disposal.
And the results of green actions are not always obvious.
Gary Hirshberg, founder and CEO of Stonyfield Farm, notes that
although many see the use of recyclable packaging as environ-
mentally friendly, Stonyfield further reduced its carbon footprint
by switching to yogurt cups that were not recyclable, and meant
to be thrown away. These cups, made from plants that are dis-
posed into landfills, generate far fewer greenhouse gas emissions
than recycled plastic containers.
Similarly, when Patagonia examined the environmental
impact of the fibers in its outdoor apparel lines, it found the
most harmful one was cotton—not petroleum-based synthet-
ics—because growing cotton requires the use of pesticides. The
company switched to organic cotton, but that has its own draw-
backs because it uses so much water. Manufacturing a single pair
of jeans can require 1,200 gallons of water!70
Deciphering environmental claims is thus very tricky. To help
provide some clarity, the U.S. government has stepped in and
demanded that companies be more specific and substantiate envi-
ronmental claims. A recycled claim must specify how much of the
product or package is recycled and whether it is postconsumer
(previously used goods) or preconsumer (manufacturing waste).
The Federal Trade Commission (FTC) is leading the charge, cracking
down on vague, unsubstantiated claims by requiring independent
product testing. For example, firms cannot use the government’s
Energy Star logo on their products unless third-party testing proves
they are more efficient than comparable regular products.71
Consumer Behavior. Like many well-publicized social
trends, corporate environmental awareness is often fairly
complex in reality and does not always fully match public
perceptions. Several studies help put consumer attitudes
toward the environment in perspective.
Although consumers often assert that they would like to
support environmentally friendly products, their behavior doesn’t
always match their intentions.72 In most segments, they appear
unwilling to give up the benefits of other options to choose green
products. For example, some consumers dislike the performance,
appearance, or texture of recycled paper and household products.
Others are unwilling to give up the convenience of disposable
products like diapers.
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464 PART V • GROWING AND SUSTAINING BRAND EQUITY
Poor Implementation. In jumping on the green
marketing bandwagon, many firms initially did a poor job.
Products were poorly designed, overpriced, and inappropri-
ately promoted. Once product quality improved, advertising
sometimes still missed the mark, being overly aggressive
or not compelling. One research study found that assertive
environmental messages were most effective for important
environmental causes; otherwise, a softer touch was more
beneficial.73
Possible Solutions. The environmental movement in
Europe and Japan has a longer history and firmer footing than
in the United States. In Europe, many of Procter & Gamble’s
basic household items, including cleaners and detergents, are
available in refills that come in throw-away pouches. P&G says
U.S. customers probably would not take to the pouches. In the
United States, firms continue to strive to meet the wishes of
consumers concerning the environmental benefits of their prod-
ucts, while maintaining necessary profitability.
NOTES
1. George Anderson, “Starbucks Knows How to Fail Fast, Just Like Amazon,” Forbes, January 18, 2017, https://www.forbes.com/sites/retailwire/2017/01/18/ starbucks-knows-how-to-fail-fast-just-like-amazon/ #5529eaba7ea2.
2. Jim Stengel, Grow: How Ideals Power Growth and Profitability at the World’s Greatest Companies (New York: Crown Business, 2011); WARC Staff, “Ideals Key for Top Brands,” WARC, January 4, 2012, https://www .warc.com/NewsAndOpinion/news/Ideals_key_for_top_ brands/d4ce6d0c-1461-4860-bc28-597ea599a6d1, Data sourced from Financial Times; additional content by Warc staff; Jack Neff, “Just How Well-Defined Is Your Brand’s Ideal?,” Advertising Age, January 16, 2012.
3. Neil A. Morgan and Lopo Leotte do Rego, “Brand Port- folio Strategy and Firm Performance,” Journal of Mar- keting 73, no. 1 (January 2009): 59–74.
4. Bharat N. Anand and Ron Shachar, “Brands as Beacons: A New Source of Loyalty to Multiproduct Firms,” Jour- nal of Marketing Research 41 (May 2004): 135–150.
5. Philip T. Kotler and Kevin Lane Keller, Marketing Management, Pearson; Patrick Barwise and Thomas Robertson, “Brand Portfolios,” European Management Journal 10, no. 3 (September 1992): 277–285.
6. For a methodological approach for assessing the extent and nature of cannibalization, see Charlotte H. Mason and George R. Milne, “An Approach for Identifying Cannibalization within Product Line Extensions and Multi-brand Strategies,” Journal of Business Research 31, no. 2–3 (1994): 163–170. For an analytical expo- sition, see Preyas S. Desai, “Quality Segmentation in Spatial Markets: When Does Cannibalization Affect Product Line Design,” Marketing Science 20, no. 3 (Summer 2001): 265–283.
7. Jack Trout, Differentiate or Die: Survival in Our Era of Killer Competition (New York: Wiley, 2000).
8. Patricia Sellers, “P&G: Teaching an Old Dog New Tricks,” Fortune, May 31, 2004, 166–172; Jenni- fer Reingold, “CEO Swap: The $79 Billion Plan,” Fortune, November 20, 2009, http://archive.fortune .com/2009/11/19/news/companies/procter_gamble_ lafley.fortune/index.htm.
9. Mark Ritson, “Should You Launch a Fighter Brand?,” Harvard Business Review 87 (October 2009): 65–81.
10. Nick Hatler, “Wyndham Buying Chanhassen-Based AmericInn Hotel Brand for $170M,” Minneapolis/ St. Paul Business Journal, July 18, 2017, https://www
. bizjournals.com/twincities/news/2017/07/18/ wyndham- buying-chanhassen-based-americinn-hotel.html.
11. Mike Wehner, “Here’s How Many People Still Rent Netflix DVDs By Mail, and Why Netflix Loves It,” Boy Genius Report, January 20, 2017, http://bgr .com/2017/01/20/netflix-dvd-rentals-subscribers/.
12. Paul W. Farris, “The Chevrolet Corvette,” Case UVA- M-320 (Charlottesville, VA: Darden Graduate Business School Foundation, University of Virginia, 1995).
13. Zeynep Gurhan-Canli, “The Effect of Expected Variability of Product Quality and Attribute Uniqueness on Family Brand Evaluations,” Journal of Consumer Research 30, no. 1 (June 2003): 105–114.
14. Much of this section—including examples—is based on an excellent article by Peter H. Farquhar, Julia Y. Han, Paul M. Herr, and Yuji Ijiri, “Strategies for Leveraging Master Brands,” Marketing Research 4, no. 3 (September 1992): 32–43.
15. Peter H. Farquhar, Julia Y. Han, Paul M. Herr, and Yuji Ijiri, “Strategies for Leveraging Master Brands,” Mar- keting Research 4, no. 3 (September 1992): 32–43.
16. “Statistic Brain Research Company, “Nike Company Statistics 2016,” http://www.statisticbrain.com/nike- company-statistics/, accessed July 27, 2018.
17. Drew Harwell, “Sneaker Wars: How Basketball Shoes Became a Billion-Dollar Business,” The Washington Post, March 17, 2015, https://www.washingtonpost .com/news/business/wp/2015/03/17/how-sneaker- kings-are-fighting-to-win-the-war-for-americas- feet/?utm_term=.f0871fcda934.
18. “A-Series Lighting Control Panel,” A-Series Lighting Control Panel | GE Industrial Solutions, July 13, 2017,
19. Tulin Erdem and Baohung Sun, “An Empirical Investi- gation of the Spillover Effects of Advertising and Sales Promotions in Umbrella Branding,” Journal of Market- ing Research 39, no. 4 (November 2002): 408–420.
20. Ben Fritz, “Dish Network Wins Bidding for Assets of Bankrupt Blockbuster,” Los Angeles Times, April 7, 2011, http://articles.latimes.com/2011/apr/07/business/ la-fi-ct-dish-blockbuster-20110407.
21. Emily Nelson, “Too Many Choices,” The Wall Street Journal, April 20, 2001, B1, B4.
22. Simon Eskow, “What Is SKU Rationalization and Why Is Everybody Doing It?,” Cin7, November 3, 2016, https:// www.cin7.com/sku-rationalization-everybody-doing/.
23. Deborah Roedder John, Barbara Loken, and Christo- pher Joiner, “The Negative Impact of Extensions: Can
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 465
Flagship Products Be Diluted?,” Journal of Marketing 62, no. 1 (January 1998): 19–32.
24. Georg Szalai, “Viacom Unveils Focus on Flagship Brands, ‘Deeper Integration’ of Paramount Pictures,” The Hollywood Reporter, February 9, 2017, http:// www.hollywoodreporter.com/news/viacom-unveils- focus-flagship-networks-deeper-integration-paramount- pictures-973795.
25. Derrick Daye and Brad VanAuken, “Creating the Brand Halo Effect,” Branding Strategy Insider, September 21, 2009, www.brandingstrategyinsider.com/2009/09/ building-a-brand-halo-effect.html#.W1d_xGevKLU.
26. Guido Berens, Cees B.M. van Riel, and Gerrit H. van Bruggen, “Corporate Associations and Consumer Product Responses: The Moderating Role of Corpo- rate Brand Dominance,” Journal of Marketing 69, no. 3 (July 2005): 35–48.
27. France Leclerc, Christopher K. Hsee, and Joseph C. Nunes, “Narrow Focusing: Why the Relative Position of a Good Within a Category Matters More Than It Should,” Marketing Science 24, no. 2 (Spring 2005): 194–206.
28. “DuPont: Corporate Advertising,” Case 9-593-023 (Boston: Harvard Business School, 1992); John B. Frey, “Measuring Corporate Reputation and Its Value,” pre- sentation given at Marketing Science Conference, Duke University, March 17, 1989.
29. Charles J. Fombrun, Reputation (Boston: Harvard Busi- ness School Press, 1996).
30. Several thoughtful reviews of corporate images are available. See, for example, James R. Gregory, Market- ing Corporate Image: The Company as Your Number One Product (Lincolnwood, IL: NTC Business Books, 1999); Grahame R. Dowling, Creating Corporate Repu- tations: Identity, Image and Performance (Oxford, UK: Oxford University Press, 2001).
31. Kevin Lane Keller and David A. Aaker, “The Effects of Sequential Introduction of Brand Extensions,” Jour- nal of Marketing Research 29, no. 1 (February 1992): 35–50. See also Thomas J. Brown and Peter Dacin, “The Company and the Product: Corporate Associations and Consumer Product Responses,” Journal of Market- ing 61, no. 1 (January 1997): 68–84.
32. Masashi Kuga, “Kao’s Strategy and Marketing Intel- ligence System,” Journal of Advertising Research 30 (April/May 1990): 20–25.
33. John Williams, “British Airways Launch Flying Start in Partnership with Comic Relief,” UK Business News, February 16, 2011; “BA and Comic Relief Launch Global Children’s Charity,” Travel Weekly, June 30, 2010; http://www.ba-flyingstart.com/; https://www .comicrelief.com/partners/british-airways-flying-start, accessed November 20, 2018.
34. R.L. Team, British Airways Remains UK’s Favou- rite Consumer Brand,” Research Live, July 19, 2017, https://www.research-live.com/article/news/british- airways-remains-uks-favourite-consumer-brand/ id/5019143.
35. Tulun Erdem and Joffre Swait, “Brand Credibility, Brand Consideration and Choice,” Journal of Consumer Research 31, no. 1 (June 2004): 191–198; Marvin E. Goldberg and Jon Hartwick, “The Effects of Adver- tiser Reputation and Extremity of Advertising Claim
on Advertising Effectiveness,” Journal of Consumer Research 17, no. 2 (September 1990): 172–179.
36. Majken Schultz, Mary Jo Hatch, and Mogens Holten Larsen, eds., The Expressive Organization: Linking Identity, Reputation, and the Corporate Brand (New York: Oxford University Press, 2000); Mary Jo Hatch and Majken Schultz, “Are the Strategic Stars Aligned for Your Corporate Brand?” Harvard Business Review (February 2001): 129–134; Mary Jo Hatch and Majken Schultz, Taking Brand Initiative: How Companies Can Align Strategy, Culture, and Identity Through Corporate Branding (San Francisco, CA: Jossey-Bass, 2008). See also James Gregory, Leveraging the Corporate Brand (Chicago: NTC Press, 1997); Lynn B. Upshaw and Earl L. Taylor, The Masterbrand Mandate (New York: John Wiley & Sons, 2000).
37. For some broad discussion, see Bhaskar Chakravorti, Special Issue on Stakeholder Marketing, Journal of Public Policy and Marketing 29, no. 1 (April 2010): https:// journals.sagepub.com/doi/full/10.1509/jppm.29.1.97, accessed November 20, 2018.
38. Laurel Cutler, vice-chairman of FCB/Leber Katz Partners, a New York City advertising agency, quoted in Susan Caminit, “The Payoff from a Good Reputation,” Fortune, March 6, 1995, 74. See also Michael E. Porter and Mark R. Kramer, “The Competitive Advantage of Corporate Philanthropy,” Harvard Business Review 80 (December 2002): 56–69; Steve Hoeffler, Paul Bloom, and Kevin Lane Keller, “Understanding Stakeholder Responses to Corporate Citizenship Initiatives: Managerial Guidelines and Research Directions,” Journal of Public Policy & Management 29, no. 1 (Spring 2010): 78–88; Frank Huber, Frederik Meyer, Johannes Vogel, and Stefan Vollman, “Corporate Social Performance as Antecedent of Consumer’s Brand Perception,” Journal of Brand Management 19, no. 3 (December 2011): 228–240.
39. Hill & Knowlton, Return on Reputation Study, March 2006.
40. Tillmann Wagner, Richard J. Lutz, and Barton A. Weitz, “Corporate Hypocrisy: Overcoming the Treat of Inconsistent Corporate Social Responsibility Perceptions,” Journal of Marketing 73, no. 6 (Novem- ber 2009): 77–91.
41. Raj Sisodia, David B. Wolfe, and Jag Sheth, Firms of Endearment: How World-Class Companies Profit from Passion and Purpose (Upper Saddle River, NJ: Wharton School Publishing, 2007); John A. Quelch and Kath- erine E. Jocz, Greater Good: How Good Marketing Makes for Better Democracy (Boston, MA: Harvard Business School Press, 2007).
42. TOMS.com, LLC, “What We Give,” https://www.toms .com/what-we-give, accessed November 20, 2018. TOMS.com, LLC “Gift of Shoes,” https://www.toms .com/what-we-give-shoes, accessed November 20, 2018.
43. For a review of current and past practices, see David W. Schumann, Jan M. Hathcote, and Susan West, “ Corporate Advertising in America: A Review of Pub- lished Studies on Use, Measurement, and Effectiveness,” Journal of Advertising 20, no. 3 (September 1991): 35–56. See also Zeynep Gürhan-Canli and Rajeev Batra, “When Corporate Image Affects Product Evaluations: The Moderating Role of Perceived Risk,” Journal of Marketing Research 41, no. 2 (May 2004): 197–205.
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466 PART V • GROWING AND SUSTAINING BRAND EQUITY
44. “Philips Unveils New Brand Direction Centered Around Innovation and People,” Philips, November 13, 2013, https://www.usa.philips.com/a-w/about/news/archive/ standard/news/press/2013/20131113-Philips-unveils- new-brand-direction-centered-around-innovation-and- people.html.
45. “Sense and Simplicity: Philips Is Spending 80 Million [Euro] on a Rebranding Strategy That Will Emphasize Simplicity and Give Consumers What They Want,” ERT Weekly, September 23, 2004; John Zerio, “Philips: Sense and Simplicity,” Thunderbird Case # A12-07-013; accessed February 27, 2012, www.philips.com.
46. David M. Bender, Peter Farquhar, and Sanford C. Schulert, “Growing from the Top: Corporate Advertising Nourishes the Brand Equity from Which Profits Sprout,” Marketing Management 4, no. 4 (1996): 10–19; Nicholas Ind, “An Integrated Approach to Corporate Branding,” Journal of Brand Management 5, no. 5 (1998): 323–329; Cees B. M. Van Riel, Natasha E. Stroker, and Onno J. M. Maathuis, “Measuring Corporate Images,” Corporate Reputation Review 1, no. 4 (1998): 313–326.
47. Gabriel J. Biehal and Daniel A. Shenin, “Managing the Brand in a Corporate Advertising Environment,” Journal of Advertising 28, no. 2 (1998): 99–110.
48. Mary C. Gilly and Mary Wolfinbarger, “Advertising’s Internal Audience,” Journal of Marketing 62, no. 1 (January 1998): 69–88.
49. Bruce Horovitz, “General Mills Cereals Go Totally Whole Grain,” USA Today, September 30, 2004; Loraine Heller, “General Mill’s Whole Grain Cereal Conversion in Retrospect,” FoodNavigator-USA, September 19, 2006, www.foodnavigator-usa.com; MPR News, “General Mills Chief Marketing Offi- cer Mark Addicks on How Marketing Can Make a Better World,” January 25, 2011, https://www .mprnews .org/story/2011/01/20/bright-ideas-with- mark-addicks; General Mills, “General Mills Donates 1 Million Servings of Whole Grain,” General Mills, February 10, 2011, https://www.generalmills.com/en/ News/ NewsReleases/Library/2011_archive/February/ GeneralMillsDonatesWholeGrainCereals.
50. Hadley Malcolm, “General Mills to Ax Artificial Flavors from Cereals,” USA Today, June 22, 2015, https://www.usatoday.com/story/money/2015/06/22/ general-mills-artificial-ingredients-cereal/29101165/.
51. Based on information from http://www.chrysler.com and http://www.lancia.de.
52. Richard Ettenson and Jonathan Knowles, “Merg- ing the Brand and Branding the Merger,” MIT Sloan Management Review (Summer 2006): 39–49; Lucinda Shen, “These Are the 12 Biggest Mergers and Acquisi- tions of 2016,” Fortune, June 13, 2016, http://fortune .com/2016/06/13/12-biggest-mergers-and-acquisitions- of-2016/
53. “Allegis: A $7 Million Name Is Grounded,” San Francisco Examiner, June 16, 1987, C9.
54. Alison Smith, “Fortune 500 Companies Spend More Than $15bn on Corporate Responsibility,” Financial Times, October 12, 2014, https://www.ft.com/ content/95239a6e-4fe0-11e4-a0a4-00144feab7de.
55. Elaine Wong, “Tide’s Charitable Makeover,” Adweek, April 10, 2009, http://www.adweek.com/brand- marketing/tides-charitable-makeover-105580/.
56. The Economist, “Corporate Social Responsibility: The Halo Effect,” The Economist, June 25, 2015, https://www.economist.com/news/business/21656218- do-gooding-pol ic ies -he lp- fi rms-when- they- get-prosecuted-halo-effect.
57. Alison Smith, “Fortune 500 Companies Spend More Than $15bn on Corporate Responsibility,” Financial Times, October 12, 2014, https://www.ft.com/ content/95239a6e-4fe0-11e4-a0a4-00144feab7de.
58. Sarah Landrum, “Millenials Driving Brands to Socially Responsible Marketing,” Forbes, March 17, 2017, https://www.forbes.com/sites/sarahlandrum/2017/ 03/17/millennials-driving-brands-to-practice-socially- responsible-marketing/#70305f634990.
59. Lee E. Preston, “Business and Public Policy,” Journal of Management 12, no. 2 (1986): 261–275.
60. William M. Pride and O. C. Ferrell, Marketing ( International edition). (1995).
61. Matt Walker, “4 Ways Agencies Can Add Meaning to Corporate Social Responsibility Programs,” Adweek, August 30, 2016, http://www.adweek.com/ brand-marketing/4-ways-agencies-can-add-meaning- corporate-social-responsibility-programs-173191/.
62. Leon Kaye, “Whirlpool and Habitat for Humanity Partnership: True Corporate Giving,” TriplePundIt, April 14, 2015, http://www.triplepundit.com/special/ disrupting-short-termism/whirlpool-and-habitat-for- humanity-partnership-true-corporate-giving/.
63. T. Wagner, R. J. Lutz, and B. A. Weitz, “Corporate Hypocrisy: Overcoming the Threat of Inconsistent Cor- porate Social Responsibility Perceptions,” Journal of Marketing 73, no. 6 (2009): 77–91.
64. Alexander Haldermann, “GE’s Ecomagination Turns 10: How a Brand Can Be a Driver for Change,” Huffing- ton Post, http://www.huffingtonpost.com/dr-alexander- haldemann/startup-slideshow-test_b_7181672.html, September 16, 2016.
65. Sankar Sen, Shuili Du, and C. B. Bhattacharya, “Build- ing Relationships through Corporate Social Responsibil- ity,” in Handbook of Brand Relationships, eds. Joseph Priester, Deborah MacInnis, and C.W. Park (New York: M. E. Sharp, 2009): 195–211; C.B. Bhattacharya, San- kar Sen, and Daniel Korschun, “Using Corporate Social Responsibility to Win the War for Talent,” MIT Sloan Management Review 49 (January 2008): 37–44; Xuem- ing Luo and C. B. Bhattacharya, “Corporate Social Responsibility, Customer Satisfaction, and Market Value,” Journal of Marketing 70, no. 4 (October 2006): 1–18; Pat Auger, Paul Burke, Timothy Devinney, and Jor- dan J. Louviere, “What Will Consumers Pay for Social Product Features?” Journal of Business Ethics 42, no. 3 (February 2003): 281–304; Dennis B. Arnett, Steve D. German, and Shelby D. Hunt, “The Identity Salience Model of Relationship Marketing Success: The Case of Nonprofit Marketing,” Journal of Marketing 67, no. 2 (April 2003): 89–105; C. B. Bhattacharya and Sankar Sen, “Consumer-Company Identification: A Framework for Understanding Consumers’ Relationships with Com- panies,” Journal of Marketing 67, no. 2 (April 2003): 76–88; Sankar Sen and C. B. Bhattacharya, “Does Doing Good Always Lead to Doing Better? Consumer Reactions to Corporate Social Responsibility,” Journal of Market- ing Research 38, no. 2 (May 2001): 225–244; Xiaoli Nan
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CHAPTER 12 • DESIGNING AND IMPLEMENTING BRAND ARCHITECTURE STRATEGIES 467
and Kwangjun Heo, “Consumer Responses to Corporate Social Responsibility (CSR) Initiatives: Examining the Role of Brand-Cause Fit in Cause-Related Marketing,” Journal of Advertising 36, no. 2 (Summer 2007): 63–74.
66. David Kiron, Nina Kruschwitz, Knut Haanaes, Martin Reeves, and Ingrid von Streng Velken, “ Sustainability Nears a Tipping Point,” MIT Sloan Management Review (January 2012): 69–74, https://sloanreview.mit.edu/ projects/sustainability-nears-a-tipping-point/, accessed November 21, 2018.
67. Geoff Colvin, “Grading Jeff Immelt,” Fortune Mag- azine, 163, no. 3 (February 2011): 75–80, http:// archive.fortune.com/magazines/fortune/fortune_ archive/2011/02/28/toc.html, accessed November 21, 2018; Beth Comstock, Ranjay Gulati, and Stephen Liguori, “Unleashing the Power of Marketing,” Har- vard Business Review (October 2010): 90–98, https:// hbr.org/2010/10/unleashing-the-power-of-marketing, accessed November 21, 2018; Bob Sechler, “GE’s ‘Green’ Effort Fails to Strike Investors’ Imagination,” Chicago Tribune, July 6, 2008, 8; Anne Fisher, “Amer- ica’s Most Admired Companies,” Fortune Magazine, March 19, 2007, 88–94, http://archive.fortune.com/mag- azines/fortune/fortune_archive/2007/03/19/8402323/ index.htm, accessed November 21, 2018; Daniel Fisher, “GE Turns Green,” Forbes, August 15, 2005, 80–85, https://www.forbes.com/forbes/2005/0815/080 .html#1b1593ff2389, accessed November 21, 2018; Mark Egan, “Ecomagination Ten Years Later: Proving That Efficiency and Economics Go Hand-in-Hand,” GE Reports, October 29, 2015, https://www.ge.com/reports/ ecomagination-ten-years-later-proving-efficiency-eco- nomics-go-hand-hand/, accessed November 21, 2018.
68. Alexander Haldemann, “GE’s Ecomagination Turns 10: How a Brand Can Be a Driver for Change, Huffington Post, September 16, 2015, updated September 16, 2016, https://www.huffingtonpost.com/dr-alexander- haldemann/startup-slideshow-test_b_7181672.html, accessed November 21, 2018.
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468
After too many
extensions began to
harm its image, Gucci
retrenched and adopted a
more careful approach to
stretching its brand that
met with greater success.
Source: Lou Linwei/Alamy Stock Photo
Learning Objectives
After reading this chapter, you should be able to
1. Define the different types of brand extensions.
2. List the main advantages and disadvantages of brand extensions.
3. Summarize how consumers evaluate extensions and how extensions contribute to parent brand equity.
4. Outline the key assumptions and success criteria for brand extensions.
Introducing and Naming New Products and Brand Extensions13
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 469
NEW PRODUCTS AND BRAND EXTENSIONS As background, first consider the sources of growth for a firm. One useful perspective is Ansoff’s product and market expansion grid, also known as the growth matrix. As in Figure 13-1, we can categorize growth strategies according to whether they rely on existing or new products, and whether they target existing or new customers or markets. Branding Brief 13-1 describes McDonald’s growth strategies along these lines.
Although existing products can further penetrate existing customer markets or push into additional ones (the focus of Chapter 14), new product introductions are often vital to the long-
run success of a firm. A discussion of all the issues in effectively managing the development and
introduction of new products is beyond the scope of this chapter. Here we simply address some
brand equity implications of new products.1
First, we will establish some terminology. When a firm introduces a new product, it has three
approaches for branding it:
1. It can develop a new brand, individually chosen for the new product.
2. It can apply one of its existing brands.
3. It can use a combination of a new brand and an existing brand.
Chapter 12 introduced the concept of brand architecture and described a process by which mar-
keters can develop it. An important part of the process is the introduction of new products to
help a brand grow and achieve its potential. Thus, this chapter considers in more detail the role
of product strategy in creating, maintaining, and enhancing brand equity. Specifically, we will
develop guidelines to improve the introduction and naming of new products and brand extensions.
Let us start with a little historical perspective. For years, firms tended to follow the lead of
Procter & Gamble, Unilever, and other major consumer goods marketers that essentially avoided
introducing any new products using an existing brand name. Over time, tight economic conditions, a
need for growth, and competitive realities forced firms to rethink their “one brand–one product” poli-
cies. Recognizing that brands are among their most valuable assets, many firms have since decided to
leverage that value by introducing a host of new products under some of their strongest brand names.
Many firms seek to build power or mega brands that establish a broad market footprint,
appealing to multiple customer segments with multiple products all underneath one brand
umbrella. Unilever’s Dove brand has made successful forays from its roots in soap into a range
of skin care and body care products, backed by its “Real Beauty” media campaign. At the same
time, marketers are also realizing that too many product variations can be counterproductive, and
ill-advised brand proliferation may actually repel consumers.
We’ve previously learned about the best-practice management of brand extensions. This chapter
begins by describing brand extensions and outlining their advantages and disadvantages. Then, we
present a simple model of how consumers evaluate brand extensions and offer managerial guidelines
for introducing and naming new products and brand extensions. We conclude with a comprehensive
summary of some of the key academic research findings on brand extensions. Brand Focus 13.0
provides a detailed case study of Apple’s brand extension and growth strategies through the years.
PREVIEW
FIGURE 13-1
Ansoff’s Growth Matrix
Market Penetration
Strategy
Product Development
Strategy
Market Development
Strategy
Diversification Strategy
Current Markets
New Markets
Current Products
New Products
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470 PART V • GROWING AND SUSTAINING BRAND EQUITY
Over the last decade, McDonald’s has
faced a challenging marketing environment. A
major challenge has been the growing aware-
ness regarding health issues posed by fast
food which is causing consumers to switch to
healthier food options. Added to this is mar-
ket saturation and economic uncertainty, both
of which have posed additional challenges to
the growth of this brand. To overcome these,
the company has employed a number of dif-
ferent growth strategies that we can classify
using the Ansoff growth matrix. As a result of
these strategies, the company’s financial for-
tunes have largely remained steady, even in the
face of challenges and uncertainties. The brand
has even been credited with producing a “halo
effect”—that is “driving growth for the entire
quick-service restaurant category.” McDonald’s
differentiates itself through cost leadership,
providing value meals for low income families.
Facing fierce competition, McDonald’s continues to provide new
products to match consumer needs as well as focus on cutting
costs through refranchising and cutting SG&A expenses.
Market Penetration
For a long time, McDonald’s increased its market penetration just
by introducing hundreds of new outlets each year. By 2002, mar-
kets had become saturated and sales had slumped. On becoming
CEO in 2004, James Skinner adopted a new corporate motto,
“Better, not bigger.” Rather than trying to grow by adding new
restaurants, McDonald’s would grow by generating greater
returns from the ones it had.
Thus, instead of investing in new real estate, the firm made
huge investments in upgrading the facilities and operations of
existing stores. One important way McDonald’s made it easier for
its customers to spend more money was by expanding to 24-hour
service at many stores. To accommodate the longer hours, the
menu is constantly fine-tuning the offerings to suit any meal or
snack opportunity.
Breakfast has become an essential part of the McDonald’s
revenue equation. A quarter of its domestic revenue—more
than $6 billion—and half its profits come from breakfast, which
includes the highly successful McMuffin and McGriddle break-
fast sandwiches. In 2015, McDonald’s began offering breakfast
items all 24 hours a day. Surveys report one-third of custom-
ers who bought breakfast items outside of breakfast hours had
not patronized the restaurant in the previous month. The all-
day breakfast continued to bring in sales and revenue growth
through its sales of all-day Egg McMuffin or hash browns for
lunch or other parts of the day.
Snack Wraps and smoothies entice customers between meals.
Snack Wraps are ideal for drive-thru customers (which accounts
for 60 percent of sales of this product) who need to have one
hand on the steering wheel. McDonald’s decade-long “I’m Lovin’
It” global advertising campaign has served as the perfect vehicle
to support new product launches and enhance loyalty. Translated
into a number of languages worldwide, it replaced some 20 dif-
ferent ad platforms that had been running in different regions.
Market Development
McDonald’s has made concerted efforts to expand globally
through the years, and its progress has been astounding. There
are more than 33,000 restaurants worldwide in 119 different
countries today, and 1.5 million employees serve 69 million cus-
tomers daily in the United States, Europe, the Middle East, the
Asia-Pacific region, Africa, Canada, and Latin America.
One key to its global success has been McDonald’s willingness
to adapt its menu to different cultural preferences and regional
tastes. The chain offers specialized menu items, such as the Teri-
yaki Burger in Japan and Vegetable McNuggets in England. In
India—where beef is not consumed because cows are sacred—it
introduced the Maharaja Mac, made from mutton. The company
also developed spicy sauces, such as McMasala and McImli.
McDonald’s targets different demographic and psychographic
market segments as well. The product offerings in Happy Meals
have been tweaked through the years to appeal to both children
and their parents. More recently, McDonald’s sought to develop a
new U.S. market by attracting 20- and 30-year-old females with
premium salads served with Newman’s Own dressing, and other
lighter menu options. McDonald’s rapidly became the number-
one salad brand in the United States.
Product Development
McDonald’s found its popularity in its core markets under threat
as international concern grew about the role of fast food in poor
health and obesity, highlighted by the 2001 book Fast Food
Nation and the 2004 movie Super Size Me, among other cri-
tiques. In response, the company began to focus on healthier
options such as salads and whole wheat wraps that were meant
to appeal to health-conscious consumers.
The shift in focus toward healthy eating and physical activity
was emphasized by McDonald’s recasting of Ronald McDonald as its
BRANDING BRIEF 13-1
Growing the McDonald’s Brand
McDonald’s snack wraps and smoothies help attract a new type of customer—
one who is looking for a quick snack between meals.
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 471
“Chief Happiness Officer,” a sports enthusiast who donned a more
athletic version of his traditional yellow-and-red clown suit and
snowboarded, skateboarded, and juggled fruit in a new TV spot.
The company also tapped into the growing premium-coffee
trend in the United States by launching McDonald’s Premium Roast
coffee, which retails for about 35 percent less than a cup of Star-
bucks coffee. McDonald’s also introduced a new line of premium
hamburger and chicken sandwiches—signature crafted recipes
including Pico Guacamole and Maple Bacon Dijon burgers. The mar-
keting campaign for these burgers included the introduction of the
“frork”—a fork made of fries to scoop up all of the toppings on the
new burgers. The 20-piece Chicken McNuggets offering allowed
the company to enter the shared-meals segment dominated by KFC.
Diversification
Although McDonald’s has largely focused on expansion through
market penetration, market development, and product develop-
ment, it has done some diversification to target new customers
with new service offerings. It extended its brand in 2001 with
the opening of its first domestic McCafé, a gourmet coffee shop
inspired by the success of Starbucks that had debuted in Portugal
and Austria. After the initial success, McDonald’s is now focusing
on expanding McCafé into its restaurants and retail chains as
well as opening additional stand-alone McCafés internationally.
With more premium coffee being sold in the United States and
with McDonald’s family-oriented restaurants, they believe they
can take market share from Starbucks. Another diversification
offering is McTreat, an ice cream and dessert shop.
While several Golden Arch Hotels in Switzerland failed to
make it and were sold off, experimentation continues. In Hong
Kong, three McDonald’s locations offer wedding packages for
loyal couples. The basic Warm and Sweet Wedding Package for
50 guests goes for under $1,300. An additional $165 covers a
rented “gown” of pearly white balloons.
Sources: Joanna Doonar, “Life in the Fast Lane,” Brand Strategy, 186 (October 2004): 20–23; Gina Piccolo, “Fries with That Fruit?” Los Angeles Times, July 18, 2005, F1; Pallavi Gogoi and Michael Arndt, “Hamburger Hell,” BusinessWeek, March 3, 2003, 104; Kate MacArthur, “Big Mac’s Back,” Advertising Age, December 13, 2004, S1; Michael Arndt, “McDonald’s 24/7,” Bloomberg BusinessWeek, February 5, 2007; “McDonald’s to Diversify into ‘Shared Meals’ Segment,” www.room54.co, February 13, 2011; Dan Malovany and Maria Pilar Clark, “McSmart and McSnackable: McDonald’s New Product Strat- egy Boosts Bottom Line,” Stagnito’s New Products Magazine, June 2007; Stefan Michel, “McDonald’s Failed Venture in Hotels,” www .knowledgenetwork.thunderbird.edu, July 11, 2008; Hillary Brenhouse, “Want Fries with That Ring? McDonald’s Offers Weddings,” Time, March 7, 2001; Trefis Team, “Here’s Why McDonald’s Is Increasing Focus On McCafe,” Nasdaq, December 7, 2016, https://www.nasdaq .com/article/heres-why-mcdonalds-is-increasing-focus-on-mccafe- cm718236, accessed November 22, 2018; Sarah Whitten, “McDonald’s Invents ‘Supremely Superfluous’ Frork Utensil to Pitch Its New Burgers,” CNBC, May 1, 2017, https://www.cnbc.com/2017/05/01/ mcdonalds-invents-the-frork-to-pitch-its-new-burgers.html, accessed November 22, 2018; Gene Marcial, “McDonald’s Turnaround Signals Accelerating Long-Term Growth,” Forbes, January 31, 2017, www .forbes.com/sites/genemarcial/2017/01/31/mcdonalds-turnaround- signals-accelerating-long-term-growth/#794d3d4e6c84; Michal Addady, “McDonald’s All-Day Breakfast Is Succeeding,” Fortune, December 9, 2015, http://fortune.com/2015/12/09/mcdonalds-all-day- breakfast-sales/, accessed May 21, 2017; Team Trefis, “‘Healthy’ Food Options in the Core Menu Can Drive Revenues for McDonald’s, www .forbes.com/sites/greatspeculations/2016/07/25/healthy-food-options- in-the-core-menu-can-drive-revenues-for-mcdonalds/#7726f3e17726, accessed May 31, 2017; Craig Smith, “42 Interesting McDonald’s Facts and Statistics (October 2018),” DMR Business Statistics, https:// expandedramblings.com/index.php/mcdonalds-statistics/, accessed November 22, 2018; John Kell, “McDonald’s Struggles to Repeat Success of All-Day Breakfast Launch,” Fortune Magazine, January 23, 2017, http:// fortune.com/2017/01/23/mcdonalds-us-sales-slow/, accessed November 22, 2018.
A brand extension occurs when a firm uses an established brand name to introduce a new
product (approach 2 or 3). As we noted in Chapter 12, when a new brand is combined with an
existing brand (approach 3), the brand extension can also be a sub-brand. An existing brand that
gives birth to a brand extension is the parent brand. If the parent brand is already associated with
multiple products through brand extensions, then it may also be called a family brand.
Brand extensions fall into two general categories:2
• Line extension: Marketers apply the parent brand to a new product that targets a new market
segment within a product category the parent brand currently serves. A line extension often
adds a different flavor or ingredient variety, a different form or size, or a different application
for the brand. In 2017, Apple’s introduction of the iPhone 8 with new features is an example
of a line extension. Starbucks introduced cold coffee beverages as a line extension within
the coffee category.
• Category extension: Marketers apply the parent brand to enter a different product category
from the one it currently serves. For example, Oprah Winfrey leveraged the success of her
show to introduce the successful publication called O, The Oprah Magazine. Oreos extended
its brand from cookies into ice cream bars.
Among all the new product introductions in any given year, 80 to 90 percent of these intro-
ductions are typically line or brand extensions.3 Both in Europe and in the United States, the
rates of product failure in the consumer goods sector range are around 80 percent.4 In identifying
reasons for product failure, the lack of a well-established brand name has surfaced as a key factor.
For example, in a global survey of consumers conducted by AC Nielsen, nearly 60 percent men-
tioned that they prefer line extensions because of recognition of and familiarity with the brand.5
Some notable launches in recent times in consumer-packaged goods include both line and brand
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472 PART V • GROWING AND SUSTAINING BRAND EQUITY
extensions such as Clorox Toilet Bowl cleaners, Old Spice Hydro Wash body wash, and Tide Stain Remover pens.6 In other categories as well, numerous extensions can be found, including iTunes Radio, Adidas watches, and Samsung’s gaming monitor. All these new products were launched as extensions.7 Nevertheless, many new products are still introduced each year as new brands. A slew of new technology brands have recently begun to make their mark, such as the SurveyMon- key online survey tool, the Spotify music Web site, Lookout mobile’s security software, and the Twilio voice and text messaging application facilitator.
Even in a product category as simple and established as hamburgers, a number of competitors in the category have attained prominence in recent years including In-N-Out Burger, Five Guys, Big Boy, Smashburger, Fatburger, and Shake Shack. Each of these chains has claimed a unique niche. For instance, Shake Shack’s updated “roadside burger stand” continues to be successful by featuring a mix of high-quality natural ingredients, cooking food to order, and emphasizing the happiness of its customers and employees.8
As described previously, most new products are branded and launched as extensions. To under- stand why, we’ll next outline some of the main advantages and disadvantages of brand extensions.
ADVANTAGES OF EXTENSIONS For most firms, the question is not whether to extend the brand, but when, where, and how to extend it. Well-planned and well-implemented extensions offer a number of advantages that we can broadly categorize as those that facilitate new-product acceptance and those that provide feedback benefits to the parent brand or company as whole (see Figure 13-2).
Facilitate New-Product Acceptance The high failure rate of new products has been well documented. Marketing analysts estimate that only 2 of 10 new products will be successful, or maybe even as few as 1 of 10. Brand extensions can certainly suffer some of the same shortcomings as any new product. Nevertheless, a new product introduced as a brand extension may be more likely to succeed, at least to some degree, because the advantages—that we describe later—work to increase acceptance.
Improve Brand Image. As we saw in Chapter 2, one of the advantages of a well-known and well-liked brand is that consumers form expectations of its performance over time. They can form similar inferences and expectations about the likely composition and performance of a brand extension, based on what they already know about the brand itself and the extent to which they feel this information is relevant to the new product.9
These inferences may improve the strength, favorability, and uniqueness of the extension’s brand associations. For example, when Microsoft first introduced the Xbox video gaming con- sole, consumers may have been more likely to feel comfortable with its anticipated performance because of their experience with and knowledge of other Microsoft products.
FIGURE 13-2
Advantages of Brand
Extension
Facilitate New Product Acceptance
Improve brand image Reduce risk perceived by customers Increase the probability of gaining distribution and trial Increase efficiency of promotional expenditures Reduce costs of introductory and follow-up marketing programs Avoid cost of developing a new brand Allow for packaging and labeling efficiencies Permit consumer variety-seeking
Provide Feedback Benefits to the Parent Brand and Company
Clarify brand meaning Enhance the parent brand image Bring new customers into brand franchise and increase market coverage Revitalize the brand Permit subsequent extensions
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 473
Reduce Risk Perceived by Customers. One research study found that the most important factor for predicting initial trial of a new product was the extent to which it connected to a known family brand.10 Extensions from well-known brands such as 3M, Amazon, Google, Apple, or oth- ers may communicate longevity and sustainability. Although corporate brands can lack specific product associations because of the breadth of products attached to their name, their established reputation for introducing high-quality products and standing behind them may be an important risk-reducer for consumers.11
Perceptions of corporate credibility—in terms of the firm’s expertise and trustworthiness— can be valuable associations in introducing brand extensions.12 Similarly, although widely extended supermarket family brands—such as Kellogg’s, Kraft, and Pepperidge Farm—may lack specific product meaning, they may still stand for product quality in the minds of consumers and, by reducing perceived risk, facilitate the adoption of brand extensions.
Increase the Probability of Gaining Distribution and Trial. The potential for increased con- sumer demand for a new product introduced as an extension may convince retailers to stock and promote it. One study indicated that brand reputation was a key screening criteria of gatekeepers making new-product decisions at supermarkets.13
Increase Efficiency of Promotional Expenditures. From a marketing communications per- spective, one obvious advantage of introducing a new product as a brand extension is that the introductory campaign does not have to create awareness of both the brand and the new product but instead can concentrate on only the new product itself.14
Several research studies document this benefit. One comprehensive study found that the aver- age advertising-to-sales ratio for brand extensions was 10 percent, compared with 19 percent for new brands, thereby confirming prior findings.15 The following example of movie sequels makes the case for how extensions can lead to efficient use of advertising dollars.
MOVIE SEQUELS AS LINE EXTENSIONS
Successful movies often introduce sequels that are intended to capitalize on the sales of the original hit
movie. The success and popularity of sequels is evident in the fact that top box office revenue is increas-
ingly derived from sequels (see this trend summarized in Figure 13-3). The arguments are much the same
as those made for typical brand and line extensions. Movie studies typically leverage the existing awareness
of the storyline and characters, thereby reducing the risk associated with launching a new movie. Given
the decline in movie studio audiences, and the high potential for failure, this risk mitigation approach may
offer significant advantages.
Moreover, the expenditures on promoting a sequel are typically much lower than a new movie, as seen
in the advertising-to-sales ratio of movie sequels. In 2015, Star Wars Episode VII: The Force Awakens was
a sequel that had among the highest sales revenue to advertising ratio of all movies during that year, and
earned $25.4 million in domestic revenue for every dollar spent on advertising. This ad-sales ratio was closely
FIGURE 13-3
Percentage of Box
Office Revenue from
Movie Sequels
Percentage of Top Box Office Revenue from Movie Sequels
Year
P e rc
e n
ta g
e
2000
50
45
40
35
30
25
20
15
10
5
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
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474 PART V • GROWING AND SUSTAINING BRAND EQUITY
Reduce Costs of Introductory and Follow-Up Marketing Programs. Because of these push and pull considerations in distribution and promotion, it has been estimated that a firm can save 40 to 80 percent on the estimated $30 to $50 million it can cost to launch a new supermarket product nationally in the United States. Other efficiencies can result after the launch. For example, when a brand becomes associated with multiple products, advertising can be more cost-effective for the family brand as a whole.
Avoid Cost of Developing a New Brand. Developing new brand elements is an art and a science. To conduct the necessary consumer research and employ skilled personnel to design high- quality brand names, logos, symbols, packages, characters, and slogans can be quite expensive, and there is no assurance of success. As the number of available—and appealing—brand names keeps shrinking, legal conflicts grow more likely. To avoid these, a global trademark search is a must for any major new brand launch or rebranding, and it can cost millions of dollars.
Allow for Packaging and Labeling Efficiencies. Similar or identical packages and labels for extensions can result in lower production costs, and, if coordinated properly, more prominence in the retail store where they can create a “billboard” effect. For example, Campbell’s soup offers a variety of soups and flavors in visually similar packaging, which increases their visibility when they are stocked together in the freezer. Coca-Cola soft drinks and Gerber’s baby food achieve a similar effect.
Permit Consumer Variety-Seeking. If marketers offer a portfolio of brand variants within a product category, consumers who need a change—because of boredom or satiation—can switch without having to leave the brand family. A company that seems to offer something for everyone is L’Oréal.
followed by Jurassic World with $15.8 million in domestic revenue for every dollar spent on advertising.
Their successes reinforce the notion that movie sequels can lead to cost savings. If a sequel is able to effec-
tively tap into the success factors from earlier films to deliver on the brand promise of the franchise, highly
favorable advertising-to-sales ratios can result from the increased efficiencies (i.e., lower costs) associated
with promoting the movie. Sequels may also benefit the DVD sales associated with the original film, thus
demonstrating significant spillover effects, as shown by researchers Henning-Thurau, Houson, and Heitjans.
All sequels are not the same, obviously, and there are differences in how sequels are marketed. Aca-
demic researchers Sood and Drèze have suggested that numbered sequels (e.g., Daredevil 2) are more
influenced by similarity to the parent (original film) than named sequels (Daredevil: Taking It to the Streets).
Despite their overall popularity, sequel success is not a guarantee. Sequels associated with smaller hit
productions are often not financially lucrative, thus belying the faith that Hollywood places in these sequels.
When it comes to sequels and other artistic productions, it is worthwhile conducting an in-depth assessment
of the extension opportunity using a similar set of guidelines, as in the case of product or service extensions.
Sources: boxofficemojo, jackdaw research; Dawson, Jan “Hollywood Clings to Sequels Despite Diminishing Returns,” June 7, 2016. http://variety.com/2016/film/features/hollywood-franchises-sequels-box-office-1201789704/. Accessed June 3, 2017. 1 Sanzo, Nick, “May the Force Be With Your Sequels”. Kantar Media. 14 January 2016. www.kantarmedia.com/ us/thinking-and-resources/blog/may-the-force-be-with-your-sequels. Accessed May 21, 2017. Thorsten Hennig-Thurau, Mark B. Houston, and Torsten Heitjans, “Conceptualizing and Measuring the Monetary Value of Brand Extensions: The Case of Motion Pictures,” Journal of Marketing 73 (November 2009): 167–183. Sood, Sanjay, and Xavier Drèze. “Brand extensions of experiential goods: Movie sequel evaluations.” Journal of Consumer Research 33, no. 3 (2006): 352–360.
L’ORÉAL
Concentrating solely on beauty and personal care since its founding in 1907, L’Oréal has become a global
powerhouse through its extensive brand portfolio. The firm has products for virtually every channel, price
point, and market. Garnier is its fast-growing mass brand. L’Oréal Paris is at the higher end of the mass
range, combining sophisticated cosmetics at accessible price points. Lancôme is the premium luxury brand.
L’Oréal adheres to a strict channel exclusivity strategy. Professional products (Matrix and Redken) are sold
at hair salons, consumer product brands (Maybelline and Garnier) at retail stores, including drug stores and
food stores, luxury products (Biotherm and Lancôme) at specialty stores or department stores, and active
cosmetic brands (La Roche-Posay) at dispensing dermatologists and pharmacies. L’Oréal also owns two retail
chain brands—Kiehl’s and the Body Shop. Geographically, the company casts a wide net. Many of its brands
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 475
FIGURE 13-4
Expanding Brand Mean-
ing through Extensions
Brand Weight Watchers
Sunkist
Kellogg’s
Aunt Jemima
Original Product Fitness centers
Oranges
Cereal
Pancake mixes
Extension Products Low-calorie foods
Vitamins, juices
Nutri-Grain bars,
Special K bars
Syrups, frozen
waffles
New Brand Meaning Weight loss and
maintenance
Good health
Healthy snacking
Breakfast foods
Provide Feedback Benefits to the Parent Brand Besides facilitating acceptance of new products, brand extensions can also provide positive feed- back to the parent brand in a number of ways.
Clarify Brand Meaning. Extensions can help clarify the meaning of a brand to consumers and define the kinds of markets in which it competes, an important first step in the brand architecture process. Thus, through brand extensions, Dove means “personal care,” Johnson & Johnson means “baby care,” Prada means “luxury,” and Lego stands for “creativity, imagination, fun.” Figure 13-4 shows how various brands that have introduced multiple brand extensions have broadened their meaning to consumers.
As Chapter 12 noted, broader brand meaning often is necessary so that firms avoid “marketing myopia” and do not mistakenly draw narrow boundaries around their brand, either missing market opportunities or becoming vulnerable to well-planned competitive strategies. Thus, as Harvard’s Ted Levitt pointed out in a pioneering article, railroads are not just in the “railroad” business, but are also in the “transportation” business.18
Thinking more broadly about product meaning can easily inspire different marketing pro- grams and new product opportunities. For example, when Xerox introduced the slogan, “The Document Company,” it broadened its business definition to include not only copiers but digi- tal printing, document services, and so on. Similarly, GE broadened its business mission to
L’Oréal has an extensive portfolio of brands involving many
different price points, markets, and channels.
are sold in as many as 130 countries; Lancôme is sold in 160 countries. Recently, L’Oréal has placed much
importance on emerging markets, China and India in particular, and it aims to double its existing customer
base of 1 billion customers worldwide by 2021. The firm invests heavily in research and development (ear-
marking approximately 3 percent of net sales) in the belief that science and technology and the quality of
its products are the keys to success. Roughly 15 to 20 percent of the product lines turn over in any given
year due to product improvements or the launch of new products. L’Oréal is also putting more emphasis
on digital and mobile strategies to engage customers but without abandoning the traditional magazine
print ads that have served beauty brands well through the years.16 The company, partnering with Automat
Technologies, is jumping into artificial intelligence, launching a Facebook Messenger bot that converses
with consumers. L’Oréal’s focus has been strongly set on technology to expand products and services, and
its ecommerce business grew 32 percent in 2016.17
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476 PART V • GROWING AND SUSTAINING BRAND EQUITY
shift away from industrial products such as turbines and engines to digital services that would help their customers deliver better services to their end users.19 In the Indian context, Titan Company Limited (owned by the famous Tata Group, and known for manufacturing watches, jewelry, and eyewear) widened its footprint in the personal lifestyle segment with the launch of the SKINN Titan range of fine fragrances.20 By changing their business mission to stay in tune with fundamental shifts in their respective industries, Xerox, GE, and the Indian brand Titan broadened their meaning to customers, thereby opening the way to introducing future line and brand extensions.
In some cases, it is advantageous to establish a portfolio of related products that completely satisfy consumer needs in a certain area. For example, many specific-purpose cleaning products have broadened their meaning to being viewed as multipurpose, including Clorox, Method, Lysol, Comet, and Mr. Clean.
Enhance the Parent Brand Image. According to the customer-based brand equity model, one desirable outcome of a successful brand extension is that it may enhance the parent brand image by strengthening an existing brand association, improving the favorability of an existing brand association, adding a new brand association, or a combination of these.
One common way a brand extension affects the parent brand image is by helping to clarify its core brand values and associations. Core brand associations, as we defined them
in Chapter 3, are those attributes and benefits that come to characterize all the products in
the brand line and, as a result, are those with which consumers often have the strongest
associations. For example, Nike has expanded from running shoes to other athletic shoes,
athletic clothing, and athletic equipment, strengthening its associations to peak performance
and sports in the process.
Another type of association that successful brand extensions may improve is consumer per-
ceptions of the company’s credibility. For example, one research study showed that a successful
corporate brand extension led to improved perceptions of the expertise, trustworthiness, and lik-
ability of the company.21
Bring New Customers into the Brand Franchise and Increase Market Coverage. Line
extensions can benefit the parent brand by expanding market coverage, such as by offering a prod-
uct benefit whose absence may have prevented consumers from trying the brand. For example,
by offering a chewable tablet, Tylenol was able to offer a product for children who had difficulty
swallowing tablets and might have otherwise avoided the brand.
Creating news and bringing attention to the parent brand may benefit the family brand as a
whole. Through the skillful introduction of extensions, Tide as a family brand has managed to
maintain its market leadership and actual market share—roughly 40 percent in the United States—
from the 1950s to the present.22 Another example of using an extension to tap into a new market
is the introduction of Coke Zero by Coca-Cola in 2005.
COKE ZERO
This extension of a low-calorie, zero-sugar, cola targeted for men became among the most successful exten-
sions launched by Coca-Cola.23 In order to attract this newer segment of the market, Coke Zero leveraged
social media to build a loyal following. For example, in 2010, the Coke Zero Facial Profiler Facebook app
was introduced to help followers find lookalikes by utilizing a novel face detection technology. The brand
also had a tie-in with the James Bond movie Skyfall. The viral video for Coke Zero was watched more than
11 million times.24 A giant billboard was set up during the 2015 NCAA Final Four in which the massive
billboard dispensed ice cold Coke Zero from a bottle supported by 4,500 feet of tubing. Viewers of a
commercial for the brand were encouraged to download a Shazam app, which showed a glass filling up
with Coke Zero as it was being poured in the TV commercial. Overall, the Coke Zero introduction was a
success for the brand and resulted in the brand being a top 10 brand in the carbonated beverage category
with a market share of 1.8 percent in 2014.25 The success of this extension was due to a well-thought-out
segmentation, targeting, and positioning for the Coke Zero brand, and an effective set of marketing mix
tactics to support the introduction. The introduction of this extension allowed Coke to reassert its dominance
in the carbonated beverages category and helped mitigate the threat of competition from both Diet Pepsi
and newer competitors (e.g., juice drinks).
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 477
Revitalize the Brand. Sometimes brand extensions can be a means to renew interest in and liking for the brand. The introduction of the sleek CTS sedan and muscular Escalade SUV com- pletely transformed the once dowdy Cadillac brand image.
Permit Subsequent Extensions. One benefit of a successful extension—especially a category extension—is that it may serve as the basis for subsequent extensions. For example, when Apple introduced the iPod, it quickly became a market leader, representing one of the company’s most successful new products ever. It also provided a halo effect that significantly boosted sales for the company’s existing computer and software products. Finally, it made it easier for the company to introduce the iPhone smartphone and perhaps even the iPad tablet computer (see Brand Focus 13.0 for a more in-depth analysis of Apple’s brand strategy).
DISADVANTAGES OF BRAND EXTENSIONS Despite their potential advantages, brand extensions have a number of disadvantages (see Figure 13-5).
Can Confuse or Frustrate Consumers Different varieties of line extensions may confuse and perhaps even frustrate consumers about which version of the product is the right one for them. For example, one study found that con- sumers were more likely to make a purchase after sampling a product (and being given a coupon) when there were six product flavors to sample than when there were 24.26 So, in some situations, greater product variety may induce shoppers to buy less. Consumers may reject new extensions for tried and true favorites or all-purpose versions that claim to supersede more specialized product versions. This is reflected in the success of Colgate Total, which positions itself as an inclusive product that contains all the necessary or desirable toothpaste benefits.
Many retailers do not have enough shelf or display space to stock the large number of new products and brands continually being introduced even if they wanted to. So some consumers may be disappointed when they are unable to find an advertised brand extension because a retailer is unable or unwilling to stock it. If a firm launches extensions that consumers deem inappropriate, they may question the integrity and competence of the brand.
Can Encounter Retailer Resistance The number of consumer packaged-goods stock-keeping units (SKUs) outpaces the growth of retail space in year-on-year percentage growth. Own-brand or private-label goods also continue to grow as a percentage of total grocery sales. Many brands now come in a multitude of different forms. For example, Campbell’s has introduced a number of different lines of soup—including Campbell’s Go, Condensed, Home Cookin’, Chunky, Healthy Request, Select, Simply Home, Ready-to-Serve Classic, Oriental, and portable Soup at Hand—and many flavors within each type.
As a result, it has become virtually impossible for a grocery store or supermarket to offer all the different varieties available across all the various brands in any one product category. More- over, retailers often feel that many line extensions are merely “me-too” products that duplicate existing brands in a product category and should not be stocked even if there is space. Walmart, the biggest retailer in the United States, attempts to stock the items that sell best, dropping as many as 20 percent of slow-moving items from its shelves annually.27
FIGURE 13-5
Disadvantages of Brand
Extension
Can confuse or frustrate consumers Can encounter retailer resistance Can fail and hurt parent brand image Can succeed but cannibalize sales of parent brand Can succeed but diminish identification with any one category Can succeed but hurt the image of parent brand Can dilute brand meaning Can cause the company to forgo the chance to develop a new brand
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478 PART V • GROWING AND SUSTAINING BRAND EQUITY
Can Fail and Hurt Parent Brand Image The worst possible scenario for an extension is not only to fail, but to harm the parent brand image in the process. Unfortunately, these negative feedback effects can sometimes happen.
Even if an extension initially succeeds, by linking the brand to multiple products, the firm increases the risk that an unexpected problem or even a tragedy with one product in the brand fam- ily can tarnish the image of some or all the remaining products. The Audi is a classic example. A number of years ago, perceived driving problems with the Audi 5000 “spilled over” and tarnished the image of the Audi 4000, although the more distinctly branded and positioned Audi Quattro was not hurt as much.
Understanding when unsuccessful brand extensions may damage the parent brand is impor- tant, and later in the chapter we’ll develop a conceptual model to address the topic and describe some important findings. On a more positive note, however, one reason an unsuccessful brand extension may not necessarily damage the parent brand is the very reason the extension may have been unsuccessful in the first place—hardly anyone may even have heard of it! Thus, the silver lining when a brand extension fails to achieve sufficient brand awareness or distribution is that the parent brand is more likely to survive unscathed. As we’ll argue later, product failures in which the extension is found to be inadequate on the basis of performance are more likely to hurt perceptions of the parent brand than these market failures.
Can Succeed but Cannibalize Sales of Parent Brand Even if sales of a brand extension are high and meet targets, success may result merely from consumers switching from existing offerings of the parent brand—in effect cannibalizing it. Line extensions designed to establish points-of-parity with current offerings in the parent brand category particularly may result in cannibalization. In the carbonated beverages category, Diet Coke’s point-of-parity of good taste and point-of-difference of low calories undoubtedly took some sales from regular Coke drinkers. In fact, although U.S. sales of Coca-Cola’s cola prod- ucts have held steady since 1980, sales in 1980 came from Coke alone, whereas sales today include significant contributions from Diet Coke, Coke Zero, Cherry Coke, and uncaffeinated and flavored forms of Coke. Without the introduction of those extensions, however, some of Coke’s sales might have gone to competing Pepsi products or other soft drinks or beverages instead.
Sometimes, however, such intrabrand shifts in sales are not undesirable; we can think of them as a form of preemptive cannibalization. In other words, without the introduction of the line extension, consumers might have switched to a competing brand instead. This alternative view of preemptive cannibalization as a positive outcome was also echoed by Steve Jobs, co-founder of Apple, who famously said “cannibalize yourself (before someone else does).”28
Can Succeed, but Diminish Identification with Any One Category One risk of linking multiple products to a single brand is that the brand may not be identified enough with any one product. Thus, brand extensions may obscure the brand’s identification with its original categories, reducing brand awareness.29 For example, when Gillette introduced Venus (a razor for women), it may have diminished its identification with the target audience of men.
Some notable—and fascinating—counterexamples to these dilution effects exist, however, in firms that have branded a heterogeneous set of products and still achieved a reasonable level of perceived quality for each. As we saw in Chapter 11, many Japanese firms have adopted a
corporate branding strategy with a very broad product portfolio. For example, Yamaha developed
a strong reputation selling an extremely diverse brand line that includes motorcycles, guitars,
and pianos. Mitsubishi uses its name to brand a bank, cars, and aircraft. Canon has successfully
marketed cameras, photocopiers, and office equipment.
Along a similar vein, the founder of Virgin Records, Richard Branson, has conducted an
ambitious, and perhaps risky, brand extension program (see Branding Brief 13-2). In all these
cases, it seems the brand has been able to secure a dominant association to quality in the minds
of consumers without strong product identification that might otherwise limit it.
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 479
Perhaps the most extensive brand extension
program in recent years has been undertaken
by Richard Branson with his Virgin brand. Vir-
gin’s brand strategy is to go into categories
where consumer needs are not well met and do
different things—and do them differently—to
better satisfy consumers.
Branson founded the Virgin record label at
the age of 21, and in 1984, he launched Virgin
Atlantic Airways. Later, he made millions on the
sale of his record label, his Virgin record retail
chain, and his Virgin computer games business.
After licensing the use of the Virgin name to
European startup airlines that were flying the
London–Athens and London–Dublin routes,
Branson decided to expand the range of prod-
ucts carrying the Virgin brand.
Branson has since licensed the Virgin name
for use on personal computers and set up joint
ventures in 1994 to market Virgin Vodka and Vir-
gin Cola. In 1997, he took over six of the United
Kingdom’s government rail lines and established
Virgin Rail. In 1999, he launched Virgin Mobile,
a wireless company that provides cellular service
through a partnership with Deutsche Telecom.
He branched into e-commerce that same year
with the debut of Virgin.com, a portal where consumers can pur-
chase every product or service offered by the Virgin brand.
Today, the Virgin Group employs more than 71,000 people,
spans 35 countries, and contains more than 60 branded compa-
nies marketing such diverse product areas as travel, lifestyle, media
and mobile, money, people and planet, music, health care, and
alcohol. Virgin had 2016 revenues of an estimated £15 billion,
and Branson’s personal fortune was estimated at £4.9 billion in 2016.
• Travel: Virgin Australia, Virgin Atlantic Airways, Virgin Holi-
days, Virgin Holidays + Hip Hotels, Virgin Holidays Cruises,
Virgin Limited Edition, Virgin Vacations, Virgin Galactic, Virgin
Books, Virgin Limobike, Virgin Trains
• Lifestyle: Virgin Active UK, Virgin Active Australia, Virgin
Active Italia, Virgin Active Portugal, Virgin Active South Africa,
Virgin Active Spain, Virgin Experience Days, Virgin Racing,
Virgin Balloon Flights, The Virgin Voucher, Virgin Sports
• Money: Virgin Money UK, Virgin Money Australia, Virgin Money
South Africa, Virgin Money Giving, Virgin Gift Card, Virgin Startup
• People and Planet: Virgin Earth Challenge, Virgin Green Fund,
Virgin Unite
• Telecom and Tech: Virgin Connect, Virgin Media, Virgin Busi-
ness, Virgin Mobile
• Music: Virgin Megastore, Virgin Radio International, Virgin Festivals
• Health Care: Virgin Health Bank, Virgin Pulse, Virgin Care,
Virgin Pure
• Alcohol: Virgin Wines Australia, Virgin Wines UK, Virgin
Wines US.
Virgin’s growth and expansion has sparked debate about Bran-
son’s seemingly undisciplined extension of the brand. One branding
expert criticized Virgin’s rapid expansion: “Virgin makes no sense; it’s
completely unfocused.” When Virgin ventures are poorly received,
as Virgin Cola, Virgin Vodka, Virgin PCs, Virgin Jeans, Virgin Brides,
and Virgin Clothing were in recent years, experts worry about the
cumulative negative effect of these unsuccessful brands on the com-
pany’s overall equity. One marketing executive illustrated the risk of
launching an unsuccessful brand by saying, “When I’m delayed on a
Virgin train, I start wondering about Virgin Atlantic. Every experience
of a brand counts, and negative experiences count even more.”
Some critics believe Virgin consumer products will do little
more than generate publicity for Virgin airlines. They also warn of
overexposure, even with the young, hip audience the Virgin brand
has attracted. For example, one advertising agency wondered
if there was a risk that the Virgin brand name would be over-
extended to the point that it lost its core meaning. In Branson’s
view, as long as a new brand adds value for the consumer, and
the consumer benefits, there should be no reason to shy away
from launching new products and extending the brand name.
Among the new products Branson is launching are Virgin
Oceanic for oceanic exploration and Virgin Galactic for space
tourism on rocket ships. Yet, Virgin has become more disciplined
about its expansion in recent years: The company now states that
it pursues new businesses only if they are expected to generate
more than $150 million in sales within three years. Virgin is also
placing great emphasis on sustainability and the environment.
Its Web site describes its mission as “to contribute to creating
BRANDING BRIEF 13-2
Are There Any Boundaries to the Virgin Brand Name?
The Virgin brand name has expanded to many different categories, resulting in
a debate about the limits of its brand extension strategy.
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480 PART V • GROWING AND SUSTAINING BRAND EQUITY
happy and fulfilling lives which are also sustainable.” Virgin also
attempts to minimize damage to its brand from failed extensions
through swift actions when an extension no longer provides any
financial value or brand value to strengthen its position as bold
and innovative.
Sources: Andy Pasztor, “Virgin Galactic’s Flights Seen Delayed Yet Again,” The Wall Street Journal, October 26, 2011; Jenny Wilson, “Virgin Oceanic: Just the Latest in Richard Branson’s Massive Ventures,” Time, April 6, 2011; Alan Deutscham, “The Gonzo Way of Branding,” Fast
Company, October 2004, 91; Melanie Wells, “Red Baron,” Forbes, July 3, 2000; Quentin Sommerville, “High-Flying Brand Isn’t All It Appears,” Scotland on Sunday, December 24, 2000; Roger Crowe, “Global—A Brand Too Far?,” GlobalVue, October 28, 1998; Virgin, “Our Purpose,” https://www.virgin.com/virgingroup/content/our-purpose-0, accessed November 22, 2018; Media Network Blog, “Smart Brand Extension Allows Virgin to Keep Up Appearances,” October 23, 2014, https://www .theguardian.com/media-network/media-network-blog/2014/oct/23/virgin- success-brand-extension-easygroup, accessed November 22, 2018; Vir- gin, “About Us,” https://www.virgin.com/virgingroup/content/about-us, accessed November 22, 2018.
Can Succeed, but Hurt the Image of the Parent Brand If customers see the brand extension’s attribute or benefit associations as inconsistent or even conflicting with the corresponding associations for the parent brand, they may change their per- ceptions of the parent brand as a result. Although Coach originally began as a maker of luxury leather handbags, it subsequently introduced (line and brand) extensions in a range of categories including women’s and men’s leather accessories, among others. They also began to sell more of their products in their own outlet stores and in department stores who often aggressively dis- counted the brand. Although these products and their prices attracted consumers in the “affordable luxury” segment, it also hurt the image of Coach as a luxury brand. Brand perception suffered some as a result. In recent years, the company has deliberately moved away from those channels to restore margins and their image as a true luxury brand. 30
Can Dilute Brand Meaning The potential drawbacks of a brand extension’s lack of identification with any one category and a weakened image may be especially evident with high-quality or prestige brands. Consider how Gucci ran into the hazards of overexpansion.
GUCCI
In its prime, the Gucci brand symbolized luxury, status, elegance, and quality. By the 1980s, however, the
label had become tarnished by sloppy manufacturing, countless knock-offs, and even a family feud among
the managing Gucci brothers. The product line consisted of 22,000 items, distributed extensively across
all types of department stores. Not only were there too many items, but some did not even fit the Gucci
image—for example, a cheap canvas pocketbook with the double-G logo that was easily counterfeited and
sold on the street for $35. Sales recovered only when Gucci refocused the brand, paring the product line
to 7,000 high-end items and selling them through its own company-owned outlets. The strategy helped
Gucci has introduced many brand extensions that are symbolic of luxury, high
quality, and status.
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Can Cause the Company to Forego the Chance to Develop a New Brand One easily overlooked disadvantage of brand extensions is that by introducing a new product as a brand extension, the company forgoes the chance to create a new brand, with its own unique image and equity. For example, consider the benefits of Amazon’s runaway success with Kindle, which gave Amazon the ability to go beyond its traditional arena of online retailing and offer a unique product to consumers.
These brands all created their own associations and image and tapped into markets completely different from those that currently existed for other brands sold by the company. Thus, introducing a new product as a brand extension can have significant and potentially hidden costs in terms of the lost opportunities of creating a new brand franchise. The extension’s brand positioning may be less flexible, too, given that it has to live up to the parent brand’s promise and image. The positioning of a new brand, in contrast, could be introduced and updated in the most competitively advantageous way possible.
UNDERSTANDING HOW CONSUMERS EVALUATE BRAND EXTENSIONS What determines whether a brand extension is able to capitalize on potential advantages and avoid, or at least minimize, potential disadvantages? Figure 13-6 displays some examples of suc- cessful and unsuccessful brand extensions through the years. Note how even leading marketing companies have sometimes failed despite their best intentions when launching a brand extension.
This section examines how consumers evaluate brand extensions and develops some ideas to help marketing managers better forecast and improve the odds for success of a brand extension.33
propel Gucci to the height of the fashion business. With revenue of $4.3 billion in 2016, Gucci is consistently
ranked in the world’s top 50 brands in value by Interbrand.31
To protect their brands from dilution, many up-and-coming fashion companies and designers seeking
to establish their brand through a family of brand extensions are now forging exclusive licensing partner-
ships with a single retailer. Target started with exclusive deals with architect and designer Michael Graves.
Target also entered into an agreement with the legendary Italian fashion house Missoni for a limited-edition
collection of apparel and accessories for women, men, girls, and babies, as well as home goods including
bedding, dinnerware, stationery, and décor.32 These exclusive licenses enable the licensor to better control
the inventory, avoid discounts, and, most importantly, protect the brand.
FIGURE 13-6
Examples of Category
Extensions
Successful Category Extensions
Dove shampoo and conditioner
Vaseline Intensive Care skin lotion
Hershey’s chocolate milk
Jell-O Pudding Pops
Visa traveler’s checks
Sunkist orange soda
Colgate toothbrushes
Mars ice cream bars
Arm and Hammer toothpaste
Bic disposable lighters
Honda lawn mowers
Mr. Clean Auto Dry car wash system
Fendi watches
Porsche coffee makers
Jeep strollers
Unsuccessful Category Extensions
Campbell’s tomato sauce
LifeSavers chewing gum
Cracker Jack cereal
Harley-Davidson wine coolers
Hidden Valley Ranch frozen entrees
Ben-Gay aspirin
Kleenex diapers
Clorox laundry detergent
Levi’s Tailored Classics suits
Nautilus athletic shoes
Domino’s fruit-flavored bubble gum
Smucker’s ketchup
Fruit of the Loom laundry detergent
Coors Rocky Mountain Spring Water
Cadbury soap
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482 PART V • GROWING AND SUSTAINING BRAND EQUITY
Managerial Assumptions To analyze potential consumer response to a brand extension, let’s start with a baseline case in which consumers are evaluating the brand extension based only on what they already know about the parent brand and the extension category, and before any advertising, promotion, or detailed product information is available. This baseline case provides the cleanest test of the extension concept itself, and it gives managers guidance about whether to proceed with an extension concept and, if so, what type of marketing program they might need.
Under these baseline conditions, we can expect consumers to use their existing brand knowl- edge, as well as what they know about the extension category, to try to infer what the extension product might be like. For these inferences to result in favorable evaluations of an extension, four basic conditions must generally hold true:
1. Consumers have some awareness of and positive associations about the parent brand in mem- ory. Unless they have positive associations about the parent brand, consumers are unlikely to form favorable expectations of an extension.
2. At least some of these positive associations will be evoked by the brand extension. A number of different factors will determine which parent brand associations are evoked, but, in general, consumers are likely to infer associations similar in strength, favorability, and uniqueness to the parent brand when they see the brand extension as similar or close in fit to the parent.
3. Negative associations are not transferred from the parent brand. Ideally, any negative asso- ciations that do exist for the parent brand will be left behind and not play a prominent role in consumers’ evaluation of the extension.
4. Negative associations are not created by the brand extension. Finally, any parent-brand attri- butes or benefits that consumers view positively—or at least neutrally—must not be seen as negative for the extension. Consumers must also not infer any new attribute or benefit asso- ciations that did not characterize the parent brand but which they see as a potential drawback to the extension.
If any assumption does not hold true, problems can follow. Now we’ll examine some factors that influence the validity of these assumptions and consider in more detail how a brand extension, in turn, affects brand equity.
Brand Extensions and Brand Equity An extension’s ultimate success will depend on its ability to both achieve some of its own brand equity in the new category and contribute to the equity of the parent brand.
Creating Extension Equity. For the brand extension to create equity, it must have a sufficiently high level of awareness and achieve necessary and desired points-of-parity and points-of- difference. Brand awareness will depend primarily on the marketing program and resources devoted to spreading the word about the extension. As Chapter 12 described, it will also obviously
depend on the type of branding strategy adopted. The more prominently we use an existing brand
that has already achieved a certain level of awareness and image to brand an extension, the easier
it should be to create awareness of and an image for the extension in memory.
Initially, whether we can create a positive image for an extension will depend on three con-
sumer-related factors:
1. How salient parent brand associations are in the minds of consumers in the extension context;
that is, what information comes to mind about the parent brand when consumers think of the
proposed extension, and the strength of those associations.
2. How favorable any inferred associations are in the extension context; that is, whether this
information suggests the type of product or service the brand extension would be, and whether
consumers view these associations as good or bad in the extension context.
3. How unique any inferred associations are in the extension category, that is, how these percep-
tions compare with those about competitors.
As with any brand, successful brand extensions must achieve desired points-of-parity
and points-of-difference. Without essential points-of-difference, the brand risks becoming an
undistinguished “me-too” entry, vulnerable to well-positioned competitors.34 Tauber refers to
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 483
“competitive leverage” as the set of advantages that a brand conveys to an extended product in the new category, that is, “when the consumer, by simply knowing the brand, can think of important ways that they perceive that the new brand extension would be better than competing brands in the category.”35
PayPal launched its mobile payments solutions (PayPal Here) in the category of mobile payment processing after the launch of Square and PayAnywhere. PayPal leveraged its brand recognition, its ease of use, wide installed base of users, and financial resources to make this foray into mobile payments a success.
At the same time, marketers must also establish any required points-of-parity. The more dissimilar the extension product is to the parent brand, the more likely that points-of-parity will become a positioning priority, and the more important it is to make sure that category POPs are sufficiently well-established. Consumers might have a clear understanding of the extension’s intended point-of-difference because it uses an existing brand name. What they often need reassur- ance about, however—and what should often be the focus of the marketing program—is whether the extension also has the necessary points-of-parity.
For example, Nivea became a leader in the skin cream category by creating strong points-of- difference on the benefits of “gentle,” “mild,” “caring,” and “protective,” which consumers value in many categories. Through skillful product development and marketing, the Nivea brand was suc- cessfully expanded across a wide variety of skin care and personal care product categories. When it leveraged its brand equity into categories such as deodorants, shampoos, and cosmetics, Nivea found it necessary to establish category points-of-parity before it could promote its points-of- difference. These were of little value unless consumers believed its deodorant was strong enough, its shampoo would produce beautiful enough hair, and its cosmetics would be colorful enough. Once points-of-parity were established, Nivea’s core brand associations could be introduced as compelling points-of-difference.
Contributing to Parent Brand Equity. To contribute to parent brand equity, an extension must strengthen or add favorable and unique associations to the parent brand and not diminish the strength, favorability, or uniqueness of any existing associations. The effects of an extension on consumer brand knowledge will depend on four factors:
1. How compelling the evidence is about the corresponding attribute or benefit association in the extension context—that is, how attention-getting and unambiguous or easily interpretable the information is. Strong evidence is attention-getting and unambiguous. Weak evidence may be ignored or discounted.
2. How relevant or diagnostic the extension evidence is for the attribute or benefit for the parent brand, that is, how much consumers see evidence on product performance or imagery in one category as predictive of product performance or imagery for the brand in other categories. Evidence will affect parent brand evaluations only if consumers feel extension performance is indicative of the parent brand in some way.
3. How consistent the extension evidence is with the corresponding parent brand associations. Consistent extension evidence is less likely to change the evaluation of existing parent brand associations. Inconsistent extension evidence creates the potential for change, with the direc- tion and extent of change depending on the relative strength and favorability of the evidence. Note, however, that consumers may discount or ignore highly inconsistent extension evidence if they do not view it as relevant.36
4. How strongly existing attribute or benefit associations are held in consumer memory for the parent brand, that is, how easy an association might be to change.
Feedback effects that change brand knowledge are thus most likely when consumers view information about the extension as equally revealing about the parent brand, and when they hold only a weak and inconsistent association between the parent brand and that informa- tion.37 Note that negative feedback effects are not restricted to product-related performance associations. As we saw earlier, if a brand has a favorable prestige image association, then consumers may disapprove or even resent a vertical extension (a new version of the prod- uct at a lower price). As the Apple case description at the end of this chapter demonstrates, a successful brand expansion strategy could involve introducing a series of well-planned and executed category and line extensions to ensure growth and profitability over time.
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484 PART V • GROWING AND SUSTAINING BRAND EQUITY
FIGURE 13-7
Steps in Successfully
Introducing Brand
Extensions
1. Define actual and desired consumer knowledge about the brand (e.g., create a mental map and identify key sources of equity).
2. Identify possible extension candidates on the basis of parent brand associations and overall similarity or fit of extension to the parent brand.
3. Evaluate the potential of the extension candidate to create equity according to the three-factor model:
• Salience of parent brand associations • Favorability of inferred extension associations • Uniqueness of inferred extension associations
4. Evaluate extension candidate feedback effects according to the four-factor model:
• How compelling the extension evidence is • How relevant the extension evidence is • How consistent the extension evidence is • How strong the extension evidence is
5. Consider possible competitive advantages as perceived by consumers and possible reactions initiated by competitors.
6. Design marketing campaign to maximize the likelihood of success and potential positive feedback effects.
7. Evaluate extension success and effects on parent brand equity.
When identifying and evaluating brand extensions, it is help-
ful to have a summary tool to judge their viability. The following
checklist along with the steps summarized in Figure 13-7 can
provide some guidance:
1. Does the parent brand have strong equity?
2. Is there a strong basis of extension fit?
3. Will the extension have necessary points-of-parity and
points-of-difference?
4. How can marketing programs help enhance extension equity?
5. What implications will the extension have on parent brand
equity and profitability?
6. How should feedback effects best be managed?
It is also useful to employ a more systematic analysis of proposed
extensions. The Brand Extendibility Scorecard is designed to help
marketers conduct thoughtful, thorough analysis of brand exten-
sions (see Figure 13-8). Like any marketing tool or framework,
however, it serves as a means to an end and is designed to inform
decision-making, not to provide black-and-white “go or no-go”
decisions.
On the scorecard, three of its four main criteria follow the clas-
sic “3 Cs” perspectives to judge brand positioning—the consumer,
company, and competitive point of view. The fourth criterion is
unique to the scorecard and measures brand equity feedback.
Within each criterion, there are two major factors and one
minor factor. Major factors are scored on a 10-point scale; minor
factors, on a 5-point scale. Maximum points are awarded if the
extension candidate is clearly ideal on that factor, using either
company or industry measures.
When we are scoring extensions, relative performance is
important as absolute performance. Ranking extension candi-
dates by their scores can provide a clear sense of priority, but
we may also want to set cutoff points to guide decisions about
potential extensions, perhaps by first scoring recent successful
and unsuccessful extensions for the brand and even for competi-
tors. This step also allows the marketing team to become more
familiar with the scorecard.
THE SCIENCE OF BRANDING 13-1
Scoring Brand Extensions
The Science of Branding 13-1 provides a framework for scoring brand extensions based on
guidelines emanating from prior research on brand extensions. The related research findings
are summarized later in the chapter.
Vertical Brand Extensions We have seen that brand extensions can expand market coverage and bring new consumers into the
brand franchise. Vertical brand extensions, which extend the brand up into more premium market
segments or down into more value-conscious segments, are a common means of attracting new
groups of consumers. The central logic here is that the equity of the parent brand can be transferred
in either direction to appeal to consumers who otherwise would not consider it.
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 485
Pros and Cons. Vertical extensions can confer a number of advantages. An upward extension can improve brand image, because a premium version of a brand often brings positive associations with it. Extensions in either direction can offer consumers variety, revitalize the parent brand, and permit further extensions in a given direction.
Yet, vertical extensions are also susceptible to many of the disadvantages of brand extensions. A vertical extension to a new price point, whether higher or lower, can confuse or frustrate con- sumers who have learned to expect a certain price range from a brand. If the upward extension is sub-branded on the basis of a new attribute addition, then competitive brands sharing that attribute may enter the picture, and the parent brand may suffer in comparison.38 Consumers may reject the extension, and the parent brand’s image will suffer. For prestige brands in particular, firms must often maintain a balance between availability and scarcity such that people always aspire to be a customer and do not feel excluded.
Even a successful downward extension has the possibility of harming the parent’s brand image by introducing associations common to lower-priced brands, such as inferior quality or reduced ser- vice. Interestingly, however, research has shown that higher-quality extensions are likely to improve evaluations of the parent brand more than lower-quality extensions might harm it.39
One of the biggest risk factors of a vertical extension, particularly a downward one, is that it will succeed but cannibalize sales of a parent brand. It may bring new consumers to the brand franchise, but it may also bring a greater number of existing customers of the parent brand.
In the technology context, another type of vertical extension that is frequently observed is that of a company offering a basic version of software for free and later introducing a line exten- sion with additional features for a significant price. The freemium model has been very successful across a range of software products. For example, Dropbox, the cloud storage platform, offered a free plan for up to 2 GB of space, and later on, upgraded users to the Pro plan with significantly larger amounts of storage for a price of $9.99 per month.40 This type of vertical extension only works when there are significant benefits associated with creating a large user base who interact regularly with the free product. These users can then be targeted for upselling the higher-priced extensions of the base product.
FIGURE 13-8
Brand Extendibility
Scorecard
Allocate points according to how well the new product concept rates on the
specific dimensions in the following areas:
Consumer Perspectives: Desirability
10 pts. _____ Product category appeal (size, growth potential)
10 pts. _____ Equity transfer (perceived brand fit)
5 pts. _____ Perceived consumer target fit
Company Perspectives: Deliverability
10 pts. _____ Asset leverage (product technology, organizational skills,
marketing effectiveness via channels and communications)
10 pts. _____ Profit potential
5 pts. _____ Launch feasibility
Competitive Perspectives: Differentiability
10 pts. _____ Comparative appeal (many advantages, few disadvantages)
10 pts. _____ Competitive response (likelihood, immunity or invulnerability
from)
5 pts. _____ Legal/regulatory/institutional barriers
Brand Perspectives: Equity Feedback
10 pts. _____ Strengthens parent brand equity
10 pts. _____ Facilitates additional brand extension opportunities
5 pts. _____ Improves asset base
TOTAL _____ pts
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486 PART V • GROWING AND SUSTAINING BRAND EQUITY
Examples. Despite the problems inherent in vertical extensions, many companies have suc- ceeded in extending their brands to enter new markets across a range of price points. These com- panies have made sure that clear differentiation existed between brand extensions, minimizing the potential for brand overlap and accompanying consumer confusion and brand cannibalization. Each extension also lived up to the core promise of the parent brand, thus reducing the possibility that any would hurt the parent’s image. Consider how vertical extensions have helped these two brands appeal to a broader audience.
• As part of a plan to upgrade, Holiday Inn Worldwide broke its domestic hotels into five separate chains to tap into five different benefit segments: the upscale Crowne Plaza, the tra- ditional Holiday Inn, the budget Holiday Inn Express, and the business-oriented Holiday Inn Select (although soon to be phased out) and Holiday Inn Hotel & Suites. Different branded chains received different marketing programs and emphasis.
• Tesla is a major automaker that introduced the Model S in 2012 as a luxury electric sedan. This very successful electric car in 2017 was priced at $68,000. Capitalizing on the success of this car, Tesla introduced the Tesla Model X as a full-size SUV at a retail price of US $132,000. The Tesla Model 3 has a price of $35,000 and is aimed to offer the eco-friendly brand to a larger audience.
Naming Strategies. Firms often adopt sub-branding strategies to distinguish their lower-priced entries. For example, the retail outlet, Nordstrom Rack offers cheaper merchandise and discounted clothing and is typically priced lower than the parent retailer, Nordstrom, which offers higher- priced merchandise. Such extension introductions clearly must be handled carefully; typically, the parent brand plays a secondary role.
An even more difficult vertical extension is an upward brand stretch. In general, it is difficult to change people’s impressions of the brand enough to justify a significant upward extension. Concern about the unwillingness of consumers to update their brand knowledge was what led Honda, Toyota, Hyundai, and Nissan to introduce their luxury car models as separate nameplates (Acura, Lexus, Equus, and Infiniti, respectively). As it turns out, product improvements to the upper ends of their brand lines since the introduction of these new car nameplates may have made it easier to bridge the gap into the luxury market with their brands.
At the same time, it is possible to use certain brand modifiers to signal a noticeable, although presumably not dramatic, quality improvement—for example, iPhone SE, Ultra Dry Pampers, Extra Strength Tylenol, or PowerPro Dustbuster Plus. These indirect extensions, or “super-brands,” may be less risky than direct extensions when moving a master brand up-market.
To avoid the potential difficulties associated with vertical extensions, however, companies sometimes elect to use new and different brand names to expand vertically. The Gap has employed a three-tier approach, using the Banana Republic brand to command a 40 percent price premium
TESLA 3 is a lower-priced Tesla meant to appeal to a larger audience.
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 487
that the Gap would likely never attain on its own and launching the Old Navy brand to offer 40 percent discounts.
By developing unique brand names, companies pursuing vertical expansion can avoid a nega- tive transfer of equity from a lower brand to a higher brand, but they sacrifice some ability to transfer positive associations. Yet, when the parent brand makes no secret of its ownership of the vertical brands, as is the case with both the Gap and Toyota, some associations may be transferred because the parent acts as a “shadow endorser” of the new brand.41
Branding Brief 13-3 illustrates how Mambo has expanded its market coverage and attracted new consumers through vertical extensions into discount clothing and apparel.
Mambo is an iconic Australian surf brand, famous for
outlandish and often politically incorrect T-shirt designs. Launched
in 1984, the company works with many talented artists from
Australia, the United States, the United Kingdom, and Japan,
putting art on anything that can be worn, hung, ridden, driven,
or played. In the 1980s and 1990s, Mambo offered often con-
troversial cultural commentary on T-shirts, but in 2000, during
the Sydney Olympics in Australia, the iconic brand became the
provider of not only the outfit of the typical Aussie surfer but also
the official uniform of the Australian Olympian.
Twelve years later, Mambo is one of Australia’s most influ-
ential brands, on par with Nike and Adidas. However, like many
other companies, Mambo has struggled through tough economic
times. As part of a retail strategy aimed at widening its sales base
and increasing annual revenue, the company sought to expand its
range of products by adding the Mambo surf-wear brand to Big
W’s clothing range in Australia (a Woolworth’s discount depart-
ment store chain).
Under the new retail strategy, the Mambo range at Big
W comprises men’s, women’s, and children’s clothing, includ-
ing sunglasses and footwear, as well as sporting gear, such
as surfboards and skateboards. For Big W, the introduction of
the Mambo brand was a way for it to differentiate itself from
competitors who focus on bargain-priced private labels. Adding
Mambo to its clothing range meant that customers could be
assured quality through a well-known brand, which in turn reit-
erates value when coupled with the competitive pricing offered
at this type of discount store.
However, just a few weeks after the introduction of the
Mambo clothing line to Big W, a T-shirt design that had first
appeared in 1986, bearing an irreverent tagline and artwork, had
BRANDING BRIEF 13-3
Mambo Extends Its Brand
Iconic Australian brand Mambo has sought to expand its range of products to widen its sales base and
increase annual revenue.
Source: Hemis/Alamy Stock Photo
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488 PART V • GROWING AND SUSTAINING BRAND EQUITY
EVALUATING BRAND EXTENSION OPPORTUNITIES Academic research and industry experience have revealed a number of principles governing suc- cessful brand extensions. Marketers must consider their strategies carefully by systematically following the steps listed in Figure 13-9 and using managerial judgment and marketing research to help make each of these decisions.
to be withdrawn following a complaint from a customer in a Big
W store. It seemed that a simple vertical extension of the original
Mambo brand would not be possible.
To reach a broader market beyond like-minded surf enthu-
siasts, Mambo has had to include new designs in its range, but
it has been able to retain some of the less controversial but
renowned designs from Mambo’s back catalog. To ensure that
the parent brand image would not be tarnished by introducing
Mambo products to the discount department chain, the range
offered at Big W does not include premium Mambo Goddess and
Mambo Surf Deluxe collections or controversial products such as
Reg Mombassa’s “Australian Jesus.”
Sources: www.mamboaustralia.com; Elle Halliwell, “Aussie Models Cheyenne Tozzi and Erin McNaught Credited with Making Surf Brand Mambo Cool Again,” The Sunday Mail, September 25, 2011; Leesha McK- enny, “Mambo ‘Crucifixion’ Shirt Withdrawn from Big W After Dressing Down,” The Sydney Morning Herald, September 3, 2010; Blair Speedy, “Big W Department Stores Add Mambo Surfwear to Fashion Range,” The Aus- tralian, August 11, 2010.
FIGURE 13-9
Brand Extension
Guidelines Based on
Academic Research
1. Successful brand extensions occur when the parent brand is seen as having favorable associations, and there is a perception of fit between the parent brand and the extension product.
2. There are many bases of fit: product-related attributes and benefits as well as non-product-related attributes and benefits related to common usage situations or user types.
3. Depending on consumer knowledge of the product categories, perceptions of fit may be based on technical or manufacturing commonalities or more surface considerations such as necessary or situational complementarity.
4. High-quality brands stretch farther than average-quality brands, although both types of brands have boundaries.
5. A brand that is seen as prototypical of a product category can be difficult to extend outside the category.
6. Concrete attribute associations tend to be more difficult to extend than abstract benefit associations.
7. Consumers may transfer associations that are positive in the original product class but become negative in the extension context.
8. Consumers may infer negative associations about an extension, perhaps even based on other inferred positive associations.
9. It can be difficult to extend into a product class that is seen as easy to make.
10. A successful extension can not only contribute to the parent brand image but also enable a brand to be extended even farther.
11. An unsuccessful extension hurts the parent brand only when there is a strong basis of fit between the two.
12. An unsuccessful extension does not prevent a firm from backtracking and introducing a more similar extension.
13. Vertical extensions can be difficult and often require sub-branding strategies.
14. The most effective advertising strategy for an extension is one that emphasizes information about the extension (rather than reminders about the parent brand).
15. Individual differences can affect how consumers make an extension decision, and will moderate extension effects.
16. Cultural differences across markets can influence extension success.
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 489
Define Actual and Desired Consumer Knowledge about the Brand It is critical for marketers to fully understand the depth and breadth of awareness of the parent brand, and the strength, favorability, and uniqueness of its associations. Moreover, marketers must know what is to be the basis of positioning and core benefits satisfied by the brand. Profiling actual and desired brand knowledge structures helps identify possible brand extensions as well as guide decisions that contribute to their success. In evaluating an extension, a company must understand where it would like to take the brand in the long run. Because the introduction of an extension can change brand meaning, it can affect consumer response to all subsequent marketing activity as well (see Chapter 14).
Identify Possible Extension Candidates Chapter 12 described a number of consumer, firm, and competitor criteria for choosing which
products and markets a firm should enter. With respect to consumer factors, marketers should
consider parent brand associations—especially as they relate to brand positioning and core
benefits—and product categories that might seem to fit with that brand image in the minds of
consumers.42 Although consumers are generally better able to react to an extension concept than to
suggest one, it still may be instructive to ask consumers what products the brand should consider
offering if it were to introduce a new product. Brainstorming is another way to generate category
extension candidates, along with consumer research.
One or more associations can often serve as the basis of fit. Allegra is a well-known allergy
medication which extended its brand to introduce Allegra Anti-Itch Cooling Relief and Anti-Itch
Intensive Relief. These products leveraged the success of the Allegra product and utilized a similar
color scheme on their packaging. Tyson’s brand of breakfast sausages, Jimmy Dean, introduced
a new line of products designed for lunch and dinner by leveraging its association with frozen
foods.43 As these examples help illustrate, identifying key brand associations can become the
starting point of identifying potential brand extension opportunities.
Evaluate the Potential of the Extension Candidate In forecasting the success of a proposed brand extension, marketers should assess—through judgment
and research—the likelihood that the extension will realize the advantages and avoid the disadvan-
tages of brand extensions, as summarized in Figures 13-2 and 13-4. As with any new product, analysis
of the 3 Cs—consumer, corporate, and competitive factors—as well as category factors can be useful.
Consumer Factors. To evaluate the potential of a proposed brand extension, we assess its abil-
ity to achieve its own brand equity, as well as the likelihood that it can affect the parent brand’s
existing brand equity. First, marketers must forecast the strength, favorability, and uniqueness of
all associations to the brand extension. In other words, what will be the salience, favorability, or
uniqueness of parent brand associations in the proposed extension context? Similarly, what will
Allegra extended its popular allergy product to introduce new products for
anti-itch relief, using the same color scheme on their packaging to unify the
brand’s identity across the products.
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be the strength, favorability, and uniqueness of any other inferred associations? The three-factor model of extension evaluations and the four-factor model of extension feedback effects can pro- vide guidance in studying consumer reactions.
To narrow down the list of possible extensions, we often need consumer research (see
Chapter 10 for a review). We can ask consumers directly for their brand permission (How well
does the proposed extension fit with the parent brand? Would you expect such a new product
from the parent brand?). We can even ask what products they believe are currently attached to
the brand. If a majority of consumers believe a proposed extension product is already being
sold under the brand, there would seem to be little risk in introducing it, at least based on initial
consumer reaction.
To understand consumers’ perceptions of a proposed extension, we can use open-ended
associations (What comes into your mind when you think of the brand extension? What are your
first impressions on hearing that the parent brand is introducing the extension?), as well as ratings
scales based on reactions to concept statements. An interesting statistical approach uses Bayesian
factor analysis to separate brand and category effects to better assess brand fit.44
Common pitfalls include failing to take all consumers’ brand knowledge structures into
account. Often marketers mistakenly focus on one or perhaps a few brand associations as
a potential basis of fit and ignore other, possibly more important, brand associations in the
process.
Another major mistake in evaluating brand extensions is overlooking how literal consumers
can be in evaluating brand extensions. Although consumers ultimately care about benefits, they
often notice and evaluate attributes—especially concrete ones—in reacting to an extension. Brand
managers, though, tend to focus on perceived benefits in predicting consumer reactions, and, as
a result, they may overlook some potentially damaging attribute associations.
BIC
By emphasizing inexpensive, disposable products, the French company Société Bic was able to create mar-
kets for nonrefillable ballpoint pens in the late 1950s, disposable cigarette lighters in the early 1970s, and
disposable razors in the early 1980s. It unsuccessfully tried the same strategy in marketing Bic perfumes in
the United States and Europe in 1989. 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 $5 each. The products were displayed on racks in plastic pack-
ages at checkout counters throughout Bic’s extensive distribution channels, which included 100,000 or so
drugstores, supermarkets, and other mass merchandisers. At the time, a Bic spokeswoman described the
new products as extensions of the Bic heritage—“high quality at affordable prices, convenient to purchase,
and convenient to use.”45 The brand extension was launched with a $20 million advertising and promotion
campaign containing images of stylish people enjoying themselves with the perfume and using the tagline
“Paris in Your Pocket.” Nevertheless, Bic was unable to overcome its lack of cachet and negative image
associations; failing to achieve a critical point-of-parity, the extension fell short. Other brand extensions by
Bic (e.g., Bic disposable underwear) although leveraging the association of Bic with disposable products,
were also seen as brand extension failures.
Although Bic has pioneered a variety of successful brand extensions which are
of a disposable nature, its perfume brand extension was less well received.
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Corporate and Competitive Factors. Marketers must take not only a consumer perspective in evaluating a proposed brand extension, but also a broader corporate and competitive perspec- tive. How effectively are the corporate assets leveraged in the extension setting? How relevant are existing marketing programs, perceived benefits, and target customers to the extension? What are the competitive advantages to the extension as consumers perceive them, and possible reactions initiated by competitors as a result?
One of the biggest mistakes marketers make in launching extensions is failing to properly account for competitors’ actions and reactions.46 Too many extension products and too strongly entrenched competition can put a strain on company resources. Arm & Hammer’s brand exten- sion program met major resistance in categories such as deodorants when existing competitors fought back.
Brand counterextensions—whereby a competing brand in the extension category chooses to launch its own extension into the parent brand’s category—can pose a significant threat. The introduction of Hershey’s strawberry syrup was followed by Smucker’s chocolate syrup; Dixie paper plates was followed by Chinet paper cups. A successful extension can reduce the perceived fit between categories, making it easier for a brand to counterattack.47
Category Factors. Marketers must determine the optimal product line strategy for their brand. To do so, they need a clear understanding of the market and the cost interdependencies between products.48 This, in turn, means examining the percentage of sales and profits contributed by each item in the product line and its ability to withstand competition and address consumer needs.
A product line is too short if the manager can increase long-term profits by adding items; the line is too long if the manager can increase profits by dropping items.49 Increasing the length of the product line by adding new variants or items typically expands market coverage, and therefore, market share, but it also increases costs. From a branding perspective, longer product lines may decrease the consistency of the associated brand image if all items use the same brand.
Reddy, Holak, and Bhat studied the determinants of line extension success using data on 75 line extensions of 34 cigarette brands over a 20-year period.50 Their major findings indicate that:
• Line extensions of strong brands are more successful than extensions of weak brands. • Line extensions of symbolic brands enjoy greater market success than those of less symbolic
brands. • Line extensions that receive strong advertising and promotional support are more successful
than those extensions that receive meager support. • Line extensions entering earlier into a product subcategory are more successful than exten-
sions entering later, but only if they are extensions of strong brands. • Firm size and marketing competencies also play a part in an extension’s success. • Earlier line extensions have helped in the market expansion of the parent brand. • Incremental sales generated by line extensions may more than compensate for the loss in
sales due to cannibalization.
Despite the pitfalls of line extensions and the many considerations necessary to properly man- age extensions, the allure of line extensions for companies remains strong, primarily due to the cost and risk incurred in launching an entirely new brand. One report showed that line extensions take half as long to develop, cost far less to market, and enjoy twice the success rate of major new brand launches.51
Design Marketing Programs to Launch Extension Too often, companies use extensions as a shortcut means of introducing a new product and pay insufficient attention to developing a branding and marketing strategy that will maximize the equity of the brand extension as well as enhance the equity of the parent brand. As is the case with a new brand, building brand equity for a brand extension requires choosing brand elements, designing the optimal marketing program to launch the extension, and leveraging secondary associations.
Choosing Brand Elements. By definition, brand extensions retain one or more elements from an existing brand. They do not have to leverage only the brand name but can use other brand ele- ments too. For example, Heinz and Campbell’s have implemented package designs that distinguish different line extensions or brand types, but reveal their common origin at the same time.52
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Sometimes packaging is such a critical component of brand equity that it is hard to imagine an extension without it. Brand managers are in a real dilemma in such cases, because if they choose the same type of packaging, they run the risk that the extension will not be well distinguished. If they use different packaging, they may leave a key source of brand equity behind.
A brand extension can retain or modify one or more brand elements from the parent brand as well as adopt its own brand elements. In creating new brand elements for an extension, marketers should follow the same guidelines of memorability, meaningfulness, likeability, protectability, adaptability, and transferability that we described in Chapter 4 for the development of any brand.
New brand elements are often necessary to help distinguish the brand extension and build
awareness and image. As Chapter 12 noted, the relative prominence of existing parent brand ele-
ments and new extension brand elements will dictate the strength of transfer from the parent brand
to the extension, as well as the feedback from the extension to the parent brand.
Designing an Optimal Marketing Program. The marketing program for a brand extension
must consider the same guidelines in building brand equity that we described in Chapters 5 and 6.
Consumer perceptions of value must guide pricing decisions, distribution strategies must blend
push and pull considerations, and the firm must integrate marketing communications by mixing
and matching communication options.
When it comes to positioning, the less similar the extension is to the parent brand, the more
important it typically is to establish necessary and competitive points-of-parity. The points-of-
difference for a category extension in many cases directly follow from the points-of-difference for
the parent brand, and consumers readily perceive them. Thus, when Nivea extended into shampoos
and conditioners, deodorants, and cosmetics and other beauty products, its key “gentleness” point-
of-difference transferred relatively easily. With line extensions, on the other hand, marketers have
to create a new association that can serve as an additional point-of-difference and help distinguish
the extension from the parent brand too.
For line extensions, consumers must also understand how the new product relates to existing
products in order to minimize possible cannibalization or confusion.
Leveraging Secondary Brand Associations. Brand extensions will often leverage the same
secondary associations as the parent brand, although competing in the extension category may
require some additional fortification like linking to other entities. A brand extension differs in
that, by definition, there is always some leveraging of another brand or company. The extent to
which these other associations become linked to the extension, however, depends on the brand-
ing strategy the firm adopts and how it brands the extension. As we’ve seen, the more common
the brand elements and the more prominence they receive, the more likely it is that parent brand
associations will transfer.
Evaluate Extension Success and Effects on Parent Brand Equity The final step in evaluating brand extension opportunities is to assess the extent to which an
extension is able to achieve its own equity as well as contribute to the equity of the parent brand.
To help measure its success, we can use brand tracking based on the customer-based brand equity
model or other key measures of consumer response centered on both the extension and the parent
brand as a whole. A simple checklist and a more detailed scorecard to help in evaluating brand
extension opportunities follows.
EXTENSION GUIDELINES BASED ON ACADEMIC RESEARCH Now we turn to some specific guidance about brand extensions. Fortunately, much academic
research has focused on this strategy. We summarize some of the important conclusions in Figure
13-9 and describe them in detail in this section.
1. Successful brand extensions occur when the parent brand has favorable associations, and consumers perceive a fit between the parent brand and the extension product. To better
understand the process by which consumers evaluate a brand extension, many academic
researchers have adopted a categorization perspective. Categorization research suggests that
people usually evaluate a stimulus in terms of whether they can classify it as a member of a
previously defined mental category.
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We could argue that consumers use their categorical knowledge of brands and products to simplify, structure, and interpret their marketing environment.53 For example, consumers may see brands as categories that, over time, have acquired a number of specific attributes based on their individual members.54 As Method has expanded its range of cleaning products, consumers might develop stronger brand associations to modern designs and environmental friendliness.
In this categorization perspective, if consumers saw a brand extension as closely related or similar to the brand category, they could easily transfer their existing attitude about the parent brand to the extension. If they were not as sure about the similarity, they might evaluate the extension in a more detailed, piecemeal fashion. In this case, the strength, favorability, and uniqueness of salient brand associations would determine how they viewed the extension.55
Consistent with these notions, Aaker and Keller collected consumer reactions to 20 pro- posed extensions from six well-known brands and found that both a perception of fit between the original and extension product categories and a perception of high quality for the parent brand led to more favorable extension evaluations.56
A number of subsequent studies have explored the generalizability of these findings to markets outside the United States. Based on a comprehensive analysis of 131 brand exten- sions from seven such replication studies around the world, Bottomly and Holden concluded that this basic model clearly generalized, although cross-cultural differences influenced the relative importance attached to the model components.57
Thus, in general, brand extensions are more likely to be favorably evaluated by con- sumers if they see some basis of fit or congruity between the proposed extension and parent brand.58 Interestingly, moderately incongruent extensions can evoke more favorable exten- sion evaluations than highly congruent extensions under certain specialized situations, such as when consumers are highly involved, and the extension is otherwise undifferentiated from competitors.59
2. There are many bases of fit; both product-related and non-product-related attributes and benefits may influence extension fit. Any association about the parent brand that consumers hold in memory may serve as a potential basis of fit. Most academic researchers assume consumers’ judgments of similarity are a function of salient shared associations between the parent brand and the extension product category. Specifically, the more common and the fewer distinctive associations that exist, the greater the perception of overall similarity, whether based on product- or non product-related attributes and benefits.60
To demonstrate how fit does not have to be based on product-related associations alone, Park, Milberg, and Lawson showed how the more prestige-oriented Rolex brand could more easily extend into categories such as grandfather clocks, bracelets, and rings than the more function-oriented Timex brand; however, Timex could more easily extend into categories such as stopwatches, batteries, and calculators.
Broniarczyk and Alba provide another compelling demonstration of the importance of recognizing salient brand associations.61 They showed that a perceived lack of fit between the parent brand’s product category and the proposed extension category could be overcome if key parent brand associations were salient and relevant in the extension category. For exam- ple, Froot Loops cereal—that has strong brand associations to sweet, flavor, and kids—was better able to extend to dissimilar product categories—such as lollipops and popsicles than to similar product categories such as waffles and hot cereal—because of the relevance of its brand associations in the dissimilar extension category.
Thus, extension fit is more than just the number of common and distinctive brand asso- ciations between the parent brand and the extension product category.62 These research stud- ies and others demonstrate the importance of taking a broader perspective of categorization and fit. For example, Bridges, Keller, and Sood refer to category coherence as members that “hang together” and “make sense.” Based on this concept of category coherence, physically dissimilar toy, bath care, and car seat products in the Fisher-Price product line can be linked together as “products for children.”63
Researchers have also explored other, more specific, aspects of fit, and have found that the use of specific contexts could influence judgments of fit. For example, Boush provided experimental data that suggests that when fit is judged in the context of a specific brand name (“Time magazine is like Time books”), judgments of fit are different than when fit is judged
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494 PART V • GROWING AND SUSTAINING BRAND EQUITY
with only category labels (e.g., magazines and books). Smith and Andrews surveyed industrial goods marketers and found that the relationship between fit and new product evaluations was influenced by customers’ confidence that a firm could provide a proposed new product.64
3. Depending on their knowledge of the product categories, consumers may perceive fit based on technical or manufacturing commonalities, or on surface considerations such as neces- sary or situational complementarity. Consumers can also base fit on considerations other than attributes or benefits. Taking a demand-side and supply-side perspective of consumer percep- tions, Aaker and Keller showed that perceived fit between the parent brand and the extension product could be related to the economic notions of substitutability and complementarity in product use (from a demand-side perspective), as well as to the firm’s perceived grasp of the skills and assets necessary to make the extension product (from a supply-side perspective).
Thus, Honda’s perceived expertise in making motors for lawn mowers and cars may help perceptions of fit for any other machinery with small motors that Honda might want to introduce. The Food Network leveraged its expertise in foods to introduce Food Network cook- ware. On the other hand, some extension examples have little manufacturing compatibility but greater usage complementarity, such as Colgate’s extension from toothpaste to toothbrushes or Duracell’s extension from batteries to flashlights. Harley Davidson clothing and Coppertone sunglasses are extension products which leverage the particular usage occasions in which their respective parent brands are used (i.e., motorcycles and sunscreen). In other cases, extensions may leverage a similar target audience, as in the case of Visa traveler’s checks.
These perceptions of fit, however, may depend on how much consumers know about the product categories. As Muthukrishnan and Weitz demonstrated, expert consumers are more likely to use technical or manufacturing commonalities to judge fit, whereas less knowledge- able novice consumers are more likely to use superficial, perceptual considerations, such as common package, shape, color, size, and usage.65 Zhang and Sood showed a similar pattern of knowledge effects based on age. Children were more likely to evaluate extensions on the basis of surface cues (such as brand name linguistic characteristics of an extension, for example whether a brand name rhymed or not) while adults were more likely to use deep cues (like category similarity between the parent brand and extension category).66
Fit perceptions also vary across different types of consumers and how they view product extensions. Yorkston, Nunes, and Matta demonstrated that those consumers who believe that the personality traits of a brand are malleable (i.e., incremental theorists), are more accept- ing of brand extensions than consumers who believe that a brand’s traits are fixed (i.e., entity theorists). Another set of findings by Cutright, Bettman, and Fitzsimmons show that when feelings of personal control are low for consumers, they may be more likely to reject brand extensions that do not seem to fit well with a parent brand. Finally, researchers Monga and Gurhan-Canli found that mating mind-sets (thinking about a mate) can increase perceptions of extension fit particularly for moderately dissimilar extensions because it induces something called relational processing.67
4. High-quality brands stretch farther than average-quality brands, although both types have boundaries. Consumers often see high-quality brands as more credible, expert, and trustwor- thy. As a result, even if they believe a relatively distant extension does not really fit with the brand, they may be more willing to give a high-quality brand the benefit of the doubt than a brand they see as average in quality.68
Thus, one important benefit of building a strong brand is that it can extend more easily into more diverse categories.69 Fedorikhin, Park, and Thomson found that if consumers had a high degree of attachment with a brand, they were willing to pay more for an extension, recommend it to others, and forgive any mishaps.70 Similarly, Yeung and Wyer showed that if a brand evokes a strong positive emotional reaction, consumers are likely to be less influenced by the fit of the extension.71
Regardless, all brands have boundaries, as a number of observers have persuasively argued by pointing out ridiculous, and even comical, hypothetical brand extension possi- bilities. As Tauber once noted, few consumers would want Jell-O shoelaces or Tide frozen entrees!
5. A brand that consumers see as prototypical for a product category can be difficult to extend outside the category. As a caveat to the earlier conclusion, if consumers see a brand as exem- plifying a category too strongly, it may be difficult for them to think of it in any other way.
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Numerous examples exist of category leaders that have failed in introducing brand exten- sions.72 For example, Bayer, a brand synonymous with aspirin, ran into a stumbling block introducing the Bayer Select line of specialized nonaspirin painkillers.73 Perhaps the most extreme examples are brands that lost their trademark distinctiveness and became a generic term for the category, such as Thermos and Kleenex. To illustrate the difficulty a prototypical brand may have in extending, consider the experiences of Clorox.
CLOROX
Clorox is a well-known brand whose name is virtually synonymous with bleach. In 1988, Clorox took on
consumer goods giants Procter & Gamble and Unilever by introducing the first bleach with detergent. After
pouring $225 million into the development and distribution of its detergent products over three years, Clo-
rox was able to achieve only a 3 percent market share. Despite being beaten to market, P&G subsequently
introduced Tide with Bleach and was able to achieve a 17 percent share. Reluctantly, Clorox chose to exit the
market. Its failure can certainly be attributed in part to the fact that consumers could think of Clorox only
in a very limited sense as a bleach product. In a combined “laundry detergent with bleach” product, too,
they see laundry detergent as the primary ingredient and bleach as secondary. As a result, in this market,we
might expect a laundry detergent extension such as Tide with Bleach to have an advantage over a bleach
extension such as Clorox. On the other hand, Clorox has successfully extended its brand into a wide variety of
household cleaning products like toilet bowl cleaners, where the bleach ingredient is seen as more relevant.74
The relationship between primary and secondary ingredients Clorox may have encoun- tered might also explain why Aunt Jemima was successful in introducing a pancake syrup extension from its well-liked pancake mix product, but syrup maker Log Cabin was less successful in introducing a pancake mix extension: pancake mix is seen as a more dominant ingredient than pancake syrup in breakfast pancakes.
6. Concrete attribute associations tend to be more difficult to extend than abstract benefit asso- ciations. The limits to market leaders’ extension boundaries may be more rigid because many market leaders have strong concrete product attribute associations. These may even be reinforced by their names, like Liquid Paper, Cheez Whiz, and Shredded Wheat.75 La-Z- Boy, for example, has struggled some to expand its strong usage imagery outside the narrow product line of recliners.
Concrete attribute associations thus may not transfer as broadly to extension categories as more abstract attribute associations.76 For example, the Aaker and Keller study showed that consumers dismissed a hypothetical Heineken popcorn extension as potentially tasting bad or like beer, and a hypothetical Crest chewing gum extension as tasting unappealing or like toothpaste. More abstract associations, on the other hand, may be more relevant across a wide set of categories because of their intangible nature.
We should note several caveats, however. First, parent brands’ concrete attributes can transfer to some product categories.77 A concrete attribute that is highly valued in the exten- sion category because it creates a distinctive taste, ingredient, or component can often make the extension successful. According to Farquhar and Herr, such extensions might include Tylenol sinus medication, Oreo cookies and cream ice cream, and Arm & Hammer carpet deodorizer.78
Second, abstract associations may not always transfer easily. This second caveat emerged from a study conducted by Bridges, Keller, and Sood, who examined the relative transferabil- ity of product-related brand information when it was represented either as an abstract brand association or as a concrete brand association. Although these authors expected the abstract brand representation to fare better, they found that, for several reasons, the two types of brand images extended equally well into a dissimilar product category—handbags. Perhaps the most important reason was that consumers did not believe the abstract benefit would have the same meaning in the extension category (durability does not necessarily transfer because durability for a watch is not the same as durability for a handbag).79
Finally, Joiner and Loken, in a demonstration of the inclusion effect in a brand extension setting, showed that consumers often generalized possession of an attribute from a specific cat- egory (like Sony televisions) to a more general category (say, all Sony products) more readily than they generalized the attribute from the specific category (Sony televisions) to another spe- cific category (Sony bicycles). The effect was greater the more the specific extension category was typical of the general category (Sony cameras are more typical than Sony bicycles).80
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496 PART V • GROWING AND SUSTAINING BRAND EQUITY
7. Consumers may transfer associations that are positive in the original product class but become negative in the extension context. Because they have different motivations or use the product differently in the extension category, consumers may not value a brand association as highly as the original product. For example, when Campbell’s test-marketed a tomato sauce with the Campbell’s name, it flopped. Apparently, Campbell’s strong associations to soup signaled to consumers that the new product would be watery. To give the product more credibility, Campbell changed the name to the Italian-sounding “Prego,” and the product has gone on to be a long-term success.
8. Consumers may infer negative associations about an extension, perhaps even based on other inferred positive associations. Even if consumers transfer positive associations from the parent brand to the extension, they may still infer other negative associations. For example, the Bridges, Keller, and Sood study showed that consumers who thought a proposed handbag extension from a hypothetical maker of durable watches also would be durable also assumed it would not be fashionable, helping to contribute to low extension evaluations.81
9. It can be difficult to extend into a product class that consumers see as easy to make. Aaker and Keller showed that consumers may dismiss some seemingly appropriate extensions if they see the product as comparatively easy to make and brand differences are hard to come by. Then a high-quality brand may seem incongruous; alternatively, consumers may feel the extension will attempt to command an unreasonable price premium and be too expensive.
When consumers see the extension category as difficult to make, on the other hand, such that brands can vary a great deal in quality, an extension has a greater opportunity to differentiate itself, although consumers may also be less sure what the exact quality level of the extension will be.82
10. A successful extension can not only contribute to the parent brand image but also enable a brand to extend even farther. An extension can help the image of the parent brand by improv- ing the strength, favorability, or uniqueness of its associations.83 For example, Swaminathan, Fox, and Reddy showed that when consumers did not already have strongly held attitudes, the successful introduction of a brand extension improved their choice and evaluations of a parent brand they originally perceived to be of only average quality.
If an extension changes the image and meaning of the brand, subsequent extensions that otherwise might not have seemed appropriate to consumers may make more sense and appear to be a better fit. Keller and Aaker showed that by taking little steps, that is, by introducing a series of closely related but increasingly distant extensions, marketers may insert brands into product categories that would have been much more difficult, or perhaps even impossible, to enter directly.84
A successful extension thus helps brands grow in three important ways:
1. By establishing a new market for the brand, 2. By strengthening existing markets for the brand, and 3. By opening up the possibility of additional new markets for the brand to subsequently
enter.
For example, when Toyota launched the successful Prius hybrid gasoline–electric car, it not only cast a positive halo on the Toyota corporate brand as a whole as innovative and environmentally concerned, but it also paved the way for the introduction of a whole family of four different Prius models.
Different factors affect the success of multiple extensions. Boush and Loken found that consumers evaluated far extensions from a broad brand with extensions already in many different categories more favorably than from a narrow brand who had not been so widely extended.85 Dacin and Smith have shown that if the perceived quality levels of different members of a brand portfolio are more uniform, then consumers tend to make higher, more confident evaluations of a proposed new extension.86 It is as if consumers in this case think, “Whatever this company does, it tends to do well.”
In an empirical study of 95 brands in 11 nondurable consumer goods categories, Sul- livan found that, in terms of stages of the product category life cycle, early-entering brand extensions did not perform as well, on average, as either early-entering new-name products or late-entering brand extensions.87
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Shine, Park, and Wyer demonstrate an interesting brand synergy effect of multiple exten- sions. The simultaneous introduction of two brand extensions (e.g., two digital cameras) had an effect on consumer evaluations of the extensions independent of their similarity or fit to the parent brand (e.g., Xerox). Consumers appear to view a related set of products from a single manufacturer as inherently appealing.88 Mao and Krishnan point out that consumers may form their perceptions of extension fit very differently when a brand operates in multiple product domains.89
11. An unsuccessful extension hurts the parent brand only when there is a strong basis of fit between the two. The general rule of thumb emerging from academic research and industry experience is that an unsuccessful brand extension can damage the parent brand only when there is a high degree of similarity or fit—for example, in the case of a failed line extension in the same category.
Roedder John and Loken found that perceptions of quality for a parent brand in the health and beauty aids area decreased with the hypothetical introduction of a lower-quality extension in a similar product category (shampoo). Quality perceptions of the parent brand were unaffected, however, when the proposed extension was in a dissimilar product category (facial tissue).90
Similarly, Keller and Aaker, as well as Romeo, found that unsuccessful extensions in dissimilar product categories did not affect evaluations of the parent brand.91 Roedder John, Loken, and Joiner found that dilution effects were less likely to be present with flagship products; they occurred with line extensions but were not always evident for more dissimilar category extensions.92
Gürhan-Canli and Maheswaran extended the results of these studies by considering the moderating effect of consumer motivation and extension typicality.93 In high-motivation conditions, they found that incongruent extensions were scrutinized in detail and led to the modification of family brand evaluations, regardless of the typicality of the extensions. In low-motivation conditions, however, brand evaluations were more extreme in the context of high (than low) typicality. Because consumers considered the less typical extension an exception, it had reduced impact.
Consistent with these high-motivation findings, Milberg and colleagues found that nega- tive feedback effects were present when (1) consumers perceived extensions as belonging to product categories dissimilar from those associated with the family brand, and (2) extension attribute information was inconsistent with image beliefs that consumers associated with the family brand.94
In terms of individual differences, Lane and Jacobson found some evidence of a negative reciprocal impact from brand extensions, especially for high-need-for-cognition subjects, but did not explore extension similarity differences.95 Kirmani, Sood, and Bridges found dilu- tion effects with owners of prestige-image automobiles when low-priced extensions were introduced, but not with owners of nonprestige automobiles or nonowners of either auto- mobile.96 Finally, Morrin revealed that exposing consumers to brand extension information strengthened rather than weakened parent brand associations in memory, particularly for parent brands that were dominant in their original product category.97
12. An unsuccessful extension does not prevent a firm from backtracking and introducing a more similar extension. The Keller and Aaker study also showed that unsuccessful extensions do not necessarily prevent a company from retrenching and later introducing a more similar extension. For example, the introduction of Levi’s Tailored Classics by Levi Strauss & Co. was initially unsuccessful, as there were problems with the chosen target market, distribu- tion channels, and product design. Perhaps the most fundamental problem was the lack of fit between the Levi’s informal, rugged, outdoor image and the image the company sought from its three-piece suits. Despite the ultimate withdrawal of the product, Levi Strauss later was able to execute one of the most successful apparel launches ever—Dockers pants—an extension much closer in fit and more strongly sub-branded.98
As these experiences with brand extensions illustrate, failure does not doom a firm never to be able to introduce any extensions—certainly not for a brand with as much equity as Levi’s. An unsuccessful extension does, however, create a perceptual boundary of sorts, in that it reveals the limits of the brand in the minds of consumers that may need to be over- come. In fact, Parker and his colleagues showed that if an unsuccessful extension managed
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to change and broaden the brand concept in the process, it could help to fuel more dissimilar extensions over time.99
13. A co-branded brand extension can leverage the success and equity of two brands. As noted in
Chapter 7, co-branding can create positive effects for a stock brand, both in terms of consumer
perceptions and financial performance. A study by Park, Youl Jun, and Shocker suggested that
having a co-branded brand extension can strengthen brand attitude by leveraging the strengths
of multiple brands.100 For example, a co-branded extension like the Angry Birds Star Wars
mobile game leverages the popularity of both Star Wars and Angry Birds brands in a joint
(co-branded) extension. Cao and Sorescu found that the stock market reacted favorably to
announcements of new co-branding arrangements.101
14. Both similar and dissimilar brands can partner successfully in a co-branded extension to achieve greater synergies. A study by Swaminathan et al. showed that co-branded extensions
can be equally successful when even highly similar brands (those with similar brand images)
join together, by leveraging their similarity of image and appeal. In contrast, complemen-
tary brands (with varying strengths), can combine together to compensate for their relative
weaknesses of the other brand and create a more successful jointly branded extension in the
process. Thus, both similar and complementary extensions can succeed, although their rela-
tive success depends on how the information about the co-branded product is processed by
consumers.102 If the brands are dissimilar on the basis of how well-known they are, however,
the less well-known brand must be careful that it is not overshadowed by the more well-
known brand.103
15. Vertical extensions can be difficult and often require sub-branding strategies. Some academic
research has investigated vertical extensions. For instance, researchers Randall, Ulrich, and
Reibstein found that brand price premium was positively correlated with the quality of the
lowest-quality model in the product line for the lower-quality segments of the market; for the
upper-quality segments of the market, brand price premium was also significantly positively
correlated with the quality of the highest-quality model in the product line.104
Hamilton and Chernev showed that upscale extensions increased the price image of a
brand, and downscale extensions decreased its price image when consumers were browsing or
just looking around, but that did not necessarily apply when consumers were actively looking
to make a purchase. In the latter case, the effects could even be reversed: upscale extensions
may actually decrease price image, and downscale extensions increase it, if consumers have
an explicit buying goal.105
Kirmani, Sood, and Bridges examined the ownership effect—whereby owners have
more favorable responses than nonowners to brand extensions—in the context of brand line
stretches. They found that the ownership effect occurred for upward and downward stretches
of nonprestige brands (such as Acura) and for upward stretches of prestige brands (such as
Calvin Klein and BMW). For downward stretches of prestige brands, however, the ownership
effect did not occur because of owners’ desires to maintain brand exclusivity. In this situation,
a sub-branding strategy protected owners’ parent brand attitudes from dilution.106
16. The most effective advertising strategy for an extension is one that emphasizes information about the extension (rather than reminders about the parent brand). A number of studies
have shown that the information provided about brand extensions, by triggering selective
retrieval from memory, may frame the consumer decision process and affect extension evalu-
ations. In general, the most effective strategy appears to be one that recognizes the type of
information already salient for the brand in the minds of consumers when they first consider
the proposed extension, and that highlights additional information they would otherwise
overlook or misinterpret.
Aaker and Keller found that elaborating briefly on specific extension attributes about
which consumers were uncertain or concerned led to more favorable evaluations. Bridges,
Keller, and Sood—as well as Klink and Smith—found that providing information could
improve perceptions of fit when consumers perceived low fit between the brand and the
extension, either by reinforcing an overlooked basis of fit or by addressing a distracting
negative association.107 Lane found that repeating an ad that evoked primarily benefit brand
associations could overcome negative perceptions of a highly incongruent brand extension.108
Research has also explored several other aspects of extension marketing programs.
Sood and Keller found that branding effects—in terms of inferences based on parent brand
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 499
knowledge—operated both in the absence and presence of product experience with an exten- sion, although they were less pronounced, or, in the case of an unambiguous negative experi- ence, even nonexistent.109
In considering the effects of retailer displays, Buchanan, Simmons, and Bickart found that evaluations of a high-equity brand could be diminished by an unfamiliar competitive brand when (1) a mixed display structure led consumers to believe the competitive brand was relevant and useful for judging the high-equity brand, (2) the precedence given to one brand over another in the display made expectations about brand differences or similarities more evident to consumers, and (3) the unfamiliar competitive brand disconfirmed these expectations.110
17. Individual differences can affect how consumers make an extension decision and will moder- ate extension effects. Consumers vary in their short-term or long-term motivation, ability, and opportunity to evaluate an extension in a number of important ways. Researchers have shown how these differences can affect extension fit and evaluations, as follows.
Monga and John demonstrate that one important individual difference in extension evaluations is whether consumers are analytical (those who focus on comparing particular attributes) or holistic thinkers (those who focus more on comparing overall attitudes and judg- ments of the parent brand and extension). Analytical and holistic thinkers both gave prestige brands permission to extend widely, but holistic thinkers gave functional brands much greater permission to extend than analytical thinkers.111
Similarly, Yorkston, Nunes, and Matta show that consumers known as incremental theo-
rists, who believe the personality traits of a brand are malleable, are more accepting of brand extensions than consumers known as entity theorists, who believe a brand’s traits are fixed.112
Another important individual difference relates to self-construal, or how people view and make sense of life and their life.113 A person with an independent self-construal is more con- cerned with the uniqueness of individuals. A person with an interdependent self-construal is more concerned with relationships between and among individuals.
In a branding context, Ahluwalia posited that a consumer with an interdependent self- construal should be better able to uncover the possible relationships among a brand exten- sion and its parent brand and thus, have higher perceptions of extension fit and favorability, particularly when interdependents were sufficiently motivated.114
Similarly, Puligadda, Ross, and Grewal argue that brand-schematic consumers are more likely than others to process or organize information according to their brand knowledge. Brand-aschematic consumers, on the other hand, use other information such as product characteristics or attributes as a frame of reference. Brand schematic consumers were shown to be more likely to see the similarity in a brand extension concept.115
Another important individual difference between consumers is what academics call regu-
latory focus. This deals with motivation and how people go about pursuing their goals. Indi- viduals with a prevention focus are concerned with negative outcomes and avoiding losses via safety, security, responsibility, and so on. Individuals with a promotion focus are concerned with positive outcomes, seeking gains and pleasure, and avoiding missed opportunities.116
Yeo and Park showed that consumers who are focused on prevention tend to judge dissimilar extensions less favorably than consumers who focus on promotion, due to their different interpretations of risk.117 Relatedly, Chang, Lin, and Chang showed that promotion- focused consumers are more likely to focus abstractly on the overlap in benefits in judging an extension, whereas prevention-focused consumers are more likely to focus concretely on sheer category similarity.118
Temporal factors can affect extension evaluations. Barone, Miniard, and Romeo experi- mentally demonstrated that positive mood led consumers to think more positively of exten- sions they viewed as moderately similar to a brand they valuated favorably (as opposed to very similar or dissimilar).119
18. Cultural differences across markets can influence extension success. Building in part on branding research on individual differences, much recent research has explored how various cultures respond differently to brand extensions. Monga and John, as well as Ng and Houston, have shown that consumers from Eastern cultures (such as China) have a more holistic style of thinking and perceive higher levels of extension fit than do consumers from Western cultures (such as the United States), who have a more analytical style of thinking.120
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500 PART V • GROWING AND SUSTAINING BRAND EQUITY
Dilution effects for a typical or similar extension that fails also can vary by culture and consumer motivation. Consumers from Eastern cultures exhibit significantly greater dilution when their motivation is high; consumers from Western cultures exhibit significantly greater dilution when their motivation is low.121
Additionally, Torelli and Ahluwalia show that cultural congruency can aid culturally consistent brand extensions over and beyond the effects of perceived fit. They note that a cultural congruent brand extension might be something like Sony electric car; a culturally incongruent car might be something like Sony cappuccino-macchiato maker. According to the research, beyond the inherent levels of fit that any electronic manufacturer might enjoy with an electric car, Sony would be expected to get an extra boost in fit and evaluations because of its Japanese country of origin and Japan’s strong association with electronics.122
DISCUSSION QUESTIONS
1. Pick a brand extension. Use the models presented in the chapter to evaluate its ability to achieve its own equity as well as contribute to the equity of a parent brand. If you were the manager of that brand, what would you do differently?
2. Do you think Virgin’s brand is overextended? What are the arguments for or against? 3. How successful do you predict these recently proposed extensions will be? Why?
a. Mont Blanc (famous for pens): fragrances and other accessories (watches, cufflinks, sun- glasses, and pocket knives)
b. Evian (famous for water): high-end spas c. Starbucks (famous for coffee): film production and promotion d. A company such as LinkedIn which enables networking for employment opportunities:
a business magazine
REVIEW
Brand extensions occur when a firm uses an established brand name to introduce a new product. We can distinguish them by whether the new product is being introduced in a product category currently served by the parent brand (a line extension) or in a completely different product cat- egory (a category extension). Brand extensions can come in all forms. They offer many potential benefits but also can pose many problems.
The basic assumptions behind brand extensions are that consumers have some awareness of and positive associations about the parent brand in memory, and that the brand extension will evoke at least some of these. Moreover, marketers assume that negative associations will not be transferred from the parent brand or created by the brand extension.
The brand extension’s ability to establish its own equity will depend on the salience of consumers’ associations with the parent brand in the extension context and the favorability and uniqueness of any associations they infer. The brand extension’s ability to contribute to parent brand equity will depend on how compelling is the evidence about the corresponding attribute or benefit association in the extension context, how relevant or diagnostic the extension evidence is about the attribute or benefit for the parent brand, and how strong consumers’ existing attribute or benefit associations are for the parent brand.
To evaluate brand extension opportunities, marketers need to carefully consider brand exten- sion strategies by applying managerial judgment and consumer research to the following steps: define actual and desired consumer knowledge about the brand, identify possible extension can- didates, evaluate the potential of extension candidates, design marketing programs to launch extensions, and evaluate extension success and effects on parent brand equity. Finally, a number of important research findings deal with factors affecting the acceptance of a brand extension, as well as the nature of feedback to the parent brand.
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 501
4. Consider the following brands, and discuss the extendibility of each: a. Harley-Davidson b. Red Bull c. Tommy Hilfiger d. Whole Foods e. Netflix f. U.S. Marines g. Grey Goose Vodka h. LEGO i. BlackBerry j. Las Vegas
k. Kate Spade l. Game of Thrones
m. ESPN 5. There are four fake brand extensions among the following list; the other six were marketed
at one point. Can you identify the four fakes?123
a. Ben-Gay Aspirin: Pain Relief That Comes with a Warm Glow b. Burberry Baby Stroller: For Discriminating Newborns c. Smith & Wesson Mountain Bikes: Ride without Fear d. Atlantic City Playing Cards: Talcum-Coated for Easy Shuffling e. Pond’s Toothpaste: Reduces the Appearance of Fine Wines f. Slim Jim Beef-Flavored Throat Lozenges: For Meat Lovers Who Like to Sing Karaoke g. Frito-Lay Lemonade: A Tangy, Crunchy Thirst Quencher h. Cosmo Yogurt: Spoon It Up, Slim Down Those Thighs i. Richard Simmons Sneakers: Shake Your Cute Little Booty to the Oldies j. Madonna Condoms: For Men Who Are Packing
A Brief History
Apple was co-founded by Steve Jobs and Steve Wozniak in
1976, and was initially a manufacturer of personal computers
(e.g., Apple II, Macintosh). The company subsequently entered
the laptop segment in the 1990s. The company’s successful
foray into smaller consumer electronics began with the launch
of the iPod in 2001. The iTunes music store in 2003 heralded
Apple’s entry into digital distribution, and during this period, Ap-
ple signaled its broader focus by dropping the “Computer” from
its name. Apple’s highly successful expansion into smartphone
and tablet computer categories, with its launch of the iPhone
and iPad, solidified its presence as a market leader.
Apple further strengthened its broad consumer electronics
focus with the introduction of the Apple Watch in 2014, and
expanded the focus through the introduction of Apple Pay in
the same year. Apple’s SIRI (speech interpretation and recognition
interface), was launched in 2011 as an intelligent personal assis-
tant to enhance the ability of users to interact with their devices
through voice-activated commands. Apple’s app store added to
its appeal—as of March 2016, the App Store had more than one
million apps for the iPad. By June 2017, Apple had the highest
market capitalization of any public company of $810 billion, and
its annual profitability in net income terms was $45 billion.124
Throughout, Apple has maintained its consistent focus on
quality, design, and ease of use, and has sequentially extended
its brand name into multiple categories, ranging from phones
to tablets, to its apps, and its operating system. Apple’s ability
to seamlessly integrate between hardware and software, along
with the availability of vast digital content in the form of Apple
Music, iTunes, iBooks, the apps, all of which are easily accessed
via a range of mobile devices, have enabled Apple to provide
exceptional value to its customers.
Apple’s Brand Image
Apple’s mission has evolved from being a computer manufac-
turer to a broader mission of being a “mobile devices company.”
Apple’s one-time advertising tagline of “Think Different” appears
to be more than a mere slogan. It also embodies a culture, and
serves as a guide to Apple regarding what their product offerings
should be. The reasoning behind the slogan has been applied with
great success across many of its products and indicates that Apple
will seek to avoid introducing products that lack distinctiveness.
Combined with its mission of being a mobile devices company,
it demarcates, at least for now, the products that Apple would
be likely to focus on, and its positioning within those categories.
A critical success factor of the Apple brand is the user’s abil-
ity to switch across Apple devices with ease and the availability
of identical features across multiple devices. For example, the
Share button on the iPhone (a rectangle with an upward arrow),
Apple: Creating a Tech Megabrand
BRAND FOCUS 13.0
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502 PART V • GROWING AND SUSTAINING BRAND EQUITY
is consistently used in various interfaces. Another success factor
is the ability of devices to seamlessly connect to each other. For
example, a Mac user can access the Internet through the Instant
Hotspot feature, which shows up if there is an Apple iPhone in
the vicinity. Much of this is the outcome of Apple’s co-founder
Steve Jobs’ vision of a tightly integrated set of Apple offerings
from devices that consumers would use every day.
Apple’s ability to integrate across devices is also supported
by its consistent use of brand elements such as typeface, logos,
etc. This idea has been described in Chapter 12 as the principle
of commonality. For example, Apple’s choice of font (typically, a
font known as Apple Garamond) has been consistently used for
product names as well as in many ads.125 All of Apple’s products
feature the same distinctive logo and product names are signified
by a lower case i (e.g., iMac, iPad, iPhone). The logo changed
colors but retained the same image through the years.
Apple’s brand image is inextricably linked to the personality
of Steve Jobs, who presided over much of Apple’s success. He
emphasized excellence, innovation, and quality, and these values
are central to Apple’s corporate culture. In addition to exceptional
quality, Apple also has a premium brand image. Apple products,
due to their high quality and high price, are synonymous with
luxury and act as symbols of status.
Apple’s personality of innovation and lifestyle has been rein-
forced via its advertising over the years, which has featured edgy
comparative advertising (PC versus Mac commercials). Incidentally,
these commercials sparked a series of counter-campaigns on You-
Tube by both PC and Mac users—and inspired a Microsoft “I am a
PC” counter-campaign. Many of its other advertising are straight-
forward and typically feature the magical ability of the devices
to enable the user to do many things that were previously either
difficult or impossible to do. They also emphasize the futuristic
nature of these devices. Apple has also created buzz through its
advertising campaigns. For instance, its recent “Shot on iPhone”
campaign, which features photographs taken by everyday users
on their iPhone cameras, generated significant social media buzz.
Apple Brand Strategy Over Time and Across Categories
Using the Ansoff matrix, we can identify four types of growth
strategies that Apple has followed over time to strengthen its
brand and its profitability.
1. Existing products–existing markets. Apple has successfully lev-
eraged its existing customer base by offering them upgrades
of existing products such as the iPhone and iPad almost annu-
ally. These upgrades feature better (larger or smaller) screens,
faster processor speeds, better cameras, and so on. Despite
the longevity of Macs or iPhones, consumers are encouraged
to upgrade their devices every three or four years. In upgrad-
ing existing products, Apple’s current users are encouraged
to spend more to keep up with the latest and most advanced
features that their product has to offer.
2. Existing products–new markets. Apple has sequentially low-
ered the prices of high-end products over time, and offered
several line extensions so as to appeal to newer market seg-
ments for the same products. Its vertical extension strategy
with the iPod (iPod, Classic followed by iPod Touch, iPod Nano,
and iPod Shuffle) is one example of this. The iPod shuffle is
a version of the iPod, but its small and rugged nature makes
it suitable for lower end uses and price-sensitive customers.
A notable aspect of Apple’s line extension strategy is
that some amount of cannibalization across the various
extensions is expected and seen as a part of the strategy.
For example, the introduction of the iPhone potentially can-
nibalized sales of an iPod. Likewise, the iPad introduction
cannibalized sales from the iPhone and the MacBook. Even
within the product, sales of the smaller iPad mini (priced at
$329) potentially cannibalized sales of the larger iPad (priced
at $499). Despite these issues of cannibalization, the switch-
ing taking place between Apple products have benefited the
Apple brand overall, suggesting that some cannibalization
within the portfolio is acceptable and even desirable. Apple’s
CEO Tim Cook has noted, “I see cannibalization as a huge
opportunity for us. One, our base philosophy is to never fear
cannibalization.”
3. New products–existing markets. Apple has also offered new
complementary products to its existing users. For example,
current users of the iPhone can use Apple Pay to make
mobile payments in an easier and more secure manner. Apple
Music provides the ability to listen to music on various Apple
devices. Currently, the installed base of iPhones is a remark-
able 600 million customers, offering Apple several oppor-
tunities for cross-selling various products under the Apple
brand. (See Figure 13-10.) Even the Apple iPad, a relatively
recent entrant, has an installed customer base of 300 million
FIGURE 13-10
Apple iPhone Installed
Customer Base (in
Millions) and Growth
Over Time
Source: P. Elmer-DeWitt (2017), Apple: A Deep Dive into the iPhone Installed Base.
1000
900
800
700
600
500
400
300
200
100
0 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17E CY18E
New
Used
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CHAPTER 13 • INTRODUCING AND NAMING NEW PRODUCTS AND BRAND EXTENSIONS 503
users, which provides opportunities for growth through sales
of complementary products.
4. New products–new markets. Apple’s diversification into soft-
ware (e.g., iTunes) in the earlier years when it was primarily
offering hardware was seen as a risky move. However, its seem-
ingly unrelated venture into digital content via iTunes is now
seen as an important step in creating an ecosystem of Apple
products which deliver exceptional value to their users. Apple’s
foray into retail was also seen as a diversification away from
consumer electronics, but it has successfully leveraged its retail
outlets to build brand presence and deliver customer service.
Collectively, the four approaches summarize how Apple has
achieved significant growth over time. The systematic introduc-
tion of complementary products and the growth of a significant
user base have created positive spillover of the hardware sales on
software sales, and vice versa. For example, as the available digital
content accessible via the iTunes store grew, it further spurred the
success of devices such as the iPhone, which provided a means to
access this content. Likewise, the success of online gaming in recent
years has been linked to the growth of the mobile device industry;
conversely, the availability of numerous gaming apps has increased
the usefulness of iPads for gaming and entertainment purposes.
MARKETING PROGRAMS AND ACTIVITIES
Product
Apple’s product strategy involves entering into new markets
with technologically advanced products that often set the bar
extremely high both in terms of performance, as well as design
and aesthetics. Apple also believes in continuous innovation and
introduces updates to its various products almost on an annual
basis. For example, Apple introduced new iPhones and iPads with
smaller screen sizes to appeal to consumers in untapped markets
but also to appeal to its core customers.
Pricing
Apple has used premium pricing approaches and has employed
its skimming strategy successfully. For instance, when the iPhone
was first introduced, Apple priced it at a relatively high price to
appeal to the high-end users. Over time, the average price of
the iPhone has decreased through a series of line extensions,
thereby making it available to a broader audience. Apple also
has successfully pursued a vertical extension strategy by intro-
ducing line extensions both at the high end and at the low
end to flank the competition. The vertical extension strategy is
evident in the case of its iPod launches. The iPod was initially
introduced as a high-end product, and Apple priced it at $249
to $349. Subsequently, Apple introduced the iPod Touch at the
high end ($299 to $399) and Nano and Shuffle at the low end
($149 to $199 for the Nano and $79 for the Shuffle). In doing
so, Apple was able to minimize competitive threats while at the
same time broadening the appeal of the iPod across various
customer segments.
Marketing Communications
Apple limits its advertising through traditional mass media. How-
ever, its previous ad campaigns have been inspirational. Its initial
ad campaign “Think Different” was created by ad agency TBWA\
Chiat\Day and featured black-and-white footage of various iconic
personalities, including Albert Einstein, Bob Dylan, and Martin
Luther King, Jr. Recently, Apple launched the “Shot on iPhone”
campaign126 that featured 10,000 billboards across 25 countries
showcasing photographs taken by real people using their iPhones.
Distribution
Apple distributes its products across both online and brick-and-
mortar retail stores. Although a majority of its sales takes place
online, Apple’s retail stores are an important component of its
image and a key touchpoint with their customers; the stores also
feature the clean layout and design that are typical of all other
Apple products.
Apple Brand Hierarchy and Extension Strategy
A summary of Apple’s brand architecture is provided in Figure
13-11. As can be seen, Apple’s line and brand extensions over
time have resulted in a product portfolio that is high in breadth,
length, and depth.
Brand and Line Extension Strategy
Even though the product categories that Apple has extended into
are seen as a set of disparate categories, Apple always focused on
a key set of associations to support each and every extension that
it introduced. These PODs included reinvention, innovation, and
offering an exceptional user experience. Apple’s extensions have
offered spillover effects. The introduction of the iPhone allowed
smartphone users to purchase a range of related, complemen-
tary products from Apple, including downloads from the iTunes
store, apps from the App store, and so on. Further, the iPhone
introduction allowed Apple to become a credible mobile devices
company, and paved the way for introduction of tablets, watches,
and so on.
FUTURE CHALLENGES FOR THE APPLE BRAND
Sales Growth
Despite its product proliferation, Apple’s top three product lines,
iPhone, iPad, and Mac, representing nearly 90 percent of Apple’s
total sales, are all falling. The decrease in growth of the iPad and
the slower growth of iPhones present challenges for Apple going
into the future.
Competition
Despite its success, competition from Alphabet Google (with its
Android operating system competing against Apple operating
system), Microsoft Windows (Windows operating system com-
peting against Apple operating system), Samsung’s Galaxy and
Motorola’s Moto Z smartphones (competing with iPhones), and
Fire Tablets (competing with iPad) have posed challenges for the
Apple brand. Apple has also been engaged in a patent infringe-
ment lawsuit against Samsung over patented design elements,
and will continue to find it difficult to prevent competitors from
adapting and incorporating successful design elements into their
own products.127 Apple’s operating system is seen as less custom-
izable and versatile than Android, which also limits the extent to
which software developers choose to focus on Apple’s operating
system, relative to the ability of developers to create new features
and themes to run on devices that have the Android operating
system.128 The high prices of Apple’s products make it harder
for newer segments of customers (especially those in developing
countries who cannot afford the high prices) to adopt the prod-
uct, thereby limiting the future growth of Apple.
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504 PART V • GROWING AND SUSTAINING BRAND EQUITY
Antibrand Activism
Despite the success of the Apple brand, it has its share of detrac-
tors and anti-brand activists. This polarization of the brand land-
scape is particularly a consequence of how much digital devices
are closely linked to consumers’ identities as individuals. The rise
of Android—as an alternative to iOS—has spurred a dislike for
Apple among many Android fans.
Conclusion
Despite these challenges, Apple’s strategy has ensured the
growth and success of Apple as a mobile devices company.
Interbrand has ranked Apple as the largest brand in the world
with a brand value of $178 billion.129 A key feature of the
Apple brand is its duality—its ability to appeal both rationally
and emotionally to its customers. This duality is an outcome
of its quality products and well-executed creative advertising
campaigns, which have struck an emotional chord with its audi-
ence. This, along with its aesthetically pleasing user-interfaces
and elegant simplicity, has caused many consumers to develop
a deep, emotional connection (i.e., brand resonance) with their
Apple products.
Sources: From annual reports, Apple Inc. Form 10-K 2015, page 24; From annual reports, Apple Inc. Form 10-K 2016, page 23; Last two rows from https://arstechnica.com/apple/2017/01/apple-sets-revenue- and-iphone-sales-records-in-q1-of-2017/; Andrew Cunningham, “Apple Sets Revenue and iPhone Sales Records in Q1 of 2017,” January 31, 2017, https://arstechnica.com/apple/2017/01/apple-sets- revenue-and-iphone-sales-records-in-q1-of-2017/, accessed May 23, 2017; Marketing Minds, Case Study, “Apple’s Branding Strategy, http://www.marketingminds.com.au/apple_branding_strategy.html, accessed November 22, 2018; Ashraf Eassa, “Why Apple Inc. Is So Profitable,” The Motley Fool, March 23, 2017, https://www.fool.com/ investing/2017/03/23/why-apple-inc-is-so-profitable.aspx, accessed
November 22, 2018; Farhad Manjoo, “Apple Strengthens Pull of Its Orbit with Each Device,” The New York Times, October 22, 2014, https:// www.nytimes.com/2014/10/23/technology/personaltech/devices-with- yosemite-and-ios-8-operating-systems-seamlessly-connect-in-apples- ecosystem.html, accessed November 22, 2018; Wikipedia, “Typography of Apple Inc.”; Rob Janoff, “Apple Logo Story,” http://robjanoff.com/ applelogo/, accessed November 22, 2018; Top 10 Iconic Apple Ads https://www.youtube.com/watch?v=ilarNBQHevA; Susan Fournier and Lara Lee, “Getting Brand Communities Right, Harvard Busi- ness Review, April 2009 Issue, https://hbr.org/2009/04/getting-brand- communities-right, accessed November 22, 2018; Albert M. Muniz Jr. and Hope Jensen Schau, “Religiosity in the Abandoned Apple Newton Brand Community,” Journal of Consumer Research 31, no. 4 (March 2005): 737–747; Luke Dormehl, “Apple Reveals How Long Its Devices Typically Last,” Cult of Mac, April 15, 2016, https://www .cultofmac.com/423304/apple-reveals-how-long-its-devices-typically- last/, accessed November 22, 2018; Zachary M. Seward, “Yes, the iPad Mini Is Cannibalizing Sales of the Larger iPad,” Quartz, January 23, 2013, https://qz.com/47265/apple-ipad-mini-is-cannibalizing-sales-of- the-larger-ipad/, accessed November 22, 2018; Ben Bajarin, “Apple’s Uncharted Territory,” Recode, May 3, 2016, https://www.recode .net/2016/5/3/11634186/apples-uncharted-territory, accessed Novem- ber 22, 2018; MacDailyNews, “Apple’s iPad Has an Installed Base of Over 300 Million, Far Larger Than the Mac’s User Base,” March 24, 2017, http://macdailynews.com/2017/03/24/apples-ipad-has-an- installed-base-of-over-300-million-far-larger-than-the-macs-user- base/, accessed November 22, 2018; Dean Takahashi, “Mobile Games Hit $40.6 Billion in 2016, Matching World Box Office Numbers,” VentureBeat, February 1, 2017, https://venturebeat.com/2017/02/01/ superdata-mobile-games-hit-40-6-billion-in-2016-matching-world-box- office-numbers/, accessed November 22, 2018; DawnNews, “Apple Cuts Prices, Screen Sizes for New iPhone, iPad,” March 22, 2016, https:// www.dawn.com/news/1247119, accessed November 22, 2018; Brittany A. Roston, “These Magazine Covers Were Swith the iPhone 7 Plus,” Slash Gear, April 18, 2017, https://www.slashgear.com/these-magazine- covers-were-shot-with-the-iphone-7-plus-18482648/, accessed Novem- ber 22, 2018; Dan Moren, “Analysis: Apple’s Ads Let Products Speak
FIGURE 13-11
Apple Brand Hierarchy Reflects the Breadth, Depth, and Length of Its Portfolio
Apple
Shulfle Touch NanoSE 65 65+ 7 7+ iPad Pro
Phones
iPhones
1 Sizes
1 Sizes
1 Sizes
1 Sizes
1 Sizes
4 Sizes
1 Sizes
3 Sizes
5 Sizes
Air Pro iMac Mac Mini
Mac Pro Store
iPads Mac Apple Watch iTunes iPodApple
Music
Tablets Computers Watches Music
Mini 4 Mac Book
Series 1
Series 2
2 Sizes
2 Sizes
4 Colors
4 Colors
4 Colors
3 Colors
4 Colors
1 Colors
1 Colors
65 Colors
5 Colors
5 Colors
16 Colors
6 Colors
4 Colors
6 Colors
2 Colors
1 Colors
1 Colors
5 Colors
1 Colors
X (XR, XS, XSMax)
2 Colors
8
5 Colors
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NOTES
1. For a more comprehensive treatment, see Glen Urban and John Hauser, Design and Marketing of New Prod- ucts, 2nd ed. (Upper Saddle River, NJ: Prentice Hall, 1993).
2. Peter Farquhar, “Managing Brand Equity,” Marketing Research 1, no. 3 (September 1989): 24–33.
3. Kurt Schroeder, “Why So Many New Products Fail (and It’s Not the Product),” The Business Journals, May 14, 2017, www.bizjournals.com/bizjournals/how-to/ marketing/2017/03/why-so-many-new-products-fail- and-it-s-not-the.html.
4. The Nielsen Company, “Looking to Achieve New Product Success?,” Nielsen, June 23, 2015, www.nielsen.com/ us/en/insights/reports/2015/looking-to-achieve-new- product-success.html.
5. Mark Dolliver, “Brand Extensions Set the Pace in 2009,” Adweek, March 22, 2010, https://www.adweek .com/brand-marketing/brand-extensions-set-pace- 2009-101891/.
6. Information Resources, Inc., “IRI Announces the Most Successful New Brands of 2009,” IRI, March 22, 2010, https://www.businesswire.com/news/ home/20100322006486/en/IRI-Announces-Successful- New-Brands-2009, accessed November 23, 2018.
7. Craig Smith, “42 Interesting McDonald’s Facts and Sta- tistics (March 2018),” DMR, March 30, 2018, http:// expandedramblings.com/index.php/mcdonalds-statistics/.
8. Roy Brunner, “How Shake Shack Leads The Better Burger Revolution,” Fast Company, June 22, 2015, www.fastcompany.com/3046753/shake-shack-leads- the-better-burger-revolution, accessed May 21, 2017.
9. Byung-Do Kim and Mary W. Sullivan, “The Effect of Parent Brand Experience on Line Extension Trial and Repeat Purchase,” Marketing Letters 9, no. 2 (1998): 181–193.
10. Henry J. Claycamp and Lucien E. Liddy, “Prediction of New Product Performance: An Analytical Approach,” Journal of Marketing Research 6, no. 4 (November 1969): 414–420.
11. Kevin Lane Keller and David A. Aaker, “The Effects of Sequential Introduction of Brand Extensions,” Jour- nal of Marketing Research 29, no. 1 (February 1992): 35–50; John Milewicz and Paul Herbig, “Evaluating the Brand Extension Decision Using a Model of Reputation Building,” Journal of Product & Brand Management 3, no. 1 (1994): 39–47.
12. See also Jonlee Andrews, “Rethinking the Effect of Per- ceived Fit on Customers’ Evaluations of New Products,” Journal of the Academy of Marketing Science 23, no. 1 (1995): 4–14.
13. David B. Montgomery, “New Product Distribution: An Analysis of Supermarket Buyer Decisions,” Journal of Marketing Research 12, no. 3 (1978): 255–264.
14. Tülin Erdem and Baohong Sun, “An Empirical Inves- tigation of the Spillover Effects of Advertising and Sales Promotions in Umbrella Branding,” Journal of Marketing Research 39, no. 4 (November 2002): 408–420.
15. Mary W. Sullivan, “Brand Extensions: When to Use Them,” Management Science 38, no. 6 (June 1992): 793–806; Daniel C. Smith, “Brand Extension and Advertising Efficiency: What Can and Cannot Be Expected,” Journal of Advertising Research 32, no. 6 (November/December 1992): 11–20. See also Daniel C. Smith and C. Whan Park, “The Effects of Brand Extensions on Market Share and Advertising Efficiency,” Journal of Marketing Research 29, no. 3 (August 1992): 296–313.
16. Jack Neff, “Speichert Looks for Big Growth Bets as First CMO,” Advertising Age, February 21, 2011, https://adage.com/print/148915, accessed November 23, 2018; Jack Neff, “Zigging Where Others Zagged, L’Oréal Focuses on U.S.—to Beautiful Effect,” Adver- tising Age, November 7, 2011, http://adage.com/article/ special-report- marketer-alist/marketer-a-list-l-oreal- focuses-u-s-market-beautiful-effect/230833/; “L’Oréal Shifts Marketing Model,” WARC, October 25, 2010; K@W, “Why L’Oreal’s Jean-Paul Agon Believes He Is on the Winning Team,” Knowledge@Wharton, March 30, 2005, http://knowledge.wharton.upenn.edu/article/ why-loreals-jean-paul-agon-believes-he-is-on-the-win- ning-team/.
17. Leonie Roderick, “L’Oréal on Why Artificial Intel- ligence Is ‘a Revolution as Big as the Internet’,” Marketing Week (Online Edition), April 24, 2017, https:/ /www.marketingweek.com/2017/04/24/ loreal-artificial-intelligence/.
18. Theodore Levitt, “Marketing Myopia,” Harvard Busi- ness Review 38, no. 4 (July–August 1960): 45–46.
19. Jason Bloomberg, “Transformation at Scale at General Electric: Digital Influencer Bill Ruh,” Forbes, July 25, 2016, www.forbes.com/sites/ jasonbloomberg/2016/07/25/
for Themselves,” Macworld, April 4, 2011, https://www.macworld .com/article/1159004/apple_advertising.html, accessed November 22, 2018; Li Justi, “Apple’s Challenge: Where Is the Future?,” Dea- kin Business School, April 25, 2016, https://mpk732t12016clustera .wordpress.com/2016/04/25/apples-challenge-where-is-the-future/, accessed November 22, 2018; Camila Domonoske, “Supreme Court Sides with Samsung, Against Apple in Patent Infringement Fight,” National Public Radio, December 6, 2016, https://www.npr.org/
sections/thetwo-way/2016/12/06/504545297/supreme-court-sides-with- samsung-against-apple-in-patent-infringement-fight, accessed Novem- ber 22, 2018; Josh Smith, “Android vs. iPhone: 14 Reasons Android Is Still Better,” GottaBeMobile.com, February 7, 2018, https://www .gottabemobile.com/android-vs-iphone-android-better/, accessed November 22, 2018; Mike Elgan, “Why Does Apple Inspire So Much Hate?,” Cult of Mac, June 9, 2012, https://www.cultofmac.com/172428/ why-does-apple-inspire-so-much-hate/, accessed November 22, 2018.
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digital-transformation-at-scale-at-general-electric-digital- influencer-bill-ruh/#3cebdf46a2fe.
20. TataWorld, “Titan Company Launches SKINN Range of Perfumes,” Tata, September 16, 2013, www .tata.com/company/releasesinside/zoEU8Oa7AFs=/ TLYVr3YPkMU.
21. K. L. Keller and D.A. Aaker, “The Effects of Sequential Introduction of Brand Extensions,” Journal of Market- ing Research 29, no. 1 (1992): 35–50.
22. Demitrios Kalogeropoulos, “The Procter & Gamble Com- pany’s Best Product in 2015,” The Motley Fool, December 27, 2015, www.fool.com/investing/general/2015/12/27/ the-procter-gamble-companys-best-product-in-2015.aspx. Robert Klara, “Chances are, the Clothes You’re Wearing Right Now Have Been Washed in Tide: How the deter- gent has reigned for 68 years,”AdWeek, December 1, 2014, www.adweek.com/brand-marketing/why-clothes- youre-wearing-right-now-have-probably-been-washed- tide-161643.
23. Jay Moye, “How Coke Zero Became a Hero: 10 Facts to Mark the Brand’s 10th Birthday,” Coca-Cola, June 30, 2015, www.coca-colacompany.com/stories/how-coke- zero-became-a-hero-10-facts-to-mark-the-brands-10th- birthday.
24. Mark J. Miller, “Coca-Cola Woos James Bond Fans with Coke Zero Skyfall Tie-In,” Brand Channel, Sep- tember 12, 2012, http://brandchannel.com/2012/09/12/ coca-cola-woos-james-bond-fans-with-coke-zero- skyfall-tie-in/.
25. Ben Reynolds, “Pepsi Overtakes Diet Coke as #2 Soda in U.S.—Which Is Best Investment?,” SureDividend Blog, March 28, 2015, http://www.talkmarkets.com/ content/stocks--equities/pepsi-overtakes-diet-coke-as- 2-soda-in-us--which-is-best-investment?post=61756, accessed November 23, 2018.
26. Laura Shanahan, “Designated Shopper,” Brandweek 42, no. 10 (March 2001): 26.
27. Ibid. 28. Interview with James Allworth, “Why You Should
Cannibalize Your Company,” interview with James Allworth, Harvard Business Review, November 2012, https://hbr.org/2012/11/why-you-should-cannibalize- you.
29. Maureen Morrin, “The Impact of Brand Extensions on Parent Brand Memory Structures and Retrieval Processes,” Journal of Marketing Research 36, no. 4 (1999): 517–525.
30. Nathan Bomey, “Coach to Acquire Kate Spade for $2.4 Billion,” Forbes, May 8, 2017, www.forbes.com/sites/ greatspeculations/2017/05/09/coachs-acquisition-of- kate-spade-finally-comes-to-fruition/#2a9d90173e26; Based on Insights from Timothy Calkins, “Reviving a Brand That’s Lost Its Luster,” Kellogg Insight, November 2, 2016, https://insight.kellogg.northwestern.edu/ article/reviving-a-brand-thats-lost-its-luster.
31. Alessandra Galloni, “Inside Out: At Gucci, Mr. Polet’s New Design Upends Rules for High Fashion,” The Wall Street Journal, August 9, 2005, A1; Interbrand, “Best Global Brands,” www.interbrand.com/en/best-global- brands/Best-Global-Brands-2011.aspx.
32. Macala Wright, “Mid-Tier to Luxury Fashion Brands Open Their Doors to Licensing,” October 16, 2011,
www.macalawright.com/2011/10/fashion-licensing- deals/; Jessica Wohl, “Target Hopes Exclusive Designer Deals Boost Sales,” Reuters, August 2, 2011, https:// www.reuters.com/article/target-exclusives/target- hopes-exclusive-designer-deals-boost-sales-idUS- N1E7700FA20110802.
33. For some reviews of the brand extension literature, see Sandor Czellar, “Consumer Attitude Toward Brand Extensions: An Integrative Model and Research Propositions,” International Journal of Research in Marketing 20, no. 3 (2003): 97–115; Barbara Loken, Rohini Ahluwalia, and Michael J. Houston, eds., Brands and Brand Management: Contemporary Research Perspectives (New York: Psychology Press, 2010); Franziska Volkner and Henrik Sattler, “Drivers of Brand Extension Success,” Journal of Marketing 70, no. 2 (April 2006): 18–34.
34. Kalpesh Kaushik Desai, Wayne D. Hoyer, and Rajen- dra Srivastava, “Evaluation of Brand Extension Relative to the Extension Category Competition: The Role of Attribute Inheritance from Parent Brand and Extension Category,” working paper, State University of New York at Buffalo, 1996.
35. Edward M. Tauber, “Brand Leverage: Strategy for Growth in a Cost-Control World,” Journal of Advertis- ing Research 28 (August/September 1988): 26–30.
36. Barbara Loken and Deborah Roedder John, “Diluting Brand Beliefs. When Do Brand Extensions Have a Negative Impact?” Journal of Marketing 57, no. 7 (1993): 71–84.
37. For another conceptual point of view, see Abishek Dwivedi, Bill Merrilees, and Arthur Sweeney, “Brand Extension Feedback Effects: A Holistic Framework,” Journal of Brand Management 17, no. 5 (March 2010): 328–342.
38. Fabio Caldieraro, Ling-Jing Kao, and Marcus Cunha, Jr., “Harmful Upward Line Extensions: Can the Launch of Premium Products Result in Competitive Disadvan- tages?” Journal of Marketing 79, no. 6 (November 2015): 50–70.
39. Timothy B. Heath, Devon DelVecchio, and Michael S. McCarthy, “The Asymmetric Effects of Extending Brands to Lower and Higher Quality,” Journal of Mar- keting 75, no. 4 (July 2011): 3–20.
40. Sujan Patel, “7 Examples of Freemium Products Done Right,” Forbes, April 29, 2015, www.forbes.com/ sites/sujanpatel/2015/04/29/7-examples-of-freemium- products-done-right/3/#6c4867e82576.
41. Peter H. Farquhar, Julia Y. Han, Paul M. Herr, and Yuji Ijiri, “Strategies for Leveraging Master Brands,” Jour- nal of Marketing Research 4, no. 3 (September 1992): 32–43.
42. Gillian Oakenfull, Edward Blair, Betsy Gelb, and Peter Dacin, “Measuring Brand Meaning,” Journal of Adver- tising Research 40, no. 5 (September–October 2000): 43–53.
43. Erik Oster, “Jimmy Dean Moves Beyond Breakfast in New Ads Campaign” Adweek, September 8, 2014, www .adweek.com/brand-marketing/jimmy-dean-moves- beyond-breakfast-new-ads-159972/.
44. Rajeev Batra, Peter Lenk, and Michel Wedel, “Brand Extension Strategy Planning: Empirical Estimation of Brand-Category Personality Fit and Atypicality,”
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Journal of Marketing Research 47, no. 2 (April 2010): 335–347.
45. Andrea Rothman, “France’s Bic Bets U.S. Consumers Will Go for Perfume on the Cheap,” The Wall Street Jour- nal, January 12, 1989, B6; Deborah Wise, “Bic Counts on a New Age for Spray Perfume,” The New York Times, October 17, 1988, https://www.nytimes.com/1988/10/17/ business/international-report-bic-counts-on-a-new-age- for-spray-perfume.html; David A. Aaker, Managing Brand Equity (New York: Free Press, 1991).
46. Sandra J. Milberg, Francisca Sinn, and Ronald C. Good- stein, “Consumer Reactions to Brand Extensions in a Competitive Context: Does Fit Still Matter?,” Journal of Consumer Research 37, no. 3 (October 2010): 543–553.
47. Piyush Kumar, “Brand Counterextensions: The Impact of Extension Success Versus Failure,” Journal of Mar- keting Research 42, no. 2 (May 2005): 183–194. See also Piyush Kumar, “The Impact of Cobranding on Cus- tomer Evaluation of Brand Counterextensions,” Journal of Marketing 69, no. 3 (July 2005): 1–18.
48. Glen L. Urban and Steven H. Star, Advanced Marketing Strategy: Phenomena, Analysis, and Decisions (Engle- wood Cliffs, NJ: Prentice Hall, 1991).
49. Kotler and Keller, Marketing Management. 50. Srinivas K. Reddy, Susan L. Holak, and Subodh Bhat,
“To Extend or Not to Extend: Success Determinants of Line Extensions,” Journal of Marketing Research 31, no. 2 (May 1994): 243–262. For some conceptual discussion, see Kalpesh Kaushik Desai and Wayne D. Hoyer, “Line Extensions: A Categorization and an Information Processing Perspective,” in Advances in Consumer Research, Vol. 20 (Provo, UT: Association for Consumer Research, 1993), 599–606.
51. Jack Neff, “Small Ball: Marketers Rely on Line Exten- sions,” Advertising Age, April 11, 2005, 10, https:// adage.com/article/news/small-ball-marketers-rely-line- extensions/102862/, accessed November 23, 2018.
52. Murphy, Brand Strategy. 53. Mita Sujan, “Nature and Structure of Product Catego-
ries,” working paper, Pennsylvania State University, 1990; Joan Myers-Levy and Alice M. Tybout, “Schema Congruity as a Basis for Product Evaluation,” Journal of Consumer Research 16, no. 18 (June 1989): 39–54.
54. Deborah Roedder John and Barbara Loken, “Diluting Brand Equity: The Impact of Brand Extensions,” Jour- nal of Marketing, 57, no. 3 (July 1993): 71–84.
55. David Boush and Barbara Loken, “A Process Tracing Study of Brand Extension Evaluations,” Journal of Mar- keting Research 28, no. 1 (February 1991): 16–28; Cathy L. Hartman, Linda L. Price, and Calvin P. Duncan, “Consumer Evaluation of Franchise Extension Products: A Categorization Processing Perspective,” Advances in Consumer Research, Vol. 17 (Provo, UT: Association for Consumer Research, 1990), 120–126.
56. David A. Aaker and Kevin Lane Keller, “Consumer Evaluations of Brand Extensions,” Journal of Market- ing 54, no. 1 (January 1990): 27–41.
57. Paul A. Bottomley and Stephen J. S. Holden, “Do We Really Know How Consumers Evaluate Brand Exten- sions? Empirical Generalizations Based on Second- ary Analysis of Eight Studies,” Journal of Marketing Research 38, no. 4 (November 2001): 494–500. See
also Jörg Hensler, Csilla Horváth, Marko Sarstedt, and Lorenz Zimmerman, “A Cross-Cultural Comparison of Brand Extensions Success Factors: A Meta-Study,” Journal of Brand Management 18, no. 1 (2010): 5–20.
58. David Boush, Shannon Shipp, Barbara Loken, Ezra Gencturk, et al., “Affect Generalization to Similar and Dissimilar Line Extensions,” Psychology and Market- ing 4, no. 3 (Fall 1987): 225–241.
59. Specifically, applying Mandler’s congruity theory, Meyers-Levy and her colleagues showed that products associated with moderately incongruent brand names could be preferred over ones that were associated with either congruent or extremely incongruent brand names. They interpreted this finding in terms of the ability of moderately incongruent brand extensions to elicit more processing from consumers that could be satisfactorily resolved (assuming consumers could identify a mean- ingful relationship between the brand name and the product). See Joan Meyers-Levy, Therese A. Louie, and Mary T. Curren, “How Does the Congruity of Brand Names Affect Evaluations of Brand Name Extensions?” Journal of Applied Psychology 79, no. 1 (1994): 46–53. See also Eyal Maoz and Alice M. Tybout, “The Mod- erating Role of Involvement and Differentiation in the Evaluation of Brand Extensions,” Journal of Consumer Psychology 12, no. 2 (2002): 119–131; Hyeong Min Kim, “Evaluations of Moderately Typical Products: The Role of Within- Versus Cross-Manufacturer Compari- son,” Journal of Consumer Psychology 16, no. 1 (2006): 70–78.
60. Deborah MacInnis and Kent Nakamoto, “Cognitive Associations and Product Category Comparisons: The Role of Knowledge Structures and Context,” working paper, University of Arizona, 1990.
61. Susan M. Broniarczyk and Joseph W. Alba, “The Importance of the Brand in Brand Extension,” Journal of Marketing Research 31, no. 2 (May 1994): 214–228. Incidentally, although a Crest toothbrush was not avail- able at the time that this study was conducted, one was later in fact introduced as Crest Complete.
62. Tammo H. A. Bijmolt, Michel Wedel, Rik G. M. Pieters, and Wayne S. DeSarbo, “Judgments of Brand Similar- ity,” International Journal of Research in Marketing 15 (3) (1998): 249–268.
63. Sheri Bridges, Kevin Lane Keller, and Sanjay Sood, “Explanatory Links and the Perceived Fit of Brand Extensions: The Role of Dominant Parent Brand Asso- ciations and Communication Strategies,” Journal of Advertising 29, no. 4 (2000): 1–11.
64. Daniel C. Smith and Jonlee Andrews, “Rethinking the Effect of Perceived Fit on Customers’ Evaluations of New Products,” Journal of the Academy of Marketing Science 23, no. 1 (1995): 4–14.
65. A. V. Muthukrishnan and Barton A. Weitz, “Role of Product Knowledge in Brand Extensions,” in Advances in Consumer Research, Vol. 18, eds. Rebecca H. Holman and Michael R. Solomon (Provo, UT: Association for Consumer Research, 1990), 407–413. See also Susan M. Broniarczyk and Joseph W. Alba, “The Importance of the Brand in Brand Extension,” Journal of Marketing Research 31, no. 2 (May 1994): 214–228.
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66. Shi Zhang and Sanjay Sood, “‘Deep’ and ‘Surface’ Cues: Brand Extension Evaluations by Children and Adults,” Journal of Consumer Research 29, no. 1 (June 2002): 129–141.
67. E. A. Yorkston, J. C. Nunes, and S. Matta, “The Mal- leable Brand: The Role of Implicit Theories in Evaluat- ing Brand Extensions,” Journal of Marketing 74, no.1 (2010): 80–93; K. M. Cutright, J. R. Bettman, and G. J. Fitzsimons, “Putting Brands In Their Place: How a Lack of Control Keeps Brands Contained,” Journal of Marketing Research 50, no. 3 (2013): 365–377; A. B. Monga and Z. Guhan-Canli, “The Influence of Mating Mind-sets on Brand Extension Evaluation,” Journal of Marketing Research 49, no. 4 (2013): 581–593.
68. Kevin Lane Keller and David A. Aaker, “The Effects of Sequential Introduction of Brand Extensions,” Journal of Marketing Research 29, no. 1 (1992), 35–50; Susan M. Broniarczyk and Andrew D. Gershoff, “The Recip- rocal Effects of Brand Equity and Trivial Attributes,” Journal of Marketing Research 40, no. 2 (May 2003): 161–175.
69. See also Arvind Rangaswamy, Raymond Burke, and Terence A. Oliva, “Brand Equity and the Extendibility of Brand Names,” International Journal of Research in Marketing 10, no. 1 (1993): 61–75. See also Zeynep Gürhan-Canli, “The Effect of Expected Variability of Product Quality and Attribute Uniqueness on Family Brand Evaluations,” Journal of Consumer Research 30, no. 1 (June 2003): 105–114; Julio J. Rotenberg, “Expected Firm Altruism, Quality Provision, and Brand Extensions,” Marketing Science 32, no. 2 (March–April 2013): 325–341.
70. Alexander Fedorikhin, C. Whan Park, and Matthew Thomson, “Beyond Fit and Attitude: The Effect of Emotional Attachment on Consumer Responses to Brand Extensions,” Journal of Consumer Psychology 18, no. 4 (2008): 281–291.
71. Catherine W. M. Yeung and Robert S. Wyer, Jr., “Does Loving a Brand Mean Loving Its Products? The Role of Brand-Elicited Affect in Brand Extension Evalu- ations,” Journal of Marketing Research 42, no. 4 (November 2005): 495–506; H. H. Chun, C. W. Park, A.B. Eisingerich, and D. J. MacInnis, “Strategic Ben- efits of Low Fit Brand Extensions: When and Why?,” Journal of Consumer Psychology 25, no. 4 (2015): 577–595.
72. See, for example, Peter H. Farquhar and Paul M. Herr, “The Dual Structure of Brand Associations,” in Brand Equity and Advertising: Advertising’s Role in Build- ing Strong Brands, eds. David A. Aaker and Alexander L. Biel (Hillsdale, NJ: Lawrence Erlbaum Associates, 1993), 263–277.
73. Ian M. Lewis, “Brand Equity or Why the Board of Directors Needs Marketing Research,” paper presented at the ARF Fifth Annual Advertising and Promotion Workshop, February 1, 1993.
74. Robert D. Hof, “A Washout for Clorox?” BusinessWeek, July 9, 1990, 32–33; Alicia Swasy, “P&G and Clorox Wade into Battle over the Bleaches,” The Wall Street Journal, January 16, 1989, 5; Maria Shao, “A Bright Idea That Clorox Wishes It Never Had,” BusinessWeek, June 24, 1991, 118–119.
75. Peter H. Farquhar, Julia Y. Han, Paul M. Herr, and Yuji Ijiri, “Strategies for Leveraging Master Brands,” Mar- keting Research 4, no. 3 (September 1992): 32–43.
76. Alokparna Basu Monga and Deborah Roedder John, “What Makes Brands Elastic? The Influence of Brand Concept and Styles of Thinking on Brand Extension Evaluation,” Journal of Marketing Research 74, no. 3 (May 2010): 80–92; Tom Meyvis and Chris Janisze- wski, “When Are Broader Brands Stronger Brands? An Accessibility Perspective on the Success of Brand Extensions,” Journal of Consumer Research 31, no. 2 (September 2004): 346–357; Stijn M. J. Van Osse- laer and Joseph W. Alba, “Locus of Equity and Brand Extensions,” Journal of Consumer Research 29, no. 4 (March 2003): 539–550; Henrik Hagtvedt and Vanessa M. Patrick, “The Broad Embrace of Luxury: Hedonic Potential as a Driver of Brand Extendibility,” Journal of Consumer Psychology 19, no. 4 (2009): 608–618.
77. Peter H. Farquhar, Julia Y. Han, Paul M. Herr, and Yuji Ijiri, “Strategies for Leveraging Master Brands,” Mar- keting Research 4, no. 3 (1992).
78. Ibid. 79. S. Bridges, K. L. Keller, and S. Sood, “Communica-
tion Strategies for Brand Extensions: Enhancing Per- ceived Fit by Establishing Explanatory Links,” Journal of Advertising 29, no. 4 (2000): 1–11.
80. Christopher Joiner and Barbara Loken, “The Inclu- sion Effect and Category-Based Induction: Theory and Application to Brand Categories,” Journal of Consumer Psychology 7, no. 2 (1998): 101–129.
81. S. Bridges, K. L. Keller, and S. Sood, “Communica- tion Strategies for Brand Extensions: Enhancing Per- ceived Fit by Establishing Explanatory Links,” Journal of Advertising 29, no. 4 (2000): 1–11.
82. Frank Kardes and Chris Allen, “Perceived Variability and Inferences about Brand Extensions,” in Advances in Consumer Research, Vol. 18, eds. Rebecca H. Holman and Michael R. Solomon (Provo, UT: Association for Consumer Research, 1990), 392–398; Babu John Mariadoss, Raj Echambadi, Mark J. Arnold, and Vishal Bindroo, “An Examination of the Effects of Perceived Difficulty of Manufacturing the Extension Product on Brand Extension Attitudes,” Journal of the Academy of Marketing Science 38, no. 6 (2010): 704–719.
83. Vanitha Swaminathan, Richard J. Fox, and Srinivas K. Reddy, “The Impact of Brand Extension Introduction on Choice,” Journal of Marketing 65, no. 4 (October 2001): 1–15; Subramanian Balachander and Sanjay Ghose, “Reciprocal Spillover Effects: A Strategic Ben- efit of Brand Extensions,” Journal of Marketing 67, no. 1 (January 2003): 4–13; Sridhar Moorthy, “Can Brand Extension Signal Product Quality?,” Marketing Science 31, no. 5 (September–October 2012): 756–770.
84. Sandy D. Jap, “An Examination of the Effects of Mul- tiple Brand Extensions on the Brand Concept,” in Advances in Consumer Research, Vol. 20 (Provo, UT: Association for Consumer Research, 1993), 607–611.
85. David M. Boush and Barbara Loken, “A Process- Tracing Study of Brand Extension Evaluation,” Journal of Marketing Research 28, no. 1 (1991): 16–28.
86. Peter Dacin and Daniel C. Smith, “The Effect of Brand Portfolio Characteristics on Consumer Evaluations of
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Brand Extensions,” Journal of Marketing Research 31, no. 2 (May 1994): 229–242. See also David M. Boush and Barbara Loken, “A Process-tracing Study of Brand Extension Evaluation,” Journal of Marketing Research 28, no. 1 (1991): 16–28; and Niraj Dawar, “Extensions of Broad Brands: The Role of Retrieval in Evalua- tions of Fit,” Journal of Consumer Psychology 5, no. 2 (1996): 189–207.
87. Mary W. Sullivan, “Brand Extensions: When to Use Them,” Management Science 38, no. 6 (1992): 793–806; Patrick DeGraba and Mary W. Sullivan, “Spillover Effects, Cost Savings, R&D and the Use of Brand Extensions,” International Journal of Industrial Orga- nization 13, no. 2 (1995): 229–248.
88. Byung Chul Shine, Jongwon Park, and Robert S. Wyer, Jr., “Brand Synergy Effects in Multiple Brand Extensions,” Journal of Marketing Research 44, no. 4 (November 2007): 663–670; Ryan Rahinel and Joseph P. Redden, “Brands as Product Coordinators: Matching Brands Make Joint Consumption Experiences More Enjoyable,” Journal of Consumer Research 39, no. 6 (June 2013), 1290–1299.
89. Huifang Mao and H. Shanker Krishnan, “Effects of Prototype and Exemplar Fit on Brand Extension Evalu- ations: A Two-Process Contingency Model,” Journal of Consumer Research 33, no. 1 (June 2006): 41–49. See also Ujwal Kayande, John H. Roberts, Gary L. Lilien, and Duncan K. H. Fong, “Mapping the Bounds of Incoherence: How Far Can You Go and How Does It Affect Your Brand?,” Marketing Science 26, no. 4 (July–August 2007): 504–513.
90. Deborah Roedder John and Barbara Loken, “Dilut- ing Brand Beliefs: When Do Brand Extensions Have a Negative Impact?,” Journal of Marketing 57, no. 4 (Summer 1993): 71.
91. Jean B. Romeo, “The Effect of Negative Information on the Evaluation of Brand Extensions and the Fam- ily Brand,” in Advances in Consumer Research, Vol. 18, eds. Rebecca H. Holman and Michael R. Solo- mon (Provo, UT: Association for Consumer Research, 1990), 399–406.
92. Deborah Roedder John, Barbara Loken, and Christopher Joiner, “The Negative Impact of Extensions: Can Flag- ship Products Be Diluted?,” Journal of Marketing 62, no. 1 (January 1998): 19–32.
93. Zeynep Gürhan-Canli and Durairaj Maheswaran, “The Effects of Extensions on Brand Name Dilution and Enhancement,” Journal of Marketing Research 35, no. 11 (1998): 464–473.
94. Sandra J. Milberg, C. W. Park, and Michael S. McCarthy, “Managing Negative Feedback Effects Associated with Brand Extensions: The Impact of Alternative Brand- ing Strategies,” Journal of Consumer Psychology 6, no. 2 (1997): 119–140.
95. Vicki R. Lane and Robert Jacobson, “Stock Market Reactions to Brand Extension Announcements: The Effects of Brand Attitude and Familiarity,” Journal of Marketing 59, no. 1 (1995): 63–77.
96. Amna Kirmani, Sanjay Sood, and Sheri Bridges, “The Ownership Effect in Consumer Responses to Brand Line Stretches,” Journal of Marketing 63, no. 1 (1999): 88–101.
97. Maureen Morrin, “The Impact of Brand Extensions on Parent Brand Memory Structures and Retrieval Processes,” Journal of Marketing Research 36, no. 4 (1999): 517–525.
98. David A. Aaker, Managing Brand Equity (New York: Free Press, 1991; Jean-Noel Kapferer, Strategic Brand Management, 2nd ed. (New York: Free Press, 2005); Not By Jeans Alone video, PBS Enterprise, 1983.
99. Jeffrey Parker, Donald Lehmann, Kevin Lane Keller, and Martin Schleicher, “Building a Multi-Category Brand: When Should Dissimilar Products Be Intro- duced?,” Journal of the Academy of Marketing Science, 46 (2), 300–316; Timothy B. Heath, Subimal Chatter- jee, Suman Basuroy, Thorsten Hennig-Thurau, and Bruno Kocher, “Innovation Sequences Over Iterated Offerings: A Relative, Innovation, Comfort, and Stimu- lation Framework of Consumer Responses,” Journal of Marketing 79, no. 6 (November 2015): 71–93.
100. C. Whan Park, Sung Youl Jun, and Allan D. Shocker, “Composite Branding Alliances: An Investigation of Extension and Feedback Effects,” Journal of Market- ing Research November 79, no. 6 (1996): 453–466.
101. Zixia Cao and Alina Sorescu, “Wedded Bliss or Tainted Love? Stock Market Reactions to the Introduction of Cobranded Products,” Marketing Science 32, no. 6 (November–December 2013): 939–959.
102. Vanitha Swaminathan, Zeynep Gürhan-Canli, Umut Kubat, and Ceren Hayran, “How, When, and Why Do Attribute-Complementary Versus Attribute-Similar Cobrands Affect Brand Evaluations: A Concept Com- bination Perspective,” Journal of Consumer Research 42, no. 1 (June 2015): 45–58; Ralf van der Lans, Bram Van den Bergh, and Evelien Dieleman, “Partner Selec- tion in Brand Alliances: An Empirical Investigation of the Drivers of Brand Fit,” Marketing Science 33, no. 4 (July–August 2014): 551–566.
103. Marcus Cunha, Jr., Mark R. Forehand, and Justin W. Angle, “Riding Coattails: When Co-Branding Helps versus Hurts Less-Known Brands,” Journal of Con- sumer Research 41, no. 5 (February 2015): 1284–1300.
104. Taylor Randall, Karl Ulrich, and David Reibstein, “Brand Equity and Vertical Product Line Extent,” Mar- keting Science 17, no. 4 (1998): 356–379.
105. Ryan Hamilton and Alexander Chernev, “The Impact of Product Line Extensions and Consumer Goals on the Formation of Price Image,” Journal of Marketing Research 47, no. 1 (February 2010): 51–62.
106. Amna Kirmani, Sanjay Sood, and Sheri Bridges, “The Ownership Effect in Consumer Responses to Brand Line Stretches,” The Journal of Marketing 63, no. 1 (1999): 88–101.
107. Sheri Bridges, Kevin Lane Keller, and Sanjay Sood, “Explanatory Links and the Perceived Fit of Brand Extensions: The Role of Dominant Parent Brand Asso- ciations and Communication Strategies,” Journal of Advertising 29, no. 4 (2000): 1–11; Richard R. Klink and Daniel C. Smith, “Threats to the External Validity of Brand Extension Research,” Journal of Marketing Research 38, no. 3 (August 2001): 326–335.
108. Vicki R. Lane, “The Impact of Ad Repetition and Ad Content on Consumer Perceptions of Incongruent Exten- sions,” Journal of Marketing 64, no. 4 (2000): 80–91.
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109. Sanjay Sood and Kevin Lane Keller, “The Effects of Product Experience and Branding Strategies on Parent Brand Evaluations and Brand Equity Dilution,” Jour- nal of Marketing Research (2012).
110. Lauranne Buchanan, Carolyn J. Simmons, and Barbara A. Bickart, “Brand Equity Dilution: Retailer Display and Context Brand Effects,” Journal of Marketing Research 36, no. 8 (1999): 345–355.
111. Alokparna Basu Monga and Deborah Roedder John, “What Makes Brands Elastic? The Influence of Brand Concept and Styles of Thinking on Brand Extension Evaluation,” Journal of Marketing Research 74, no. 3 (May 2010): 80–92. See also Hakkyun Kim and Deborah Roedder John, “Consumer Response to Brand Extensions: Construal Level as a Moderator of the Importance of Perceived Fit,” Journal of Con- sumer Psychology 18, no. 2 (2008): 116–126.
112. Eric A. Yorkston, Joseph C. Nunes, and Shashi Matta, “The Malleable Brand: The Role of Implicit Theories in Evaluating Brand Extensions,” Journal of Marketing 74, no. 1 (January 2010): 80–93.
113. Hazel R. Markis and Shinobu Kitayama, “Culture and the Self: Implications for Cognition, Emotion, and Motivation,” Psychological Review 98, no. 2 (April 1991): 224–253; Angela Y. Lee, Jennifer L. Aaker, and Wendi L. Gardner, “The Pleasures and Pains of Distinct Self-Construals: The Role of Inter- dependence in Regulatory Focus,” Journal of Person- ality and Social Psychology 78, no. 6 (June 2000): 1122–1134; Angela Y. Lee, Punam Anand Keller, and Brian Sternthal, “Value from Regulatory Construal Fit,” Journal of Consumer Research 36, no. 5 (Febru- ary 2010): 735–747.
114. Rohini Ahluwalia, “How Far Can a Brand Stretch? Understanding the Role of Self-Construal,” Journal of Marketing Research 45, no. 3 (June 2008): 337–350.
115. Sanjay Puligadda, William T. Ross, Jr., and Radeep Grewal, “Individual Differences in Brand Schematic- ity,” Journal of Marketing Research 49, no. 1 (February 2012): 115–130; Jochim Hansen, Florian Kutzner, and Michaela Wänke, “Money and Thinking: Reminders of Money Trigger Abstract Construal and Shape Con- sumer Judgments,” Journal of Consumer Research, 39, no. 6 (April 2013): 1154–1166.
116. Edward T. Higgins, “Beyond Pleasure and Pain,” American Psychologist 52, no. 12 (December 1997): 1280–1300; Edward T. Higgins, “How Self-Regulation Creates Distinct Values: The Case of Promotion and Prevention Decision Making,” Journal of Consumer Psychology 12, no. 3 (2002): 177–191.
117. Junsang Yeo and Jongwon Park, “Effects of Parent- Extension Similarity and Self-Regulatory Focus
on Evaluations of Brand Extensions,” Journal of Consumer Psychology 16, no. 3 (2006): 272–282.
118. Chung-Chau Chang, Bo-Chi Lin, and Shin-Shin Chang, “The Relative Advantages of Benefit Overlap Versus Category Similarity in Brand Extension Evaluation: The Moderating Role of Self-Regulatory Focus,” Mar- keting Letters 22, no. 4 (November 2011): 391–404.
119. Michael J. Barone, Paul W. Miniard, and Jean B. Romeo, “The Influence of Positive Mood on Brand Extension Evaluations,” Journal of Consumer Research 26, no. 4 (December 2000): 386–400.
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121. Sharon Ng, “Cultural Orientation and Brand Dilution: Impact of Motivation Level and Extension Typicality,” Journal of Marketing Research 47, no. 1 (February 2010): 186–198.
122. Carlos J. Torelli and Rohini Ahluwalia, “Extending Culturally Symbolic Brands: A Blessing or Curse?,” Journal of Consumer Research 38, no. 5 (February 2012): 933–947.
123. The fakes are Burberry Baby Stroller, Atlantic City Playing Cards, Slim Jim Beef Jerky Throat Lozenges, and Richard Simmons Sneakers.
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511
Learning Objectives
After reading this chapter, you should be able to
1. Understand the important considerations in brand reinforcement.
2. Describe the range of brand revitalization options available to a company.
3. Outline the various strategies to improve brand awareness and brand image.
4. Define the key steps in managing a brand crisis.
Managing Brands Over Time 14
Some companies like Barnes & Noble have
found it difficult to maintain market leadership
in the face of strong competition and the
sweeping changes taking place due to
online retailing.
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512 PART V • GROWING AND SUSTAINING BRAND EQUITY
One of the obvious challenges in managing brands is constant change in the marketing environ-
ment. Shifts in consumer behavior, competitive strategies, government regulations, technological
advances, and other areas can profoundly affect the fortunes of a brand. Besides these external
forces, the firm’s own strategic focus may force minor or major adjustments in the way it mar-
kets its brands. Effective brand management thus requires proactive strategies designed to at
least maintain—if not actually enhance—customer-based brand equity in the face of all these
different forces.
Consider the fate of these four brands: Myspace, Yahoo!, Blockbuster, and Barnes & Noble.
In the mid-2000s, each enjoyed a strong market position, if not outright leadership. In just a few
short years, however, each was struggling for survival as Facebook, Google, Netflix, and Amazon,
respectively, raced past them to establish market superiority. Although there are many explana-
tions, the way these brands were managed certainly contributed to the outcomes.
This chapter considers how to best manage brands over time. Any marketing action a firm
takes today can change consumers’ brand awareness or brand image and have an indirect effect
on the success of future marketing activities (see Figure 14-1). For example, the frequent use of
temporary price decreases as sales promotions may create or strengthen a discount association to
the brand, with potentially adverse implications on customer loyalty and responses to future price
changes or nonprice-oriented marketing communication efforts.1
Unfortunately, marketers may have a particularly difficult time trying to anticipate future con-
sumer responses; if the new knowledge structures that will influence future consumer responses do
not exist until the short-term marketing actions actually occur, how can they realistically simulate
future consumer responses to permit accurate predictions?
The main assertion of this chapter is that marketers must actively manage brand equity
over time by reinforcing the brand meaning, and, if necessary, by making adjustments to the
marketing program to identify new sources of brand equity. In considering these two topics, we
will look at a number of different brand reinforcement issues and brand revitalization strate-
gies. The Brand Focus 14.0 at the end of the chapter considers how to deal with a marketing
crisis, with specific emphasis on Johnson & Johnson’s experiences with the Tylenol brand
through the years.
PREVIEW
REINFORCING BRANDS How should we reinforce brand equity over time? How can marketers make sure consumers have
knowledge structures that support brand equity for their brands? Generally, we reinforce brand
equity by marketing actions that consistently convey the meaning of the brand to consumers in
terms of brand awareness and brand image. As we have discussed before, questions marketers
should consider are as follows:
• What products does the brand represent, what benefits does it supply, and what needs does it
satisfy? Nutri-Grain has expanded from cereals into granola bars and other products, cement-
ing its reputation as “makers of healthy breakfast and snack foods.” Disney has been con-
tinually updating its portfolio through a series of high-profile acquisitions. In 2005, Disney
acquired Pixar, and Disney bought Marvel in 2009. Disney acquired Lucasfilm and the entire
Star Wars franchise for $4 billion. These acquisitions have helped Disney maintain its com-
petitive edge and expand its appeal to its audiences.
• How does the brand make those products superior? What strong, favorable, and unique brand
associations exist in the minds of consumers? Through product development and the suc-
cessful introduction of brand extensions, Black & Decker is now seen as offering innovative
designs in its small appliance products.
Both these issues—brand meaning in terms of products, benefits, and needs, as well as in terms of
product differentiation—depend on the firm’s general approach to product development, branding
strategies, and other strategic concerns, as we discussed in Chapters 12 and 13.
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CHAPTER 14 • MANAGING BRANDS OVER TIME 513
COLDPLAY
Having sold 55 million albums in their careers, British rock band Coldplay might find the release of a new
album to be nothing special. After all, their fourth album Viva la Vida or Death and All His Friends sold 2.8
million units in the United States alone, and their U.S. tour grossed more than $126 million.
When launching their fifth album, Mylo Xyloto, however, Chris Martin, lead singer and front man for
the band, noted how aggressively they had to approach the release. “Because of the speed of media and
entertainment, with every album you have to think like a new act,” noted Martin. “Just because they liked A
Rush of Blood to the Head doesn’t mean they’re gonna like this one. So we start again.” Before launching a
worldwide tour in 2012—that was scheduled to last over a year—the band made 60 appearances of various
sorts in 2011 to help promote the album; a video shoot in South Africa; a live-streamed Amex Unstaged
launch show in Madrid shot by famed video and film director Anton Corbijn, and so on. Performances of
new songs appeared on YouTube and elsewhere. The band also created a viral campaign to generate fan
interest and involvement. Leaving nothing to chance paid off for the band. Mylo Xyloto went to No. 1 in
album sales in 17 countries, and most venues for the world tour sold out in minutes. The band did not stand
still with respect to their world tour, either. In a concert first, each concertgoer received a RF-driven Xyloband
flashing wristband that changed colors for different songs after receiving a signal.2
Coldplay has managed to remain relevant to their audi-
ences through a series of music albums featuring their
hit songs and spectacular concert performances.
FIGURE 14-1
Coldplay Album Sales
Across Years
8,500,000
20,000,000
15,000,000
10,000,000
8,000,000
3,700,000 5,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
2000 2002 2005 2008 2011 2014 2015
This section on brand reinforcement examines three key issues: (1) advantages of maintaining
brand consistency; (2) importance of protecting sources of brand equity; and (3) and trade-offs
between fortifying and leveraging brands. If there is one rule for modern branding, however, it is
that brands can never stand still. Brands must be constantly moving forward. A vivid example is
the way Coldplay chose to launch their latest album.
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514 PART V • GROWING AND SUSTAINING BRAND EQUITY
FIGURE 14-2
Coldplay Timeline
Coldplay’s timeline
highlights key mile-
stones in the band’s
twenty-year history.
The British rock band Coldplay forms with lead singer Chris Martin and lead guitarist Jonny Buckland while the
two were at University College London. 1996
Coldplay begins promoting their upcoming album Mylo Xyloto in creative ways. The band held more than 60 appearances, visited schools
and churches, and released singles in the days before the official release. Coldplay released Mylo Xyloto on October 24, 2011. 2011
A Head Full of Dreams, the bands supposed final album, releases. The band launches a
worldwide tour that starts in March of 2016 and extends into 2017. 2015
Coldplay performs at the Super Bowl halftime show. Coldplay's tour continues and
has made $137.2 million dollars in the first half of the tour alone. The band continues to
be hugely successful, despite competition from other top artists.
2016
Before the band departs for their tour that will last for an entire year, their album tops charts at #1 in 17 countries. Tickets for their tour
sold out in minutes. Coldplay decides to give concert-goers RF-driven wristbands that changed lights automatically depending on the song.
2012
2014
Coldplay releases their sixth album, Ghost Stories. The band goes in an opposite direction with this
promotion, release, and tour. They plan only six venues to perform at, hoping to achieve a much more
intimate setting with fans. Still, the album debuted at #1 and sold 3.7 million copies.
Coldplay releases their fourth album, Viva la Vida. The album goes on to sell an estimated 10 million units. Coldplay's tour of the
U.S. alone generates $126 million. 2008
Coldplay writes, records, and releases three albums. The band has gained worldwide recognition and tops
music charts. Up until this point, Coldplay has sold 55 million albums. 1996-2008
Overall, a series of carefully executed strategies has helped Coldplay effectively manage its brand over
time, and this has helped with improving their album sales over time (see Figure 14-2). For their sixth album,
Ghost Stories, Coldplay reversed direction and chose to book only six performances in more intimate set-
tings.3 The promotional mix included a scavenger hunt where lyrics to the nine songs on the album were
M14_KELL4969_05_GE_C14.indd 514 03/05/19 9:42 AM
CHAPTER 14 • MANAGING BRANDS OVER TIME 515
included in ghost story books over the world.4 For the seventh and potentially final album, A Head Full of
Dreams, released in December 2015, Coldplay launched a world tour beginning in 2016. The long-term
success of this band based on well-thought-out product and marketing strategy has resulted in long-term
success. This type of success is somewhat rare in the music industry, where music bands have a relatively
short existence.5
Maintaining Brand Consistency Maintaining consistency involves two key aspects: (1) consistency of marketing support; and (2)
consistency of brand associations. Without question, the most important consideration in rein-
forcing brands is consistency in the nature and amount of marketing support the brand receives.
Brand consistency is critical to maintaining the strength and favorability of brand associations.
Another way to achieve a consistent appeal is through retro-marketing, or convincing consumers
that heritage brands have nostalgic appeal that can help consumers connect with their past, as
outlined in a section that follows.
Consistent Marketing Support for Market Leader Brands. Inadequate marketing support
is an especially dangerous strategy when combined with price increases. An example of failure
to adequately support a brand occurred in the kitchen and bath fixtures market.
DELTA FAUCET
Delta Faucet, the first company to advertise faucets on television in the 1970s, was the market leader in
the 1980s with more than 30 percent market share. Beginning in the 1990s, however, two major factors
contributed to a decline in market share. First, whereas Delta had built a strong business model based on
the loyalty of professional plumbers, the advent of hardware superstores and online shopping empowered
consumers to make their own choices and repairs. Second, Delta’s support for its brand through innovation
and advertising diminished during this time. These factors combined to give rival Moen an opportunity to
gain market share, and by 2005, each company held 25 percent of the U.S. faucet market. That same year,
Delta countered by raising its advertising budget 60 percent and conducting thousands of interviews and
other forms of consumer research to feed R&D efforts.6
Lost market share can be difficult to regain. In 2015, it was estimated that 17.9 percent of U.S. con-
struction firms use Delta faucets.7 Overall, they commanded a market share in the low 20 percent area, giv-
ing them the second largest share.8 In an effort to gain market share, Delta Faucet tried various approaches.
For instance, it was a key partner for five 5k Warrior Dash mud runs in 2015, where it provided showers for
runners after the race and set a Guinness World Record for the most people simultaneously showering at a
single venue. Providing a photo booth for the runners who were unable to carry their cell phones through the
mud and subsequently e-mailing the photos generated more than 50 percent opt-ins to receive additional
information about Delta Faucet.9
Even a cursory examination of the brands that have maintained market leadership for the
last 50 or 100 years or so testifies to the advantages of staying consistent. Brands such as Disney,
McDonald’s, Mercedes Benz, and others have been remarkably true to their strategies once they
achieved a preeminent market leadership position.
Perhaps an even more compelling demonstration of the benefits of consistency is the fortunes
of brands that have constantly repositioned or changed ad agencies.
Consistency and Change. Being consistent does not mean, however, that marketers should
avoid making any changes in the marketing program. On the contrary, managing brand equity
with consistency may require making numerous tactical shifts and changes in order to maintain
the strategic thrust and direction of the brand. The most effective tactics for a particular brand at
any one time can certainly vary. Prices may move up or down, product features may be added or
dropped, ad campaigns may employ different creative strategies and slogans, and different brand
extensions may be introduced or withdrawn to create the same desired knowledge structures in
consumers’ minds.
Nevertheless, the strategic positioning of many leading brands has been kept remarkably
uniform over time by the retention of key elements of the marketing program and the preservation
M14_KELL4969_05_GE_C14.indd 515 03/05/19 9:42 AM
516 PART V • GROWING AND SUSTAINING BRAND EQUITY
of the brand meaning. In fact, many brands have kept a key creative element in their marketing
communication programs over the years and, as a result, have effectively created some “advertis-
ing equity.” As the Branding Brief 14-1 illustrates, Patagonia has continually refined its vision
and mission of sustainability.
As the next segment on nostalgic brands suggests, brands sometimes return to their roots
to remind existing or lapsed customers or to attract new ones. Such efforts to refresh awareness
obviously can make sense. At the same time, marketers should be sure that these old advertising
elements or marketing appeals have enduring meaning with older consumers but are also relevant
to younger consumers. They should examine the entire marketing program to determine which
elements are making a strong contribution to brand equity and must therefore be protected.
Patagonia is a brand whose mission and values are focused
on sustainability. The company stated aims are as follows: “We
design and sell things made to last and be useful. But we ask our
customers not to buy from us what you don’t need or can’t really
use. Everything we make—everything anyone makes—costs the
planet more than it gives back.” This ethos runs through every-
thing that the company does, and it has built its entire brand
image on socially and environmentally responsible business prac-
tices. Doing so has helped the brand resonate with its customers.
As one marketing observer noted, “Patagonia’s audience trusts
the brand, admires its values, and aspires to live by the same prin-
ciples. Very few brands can compete on quality and price alone.”
Patagonia has refined its business practices to reflect its sus-
tainability mission. Since its beginning in 1973 as an outdoor
clothing and gear company, the company has communicated
its commitment to sustainability and environmental causes. For
example, in 1986, the company began donating 10 percent of
its profits each year to small grassroots environmental protection
groups. In 1993, the company began making recycled polyester
from plastic soda bottles and was the first outdoor clothing man-
ufacturer to transform trash into fleece. In 1994, the company
conducted its first environmental impact assessment report and
subsequently began an exclusive use of organically grown cotton
in all cotton products. In 2002, Yvon Chouinard co-founded One
Percent for the Planet, whose goal was to encourage businesses
to donate 1 percent of sales to help protect the environment.
In 2007, Fortune named Patagonia the “Coolest Company on
the Planet.” That same year, the company introduced the Footprint
Chronicles, a Web site that explained its social and environmental
practices and told stories of its products’ origins. In 2008, the com-
pany began sharing strategies for “greening” supply chain with
Walmart for free and also began working with Walmart to build a
sustainability index for its products. In a major effort to strengthen
its sustainability efforts, Patagonia, in coordination with Walmart,
founded the Sustainable Apparel Coalition, standardizing sustainabil-
ity metrics for the industry. Soon after, Patagonia began collaborating
with its competitors REI and North Face, agreeing to use Bluesign
Technologies to grade dyeing and finishing by textile suppliers.
In 2011, Patagonia launched its “Don’t Buy This Jacket” cam-
paign asking consumers to consider purchasing used jackets. Soon
after, the company launched its “Worn Wear” program to repair
used items to keep them out of landfills. Patagonia also launched
its new hexagonal packaging using 100 percent post-consumer
waste corrugate and later launched “The New Localism” campaign,
a call to take action in stand-
ing up for environmental
causes. More recently, when
PETA released video footage
of cruelty on Ovis 21 farms,
Patagonia dropped them as
a wool supplier. To further
reinforce their sustainability
mission and vision, Patago-
nia released a set of new
wool principles that guide
the treatment of animals as
well as land-use practices
and sustainability. In 2017,
Patagonia announced it will
accept used clothing for store
credit, repairing and reselling
the used items as Worn Wear.
Overall, Patagonia has been
successful at maintaining a
consistent brand positioning
around the theme of social
and environmental responsibility, but has leveraged this position-
ing in multiple ways by sponsoring various sustainability initiatives.
Sources: Ashley Lutz, “A Clothing Company Discourages Customers
from Buying Its Stuff—And Business Is Booming,” Business Insider,
September 8, 2014, https://www.businessinsider.com/patagonia-business-
strategy-2014-9, accessed November 24, 2018; Monte Burke, “Wal-Mart,
Patagonia Team to Green Business,” Forbes Magazine, May 6, 2010,
https://www.forbes.com/forbes/2010/0524/rebuilding-sustainability-
eco-friendly-mr-green-jeans.html#5a3e71d74299, accessed November
24, 2018; Marc Gunther, “The Patagonia Adventure: Yvon Chouinard’s
Stubborn Desire to Redefine Business,” B the Change, September 6,
2016, https://bthechange.com/the-patagonia-adventure-yvon-chouinards-
stubborn-desire-to-redefine-business-f60f7ab8dd60, accessed November
24, 2018; Megan Michelson, “Want Ethically Sourced Wool? Buy from
Patagonia,” Outside Online, July 29, 2016, https://www.outsideonline
.com/2101871/want-ethically-sourced-wool-buy-patagonia, accessed
November 24, 2018; People for the Ethical Treatment of Animals (PETA),
“Patagonia’s ‘Sustainable Wool’ Supplier Exposed: Lambs Skinned
Alive, Throats Slit, Tails Cut Off,” https://investigations.peta.org/ovis-
lamb-slaughter-sheep-cruelty/, accessed November 24, 2018; Poonkulali
Thangavelu, “The Success of Patagonia’s Marketing Strategy,” Investo-
pedia, https://www.investopedia.com/articles/personal-finance/070715/
success-patagonias-marketing-strategy.asp, accessed November 24, 2018.
BRANDING BRIEF 14-1
Patagonia
Patagonia’s Common Threads
Initiative spotlights its com-
mitment to sustainability.
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CHAPTER 14 • MANAGING BRANDS OVER TIME 517
FIGURE 14-3
Patagonia’s Timeline
Patagonia’s timeline highlights how
the brand’s sustaintability initiatives over
the years have played an important role
in its success.
Patagonia begins to gain popularity with technical new fabrics and vivid colored clothing, while ramping up R&D.
1973
1993
1994
1996
1985 −
1986
2002
Early 1980s
2005
2007
2010
2011
2012
2013
2014
2015
2016
patagonia
Founded by Yvon Chouinard.
Patagonia shift entire line of polypropylene underwear to Capilene; sales soar. Company commits to donate 10% of profits each year to small environmental protection groups.
Company begins making recycled polyester from plastic soda bottles–the first manufacturer to transform trash into fleece.
Company conducts its first environmental impact assessment report.
Patagonia opens distribution center in Reno, NV, achieving 60% reduction in energy usage. Company begins exclusively using organic cotton in all cotton products.
Couhinard co-founds One Percent for the Planet, encouraging businesses to donate 1% of sales to protect the environment. Introduces Down products.
Company is criticized by PETA for wool sourced from Australian farm requiring mulesing. Chouinard’s book “Let My People Go Surfing” published.
Fortune names Patagonia “Coolest Company on the Planet.” Company introduces Footprint Chronicles, explaining its social and environmental practices as well as stories of products’ origins.
Patagonia begins sharing strategies for “greening” supply chain with Walmart. Company co-founds the Sustainable Apparel Coalition with Walmart, standardizing sustainability metrics for industry.
Patagonia begins collaborating with competitors REI and North Face, agreeing to use Bluesign Technologies to grade dyeing and finishing by textile suppliers.
Company launches “Don’t Buy This Jacket” campaign asking consumers to buy used jackets instead. Revenues increase 30%.
Company becomes California certified B Corp. Chouinard’s account of operating a responsible business, “The Responsible Company: What We’ve Learned from Patagonia’s First 40 Years” published.
Patagonia introduces new hexagonal packaging using 100% post consumer waste corrugate. Company begins “Worn Wear” program to reuse items and keep used items out of landfills while also introducing Traceable Down products.
Patagonia launches The New Localism campaign, a call to stand up for environmental causes. Patagonia branded film DamNation premieres at SXSW.
PETA releases video footage of cruelty on wool supplier Ovis 21 farms; company drops them as supplier. Chouinard named to Marketing Hall of Fame.
Company releases new wool principles, guiding treatment of animals along with land-use practices and sustainability.
2008 −
2009
Brand Flashbacks. Older, heritage brands can reach into their past in different ways to develop
successful new marketing campaigns. One way is to revisit well-known and loved past ad cam-
paigns, perhaps giving them a twist and updating them in the process.
Dubbed retro-branding, retro-advertising, or nostalgia marketing by some marketing pundits,
the tactic is a means to tie in with past advertising that was, and perhaps could still be, a key source
of brand equity. Demonstrating the latent value of past advertising is the return of such advertising
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518 PART V • GROWING AND SUSTAINING BRAND EQUITY
icons as Colonel Sanders for KFC, who reappeared in new advertising and packaging focused on
the restaurant’s Southern roots, albeit with a thinner face and a red apron instead of the classic
three-piece suit, and a very different attitude!
Retro-branding can activate and strengthen brand associations that would be virtually impos-
sible to recreate with new advertising today. In some cases, a key point-of-difference for the brand
may just turn out to be heritage or nostalgia rather than any product-related difference. Heritage
can be a powerful point-of-difference—at least as long as it conveys expertise, longevity, and
experience and not just age.
Anniversaries and milestones of longevity can be excellent opportunities to launch a campaign
to celebrate. Marketers should focus as much on the future of the brand as on its past, of course, per-
haps emphasizing how all that the brand has gone through will benefit its customers in the future.
Oreo’s 100-year anniversary (which took place in 2012) was marked by the popular “cel-
ebrate the kid inside” campaign. The advertising featured many spots highlighting how Oreos
can liven up an otherwise dull bus ride or morning commute with kids serving adults Oreos.
The ads and in-store contests created a birthday party atmosphere and focused on the “Twist,
Lick, and Dunk” method of eating Oreos with milk. The marketing campaign also included a
100-day “Daily Twist” promotion that paired the brand with various cultural images and icons.
The Oreo birthday page received 25 million likes, and sales increased 25 percent, making it one
of the most successful brand pages. Oreo also adapted this campaign for the global marketplace.
In a variation of the ‘Twist, Lick, and Dunk” campaign, Oreo also created ads featuring shared
moments of togetherness between family members, and featured a father and son in the “twist,
lick, dunk” ritual. It also encouraged parents to sign a “Oreo Togetherness Pledge” promising to
spend more quality time with their children. In addition, in the India market, an Oreo Together-
ness Bus roamed various cities across the country providing a platform for parents and children
to catch fun family moments.10
Research shows that nostalgic advertising can positively influence consumers. One empirical
study confirmed that intentionally nostalgic advertisements yielded favorable attitudes toward the
advertisement and the brand. Another study identified a potential source of nostalgic purchase
behavior, called “intergenerational influence,” or the influence of a parent’s purchase behavior
and brand attitudes on a child’s behavior and attitudes.
The nostalgic connection evoked by the mobile game Pokémon GO was a key factor account-
ing for the runaway success of this game.11 The characters featured on the Pokémon GO mobile
game were identical to the ones featured in the cards when they were first introduced. A number
of millennials enjoyed playing a game that allowed them to reconnect with the characters that
were familiar to them and brought back memories of their youth.
Some brands attempt to make the case that their enduring appeal is still relevant for lapsed
users today. Kraft Macaroni and Cheese Dinner, long sold to parents as a meal favorite for chil-
dren, turned the tables on grown-ups to remind them, “You Know You Love It.” A $50 million
campaign featuring TV, print and online ads, billboards, a Web site (www.youknowyouloveit
.com), and social media communications on Facebook and Twitter supported the entire product
line. The Branding Brief 14-2 describes how Pabst has retained its appeal over the years.
Heritage appeals do not necessarily have to use advertising
though, as Pabst Blue Ribbon (PBR) beer shows. The brand was
born in 1882, when the Pabst Brewing Company began tying
silk ribbons to bottles of its Select beer. The company became
one of the major U.S. beer brands and remained so through
1977, when sales peaked at 18 million barrels. As competition
from Budweiser and Miller increased, however, the PBR brand
suffered as a consequence of price cuts, quality problems, and
ownership changes.
After years of decline, sales of PBR suddenly spiked in the
Portland, Oregon area in 2001. Management investigated and
discovered that young trendsetters were adopting the beer as a
“blue-collar, Americana” alternative to the big brands and craft
beers favored by their parents. Rather than using above-the-line
advertising, which it had not done since the 1970s, Pabst sought
to capitalize on this market through word-of-mouth, on-premise
promotions, and event sponsorships, primarily of local bands and
concerts, and licensed merchandise aimed at “hipsters.”
BRANDING BRIEF 14-2
Pabst
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CHAPTER 14 • MANAGING BRANDS OVER TIME 519
Pabst regained its market presence through a combination of
word-of-mouth, on-premise promotions, and event sponsorships.
By letting the brand’s image be created as much by consum-
ers as by the company itself and by keeping it local, hip, and
organic, Pabst increased sales over the next nine years. With the
Metropoulus family as new owners, other Pabst brands became
candidates for revitalization—including Schlitz, Schaefer, Stroh’s,
and Falstaff. A total of 5 of the top 10 brands—from 1973! More
recently, Pabst has been entering into partnerships with various
craft breweries to improve its market presence against the large,
national breweries such as Anheuser-Busch InBev and MillerCoors.
Sources: Bruce Horovitz, “Southern Finger-Lickin’ Roots Help KFC
Revamp,” USA Today, April 20, 2005, 3B; Darrel D. Muehling and David E.
Sprott, “The Power of Reflection: An Empirical Examination of Nostalgia
Advertising Effects,” Journal of Advertising 33, no. 3 (Autumn 2004):
25–35; Elizabeth S. Moore, William L. Wilkie, and Richard J. Lutz, “Pass-
ing the Torch: Intergenerational Influences as a Source of Brand Equity,”
Journal of Marketing 66, no. 2 (April 2002): 17–37; Stephen Brown, Robert
V. Kozinets, and John F. Sherry Jr., “Teaching Old Brands New Tricks:
Retro Branding and the Revival of Brand Meaning,” Journal of Market-
ing 67, no. 3 (July 2003): 19–33; Katherine E. Loveland, Dirk Smeesters,
and Naomi Mandel, “Still Preoccupied with 1995: The Need to Belong
and Preference for Nostalgic Products,” Journal of Consumer Research
37, no. 3 (October 2010): 393–408; Jenn Abelson, “L.L.Bean Marks 100
Years with ‘Bootmobile’,” Boston Globe, January 18, 2012, https://www
.bostonglobe.com/business/2012/01/18/bean-marks-years-with-bootmobile
-tour/ToAo57TJgsb6NWYi9bOFAN/story.html, accessed November 24,
2018; Stuart Elliott, “Kraft Hope to Encourage Adults to Revert to a Child-
hood Favorite,” The New York Times, May 26, 2010, https://www.nytimes
.com/2010/05/27/business/media/27adco.html, accessed November 24,
2018; Jeremy Mullman, “Schlitz Tries to Revive '50s Heyday,” Advertising
Age, April 17, 2006, 8; Ann Cortissoz, “Not Your Father’s Beer: Your Grand-
father’s,” Boston Globe, October 20, 2004, F1, http://archive.boston.com/
ae/food/articles/2004/10/20/not_your_fathers_beer_your_grandfathers/,
accessed November 24, 2018; Matt Schwartz, “Can This Stay Cool? A Jet-
Setting Family Takes Over a Blue Collar Brand,” Bloomberg BusinessWeek,
September 20, 2010; E. J. Schultz, “A Tiger at 60: How Kellogg’s Tony
Is Changing for a New Age,” Advertising Age, August 29, 2011, https://
adage.com/article/news/kellogg-s-tony-tiger-60-changing-a-age/229493/,
accessed November 24, 2018; Lauren Friedman, “Why Nostalgia Marketing
Works So Well with Millennials, and How Your Brand Can Benefit,” Forbes
Magazine, August 2, 2016, https://www.forbes.com/sites/laurenfriedman
/2016/08/02/why-nostalgia-marketing-works-so-well-with-millennials-
and-how-your-brand-can-benefit/#423ed3e93636, accessed November
24, 2018; Jason Notte, “How Pabst Is Taking on Big Beer, Craft Beer and
Imported Beer All at Once,” MarketWatch, January 10, 2017, https://www
.marketwatch.com/story/how-pabst-is-taking-on-big-beer-craft-beer-and-
imported-beer-all-at-once-2017-01-10, accessed November 24, 2018.
Protecting Sources of Brand Equity Consistency thus guides strategic direction and does not necessarily prescribe the particular tactics
of the supporting marketing program for the brand at any one point in time. Unless some change
in either consumer behavior, competition, or the company makes the strategic positioning of the
brand less powerful, there is likely little need to deviate from a successful positioning.
Although brands should always look for potentially powerful new sources of brand equity, a
top priority is to preserve and defend those that already exist. Often brands can be the subject of
scandals and transgressions which may cause irreparable harm. As the Volkswagen Branding Brief
14-3 illustrates, firms have to monitor and recover their reputation in the aftermath of a scandal.
Brand Crises. Regardless of how strong a brand is, crises incidents are unavoidable. These
crises could range from product or service failures resulting in product recalls to moral transgres-
sions which may lead consumers to question a company’s values. For example, in 2009, Toyota
experienced a major crisis when its faulty brake pedals caused its cars to suddenly accelerate.
The Toyota brand crisis resulted in the largest recall of its history, with nearly 9 million vehicles
being recalled from 2004 to 2010.12
How do these crises incidents impact a brand’s reputation, and how can a brand recover?
Researchers have examined brand crises (or transgressions) with a view to explaining how they
can impact consumers’ perceptions and preferences. Some key findings are highlighted in The
Science of Branding 14-1. Following that, Branding Brief 14-3 describes how the Volkswagen
diesel emissions scandal played out in social media. What are some strategies for brands to
recover from such crises? The section that follows highlights specific recovery strategies for
brands to recover from such crises and provides examples of each of these approaches.
Recovering from a Brand Crisis or Scandal. Firms resort to many approaches to recover their
brand reputation following a crisis or a scandal. However, there are two principles to keep in mind
as you craft a response: swiftness and sincerity. The response to a brand crisis must be swift. The
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520 PART V • GROWING AND SUSTAINING BRAND EQUITY
In September 2015, the Environmental Protection Agency
found that many Volkswagen cars sold in the United States were
equipped with software that could falsely improve the perfor-
mance of diesel engines on emissions tests. This cheating was
subsequently acknowledged by the car manufacturer. Among
the many issues at stake for the company was one of pub-
lic perception. Anecdotal evidence at the time of the incident
suggested irreparable harm to the Volkswagen brand. So could
Volkswagen recover in the short-term in this regard? And more
broadly, how did brand perception towards Volkswagen change
during the scandal, particularly in an era where social media can
cause negative news to proliferate and reverberate over time?
Academic researchers conducted extensive analysis of the Volk-
swagen scandal using data from Twitter. They analyzed periods
aligned with some of the key events relating to the scandal, and also
representing periods during and following the scandal. Specifically,
they examined how customers were reacting to information about
the scandal based on three factors: (1) frequency of mentions of the
Volkswagen brand name; (2) the sentiment towards the brand; and
(3) topics that dominated the conversation at various points in time.
They found that the frequency of mentions varied dramatically day
by day, and the mentions seemed to parallel specific actions taken
by Volkswagen in order to issue apologies or by regulatory agencies
in order to place responsibility or issue punishments. In terms of
topics that were discussed, initially the focus was on cheating itself,
but later gave way to discussions of specific models—for example,
Beetle and Jetta that were the focus of the recall. Their findings sug-
gested that while sentiment towards the brand was extremely nega-
tive at the beginning of the scandal, over time, the daily percentage
of negative mentions decreased and the sentiment became more
neutral. To a large extent, recovering a brand reputation depends
on the recovery strategies that a company employs in the aftermath
of a brand crisis. Table 14–1 summarizes and provides examples of
different types of recovery efforts that a firm could use to overcome
the negative consequences of a reputational crisis.
Source: Vanitha Swaminathan and Suyun Mah, “What 100,000 Tweets
About the Volkswagen Scandal Tell Us About Angry Customers,” Har-
vard Business Review, September 2, 2016, https://hbr.org/2016/09/
what-100000-tweets-about-the-volkswagen-scandal-tell-us-about-angry-
customers, accessed November 24, 2018.
BRANDING BRIEF 14-3
Volkswagen
FIGURE 14-4
Volkswagen on Twitter
Volkswagen’s emissions scandal was reflected in increased negative sentiment towards the brand in social media, and the
negative sentiment became more neutral over time.
0 Jan. 1– Jan. 7, 2016
Negative
Neutral
Posit ive
Jan. 25 Jan. 17–Oct. 18–
Oct. 27 Sept. 29– Oct. 7, 2015
20
40
60
80
100% PERCENTAGE OF TWEETS
longer it takes a firm to respond to a marketing crisis, the more likely that customers will form
negative impressions based on unfavorable media coverage or word-of-mouth. Perhaps worse,
they may decide they do not really like the brand after all and permanently switch to alternatives.
In the context of the Volkswagen diesel emissions crisis, VW adopted a strategy of apologizing
for the incident. While this is a good response to an unfolding crisis—some viewed this as too
little, too late—the company wavered in the initial days of the crisis. Swift actions must also
come across as sincere. Public acknowledgment of the severity of the impact on consumers and
willingness to take whatever steps are necessary and feasible to solve the crisis reduce the chance
that consumers will form negative attributions for the firm’s behavior.
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CHAPTER 14 • MANAGING BRANDS OVER TIME 521
1. There are various research articles that have shed light on the
impact of brand crises on brand equity and reputation. Some
brand types and some consumers react more negatively to
brand crises. Researchers Aaker, Fournier, and Brasel found
that certain types of brands (e.g., brands like Campbell’s
soup which have a sincere brand personality) are likely to be
affected more when a crisis occurs.
2. Some consumers are more likely to punish brands for
transgressions, especially those consumers who have
strong relationships with brands, but this effect is only
seen when the consumer directly experiences the crisis.
In these situations, consumers may experience a sense of
injustice or betrayal.
3. In other cases, when consumers have strong relationships
with brands, and the crisis does not impact them directly, they
are more willing to forgive the brand. Researchers have found
an interesting phenomenon called counter-argumentation
which occurs when consumers are highly committed to a
brand, in which consumers actually produce arguments why
their brand is not responsible or accountable for the crisis.
Consumers are known to resort to counter-argumentation
when negative information is seen as a direct challenge to
their self and identity, causing them to want to defend their
brand.
4. Crises involving related brands can spill over and impact the
reputation of a parent brand as well, particularly when the
brand has line extensions and brand extensions carrying the
same brand name.
5. Brand crises could also provide opportunities to strengthen
relationships with customers. The Brand Focus 14.0 on Tyle-
nol’s crisis is an excellent example of this. If handled well,
companies can institute recovery efforts such as apology or
compensation that may cause some consumers to feel even
more positive towards a brand.
In most cases, crises incidents can be very detrimental to a brand’s
reputation. This is more so today with social media acting as an
amplifier of information about brands. Branding Brief 14-3 out-
lined how the diesel emissions crisis harmed the reputation of the
Volkswagen brand, and how the crisis played out in social media.
THE SCIENCE OF BRANDING 14-1
UNDERSTANDING BRAND CRISES
FIGURE 14-5
Volkswagen’s Emissions
Scandal: Timeline of
Events
VW Type 1 passes the Ford Model T as the most-produced
single make of a car.
VW is told to recall 482,000 vehicles in the
U.S. by EPA for cheating
emissions software.
U.S. files civil suit against VW,
Audi, and Porsche for
Clean Air Act violations,
alleging VW knowingly hid its diesel cheat software from regulators for
years. The violations
penalties could be up to $48
billion.
U.S. Justice Department announces
VW has agreed to pay
more than $15 billion in far-reaching settlements with federal regulators,
diesel owners, and dozens of states.
Volkswagens are first sold in the United States. The
company sold only two cars
in the first year.
VW CEO Martin
Winterkorn resigns.
Volkswagen, then known as
Gezuvor, founded by
German Labour Front,
headquartered in Wolfsburg,
Germany. May 28,
1937
Feb. 17, 1972
Sep. 18, 2015
Sep. 23, 2015
June 28, 2016
VW shows contrition,
issues public apology, and
begins external
investigation.
1999
U.S. sales tumbled 25% from November 2014 to November 2015.
VW U.S. CEO Michael Horn departs due to
“mutual agreement.”
Dec. 4, 2015
Mar. 9, 2016
Sep. 20, 2015
VW agrees to
compensate 652 U.S.
dealers worth about $1.2 billion in
settlement packages.
Volkswagen Type 1, “The Bug,” named
fourth most influential car of the 20th century.
1949
VW
Jan. 4, 2016
Aug. 26, 2016
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522 PART V • GROWING AND SUSTAINING BRAND EQUITY
Recovery Approach What Is It? Example
Apology and admission Accepting responsibility for the scandal or crisis
On April 9, 2017, millions watched as passenger Dr. David Dao, of Kentucky, was violently dragged off a United flight by Chicago Aviation Department security offi- cers. Cell phone videos captured the disturbing incident, and social media quickly disseminated the video to millions of viewers, prompting public outrage and corporate backpedaling by United officials. The airline said the incident was a con- sequence of over booking, and the seat occupied by the passenger was needed by one of its employees. This sparked calls for a boycott and even parody adverts from rival companies. Overall, this incident turned into a public relations disaster for United Airlines and caused severe harm to the brand name. Even with the United Airlines CEO issuing an apology, United Airlines lost $250 million in market value in the immediate aftermath.*
Bolstering brand image The bolstering response involves companies counter- ing the negative publicity with some positive publicity.
When Maggi Noodles (a company owned by Nestle which marketed a brand of instant noodles called Maggi) was the subject of negative publicity in the India market, it countered the negative effects by embarking on an advertising campaign to win its customers back. Chipotle attempted to win back customers after an E. coli outbreak threatened its brand reputation. The outbreak affected a number of people across various states, and Chipotle doubled the amount of food that was given away at its restaurants in an effort to retain its customers (see enclosed video links).
Not just me This response is useful to provide consumers with the big picture regarding why the transgression may not be lim- ited to only a single brand.
In 2013, Southwest Airlines was forced to acknowledge flight delay problems. Now at least Southwest is admitting the error of its ways: “Looking back, the changes we made were too aggressive and impacted our overall performance—putting us behind on on-time (performance) by around 10 minutes.” The carrier managed to put some of the blame for its recent poor performance on the weather, saying the adjustments it made earlier in connect and turn times were exacerbated by chal- lenging weather and high holiday load factors in late 2013. This is an example of how Southwest was partially resorting to a “Not just me” response to mitigate the fallout from the negative publicity.
Downplaying the crisis Downplaying the crisis involves explaining the reasons or miti- gating factors for a crisis and trying to downplay the damage from the incident itself. Some- times this may involve finger- pointing and blame shifting.
Samsung pointed to problems with its supplier in order to mitigate blame from the Galaxy 7 phones which overheated, and caught on fire when batteries exploded.
Table 14-1 Recovery Strategies for Brand Crises
Sources: Yany Gregoire, Thomas M. Tripp, and Renaud Legoux, “When
Customer Love Turns Into Lasting Hate: The Effects of Relationship
Strength and Time on Customer Revenge and Avoidance,” Journal of Mar-
keting 73, no. 6 (2009): 18–32; Rohini Ahluwalia, Robert E. Burnkrant,
and H. Rao Unnava, “Consumer Response to Negative Publicity: The
Moderating Role of Commitment,” Journal of Marketing Research 37,
no. 2 (2000): 203–214; Rohini Ahluwalia, “Examination of Psychological
Processes Underlying Resistance to Persuasion,” Journal of Consumer
Research 27, no. 2 (2000): 217–232; Niraj Dawar and Madan M. Pillutla,
“Impact of Product Harm Crises on Brand Equity: The Moderating Role
of Consumer Expectations,” Journal of Marketing Research 37, no. 2
(2000): 215–226; Vanitha Swaminathan, Karen L. Page, and Zeynep
Gurhan-Canli, “‘My’ Brand or ‘Our’ Brand: The Effects of Brand Rela-
tionship Dimensions and Self-Construal on Brand Evaluations,” Journal
of Consumer Research 34, no. 2 (2007): 248–259; Mary Sullivan, “Mea-
suring Image Spillovers in Umbrella-Branded Products,” The Journal
of Business 63, no. 3 (July 1990): 309–329; Matthew Thomson, Jodie
Whelan, and Allison R. Johnson, “Why Brands Should Fear Fearful
Consumers: How Attachment Style Predicts Retaliation,” Journal of
Consumer Psychology 22, no. 2 (2012): 289–298.
As Table 14–1 illustrates, a variety of recovery strategies have been employed by firms in the
aftermath of a scandal. Before selecting a particular approach, firms must carefully examine the
nature of the crisis itself.13 The severity and likely causes of the crisis will dictate the appropriate
recovery effort.
Ideally, the key sources of brand equity are of enduring value. Unfortunately, marketers can
easily overlook that value as they attempt to expand the meaning of their brands and add new
product-related or nonproduct-related brand associations. The next section considers these types
of trade-offs.
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CHAPTER 14 • MANAGING BRANDS OVER TIME 523
Fortifying versus Leveraging Chapters 4–7 described a number of different ways to raise brand awareness and create strong,
favorable, and unique brand associations in consumer memory to build customer-based brand
equity. In managing brand equity, marketers face trade-offs between activities that fortify brand
equity and those that leverage or capitalize on existing brand equity to reap some financial
benefit.
Marketers can design marketing programs that mainly try to capitalize on or maximize brand
awareness and image—for example, by reducing advertising expenses, seeking increasingly
higher price premiums, or introducing numerous brand extensions. The more marketers pursue
this strategy, however, the easier it is to neglect and perhaps diminish the brand and its sources of
equity. Without its sources of brand equity, the brand itself may not continue to yield such valu-
able benefits. Just as failure to properly maintain a car eventually affects its performance, so too
can neglecting a brand, for whatever reason, catch up with marketers.
Fine-Tuning the Supporting Marketing Program Marketers are more likely to change the specific tactics and supporting marketing program for the
brand than its basic positioning and strategic direction. They should make such changes, however,
only when it is clear the marketing program and tactics are no longer making the desired contri-
butions to maintaining or strengthening brand equity. The way brand meaning is reinforced may
depend on the nature of brand associations. We next look at specific considerations in terms of
product-related performance and nonproduct-related imagery associations.
Product-Related Performance Associations. For brands whose core associations are primar-
ily product-related performance attributes or benefits, innovation in product design, manufactur-
ing, and merchandising is especially critical to maintaining or enhancing brand equity.
For companies in categories as diverse as high technology, toys and entertainment products,
personal care products, and insurance, innovation is critical to success. For example, Progressive
has become one of the most successful auto insurers, in part due to consistent innovations in
service. A pioneer in direct sales of insurance online, the firm was the first to offer prospective
customers the ability to instantly compare price quotes from up to three other insurers.
Failure to innovate can have dire consequences. Smith Corona, after struggling to sell its
typewriters and word processors in a booming personal computer market, finally filed for bank-
ruptcy. As one industry expert observed, “Smith Corona never realized they were in the docu-
ment business, not the typewriter business. If they had understood that, they would have moved
Recovery Approach What Is It? Example
Limit damage When there is no way of avoiding the scandal entirely, some companies try to limit the damage to certain makes, models, products, or to a given geographic region.
When Ford Explorer SUVs were subject to recalls due to rollover incidents, Ford tried to limit damage to only those vehicles which were equipped with Firestone tires.
Flat-out denial Categorically denying that the scandal is true.
Tommy Hilfiger was falsely accused of being racist and he issued a flat-out denial as follows: “We had heard that I was supposedly on “Oprah,” and I had told her that if I had known black people were going to buy my clothes, I wouldn’t have been a designer. I had never been on “Oprah,” and I had never said that. And I would never believe that anyway, nor would I ever say that anyway [ . . . ] It was a rumor and a myth. Oprah invited me [to be on the show to deal with it].”
Counterattack or attack the accuser
A brand or company could undertake an offensive attack against the accuser, with a view to discredit- ing the source of negative information.
Hewlett-Packard and Xerox had filed patent infringement lawsuits against each other, and both brands were subject to negative publicity.
*The recovery strategies are adapted from Gita V. Johar, Matthias Birk, and Sabine Einwiller, “Brand Recovery: Communication in the Face of Crisis, Columbia Case Works,” April 1, 2010.
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524 PART V • GROWING AND SUSTAINING BRAND EQUITY
into software.”14 Blockbuster, the video rental company, encountered a similar fate when its
retail locations’ based model of renting videos and DVDs was quickly replaced by subscription-
based streaming services. Netflix seized the opportunity to transform the business by introducing
a subscription-based services model and effectively moved past its well-entrenched rival,
Blockbuster.15
Product innovations are, therefore, critical for performance-based brands whose sources of
equity reside primarily in product-related associations. In some cases, product advances may
include brand extensions based on a new or improved product ingredient or feature. In fact, in
many categories, a strong family sub-brand has emerged from product innovations associated with
brand extensions (such as Wilson Hammer wide-body tennis racquets).
At the same time, it is important not to change products too much, especially if the brand
meaning for consumers is wrapped up in the product design or makeup. Recall the strong con-
sumer resistance encountered by New Coke, described in Chapter 1. In making product changes to
a brand, marketers want to reassure loyal consumers that it is a better product, but not necessarily
a different one. The timing of the announcement and the introduction of a product improvement
are also important: if the brand improvement is announced too soon, consumers may stop buy-
ing existing products; if too late, competitors may already have taken advantage of the market
opportunity with their own introductions.
Nonproduct-Related Imagery Associations. For brands whose core associations are primar-
ily nonproduct-related attributes and symbolic or experiential benefits, relevance in user and usage
imagery is especially critical. Because of their intangible nature, nonproduct-related associations
may be easier to change, for example, through a major new advertising campaign that commu-
nicates a different type of user or usage situation. MTV is a brand that has worked hard to stay
relevant with young consumers.
Nevertheless, ill-conceived or too-frequent repositionings can blur the image of a brand
and confuse or perhaps even alienate consumers. It is particularly dangerous to flip-flop
between product-related performance and nonproduct-related imagery associations because
of the fundamentally different marketing and advertising approaches each entails. Heineken
has sometimes been accused of flip-flopping too much between product-focused advertis-
ing (“It’s All About the Beer”) and more user-focused advertising (“Give Yourself a Good
Name”). The JCPenney repositioning case study offers a cautionary tale to marketers who
wish to change their brand image.
JCPENNEY: REPOSITIONING A RETAIL BRAND
JCPenney is an example of a brand that tried to drastically change its positioning. Until 2013, JCPenney was a
well-known retailer, and famous for its periodic sales and for offering coupons to consumers at various points
during the year. The company tried to reposition itself and move away from issuing coupons throughout
JC Penney’s repositioning involved doing away with coupons and moving
towards an everyday low price.
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CHAPTER 14 • MANAGING BRANDS OVER TIME 525
Significant repositionings may be dangerous for other reasons, too. Brand images can be
extremely sticky, and once strong associations have formed, they may be difficult to change. Con-
sumers may choose to ignore or simply be unable to remember the new positioning when strong,
but different, brand associations already exist in memory.18 Club Med has attempted for years to
transcend its image as a vacation romp for swingers to attract a broader cross-section of people.
For dramatic repositioning strategies to work, marketers must present convincing new brand
claims in a compelling fashion.
Summary. Reinforcing brand equity requires consistency in the amount and nature of the sup-
porting marketing program for the brand. Although the specific tactics may change, marketers
should preserve and amplify the key sources of equity for the brand where appropriate. Product
innovation and relevance are paramount in maintaining continuity and expanding the meaning
of the brand.
At the end of every day, week, month, quarter, and year, marketers should ask themselves,
What have we done to innovate our brand and its marketing and make them more relevant? A
weak answer can have adverse consequences. One-time industry icons Blockbuster and Yahoo!
have both desperately struggled in recent years to catch up as the markets they were in have
gone through remarkable technological and marketing transformations.19 On a more positive
note, Branding Brief 14-6 describes how the British brand Burberry remade itself in the world of
fashion. Next, we consider what to do when brands find themselves in situations in which more
drastic brand actions are needed.
REVITALIZING BRANDS In virtually every product category are examples of once prominent and admired brands that have
fallen on hard times or even completely disappeared. Nevertheless, a number of brands have man-
aged to make impressive comebacks in recent years, as marketers have breathed new life into their
customer franchises.20 Recently, brands such as Microsoft, GE, and Old Spice are examples of
brands which have successfully repositioned their brands.
For a successful turnaround, brands sometimes have to return to their roots to recapture lost
sources of equity. In other cases, the brand meaning has had to fundamentally change to recap-
ture market leadership. Regardless of approach, brands on the comeback trail must make more
revolutionary than evolutionary changes to reinforce brand meaning.
Often, the first place to look in turning around the fortunes of a brand is the original sources
of brand equity. In profiling brand knowledge structures to guide repositioning, marketers need
to accurately and completely characterize the breadth and depth of brand awareness; the strength,
favorability, and uniqueness of brand associations and brand responses held in consumer memory;
and the nature of consumer–brand relationships. A comprehensive brand equity measurement
system as outlined in Chapter 9 should help reveal the current status of these sources of brand
equity. If not, or to provide additional insight, a special brand audit may be necessary.
Of particular importance is the extent to which key brand associations are still adequately
functioning as points-of-difference or points-of-parity to properly position the brand. Are positive
associations losing their strength or uniqueness? Have negative associations become linked to the
brand—for example, because of some change in the marketing environment?
Marketers must next decide whether to retain the same positioning or create a new one, and,
if the latter, which positioning to adopt. The positioning considerations outlined in Chapter 3
the year to a steady pricing model. In addition to becoming an everyday low price retailer, JCPenney tried to
redesign its stores to emulate the Apple retail experience. Having steady prices and a better store environ-
ment implied an entirely different type of consumer that JCPenney was not catering to. Further, doing away
with sales coupons altogether deprived JCPenney of the fundamental appeal of its brand—that is, consum-
ers who liked to share stories about deals that they received with their friends and family. Therefore, this
shift in positioning did not appeal to JCPenney’s target consumers, and sales continued to decline.16 More
recently, JCPenney reversed its strategy and went back to offering coupons, but it is still difficult to recoup
its lost sales and stem the sales decline. The retail giant is part of a growing trend of consumers who are
purchasing increasingly online. While it has made efforts to change its product assortment to better appeal
to consumers within stores, it is hard to say whether these efforts will pay off for the brand.17
M14_KELL4969_05_GE_C14.indd 525 03/05/19 9:42 AM
526 PART V • GROWING AND SUSTAINING BRAND EQUITY
Harley-Davidson is one of the few companies in the world
that can claim a legion of fans so dedicated to the brand that
some of them get tattoos of the logo. Even more impressive is
the fact that the company attracted such a loyal customer base
with a minimum of advertising. Founded in 1903 in Milwaukee,
Wisconsin, it has twice narrowly escaped bankruptcy and is today
one of the most recognized brands in the world.
In recovering from its financial downfalls, Harley-Davidson
realized its product needed to better live up to the brand promise.
Quality problems plagued the product line in the 1970s. Although
consumers loved what the brand represented, they hated the
constant need for repairs. The joke was that you needed to have
two Harleys because one was always in the shop!
Harley’s back-to-basics approach to revitalization centered
on improving factories and production process to achieve higher
levels of quality. The company also dialed up marketing efforts to
better sell its products. Establishing a broader access point with
consumers to make the brand relevant to more people, Harley
was able to attract a diverse customer base that went way beyond
the traditional biker image. The company also changed the way
it went to market.
Before the 1980s, Harley-Davidson relied almost exclusively
on word-of-mouth endorsements and the image of its user group
to sell its motorcycles. In 1983, the company established an own-
ers’ club, the Harley Owners Group (HOG), which sponsors bike
rallies, charity rides, and other motorcycle events. Every Harley
owner becomes a member for free by signing up at the www
.hog.com Web site. In its first year, HOG had 33,000 members.
Now, it has more than one million in 1,400 chapters throughout
the world.
In the early 1980s, Harley-Davidson began a licensing
program to protect its trademarks and promote the brand.
Early efforts primarily supported the riding experience with
products like T-shirts, jewelry, small leather goods, and other
products appealing to riders. Currently, the primary target for
licensed products is existing customers through the Harley
dealer network. To attract new customers, though, Harley-
Davidson has licensed children’s clothing, toys, games, and many
other items aimed at children and sold beyond the dealer net-
work. In the world of licensing, Harley-Davidson is considered
an evergreen brand and earns the company tens of millions in
revenue annually.
Motorcycle riding gear has been around almost as long as
motorcycles. As business grew, Harley-Davidson created Harley-
Davidson MotorClothes to produce traditional riding gear along
with men’s and women’s casual sportswear and accessories to
reach an ever-expanding and diverse customer base of riders and
nonriders. Harley MotorClothes is a key facet of the company’s
General Merchandise division, whose revenues nearly doubled
from $151 million in 2000 to $274 million in 2011.
Harley-Davidson continues to promote its brand with grass-
roots marketing efforts. Many employees and executives at the
company own Harleys and often ride them with customers, mak-
ing traditional advertising almost unnecessary. As ever, Harley’s
highly visible contingent of riders provides invaluable promotions
and endorsements free of cost. Many other marketers seek to
borrow the Harley cachet and use the bikes in their ads, giving
the company free product placement.
One of the newest growth areas is its target audience of
women. For women and smaller riders, Harley offers Sportster
motorcycles that are built low to the ground with narrower seats,
softer clutches, and adjustable handlebars and windshields. Sev-
eral times a year, Harley dealers hold garage parties for women
to help them learn about their bikes. Five hundred such events in
March 2010 attracted 27,000 women, almost half of whom were
at a Harley dealer for the first time, leading to 3,000 new bikes
sold. After making up only 2 percent of Harley owners in 1995,
women now represent about 12 percent of sales.
BRANDING BRIEF 14-4
Harley-Davidson Motor Company
can provide useful insights as to the desirability, deliverability, and differentiability of possible
positions based on consumer, company, and competitive considerations.
Revitalization strategies obviously run along a continuum, with pure back-to-basics at one
end and pure reinvention at the other. In some cases, the positioning is still appropriate, but the
marketing program is the source of the problem because it is failing to deliver on it. In these
instances, a back-to-basics strategy may make sense. As is described in Branding Brief 14-4,
Harley-Davidson rode this “back to basics” strategy to icon status. At the other extreme, a com-
plete repositioning is needed. The Mountain Dew example (Branding Brief 14-5) provides an
illustration of this approach. A moderate approach which falls in between these two extremes is
illustrated in the Burberry example (Branding Brief 14-6).
Finally, note that market failures, in which insufficient consumers are attracted to a brand,
are typically much less damaging than product failures, in which the brand fundamentally fails to
live up to its consumer promise. In the latter case, strong, negative associations may be difficult
to overcome. With market failures, a relaunch can sometimes prove successful.
M14_KELL4969_05_GE_C14.indd 526 03/05/19 9:42 AM
CHAPTER 14 • MANAGING BRANDS OVER TIME 527
While Harley-Davidson maintains about a 50 percent mar-
ket share of motorcycles in the United States, its market share
in Europe is around 10 percent. In 2015, they opened 40 new
international dealerships with plans of adding 150 more by
2020. However, 2015 was also plagued by recalls that are
reminiscent of their brand troubles in the 1970s. Revenues
that year saw a decrease of 3.7 percent in 2014. Revenues as
well as stock prices dipped in early 2016, but Harley contin-
ues to rebound with increasing revenues and stock prices. The
introduction of their new Milwaukee-Eight Engines, based on
customer interviews about what they wanted to see in a new
touring bike, has given the company confidence that sales will
remain strong. Relying on Harley-Davidson’s strength, the new
engine provides more power, more comfort, a smoother ride,
and less engine noise. These changes may be part of the reason
that the company is the largest seller of on-road motorcycles
to young adults, women, African Americans, and Hispanic
Americans.
Sources: Bill Tucker, Terry Keenan, and Daryn Kagan, “In the Money,”
CNNfn, January 20, 2000; “Harley-Davidson Extends MDI Entertainment
License for Lotteries’ Hottest Brand,” Business Wire, May 1, 2001; Glenn
Rifkin, “How Harley-Davidson Revs Its Brand,” Strategy & Business, Octo-
ber 1, 1997, https://www.strategy-business.com/article/12878?gko=ffaa3,
accessed November 24, 2018; Joseph Weber, “He Really Got Harley Roar-
ing,” BusinessWeek, March 21, 2005, 70, https://www.bloomberg.com/news/
articles/2005-03-20/commentary-he-really-got-harley-roaring, accessed
November 24, 2018; Rick Barrett, “From the Executive Suite to the Sad-
dle,” Chicago Tribune, August 1, 2004, CN3; Clifford Krauss, “Harley Woos
Female Bikers,” The New York Times, July 25, 2007; Mark Clothier, “Why Har-
ley Is Showing Its Feminine Side,” Bloomberg BusinessWeek, September 30,
2010, https://www.bloomberg.com/news/articles/2010-09-30/why-harley-is-
showing-its-feminine-side, accessed November 24, 2018; Richard D’Aveni,
“How Harley Fell Into the Commoditization Trap,” Forbes, March 17, 2010,
https://www.forbes.com/2010/03/17/harley-davidson-commoditization
-leadership-managing-competition.html#706481635e87, accessed Novem-
ber 24, 2018; “Harley Motorcycle Sales Up in 2011,” Classic American Iron,
January 25, 2012; Harley-Davidson MotorClothes, https://motorclothes.
harley-davidson.eu/education/heritage/, accessed November 24, 2018.
FIGURE 14-6
Harley-Davidson’s
Timeline
Harley-Davidson’s
repositioning
involved a “back-
to-basics” approach
that has served the
brand well over
the years.
Harley-Davidson is founded by
William S. Harley and Arthur Davidson in
Milwaukee, Wisconsin.
The American Machine Foundary buys Harley-Davidson
and slashes the workforce. This results in labor strikes and
low-quality products. Overall sales and quality
decline greatly as customers grow frustrated with the constant repairs needed.
Harley-Davidson executives buy back the Harley-Davidson
Motor Company. The company
decides to dial-up marketing efforts and improve the
quality issues that have plagued the
company for years. They also begin a
licensing program, a decision that brings
in millions in revenue.
Harley-Davidson established an owners’ club called “The
Harley Owners Group,” or
“HOG.” In its first year, the free program has
33,000 members. Today, the group
has more than one million
members around the world.
Harley-Davidson continues to promote its brand in unique ways and thrive, owning 50% of the market share. Executives are often seen riding with
customers, making traditional advertising efforts seemingly unnecessary. Looking towards the future, the company aims to fill the gap in women’s motorcycles by
offering the Sportster. The company looks to open 150 more international dealerships by 2020.
The company creates Harley-Davidson Motor Clothes to diversify into the retail sector. Their clothing
continues to be a key facet in the company’s profits, with revenues topping $274 million in 2011.
1903
1983
19811981
19891989
1989–2017
1969
Harley-Davidson continues to expand and innovate.
1903–1969
HARLEY-DAVIDSON
M14_KELL4969_05_GE_C14.indd 527 03/05/19 9:42 AM
528 PART V • GROWING AND SUSTAINING BRAND EQUITY
BRANDING BRIEF 14-5
FIGURE 14-7
Mountain Dew’s Timeline
Mountain Dew’s timeline
highlights the brand’s
ability to makeover its
image every few years,
as a way of maintaining
the brand’s appeal to its
target audiences.
1969
1990
200 0
2005
2 0 07
20 09
2017
By 2000, Mountain Dew was known as
the fastest growing U.S. soft
drink with 7.2% of the market
share. This success can largely be
attributed to the advertising work done by BBDO and the famous line,
”Do the Dew.” The company also launched its first
sub-brand, Code Red.
Mountain Dew
decided to
experiment with
crowdsourcing in a new
marketing campaign.
For the first time, the customers
were involved in
the actual product
development process.
This process
became known
as “Dewmocracy.”
After a logo change
in 2008, the brand is now
referred to as Mtn Dew. The brand decides to attempt more changes with crowdsourcing
in marketing campaigns. The
company involved
consumers in picking
flavors, colors, and
packaging. The
campaign generated enormous
buzz.
Mtn Dew created “the game beyond the game” during the NBA All-Star event. This campaign was aimed to create an experience that comprised of a variety of marketing tactics. Mountain Dew continues to increase its presence in E-Sports Sponsorships.
Pepsi Co. switches its advertising focus in
order to attract newer and
younger customers. The brand begins to succeed after a rough start.
Mountain Dew was launched in 1969. PepsiCo initially marketed
it with a rural folksy image, exemplified by the countrified tagline
“Yahoo Mountain Dew! It’ll Tickle Your Innards.” Since then, the
drink has far outgrown its provincial roots, though an unsuccessful
attempt to bring urban teenagers to the brand in the early 1980s
by advertising on MTV left it on the brink of deletion. The company
decided to switch its ad focus to outdoors action scenes, and by the
late 1980s, Mountain Dew had begun to show signs of life again.
The brand really hit its stride in the 1990s, experiencing phe-
nomenal, double-digit growth. Mountain Dew was the fastest-
growing major U.S. soft drink for much of the decade, rising to
a market share of 7.2 percent in 2000 from a mere 2.7 percent
back in 1980. Growth was fueled by some edgy advertising from
PepsiCo’s long-time ad agency BBDO that was funny and fast-
paced, featuring a rotating group of guys—the Dew dudes—
engaged in action sports such as skydiving, skateboarding, and
snowboarding to up-tempo music. The tagline “Do the Dew,”
was a strong call to action, and the ads were a high-energy blast
of adrenalin.
The next decade saw much product expansion, introduction
of nontraditional marketing, and a pioneering digital strategy. In
2000, PepsiCo launched Mountain Dew Code Red, the brand’s
first line extension since Diet Mountain Dew debuted in 1988.
The bright red cherry-flavored drink was supported by a national
advertising campaign that employed grassroots marketing as well
as high-profile media buys. The launch was an unqualified success.
To better connect with its core teen audience, Mountain Dew
increased its sponsorship of the Mix Tape street basketball tour
and the Dew Action Sports Tour. The company also launched
the Dew U loyalty program, in which drinkers exchanged codes
printed under bottle caps for a variety of goods available on the
Dew U Internet site.
In 2005, Mountain Dew launched another brand extension,
a highly caffeinated energy drink called MDX aimed at the esti-
mated 180 million video game players, by introducing it as the
official soft drink of the E3 Electronics Entertainment Expo. Prior
to the launch, the company invited gamers to “beta test” the
product in order to refine the recipe and name.
A New Morning for Mountain Dew
M14_KELL4969_05_GE_C14.indd 528 03/05/19 9:42 AM
CHAPTER 14 • MANAGING BRANDS OVER TIME 529
Burberry, founded in 1856 by 21-year-old Thomas Burberry,
was a veritable fashion disaster in the mid-1990s. It was known
to many as a stodgy throwback brand making raincoats for the
middle-aged, “far off the radar screens of the fashion world.”
Yet, within a span of several years, with the help of contemporary
designs and updated marketing, the brand shrugged off its staid
image and became fashionable again. The company instituted
a new motto—“Never stop designing”—that encapsulated its
new approach to establishing and maintaining relevance with the
fickle fashion consumer.
BRANDING BRIEF 14-6
Remaking Burberry’s Image
All these actions helped Mountain Dew remain the number-
four carbonated U.S. beverage in terms of sales throughout the
decade. A logo change on the packaging occurred in 2008, as the
company chose the simpler “Mtn Dew.” An even bigger change
was a viral marketing experiment in crowdsourcing that put cus-
tomers into the actual product development process. The initial
“Dewmocracy” campaign began in 2007 and included an online
game in which players designed a new drink.
The follow-up Dewmocracy campaign in 2009 raised the
stakes. Mountain Dew marketers put the bulk of their marketing
budget online to allow consumers to select three new flavors to
be distributed nationwide. The campaign began with 50 contest
winners receiving home-tasting kits of seven potential flavors.
They were instructed to share their tasting experiences via video
on YouTube. Next, consumers helped pick the colors, names,
packaging, and even the ad agency! Enormous buzz followed—
much of it generated by the actual product users, as intended.
During NBA All-Star 2017, Mountain Dew created a “the game
beyond the game” fan experience. The experience comprised of a
variety of marketing activations including the launch of The Court-
side Project at Courtside HQ, which brings together NBA players
and trendsetters across style, art, and music, and a basketball game
for elite amateur players featuring NBA All-Stars Russell Westbrook
and Kyrie Irving as honorary general managers. Russell Westbrook’s
involvement worked perfectly as he also starred in an advertising
spot with a new rallying cry: “Don’t Do ‘They’—Do You.”
Mountain Dew increased its presence in E-Sports Sponsorship
by creating an amateur E-Sports League in partnership with ESL
and the Entertainment E-Sports Association (ESEA). The league
allows players to participate through a league called the Moun-
tain Dew Pro League, with a chance to enter the ESP Pro League.
Sources: Theresa Howard, “Being True to Dew,” Brandweek, April 24,
2000, 28–31; Greg Johnson, “Mountain Dew Hits New Heights to Help
Pepsi Grab a New Generation,” Los Angeles Times, October 6, 1999,
http://articles.latimes.com/1999/oct/06/business/fi-19312, accessed
November 24, 2018; Michael J. McCarthy, “Mountain Dew Goes Urban
to Revamp Country Image,” The Wall Street Journal, April 19, 1989;
John D. Sicher, “Beverage Digest/Maxwell Ranks Soft Drink Industry for
2000,” Beverage Online, February 15, 2001, https://www.beverageonline
.com/doc/beverage-digestmaxwell-ranks-soft-drink-indus-0001, accessed
November 24, 2018; Kate MacArthur, “Mountain Dew Gives Gamers
More Caffeine,” Advertising Age, September 26, 2005, 6; Gregg Bennett,
Mauricio Ferreora, Jaedeock Lee, and Fritz Polie, “The Role of Involve-
ment in Sports and Sports Spectatorship in Sponsor’s Brand Use: The
Case of Mountain Dew and Action Sports Sponsorship,” Sports Marketing
Quarterly, 18 (March 2009): 14–24; Natalie Zmuda, “Why Mtn Dew Let
Skater Dudes Take Control of Its Marketing,” Advertising Age, Febru-
ary 22, 2010, https://adage.com/article/special-report-digital-alist-2010/
digital-a-list-2010-mtn-dew-lets-skaters-control-marketing/142201/,
accessed November 24, 2018; Simon Landon, “Mountain Dew® Takes
Hoops Culture to New Heights During NBA All-Star 2017,” PR Newswire,
February 13, 2017, www.prnewswire.com/news-releases/mountain-dew-
takes-hoops-culture-to-new-heights-during-nba-all-star-2017-300406010
.html; Jacob Wolf, “Mountain Dew Launches CS:GO League, Allows Ama-
teur Teams to Qualify for ESL Pro League,” ESPN, July 13, 2016, www
.espn.com/esports/story/_/id/17050356/mountain-dew-launches-csgo-
league-allows-amateur-teams-qualify-esl-pro-league.
Burberry’s repositioning strategy is an excellent example of how best to improve
a brand’s image through product innovation and marketing strategy.
M14_KELL4969_05_GE_C14.indd 529 03/05/19 9:42 AM
530 PART V • GROWING AND SUSTAINING BRAND EQUITY
One of Burberry’s first moves to freshen the brand was to lever-
age its classic beige-check plaid in a series of accessories that quickly
became best sellers, including handbags, scarves, and headbands.
Another was rejuvenating the check itself by using different colors,
patterns, sizes, and materials. Burberry was careful to maintain a
balance between the contemporary and the traditional, since tradi-
tion still resonated with modern consumers. It also sought to lever-
age other iconic imagery, such as the trench coat and the Prorsum
horse insignia. The use of these brand icons reflected management’s
belief that, “the core ethos and aesthetics of the brand were rel-
evant today because of Thomas Burberry’s ingenuity and creativity.”
Another key to Burberry’s turnaround was refreshing its
advertising. The company hired famed fashion photographer
Mario Testino to shoot a spread featuring edgy supermodels,
such as Kate Moss, wearing iconic Burberry raincoats. The ads
were credited with bringing a “rebellious, streetwise image to the
brand.” The company gave its retail stores a makeover as well to
match the contemporary feel of the new designs.
Collectively, these efforts turned the company’s fortunes
around—but almost too well. One of the challenges in any
brand revitalization is sustaining momentum, and Burberry was
no exception. After peaking in 2002 with a successful IPO, the
Burberry grows into an iconic and traditional British retailer. Known for its classic checkered pattern and trench coat, the company gains
recognition around the world.
Burberry brings in new executives and designers to freshen the brand image. The company decides to
add accessories like handbags, scarves, and headbands to its classic beige-check line. They also
decided to add a variety of color options to their classic check, striking a delicate balance between
contemporary and traditional.
Burberry is founded by a 21-year-old named Thomas
Burberry.
The brand hits turmoil as it begins to be labeled as "stodgy." Younger customers consider the brand to be
for middle-aged adults. The brand is in trouble as it begins to fall off the fashion radar.
Burberry decides to freshen up its advertising and decides to bring on famed fashion photographer, Mario
Testino, to shoot edgy models such as Kate Moss in traditional Burberry pieces. The new ads brought a
"rebellious, streetwise image to the brand." Retail stores receive a makeover to match the new look. This moment
is one of the key turning points for the brand.
After a successful IPO, the brand continues to suffer due to
overexposure and counterfeit problems. Burberry realizes it must focus on a sustainable strategy now
more than ever.
Burberry announces changes to its runway and retail collections. The
company also launches a new fragrance called Mr. Burberry.
The company institutes the motto "Never Stop Designing" to encapsulate its new
approach to growth. Management initiates the belief that, "the core ethos and aesthetics of the brand [are] relevant today because of Thomas Burberry's ingenuity and creativity."
A number of marketing changes are implemented, including product redesign, the addition to high-end
runway fashion, and more staffing changes. The brand continues to thrive after its continuous efforts to
rebrand. Burberry experiences revenues over $2 billion, signaling all the strategic planning paid off.
Burberry announces partnership with Coty to begin work in the
beauty business.
1900s–1990s
1997–1999
2000–2011
2017
1990s
1856
2016
2002
1998–2000
2000s
FIGURE 14-8
Burberry’s Timeline
M14_KELL4969_05_GE_C14.indd 530 03/05/19 9:42 AM
CHAPTER 14 • MANAGING BRANDS OVER TIME 531
With an understanding of the current and desired brand knowledge structures in hand, we can
again look to the customer-based brand equity framework for guidance about how to best refresh
old sources of brand equity or create new ones to achieve the intended positioning. According to
the model, we have two strategic options:
1. Expand the depth or breadth of brand awareness, or both, by improving consumer recall and
recognition of the brand during purchase or consumption settings.
2. Improve the strength, favorability, and uniqueness of the brand associations making up the
brand image. This may require programs directed at existing or new brand associations.
By enhancing brand salience and brand meaning in these ways, we can achieve more favorable
responses and greater brand resonance.
Tactically, we can refurbish lost sources of brand equity and establish new ones in the same
three ways we create sources of brand equity to start with: by changing brand elements, changing
the supporting marketing program, or leveraging new secondary associations. Next, we consider
several alternative strategies to achieve these goals.
brand began to suffer from overexposure and a slew of coun-
terfeit products. Following a holiday sales slump in 2004, the
company knew it had to set a different course.
Several marketing changes were implemented. The trade-
mark Burberry plaid was dialed down and made more discreet,
appearing on only 10 percent of the brand’s different items. More
emphasis was placed on high-margin accessories—nonapparel
accounts for one-third of revenue—and high-end fashions. The
pricey Prorsum collections made up only 5 percent of the brand’s
sales, but they became the label’s fashion flag-bearer and source
of creative credibility.
Benefiting from vibrant emerging markets such as China, a
constantly updated new product pipeline, and one of the most
advanced digital strategies of any luxury brand, Burberry found
itself in 2011 with annual revenues over $2 billion, far exceed-
ing financial forecasts. In 2015, Burberry launched a 40-piece
capsule collection called Burberry XO Barneys New York in part-
nership with Barneys New York. The collection was inspired by
the spirit of its Prorsum collection. The collection launched with
a feature on Barneys microsite, as well as a digital lookbook and
an Instagram initiative. Burberry has also invested significantly
in mobile marketing through a partnership with Apple and
WeChat. Overall, Burberry has continually reinvented itself to
stay abreast of changes in consumers’ fashion and tastes, and
this approach has yielded significant benefits to the brand. (The
corresponding timeline summarizes Burberry’s strategic shifts
over time.)
Sources: Sally Beatty, “Plotting Plaid’s Future,” The Wall Street Journal,
September 9, 2004, B1; Mark Tungate, “Fashion Statement,” Market-
ing, July 27, 2005, 28; Sharon Wright, “The Tough New Yorker Who
Transformed a UK Institution Gets Her Reward,” The Express, August 5,
2004, 17; Kate Norton, “Burberry, Plaid in Check, Is Hot Again,” Bloom-
berg BusinessWeek, April 16, 2007, https://www.bloomberg.com/news/
articles/2007-04-16/burberry-plaid-in-check-is-hot-againbusinessweek-
business-news-stock-market-and-financial-advice, accessed November
24, 2018; Kathy Gordon, “Global Demand Buoys Burberry,” The Wall
Street Journal, July 13, 2011, https://www.wsj.com/articles/SB10001424
052702304911104576443122620649828, accessed November 24, 2018;
Nancy Hass, “Earning Her Stripes: Burberry CEO Angela Ahrendts Bal-
ances Life and Work,” WSJ Magazine, September 9, 2010, http://maga-
zine.wsj.com/features/the-big-interview/earning-her-strips/, accessed
November 24, 2018.
FEBREZE
When P&G introduced Febreze household odor eliminators, it adopted the classic problem–solution pattern
that characterizes much of its brand advertising. But there was one flaw—people didn’t think they had a
problem! They had become accustomed to odors from cigarettes, pets, and cooking, no matter what others
might say. When the problem–solution ads fell flat, P&G’s marketers conducted in-depth research, prompting
a relaunch that focused on Febreze as a finishing touch and a way to celebrate that a room was really clean.
The new positioning connected, and sales exploded. With revenues now exceeding a billion dollars, Febreze
has been successfully extended into air fresheners, candles, and laundry detergents.21 Febreze’s first Super
Bowl in 2017 ad was a huge success.22 The ad featured a half-time bathroom break based on a study done
relating water usage to the Super Bowl half-time. The ad introduces Febreze’s new OdorClean technology
and rallies around a “unifying moment.” A part of Febreze’s “Odor Odes” marketing campaign, which states
that the things people love most can also stink, there are more extensions available after the Super Bowl.23
Expanding Brand Awareness With a fading brand, often depth of awareness is not the problem—consumers can still recognize
or recall the brand under certain circumstances. Rather, the breadth of brand awareness is the
stumbling block—consumers tend to think of the brand only in very narrow ways. As we sug-
gested in Chapter 3, one powerful means of building brand equity is to increase the breadth of
brand awareness, making sure consumers do not overlook the brand.
M14_KELL4969_05_GE_C14.indd 531 03/05/19 9:42 AM
532 PART V • GROWING AND SUSTAINING BRAND EQUITY
Assuming a brand has a reasonable level of consumer awareness and a positive brand image,
perhaps the most appropriate starting point is to increase usage. This approach often does not
require difficult and costly changes in brand image or positioning, but rather relatively easier
changes in brand salience and awareness.
We can increase usage either by increasing the level or the quantity of consumption (how
much consumers use the brand), or by increasing the frequency of consumption (how often they
use it). It is probably easier to increase the number of times a consumer uses the product than
to actually change the amount he or she uses at any one time. (A possible exception is impulse-
purchase products like soft drinks and snacks, whose usage increases when the product is more
available.) Increasing frequency of use is particularly attractive for category leaders with large
market share; it requires either identifying new opportunities to use the brand in the same basic
way or identifying completely new and different ways to use it. Let’s look at both approaches.
Identifying Additional or New Usage Opportunities. To identify additional or new oppor-
tunities for consumers to use the brand more—albeit in the same basic way—marketers should
design a marketing program to include both of the following:
• Communications about the appropriateness and advantages of using the brand more fre-
quently in existing situations or in new situations
• Reminders to consumers to actually use the brand as close as possible in time to those situ-
ations for which it could be used
For many brands, increasing usage may be as simple as improving top-of-mind awareness
through reminder advertising (as V8 vegetable juice did with its classic “Wow! I Could Have Had
a V8” ad campaign). In other cases, more creative retrieval cues may be necessary. Consumers
often adopt functional fixedness with a brand, which makes it easy to ignore in nontraditional
consumption settings.
For example, consumers see some brands as appropriate only for special occasions. As the
Chobani Greek Yogurt example suggests, an effective strategy is to identify new occasions and
highlight these using novel social media and digital marketing techniques.
Another opportunity to increase frequency of use occurs when consumers’ perceptions of
their usage differ from the reality. For many products with relatively short life spans, consumers
may fail to buy replacements soon enough or often enough.24 Here are two possible solutions:
• Tie the act of replacing the product to a certain holiday, event, or time of year. For example,
several brands, such as Oral-B toothbrushes, have run promotions tied in with the springtime
switch to daylight saving time.
• Provide consumers with better information about either (1) when they first used the product
or need to replace it, or (2) the current level of product performance. For example, batteries
offer built-in gauges that show how much power they have left, and toothbrushes and razors
have color indicators to indicate when they have worn out.
Finally, perhaps the simplest way to increase usage occurs when it is at less than the optimal
or recommended level. Here, we want to persuade consumers of the merits of more regular usage
and overcome any potential hurdles to increased usage, such as by making product designs and
packaging more convenient and easier to use.
CHOBANI
Chobani, a market leader in Greek Yogurt, is one of the most successful brands launched in recent years.25
The founder Hamdi Ulukaya introduced the first Greek Yogurt as a novel alternative to American yogurt brands
including Dannon and Yoplait in 2005. By launching a unique product based on a new recipe, the brand was
able to carve out a presence in the yogurt category. Their keys to success included a focus on broad distribution
through grocery stores, their emphasis on taste as well as packaging. This strategy brought them considerable
success as sales reached $1 billion by 2010 only a few years after the brand was launched. Chobani Flip was
introduced as a line extension and positioned as an afternoon snack yogurt with various new flavors. This was
a successful introduction and contributed significantly to sales increases. Further, Chobani extended its brand
beyond Greek Yogurt by introducing Chobani Meze dips (resembling hummus or salsa).26
Chobani has also evolved various unique approaches to utilizing in-store promotions, aimed at increasing
the usage occasions that the brand would become a part of. For example, Chobani Greek Yogurt utilized the
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CHAPTER 14 • MANAGING BRANDS OVER TIME 533
Chobani Greek Yogurt is among the most successful new brand introductions
in recent times, and it has effectively capitalized on consumers’ desire for
healthy alternatives to traditional snacks.
COACH
Coach has played a key role over the past decade in getting U.S. women to buy more handbags; most now
make three new purchases annually. Coach’s strategy was to fill “usage voids”—situations where existing
bag options were not appropriate—with a plethora of different bag options for almost every occasion,
including evening bags, backpacks, satchels, totes, briefcases, coin purses, and duffels. Rather than owning
a small number of bags suitable for a limited number of uses, women were encouraged to treat handbags
as “the shoes of the twenty-first century: a way to frequently update wardrobes with different styles without
shelling out for new clothes.” When the recession of 2008 challenged many providers of luxury fashion
Coach’s marketing strategy involves promoting handbags as a key
fashion accessory.
power of online social influencers to generate buzz and identify special ways of using their brand. The company
sponsored a “Smoothie Week” challenge where social influencers were challenged to create novel recipes by
utilizing Chobani Greek Yogurt flavors. The unique recipes created by the social influencers allowed Chobani
to expand its usage as an important ingredient in a range of healthy smoothie options. The campaign resulted
in over 33K engagements from 22 blog posts and a return on investment on marketing that was more than
200 percent of the marketing expenditure for the campaign.27 For campaigns like this to work, however, the
brand has to retain its primary brand association (e.g., healthiness in the case of Chobani)—a key source of
equity—while convincing consumers to adopt broader usage habits at the same time.
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534 PART V • GROWING AND SUSTAINING BRAND EQUITY
Identifying New and Completely Different Ways to Use the Brand. The second approach
to increasing frequency of use is to identify completely new and different applications. Food
product companies have long advertised new recipes that use their branded products in entirely
different ways. Perhaps the classic example of finding creative new applications is Arm & Ham-
mer baking soda, whose deodorizing and cleaning properties have led to a number of new uses.
Other brands have taken a page from Arm & Hammer’s book: Clorox has run ads stressing the
many benefits of its bleach, such as how it eliminates kitchen odors; Wrigley’s chewing gum advertising
touts it as a substitute for smoking; and Tums promotes its antacid’s benefits as a calcium supplement.
New usage applications may require more than just new advertising campaigns or merchan-
dising approaches. Sometimes they can arise from new packaging. For example, Arm & Hammer
introduced a “Fridge-Freezer Pack” (with “freshflo vents”) for its natural baking soda that was
specially designed to freshen and deodorize refrigerators and freezers better.
Improving Brand Image Although changes in brand awareness are probably the easiest means of creating new sources of brand
equity, more fundamental changes are often necessary. We may need to create a new marketing pro-
gram to improve the strength, favorability, and uniqueness of brand associations making up the brand
image. As part of this repositioning—or recommitment to the existing positioning—we may need to
bolster any positive associations that have faded, neutralize any negative associations that have been
created, and create additional positive associations. These repositioning decisions require us to clearly
specify the target market and the nature of the competition to set the competitive frame of reference.
Identifying the Target Market. Marketers often focus on taking action with one or more of
four key target market segments as part of a brand revitalization strategy:
1. Retaining vulnerable customers
2. Recapturing lost customers
3. Identifying neglected segments
4. Attracting new customers.
There is a clear hierarchy in these strategic targeting options. In an attempt to turn sales around,
some firms mistakenly focus initially on the fourth one, chasing after new customers. This is the
riskiest option. If it fails, two bad things can happen: the firm may fail to attract any new custom-
ers, but even worse, it may lose existing ones.
When Talbots, seller of women’s suits, blouses, and dresses in roughly 580 predominately
suburban locations, ran into sales troubles after the 2008 recession, it decided to expand its target
market. Bold jewelry and metallic suits appeared next to classic pearls and seasonal sweaters in
an attempt to reach a younger audience than its traditional, older than 35-year-old women. The
accessories, who began to introduce steep discounts, Coach was an exception. The company maintained
prices on its regular product lines and instead introduced new low-priced items. Coach always conducts
much research, and here, it engaged with consumers to confirm two facts. First, the new products would
not cheapen or damage its image. Second, the resulting decreases in margin would be more than offset by
increases in volume. Through renegotiated deals with suppliers, new sources of leather, fabric, and hardware,
and other steps, the company assured itself the handbags could have the proper designs at the necessary
price points. Thus, the youthful and somewhat eclectic Poppy line was launched with an average price of
$260, about 20 percent less than the typical Coach purse. The percentage of sales of low-priced handbags
increased from about one-third to one-half of sales as a result of the shift in consumer willingness to pay.
Handbags make up almost two-thirds of Coach’s sales.28
Coach’s successes in product strategy over time are outweighed by some problems with their pricing
and channel strategies. For instance, Coach is currently finding itself in a predicament where they have been
increasing the number of retail and department stores, but same store sales growth has been declining.29
Although sales increased in 2016 for North American stores, customers have become used to discounted prices
on their handbags, potentially hurting Coach’s brand image as a luxury brand. Introducing a new high-end line
resulted in handbags priced at $400+ to make up 4 percent of sales, up 30 percent from 2015. “The move
comes as Coach tries to position itself as more of a luxury brand, after years of over expansion and discounting
that hurt its image. The company is also scaling back online outlet flash sales, closing underperforming stores,
and introducing new products with better quality and higher prices.”30 The handbag category has shown
minimal growth recently, but there is success with limited edition and higher-priced, higher-quality products.31
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CHAPTER 14 • MANAGING BRANDS OVER TIME 535
result was a disaster that confused existing customers as well as hoped-for new prospects, and sales
plunged. Asia’s leading chain of low-priced casual wear, Uniqlo, ran into the exact same predica-
ment when stores began to stock too many fashion-forward items at the expense of popular basics.32
To avoid this double whammy and steady the course in the face of a sales decline, it is often
best to try to halt the erosion first and ensure that no more customers are lost in the short run
before chasing after new ones. Some of the same marketing efforts to retain existing customers
can also help recapture lost customers who are no longer using the brand. This may mean simply
reminding consumers of the virtues of a brand they have forgotten about or begun to take for
granted. Recall how the New Coke debacle described in Chapter 1—although not intended to do
so—accomplished just that, in a roundabout way. Kellogg’s Corn Flakes once ran a successful ad
campaign with the slogan “Try Them Again for the First Time.”
The third approach—segmenting on the basis of demographic variables or other means and
identifying neglected segments—is the next-most viable brand revitalization option. Of course,
the final strategic targeting option for revitalizing a fading brand is simply to more or less aban-
don the consumer group that supported it in the past to target a completely new market segment.
Many firms have reached out to new customer groups to build brand equity. The Home Shopping
Network (HSN) found success in going after fashion-oriented power shoppers by dumping a slew of
unknown brands with me-too products to make the cable channel more designer-friendly to celebrities
such as Badgley Mischka, Sean “Diddy” Combs, Stefani Greenfield, and Serena Williams.33
Market segments the firm currently serves with other products may represent potential growth
targets for the brand. Effectively targeting these segments, however, typically requires some changes
or variations in the marketing program, especially in advertising and other communications, and the
decision whether to do so ultimately depends on the outcome of a cost–benefit analysis.
Attracting a new market segment can be deceptively difficult. Brands such as Gillette, Harley-
Davidson, and ESPN have worked hard for years to find the right blend of products and advertis-
ing to make their masculine-image brands relevant and attractive to women. Creating marketing
programs to appeal to women has become a priority of makers of products from cars to computers.
TOMMY HILFIGER
One of the hottest fashion brands in the 1990s—when its worldwide sales peaked at $2 billion—Tommy
Hilfiger was overexposed and struggling to stay relevant by the early 2000s. Other labels such as Phat Farm,
FUBU, Sean John, and Ecko had drawn customers away by better executing the young urban, hip-hop style
on which Hilfiger had built its 1990s success. Bloomingdale’s reduced the number of Hilfiger boutiques
from 23 to 1, and Hilfiger closed all but 7 of its 44 own-brand specialty shops in 2003. To recover, the firm
essentially cut all ties with the style that had made it popular—oversized apparel, even more oversized
logos, and an edgy urban aura—even going so far as to remove the stylized U.S. flag logo from many of its
clothing products. Hilfiger struck out in a new direction with classic preppy styles more closely associated
with the brand’s original roots, although perhaps with a twist. One set of styles was inspired by the sun
Tommy Hilfiger is known for transforming its runway into an entertainment experience.
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536 PART V • GROWING AND SUSTAINING BRAND EQUITY
Marketers have also introduced programs targeted to different racial and ethnic groups, age
groups, and income groups. These cultural market segments may require different messages, cre-
ative strategies, and media. They can be fickle, however, as Tommy Hilfiger discovered, forcing
the brand to implement a back-to-basics revitalization strategy, which then was further refined
into a positioning focused on fashion immediacy.
Repositioning the Brand. Regardless of the type of target market segment, repositioning the
brand sometimes requires us to establish more compelling points-of-difference. At other times,
we need to reposition a brand to establish a point-of-parity on some key image dimension.
A common problem for marketers of established, mature brands is to make them more con-
temporary by creating relevant usage situations, a more contemporary user profile, or a more
modern brand personality. Heritage brands that have been around for years may be seen as trust-
worthy but also boring, uninteresting, and not that likable.
Updating a brand may require some combination of new products, new advertising, new
promotions, and new packaging. Reaching its 100th birthday in 2013, Clorox is a heritage brand
that must constantly take steps to update itself. To reach young parents on the go, it developed
the myStain smartphone app dedicated to stain removal. Family-oriented images, such as photos
of kids’ faces covered with spaghetti sauce, were included to make the app more accessible and
fun. Many solutions offered convenient alternatives to Clorox products, such as seltzer water as
a stain treatment in a restaurant.37
Changing Brand Elements. Often we must change one or more brand elements either to convey
new information or to signal that the brand has taken on new meaning because the product or some
other aspect of the marketing program has changed. The brand name is typically the most impor-
tant brand element, and it’s often the most difficult to change. Nevertheless, we can drop names or
combine them into initials to reflect shifts in marketing strategy or to ease pronounceability and
recall. Shortened names or initials can also minimize potentially negative product associations.
For example, Federal Express chose to officially shorten its name to FedEx and introduce
a new logo to acknowledge what consumers were actually calling the brand.38 In an attempt to
convey a healthier image, Kentucky Fried Chicken abbreviated its name to the initials KFC. The
company also introduced a new logo incorporating the character of Colonel Sanders as a means
of maintaining tradition but also modernizing its appeal. When the company began to emphasize
grilled chicken and sandwiches in its national advertising over the traditional bone-in fried offer-
ings though, some franchisees actually sued, saying the brand had strayed too far from its roots.39
It is easier to change other brand elements, and we may need to, especially if they play an impor-
tant awareness or image function. Chapter 4 described how to modify and update packaging, logos,
and characters over time. We noted there that changes generally should be moderate and evolution-
ary, and marketers must take great care to preserve the most salient aspects of the brand elements.
and surf, for instance. An exclusive distribution deal with Macy’s in 2008 allowed the company to focus its
marketing efforts, and by 2010, the brand was being sold in 1,000 retail locations in 65 countries. Hilfiger
tailored its offerings in many of these markets. For example, German consumers preferred darker colors,
whereas Spanish consumers wanted lighter and brighter shades. In many overseas markets such as China,
India, and parts of Europe, the brand was seen as high status. All these revitalizing efforts were validated
when the Hilfiger brand was purchased for $3 billion by Phillips-Van Heusen.34 With the brand back on
its feet, Tommy Hilfiger embraced new technology and other means to bring innovation and relevance to
the brand to keep it moving. Tommy Hilfiger also launched a fashion line for children with disabilities in
partnership with the nonprofit Runway of Dreams. The designers created clothing that eased the process
of getting dressed for children with disabilities. Tommy Hilfiger creates a Virtual Reality immersive runway
show experience for its customers. Through the Samsung GearVR device, viewers were able to view the
football-themed fashion show. The show included behind the scenes looks at the fashion show. This push
for digital improved the shopping experience at one of Tommy Hilfiger’s flagship retail locations.35
Tommy Hilfiger has recently been retooling its brand for fashion immediacy by developing items that
are available for immediate purchase on Tommy.com and at retail locations. The brand has successfully
generated buzz by transforming its runway into an entertainment experience. Fashion shows are abuzz
with amusement parks complete with carnival rides, flamethrowers, and live musical performances.
Fashion runways shows utilize online social influencers to generate online buzz about their offerings. In
these ways, Tommy Hilfiger has become known as the fashion industry’s “de facto showman.”36
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CHAPTER 14 • MANAGING BRANDS OVER TIME 537
ADJUSTMENTS TO THE BRAND PORTFOLIO Managing brand equity and the brand portfolio requires taking a long-term view and carefully
considering the role of different brands in the portfolio and their relationships over time. Some-
times, a brand refresh just requires cleaning up the brand architecture.
When P&G saw sales slump for its $3-billion-in-revenue Pantene hair care brand during
the recession of 2008, the company engaged in a massive research and development process
to improve and revamp the product line. Extensive consumer testing and technologies typi-
cally employed for medical and space research were used to examine how different ingredients
interacted with various hair types to develop new and improved products. P&G reduced the
number of its shampoos, conditioners, and styling aids by one-third and reorganized and color-
coded the entire product line around four specific hair types: color-treated, curly, fine, and
medium-to-thick.40
Migration Strategies The brand migration strategy helps consumers understand how various brands in the portfolio
can satisfy their needs as they change over time, or as the products and brands themselves change
over time. Managing brand transitions is especially important in rapidly changing, technologically
intensive markets. Ideally, brands will be organized in consumers’ minds so they know at least
implicitly how they can switch among them as their needs or desires change.
A corporate or family branding strategy in which brands are ordered in a logical manner
could provide the hierarchical structure in consumers’ minds to facilitate brand migration.
Automobile companies are quite sensitive to this issue, and brands such as BMW—with its
3-, 5-, and 7-series numbering systems to denote increasingly higher levels of quality—are
good examples.
Acquiring New Customers All firms face trade-offs between attracting new customers and retaining existing ones. In
mature markets, trial is generally less important than building loyalty and retaining existing
customers. Nevertheless, some customers inevitably leave the brand franchise—even if only
from natural causes. Thus, firms must proactively develop strategies to attract new customers,
especially younger ones. The marketing challenge here, however, often lies in making a brand
seem relevant to vastly different generations and cohort groups or lifestyles. The challenge is
greater when the brand has a strong personality or user image associations that tie it to one
particular consumer group.
Unfortunately, even as younger consumers age, there is no guarantee they will have the same
attitudes and behaviors as the older consumers who preceded them. In 2011, the first wave of
post–World War II baby boomers celebrated their 65th birthdays and officially entered the senior
citizen market. Many experts forecast that this group will insist companies embrace their own
unique values in marketing products and services. As one demographic expert says, “Nothing
could be further from the truth than saying boomers will be like their parents.”
The response to the challenge of marketing across generations and cohort groups has taken
all forms. Some marketers have attempted to cut loose from the past, as Tommy Hilfiger did by
renouncing the urban styles it had come to embody in the 1990s. Other brands have attempted
to develop more inclusive marketing strategies to encompass both new and old customers. For
example, Brooks Brothers has worked hard to upgrade its merchandise mix, renovate its fleet of
stores, expand the franchise into overseas markets, and introduce its first designer label, Black
Fleece, to retain the loyalty of older customers but attract new, younger customers at the same
time. The company also engaged in an exclusive partnership with Nordstrom to sell a selected set
of its more contemporary offerings.41
Retiring Brands Because of dramatic or adverse changes in the marketing environment, some brands are just not
worth saving. Their sources of brand equity may have essentially dried up, or, even worse, dam-
aging and difficult-to-change new associations may have been created. At some point, the size of
the brand franchise—no matter how loyal—fails to justify support. In the face of such adversity,
decisive management actions are necessary to properly retire or milk the brand.
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538 PART V • GROWING AND SUSTAINING BRAND EQUITY
Several options are possible. A first step in retrenching a fading brand is to reduce the number
of its product types (package sizes or variations). Such actions reduce the cost of supporting the
brand and allow it to put its best foot forward so it can more easily hit profit targets. If a sufficiently
large and loyal enough customer base exists, eliminating marketing support can be a means to
milk or harvest profits from these cash cows.
An orphan brand is a once-popular brand with diminished equity that a parent company
allows to decline by withdrawing marketing support. Typically, these orphan brands have a
customer base too small to warrant advertising and promotional expenditures. For example,
Take 5 was a once-popular Hershey’s salty-sweet chocolate brand, originally launched in
2004. In 2011, the brand, despite being popular, was targeted by Hershey’s for withdrawal
of marketing support.42 Despite its withdrawing support for the Take 5 brand, its contin-
ued popularity with consumers caused Hershey’s to reverse its decision. The brand was
relaunched in 2016 with a new packaging and a new marketing campaign targeting the mil-
lennial population.
Finally, a permanent solution is to discontinue the product altogether. The marketplace
is littered with brands that either failed to establish an adequate level of brand equity or saw
their sources of brand equity disappear because of changes in the marketing environment.
Toyota recently made the decision to discontinue the Scion model, in 2016, 13 years after
its launch. This young-oriented car brand was not able to keep up with shifting attitudes of
young buyers towards the Toyota brand name, and many of the millennials in the Scion’s
target market did not view the brand favorably.43 Companies sometimes spin off their orphan
brands when sales drop too far, as Campbell did with Vlasic pickles and Swanson frozen din-
ners. Other companies sell brands if they are not directly aligned with their strategic goals
and focus areas. For instance, P&G sold its beauty brands (including well-known brands such
as (Covergirl, Clairol, and Wella) to Coty for $12.5 billion in order to focus on other, larger
brands within its portfolio.44 Similarly, P&G also sold its Duracell battery brand to Berkshire
Hathaway and its Iams pet food brand to Mars. In divesting these brands, P&G was able to
eliminate its slow-growing and declining brands, thereby freeing up resources to focus on
the high-performing brands.45
Harvard professor Nancy Koehn explains that old brands retain some value because consum-
ers often remember them from childhood. “There’s at least an unconscious link,” says Koehn.46
Perhaps this fact helps explain the success of a Web site called www.mybrands.com, which offers
hundreds of exotic orphan brands such as Chupa Chups Cremosa Lollipops. Other brands such
as Fruitopia from Coca-Cola are still being sold overseas in Australia and Germany. As long as
orphan brands remain popular with a core audience, it seems that companies are willing to sell
them.47
Obsoleting Existing Products Technological changes and shifting consumer tastes can often spell trouble for brands that have
not kept up with changes in the marketplace. In this context, companies can be faulted for not
discontinuing products fast enough. Discontinuing such brands (or deliberate obsoleting) can often
be a bold move, but one which can pave the way for the introduction of innovative new brands. In
2016, Blackberry decided to stop manufacturing its once-famous cell phones, as it had failed to
keep up with changes such as touchscreen technology, while its competitors (e.g., Apple iPhone)
had forged ahead with innovative features.48 Kodak faced significant challenges, as consumers
shifted to digital cameras, and Kodak still remained focused on selling traditional film (despite
having the technology and investment in digital cameras). Its shift to digital technologies did not
happen quickly enough, and Fuji quickly seized the opportunities for creating and introducing
new digital products, thereby moving ahead of Kodak. Thus, obsoleting existing products can
sometimes be an essential strategy in fast-paced technology industries.49 The decision to retire a
brand depends on a number of factors.
Fundamentally, the issue is the existing and latent equity of the brand. As the former
head of consumer packaged-goods giant Unilever commented in explaining his company’s
decision to review about 75 percent of its brands and lines of businesses for possible sell-offs,
“If businesses aren’t creating value, we shouldn’t be in them. It’s like having a nice garden
that gets weeds. You have to clean it up, so the light and air get in to the blooms which are
likely to grow the best.”50
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CHAPTER 14 • MANAGING BRANDS OVER TIME 539
REVIEW
Effective brand management requires taking a long-term view and recognizing that any changes in
the supporting marketing program for a brand may, by changing consumer knowledge, affect the
success of future marketing programs. A long-term view also dictates proactive strategies designed
to maintain and enhance customer-based brand equity over time, in the face of external changes
in the marketing environment and internal changes in a firm’s marketing goals and programs.
Marketers reinforce brand equity by actions that consistently convey the meaning of the
brand—what products the brand represents, what core benefits it supplies, what needs it satisfies,
how it makes products superior, and which strong, favorable, and unique brand associations should
exist in consumers’ minds. The most important consideration in reinforcing brands is consistency
in the nature and amount of marketing support. Consistency does not mean marketers should avoid
making any changes in the marketing program; in fact, many tactical changes may be necessary to
maintain the brand’s strategic thrust and direction. Unless there is some change in the marketing
environment or shift in strategic direction, however, there is little need to deviate from a successful
positioning. The critical points-of-parity and points-of-difference that represent sources of brand
equity should then be vigorously preserved and defended.
The strategy for reinforcing brand meaning depends on the nature of the brand association.
For brands whose core associations are primarily product-related attributes and functional ben-
efits, innovation in product design, manufacturing, and merchandising is especially critical to
maintaining or enhancing brand equity. For brands whose core associations are primarily nonprod-
uct-related attributes and symbolic or experiential benefits, relevance in user and usage imagery
is especially critical to maintaining or enhancing brand equity.
In managing brand equity, managers have to make trade-offs between those marketing activi-
ties that fortify the brand and reinforce its meaning, and those that attempt to leverage or borrow
from its existing brand equity to reap some financial benefit. At some point, failure to fortify the
brand will diminish brand awareness and weaken brand image. Without these sources of brand
equity, the brand itself may not continue to yield valuable benefits. Figure 14-9 summarizes brand
reinforcement strategies.
Revitalizing a brand requires marketers to either recapture lost sources of brand equity or
establish new ones. According to the CBBE framework, two general approaches are possible: (1)
expand the depth or breadth (or both) of brand awareness by improving brand recall and recogni-
tion by consumers during purchase or consumption settings; and (2) improve the strength, favor-
ability, and uniqueness of brand associations making up the brand image. This latter approach
may require programs directed at existing or new brand associations.
With a fading brand, the depth of brand awareness is often not a problem as much as the
breadth; that is, consumers tend to think of the brand in very narrow ways. Although changing
brand awareness is probably the easiest means of creating new sources of brand equity, we may
often have to create a new marketing program to improve the strength, favorability, and unique-
ness of brand associations.
As part of this repositioning, target markets should be analyzed carefully. It is often best to first
retain new customers and then try to attract lapsed users or neglected segments before attempting
to attract wholly different segments. The challenge in all these efforts to modify the brand image is
not to destroy the equity that already exists. Figure 14-10 summarizes brand revitalization strategies.
Managers must also consider the role of different brands in the portfolio and their rela-
tionships over time. In particular, a brand migration strategy should ensure that consumers
understand how various brands in the portfolio can satisfy their needs as they change or as
the products and brands themselves change over time. Strategies exist to retire those brands
whose sources of brand equity have essentially dried up or that have acquired damaging and
difficult-to-change associations.
If a brand encounters a crisis, being swift and sincere are of paramount importance.
Companies that come across as unresponsive or uncaring with their customers inevitably
encounter problems. In the context of social media, there is a significant risk of company
reputations being destroyed within days of a crisis incident going viral. Companies should be
carefully reviewing and utilizing various recovery strategies to combat any negative publicity
surrounding their brands.
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540 PART V • GROWING AND SUSTAINING BRAND EQUITY
DISCUSSION QUESTIONS
1. Which external changes in the marketing environment influence management decisions for
automotive brands over time?
2. Pick a product category. Examine the histories of the leading brands in that category over
the last decade. How would you characterize their efforts to reinforce or revitalize brand
equity?
FIGURE 14-9
Brand Reinforcement
Strategies
• What products does the brand represent? • What benefits does it supply? • What needs does it satisfy?
• How does the brand make products superior? • What strong, favorable, and unique brand associations exist in customers’ minds?
Innovation in product design, manufacturing,
and merchandising
Relevance in user and usage imagery
Consistency in amount and nature of marketing support
Continuity in brand meaning; changes in marketing tactics
Protecting sources of brand equity
Trading off marketing activities to fortify versus. leverage brand equity
BRAND REINFORCEMENT
STRATEGIES
Brand Awareness
Brand Image
BRAND REVITALIZATION
STRATEGIES
Refresh old sources of brand equity
Create new sources of brand equity
Expand depth and breadth of awareness and usage of brand
Improve strength, favorability, and uniqueness of brand associations
Increase quantity of consumption (how much)
Increase frequency of consumption (how often)
Bolster fading associations
Neutralize negative associations
Create new associations
Identify additional opportunities to use brand in the same basic way
Identify completely new and different ways to use brand
Retain vulnerable customers
Recapture lost customers
Identify neglected segments
Attract new customers
FIGURE 14-10
Brand Revitalization
Strategies
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CHAPTER 14 • MANAGING BRANDS OVER TIME 541
Tylenol has been a true marketing success
story.51 Originally introduced by McNeil Labo-
ratories as a liquid alternative to aspirin for
children, Tylenol achieved nonprescription sta-
tus when McNeil was bought by Johnson &
Johnson (J&J) in 1959. J&J’s initial marketing
plan promoted a tablet form of the product for
physicians to prescribe as a substitute for aspirin
when allergic reactions occurred. Tylenol con-
sists of acetaminophen, a drug as effective as
aspirin in the relief of pain and fever but without
the stomach irritation that often accompanies
aspirin use.
Backed by this selective physician push,
sales for the brand grew slowly but steadily over
the course of the next 15 years. By 1974, sales
reached $50 million, or 10 percent of the anal-
gesic market. In defending its turf from Bristol-
Myers’s low-priced but heavily promoted entry
Datril, J&J recognized the value of advertising
Tylenol directly to consumers.
Thanks also to the successful introduction
of a line extension, Extra-Strength Tylenol in tablet and capsule
form, the brand’s market share had risen to 37 percent of the pain
reliever market by 1982. As the largest single brand in the history
of health and beauty aids, Tylenol was used by 100 million U.S.
consumers. It contributed 8 percent to J&J’s sales but almost twice
that percentage in net profits.
Advertising support for the brand was heavy. A $40 million
media campaign for 1982 used two different messages. The
“hospital campaign” employed testimonials from people who
had been given Tylenol in the hospital and had grown to trust
it. The ad concluded with the tagline, “Trust Tylenol—hospitals
do.” The “hidden camera” campaign showed subjects who had
been unobtrusively filmed while describing the symptoms of their
headache, trying Extra-Strength Tylenol as a solution, and vowing
to use it again based on its effectiveness. These advertisements
concluded with the tagline, “Tylenol . . . the most potent pain
reliever you can buy without a prescription.”
The Tylenol Product Tampering Crisis
All this success came crashing to the ground in the first week of
October 1982, with the news that seven people had died in the
Chicago area after taking Extra-Strength Tylenol capsules that
turned out to contain cyanide poison. Although it quickly became
evident that the problem was restricted to that area of the country
and had almost certainly been the work of some deranged person
outside the company, consumer confidence was severely shaken.
Most marketing experts believed the damage to the brand’s
reputation was irreparable, and that Tylenol would never fully
recover. Well-known advertising guru Jerry Della Femina was
quoted in The New York Times as saying, “On one day, every
single human being in the country thought that Tylenol might kill
them. I don’t think there are enough advertising dollars, enough
marketing men, to change that . . . You’ll not see the name Tyle-
nol in any form within a year.” Tylenol’s comeback from these
seemingly insurmountable odds has become a classic example of
how best to handle a marketing crisis.
The Tylenol Product Tampering Recovery
Within the first week of the crisis, Johnson & Johnson issued a
worldwide alert to the medical community, set up a 24-hour toll-
free telephone number, recalled and analyzed sample batches
of the product, briefed the Food and Drug Administration, and
Responding to a Brand Crisis
BRAND FOCUS 14.0
Tylenol’s response to a product tampering incident provides a great example of
how a great crisis response can avert damage to a brand’s image.
3. Identify a fading brand. What suggestions can you offer to revitalize its brand equity? Try
to apply the different approaches suggested in this chapter. Which strategies would seem to
work best?
4. Try to think of additional examples of brands that adopted either a back-to-basics or a rein-
vention revitalization strategy. How well did the strategies work?
5. Choose a brand that has recently experienced a marketing crisis. How would you evaluate
the marketers’ response? What did they do well? What did they not do well? How did the
company utilize social media to control the crisis incident? Which of the recovery approaches
used by the company worked well, particularly in social media?
M14_KELL4969_05_GE_C14.indd 541 03/05/19 9:42 AM
542 PART V • GROWING AND SUSTAINING BRAND EQUITY
offered a $100,000 reward to apprehend the culprit of the tam-
pering. During the week of October 5, the company began a
voluntary withdrawal of the brand by repurchasing 31 million
bottles with a retail value of $100 million. It stopped advertis-
ing, and all communications with the public were in the form
of press releases.
To monitor consumer response to the crisis, J&J started
to conduct weekly tracking surveys with 1,000 consumer
respondents. Ultimately, the company spent a total of $1.5
million for marketing research in the fourth quarter of 1982.
The following week of October 12, it introduced a capsule
exchange offer, promoted in half-page press announcements
in 150 major markets across the country, that invited the public
to mail in bottles of capsules and receive tablets in exchange.
Although well intentioned, this offer met with poor consumer
response.
During the week of October 24, J&J made its return to TV
advertising with the goals of convincing Tylenol users they could
continue to trust the safety of Tylenol products and encouraging
the use of the tablet form until tamper-resistant packaging was
available. The spokesperson for the ad was Dr. Thomas N. Gates,
the company’s medical director, whose deep, reassuring voice
exuded confidence and control. Looking calmly straight into the
camera, he stated:
You’re all aware of the recent tragic events in which
Extra-Strength Tylenol capsules were criminally tam-
pered with in limited areas after they left our factories.
This act damages all of us—you the American public,
because you have made Tylenol a trusted part of your
healthcare, and we who make Tylenol because we’ve
worked hard to earn that trust. We will now work even
harder to keep it. We have voluntarily withdrawn all
Tylenol capsules from the shelf. We will reintroduce
capsules in tamper-resistant containers as quickly as
possible. Until then, we urge all Tylenol capsule users
to use the tablet form and we have offered to replace
your capsules with tablets. Tylenol has had the trust of
the medical profession and 100 million Americans for
over 20 years. We value that trust too much to let any
individual tamper with it. We want you to continue to
trust Tylenol.
The heavy media schedule for this ad ensured that 85 percent
of the market viewed it at least four times during this week.
On November 11, 1982, six weeks after the poisonings and
after intense behind-the-scenes activity, the chairman of J&J held
a live teleconference with 600 news reporters throughout the
United States to announce the return of Tylenol capsules to the
market in a new, triple-sealed package that was regarded as vir-
tually tamperproof. To get consumers to try the new packaging,
the company undertook the largest program of couponing in
commercial history.
On November 28, 1982, 60 million coupons offering a free
Tylenol product (valued up to $2.50) were distributed in Sun-
day newspapers nationwide. Twenty million more coupons were
distributed the following Sunday. By the end of December, 30
percent of the coupons had been redeemed. J&J also engaged in
a number of activities to enlist the support of retailers in the form
of trade promotions, sales calls, and so forth.
Convinced that market conditions were now stable enough
to commence regular advertising, J&J’s ad agency developed
three ad executions using the testimony of loyal Tylenol users
with the goal of convincing consumers that they could continue
to use Tylenol with confidence. The first ad execution contained
excerpts of consumers’ reaction to the tampering incident, the
second ad brought back a Tylenol supporter from an ad cam-
paign run before the tampering incident to reassert her trust in
Tylenol, and the third ad used the testimony of a Tylenol user who
reasoned that she could still trust the product because hospitals
still used it. The recall scores for two of the commercials were
among the highest ever recorded by ASI, a well-known marketing
research firm that conducted the ad testing for J&J. The return to
advertising was accompanied by additional coupon promotional
offers to consumers.
Incredibly, by February 1983, sales for Tylenol had almost
fully returned to the lofty pretampering sales levels the brand
had enjoyed six months earlier. Clearly, J&J’s skillful handling of
an extremely difficult situation was a major factor in the brand’s
comeback. Another important factor, however, was the equity of
the brand and its strong and valuable trust association built up
over the years prior to the incident. The feelings of trust the brand
engendered helped speed its recovery, a fact certainly evident to
J&J (note how often the word trust appears in the initial Gates
ad—five times).
Johnson & Johnson and McNeil Consumer Healthcare’s
remarkable recovery from the brink of disaster allowed the
company to reap the benefits of market leadership. A $1 billion
brand, Tylenol was successfully extended into cough and cold
remedies, nighttime pain relievers, and children’s versions. The
next-largest pain reliever competitor had only half the market
share.
The tide began to turn in the 1990s, however, as the pos-
sibility of liver damage and even death from taking more than
the recommended dosage of Tylenol was found. Some analysts
felt J&J should have been more forthcoming about the possible
product dangers in its labeling. This health issue persisted over
the next two decades as research continued to uncover con-
sumers’ lack of understanding of proper dosing and dangers of
side effects. The government continued to weigh its regulatory
options.
Tylenol’s Quality Control Crises
Concerns about dosage were exacerbated by a series of disas-
trous quality-control scandals and problems. During 2009 to
2011, the brand came under a flood of negative publicity and
harsh criticism from government regulators. Unlike the tamper-
ing incidents, these wounds were self-inflicted, and although no
deaths occurred, the care, comfort, and confidence of Tylenol
customers were at stake, making Johnson & Johnson’s actions—
or inactions, in some cases—highly troubling.
The problems seemed to arise in cutbacks in quality con-
trol and compliance at some of McNeil Consumer Healthcare’s
manufacturing facilities. Cost-cutting and a change in oversight
procedures let several defective products fall through the cracks,
while errors in judgment after the fact only compounded the
problems.
In one of the first incidents, J&J recalled two dozen variet-
ies of its Children’s Tylenol in 2009 because of possible bacterial
contamination at one of its manufacturing facilities. Additional
problems emerged in the same plant the following year, and gov-
ernment regulators expressed their displeasure at the company’s
lack of progress in dealing with the problem.
In January 2010, J&J recalled several hundred batches of Tyle-
nol, Motrin, Benadryl, and St. Joseph’s Aspirin, 20 months after
M14_KELL4969_05_GE_C14.indd 542 03/05/19 9:42 AM
CHAPTER 14 • MANAGING BRANDS OVER TIME 543
it reportedly first began to receive consumer complaints about
moldy-smelling bottles that made some people feel ill. The FDA
faulted the company for not conducting a timely, comprehensive
investigation; not quickly identifying the source of the problem;
and not notifying authorities of the problem, all of which pro-
longed consumer vulnerability.
The culprit was the breakdown of a chemical used to treat
wood pallets that transported and stored product packaging in a
Las Piedras, Puerto Rico facility. A few months later, in April 2010,
J&J also recalled millions of bottles of Tylenol, Benadryl, Zyrtec,
and Motrin because excessively high levels of an active drug,
metal specks, or ingredients that had failed testing requirements
led to possible safety violations. Ever-higher levels of scrutiny of
the company followed, revealing that back in 2009, McNeil Con-
sumer Healthcare had hired private contractors to buy scores of
bottles of defective Motrin in a stealth recall. Because there was
no actual safety risk, the company maintained that a formal recall
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was not necessary. Once again, federal regulators disagreed with
its handling of a problem.
These unprecedented quality-control miscues cost the com-
pany $1 billion in sales, and, perhaps more importantly, the trust,
respect, and admiration of the public it had worked so hard to
preserve back in 1982. After much criticism contrasting his han-
dling of the quality control problems with the product tampering
crisis, CEO William Weldon stepped down in April 2012.
Other controversies, however, continued to challenge Tylenol.
Despite these additional reasons to question the brand, consum-
ers appear to still trust it and continue to buy it, and the Tylenol
brand was still valued at $200 million in 2013. The strength of its
brand has gotten Tylenol through many crises, and the size of the
market helps keep sales at a high level, but competition is strong.
Tylenol remains the #4 brand of analgesic tablets after private
labels, Advil, and Aleve. Aleve has overtaken Tylenol because of
its ease of use, requiring only 2 tablets for 24 hours.52
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544 PART V • GROWING AND SUSTAINING BRAND EQUITY
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50. Tara Parker-Pope, “Unilever Plans a Long-Overdue Prun- ing,” The Wall Street Journal, September 3, 1996, A13.
51. The section on Tylenol is based on a series of articles and papers: John A. Deighton, “Features of Good Integration: Two Cases and Some Generalizations,” in Integrated Communications: The Search for Syn- ergy in Communication Voices, eds. J. Moore and E. Thorsen (Hillsdale, NJ: Lawrence Erlbaum Associ- ates, 1996); O. C. Ferrell and Linda Ferrell, “Tylenol Continues Its Battle for Success,” Daniel Funds Ethics Initiative, University of New Mexico, Anderson School of Management, Highlighted Cases and Case Studies, 2011, https://danielsethics.mgt.unm.edu/teaching -resources/highlighted-cases-and-case-studies.asp, accessed November 24, 2018; Mina Kimes, “Why J&J’s Headache Won’t Go Away,” Fortune, September 6, 2010, 100; Parija Kavilanz, “Johnson & Johnson CEO: ‘We Made a Mistake’,” CNN Money, September 30, 2010, https://money.cnn.com/2010/09/30/news/ companies/hearing_johnson_fda_drug_recalls/index. htm, accessed November 24, 2018; Jonathan D. Rock- off and Joann S. Lublin, “J&J CEO Weldon Is Out,” The Wall Street Journal, February 22, 2012, https://www .wsj.com/articles/SB1000142405297020490910457723 7642041667180, accessed November 24, 2018.
52. Sean Williams, “The Surprising Over-the-Counter Pain Reliever Consumers Are Least Loyal To,” The Motley Fool, September 6, 2014, www.fool.com/investing/ general/2014/09/06/the-surprising-over-the-counter- pain-reliever-cons.aspx.
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546
Learning Objectives
After reading this chapter, you should be able to
1. Understand the role of a regional marketing strategy with a focus on marketing based on geodemograph- ics, ethnicity, and age.
2. Understand the rationale for developing a global brand.
3. Outline the main advantages and disadvantages of developing a global marketing program.
4. Define a global brand and describe the strategic steps in developing a global brand positioning.
5. Describe how to tailor different marketing mix elements to global markets.
6. Describe some of the unique characteristics of brand building in emerging growth markets such as China.
Managing Brands Over Geographic Boundaries and Market Segments15
KFC is among
the most popular
fast-food brands
in China, and has
more than 5,000
restaurants across
the country.
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 547
In earlier chapters, we have considered how and why marketers (1) create brand portfolios to satisfy different market segments and (2) develop brand migration strategies to attract new and retain existing customers. This chapter looks at managing brand equity in different types of market segments, both in domestic markets and international markets.
We begin by examining market segments within the U.S. market to showcase brand man- agement issues over regional, demographic, and cultural market segments. Given their unique characteristics and strategic relevance to marketers, we provide an in-depth look at millennials as a demographic group.
Next, we will pay particular attention to international issues and global branding strategies. After reviewing the basic rationale for taking brands into new international markets, we consider the broader issues in developing a global brand strategy. We will also look at some of the pros and cons of developing a standardized global marketing program. In the remainder of the chapter, we concentrate on specific strategic and tactical issues in building global customer-based brand equity, organized around the concept of the “Ten Commandments of Global Branding.” To illus- trate these guidelines, we will rely on global brand pioneers such as Coca-Cola. Brand Focus 15.0 addresses branding issues in the exploding Chinese market.1
PREVIEW
REGIONAL MARKET SEGMENTS Regionalization seems to run counter to globalization. Marketers are more interested in regional marketing today than previously because there is high-quality data available about purchasing behavior both in-store and online. For example, online platforms such as Facebook and Google include geotargeting as a key feature, which can identify and track consumers down to their specific location. These targeting options make it possible to target different customer segments with different offerings by dynamically varying product attributes and pricing based on what con- sumers are seeking. Syndicated data made available by companies such as AC Nielsen provides insights about where consumers live, where they shop, and what media they use. Therefore, a regional targeting strategy can make a brand more relevant and appealing to any one individual. Regionalization can have downsides. Marketing efficiency may suffer, and costs may rise with regional marketing. Moreover, regional campaigns may force local producers to become more competitive or blur a brand’s national identity. The upside, however, is that marketing can have a stronger impact. The following box describes how using Nielsen’s Spectra data, brand marketers can develop an in-depth understanding of regional segments.
UNDERSTANDING BEHAVIORSTAGES AND LIFESTYLES OF CONSUMERS USING NIELSEN’S SPECTRA
Spectra is a consumer segmentation and targeting tool owned by AC Nielsen. Spectra provides segmentation
and targeting information based on scanner panel data as well as data from retailers. AC Nielsen augments
this information with data from the U.S. Census to provide the “most comprehensive understanding of their
consumers” that will provide brand managers the ability to accurately assess the demand potential of vari-
ous segments. In addition, the Spectra Lifestyle and BehaviorStage segments offer companies the ability to
track the most effective marketing programs that can be useful to drive growth. For instance, one analysis
revealed that the older bustling family segment was critical to drive growth. This segment only accounted
for 10 percent of the population of U.S. households, but was shown to spend 33 percent more than the
average household and have larger basket sizes.
Spectra’s 10 behavior stages are based on family groups and the number and age of children within
the household. For example, the start-up family consists of households with young children under the age
of 6, whereas the senior singles group consists of one-person households with individuals older than 65
who have no children in the household. Spectra’s lifestyle segments include cosmopolitan centers, struggling
urban cores, and so on, and they provide an assessment of where a given brand’s customers may live and
shop. For example, consumers in affluent suburban spreads have average incomes much higher than those
in cosmopolitan centers or comfortable country areas.
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548 PART V • GROWING AND SUSTAINING BRAND EQUITY
OTHER DEMOGRAPHIC AND CULTURAL SEGMENTS Any market segment—however we define it—may be a candidate for a specialized marketing and branding program. For example, demographic dimensions such as age, income, gender, ethnicity, and race—as well as psychographic considerations—often relate to more fundamental differences in shopping behaviors or attitudes about brands. These differences can often serve as the rationale for a separate branding and marketing program. The decision ultimately rests on the costs and benefits of customized marketing efforts versus those of a less targeted focus.
Marketing Based on Age Chapter 14 described how important it is for marketers to consider age segments, and how younger consumers can be brought into the consumer franchise. Of particular interest to marketers in recent years is the segment of millennials. These are consumers who were born after 19803 and have
How Spectra Can Help Brand Managers
One way in which brand managers can utilize Spectra data is to identify high- and low-potential segments
for focusing their marketing and advertising dollars. For instance, a brand like Iams dog food can evaluate the
Spectra data and identify a segment, such as cosmopolitan centers and older bustling families, as having a high
customer demand. Further, they may evaluate the extent to which consumers in this segment are loyal to other
competing brands. A competitor to Iams may not be as popular in this same segment, which provides useful
insights to brand managers as to where to invest their marketing expenditures. Also, Spectra can help in identify-
ing gaps in the brand portfolio if there are segments with high demand for the pet food category as a whole,
but for which no strong brand presence is present. This would indicate an important opportunity for either brand
extensions or line extensions. This type of analysis can also point out potential overlaps, particularly if there are
multiple brands that are serving the needs of a given segment. Spectra can also help identify other products
that the current customers of a brand are likely to buy, thereby identifying opportunities for co-branding or co-
promotions. It can also help identify sales gaps and pinpoint particular stores to target for in-store promotions
and demonstrations.2 This allows brand managers to evolve specific strategies that can vary by geodemographic
segments, thereby allowing for customized brand messages and offerings across various customer segments.
Nielsen’s Spectra Segmentation characterizes consumers based on BehaviorStages, which describes
consumer segments based on a variety of demographic variables. Nielsen’s Spectra segmentation
also integrates information about consumer lifestyles.
Source: https://www.nielsen/com/us/en/solutions/capabilities/spectra.html, accessed December 18, 2018.
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 549
Table 15-1 Marketing to Millennials
Key Traits Characteristics of Millennials
Size Millennials consist of 83 million individuals or more than a quarter of the U.S. population.
Traits Some of the traits that distinguish millennials include environmentally conscious, idealistic, tolerant, entrepreneurial, wasteful, self-absorbed, cynical, greedy.
Use of Technology The millennial population is seen as very tech savvy. A majority of them have a social media presence (more than 80 percent have a Facebook page)4, and a majority (75 percent) of them own and use a smartphone. They regularly use text messaging to communicate (44 percent). They are twice as likely as nonmillennials to use smartphones to research products. Paradoxically, 83 percent of millennials prefer brick-and-mortar stores to online shopping.
Education Millennials place high value on college education (63 percent) and plan on getting a col- lege degree.
Diversity Millennials are extremely diverse and have a higher concentration of bilinguals (38 percent) relative to English-dominant (31 percent) or Spanish-dominant (31 percent) individuals.
Spending Millennials spend $600 billion annually. It is predicted that by 2020, millennial spending power will reach $1.4 trillion.
Family and Home Values
A number of millennials are postponing family obligations until later, and fewer millennials are likely to own their own home, relative to other cohorts (e.g., Generation X or Baby Boomers). 60 percent of millennials rent their homes.
Millennials are highly fitness- and health-focused. A high percentage (more than 70 percent) disapprove of smoking and drinking. They invest in their health and spend a lot on athletic gear.
Brands Millennials seek out high-quality products (75 percent), and 89 percent of millennials also indicated that they would like brands to incorporate socially responsible practices.
Shopping Influences
Millennials are more influenced by word-of-mouth from peers and friends while shopping for products and brands. They are skeptical of traditional advertising, but 50 percent of them are willing to try products with celebrity endorsers, if the celebrity is liked by them. 68 percent of them are influenced to try a product or brand based on a friend’s social media post.
Marketing Based on Ethnicity Why is marketing to different ethnic groups an effective strategy? Different ethnicities have unique characteristics, tastes, and preferences such that brands which are customized tend to be more appealing. We next describe each sub group in turn. Table 15-2 provides a summary of key char- acteristics of major ethnic segments in the United States.
African Americans. Although much marketing has targeted baby boomers, millennials, His- panics, and other demographic and psychographic groups, many critics argue that firms have not effectively targeted the African American market.
Because almost all African Americans speak English as their first language and watch much network television, many companies rely on general marketing campaigns to reach them. But unique attitudes and behaviors distinguish this audience. Black media executives such as Thomas Burrell, founder and chairman emeritus of Burrell Advertising in Chicago, the largest black-owned agency in the United States, says: “Black people aren’t dark-skinned white people. We have different prefer- ences and customs, and we require special effort.” Many observers note the important role of religion, church, and family. As a result of their historical experiences, African Americans are often thought to exhibit a strong togetherness and pride in their heritage. They are also seen as style leaders who set fashion trends, especially among younger people. Marketers are increasingly focusing on this group, and ad dollars focusing on African-American audiences almost tripled between 2011 and 2015.8
The challenge for building brand equity among African Americans is to create relevant mar- keting programs and communication campaigns that accurately portray brand personality and avoiding fostering stereotypes, offending sensibilities, or lumping market segments together. The president of one black-owned agency says the formula for marketing to blacks consists of
various distinct traits that single them out from a marketing standpoint. The Marketing Memo highlights some of these distinguishing features of the millennial generation and spotlights how Campbell’s Soup has evolved a campaign focused on this segment.
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550 PART V • GROWING AND SUSTAINING BRAND EQUITY
Ethnic Group Population (United States)
Purchasing Power ($) Best Marketing Practices
African Americans 46.3 million 1.2 trillion Use ads featuring African Americans, particularly using TV, radio, and social media Use of African American influencers to speak directly to consumers
Hispanics and Latino-Americans
56.6 million 1 trillion Use bilingual advertising Use pop culture influencers to represent Hispanic and Latino pride Identify regional differences
Asian Americans 21 million 962 billion Focus on distinct sub segments (e.g., Chinese Americans, Indian Americans) Leverage the influence of online Asian celebrities
Table 15-2 Ethnic Segments in the United States7
CAMPBELL’S SOUP
Campbell’s Soup is a brand that is a classic and traditional brand, but it had to deal with a chal- lenge of marketing its traditional brand in a very old-fashioned product category (i.e., soups) to the millennial target audience. To address this challenge, the company created a new product line with global tastes incorporating Caribbean, Middle Eastern, and African flavors and used this to appeal to the multicultural cuisine preferences of millennials. Their redesigned packaging was based on microwaveable pouches that fit into millennials’ need for convenience and portability. Further, the company used an edgy advertising campaign, which leveraged a newly redesigned Web site, and encouraged consumers to make Spotify playlists based on soup flavors.5 Campbell’s Soup also initi- ated the Communal Tables program which involved inviting millennials in select cities such as New York and Chicago to gather around the Campbell’s Go Communal Tables, which are hosted by an influential and well-known celebrity, to enjoy a meal and discuss a topic. In these ways, a traditional brand such as Campbell’s Soup reinvigorated its brand to appeal to a youthful millennial audience with unique tastes and characteristics.6
Campbell’s Go Soup (targeted to millenials) featured new flavors and
redesigned packaging.
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 551
relevance, recognition, and respect. As with global brand programs in general, marketers should blend standardization and customization as appropriate.9
Hispanics and Latinos. The term Hispanic refers to persons of Spanish-speaking origin or ancestry, and Latinos references those who are of Latin-American origin, including those who are Portuguese speakers (e.g., Brazilians). We broadly combine these groups for the current descrip- tion of Hispanics and Latinos. Numerous companies have devised unique marketing and advertis- ing strategies specifically targeting this group. For instance, Toyota’s Más Que Un Auto (More Than a Car) campaign featuring car owners with personalized nameplates for their cars, lever- ages the Hispanic tradition of naming their vehicles with descriptive names that reflect the car’s attributes. Research shows that unique ads that are developed for a specific ethnic group—for example, Hispanic Americans, are judged three times more effective as those that were translated into Spanish (from English).10
Social networking has special resonance for Hispanics and Latinos in the United States as a way to keep in touch with family members elsewhere. A recent study conducted regarding Facebook usage showed that 48 percent of U.S. Latino and Hispanics’ Facebook friends were family members, relative to 36 percent among U.S. Facebook users in general.11 The average Hispanic and Latino spends more than eight hours watching online videos each month—more than 90 minutes longer than the U.S. average. Despite these important differences, the Hispanic and Latino market, particularly with regard to digital marketing and advertising spends, remains under served. According to Marla Skiko, senior vice president and director of digital innovation at SMG Multicultural, “Many marketers may think they [U.S. Hispanics/ Latinos] trail the so-called general market in adoption of new tech, when in fact they are far ahead and should be among the first prospects for marketers seeking to grow their consumer base.”12 In order to better appeal to this segment, some companies such as Moët Hennessy have partnered with hip-hop artists such as Nas and Manny Pacquiao to increase their appeal to Latino and Hispanic youth. Others have turned to digital channels such as MiTu (a multichannel YouTube network) and Young California (a West Coast network of DJs and content creators focused on hip-hop) to appeal to millennial Latinos and Hispanics.13
Asian Americans. The Asian-American group is also among the fastest growing groups in the United States (growth rate of 3.4 percent in 2015), relative to Hispanics (growth rate of 2.2 per- cent), African Americans (growth rate of 1.3 percent), and Caucasians (growth rate of 0.5 percent). Some unique aspects of Asian American households include the larger-than-average ownership of Internet devices, and a greater emphasis on marriage, parenthood, hard work, and career suc- cess.14 A number of companies—for example, Costco and Toyota—have developed marketing campaigns specifically targeting this ethnic group. Some best practices for marketing to various ethnic groups are highlighted in Table 15-2.
It is worth highlighting a key downside of targeting specific ethnic or cultural groups—the potential that this may backfire. Marketing critics say that some consumers may not like being targeted on the basis of being different, since that only reinforces their image as outsiders or a minority. Moreover, consumers not in the targeted segment may feel alienated or distanced from the company and brand as a result.15
GLOBAL BRANDING We organize this section on global branding to answer the following three questions:
1. Why should a brand focus on global markets? What are the advantages and disadvantages of expanding internationally?
2. What is the definition of a global brand? What are some factors which contribute to global brand equity?
3. What are some pros and cons of standardizing versus customizing brand offerings? How should a brand effectively customize various aspects of marketing mix?
We conclude with a discussion of China as a global market, given its size and strategic importance in the global marketplace.
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552 PART V • GROWING AND SUSTAINING BRAND EQUITY
African Americans: Verizon effectively
appealed to this audience through its annual
festival called “How Sweet the Sound.” This
campaign was effective because it aligned
Verizon with something that holds impor-
tant and unique meaning to that commu-
nity: gospel music. The campaign included
lush drawings of performers in print ads,
and these looked like vibrant paintings of
African Americans. Verizon saw a 14 per-
cent increase in sales in the cities where the
program was implemented.
CoverGirl cosmetics was successful in
targeting African Americans with unique
colors in their make-up line. This campaign
was effective because African-American
audiences of all ages and income brackets
respond more positively to marketing where
their ethnicity is highlighted, and where it
is an integral part of the marketing effort.
Hispanic Americans and Latinos: Buchan-
an’s Whisky is an example of a brand which
effectively targeted Hispanics and Lati-
nos. Their campaign was centered around
the theme of “It’s Our Time,” Es Nuestro
Momento in Spanish. The campaign part-
nered with global Latin music superstar, J
Balvin, and aimed to empower a new gen-
eration of Latinos with the belief that their
cultural pride was key to unlocking true
greatness. Balvin embodied the brand’s belief
that true greatness comes from embracing
who you are and where you come from.
Asian Americans: Toyota launched a
campaign targeting Asian Americans.
Hoping to capitalize on actor Lee Min
Ho’s popularity among Asian Americans,
Toyota’s American marketing team tapped
the celebrity to appear in a web series,
The One & Only. The One & Only was suc-
cessful in winning over consumers from its three key markets:
Chinese, Vietnamese, and Korean immigrants living in America.
Asian Americans surveyed saw the car as “smart” and that they
attributed “smart” as attractive. Toyota was successful because
it selected a celebrity the Asian demographic sees as both attrac-
tive and smart, the dual attributes it wants to be associated with
the Camry brand.
Sources: Esther Franklin, “Multicultural Marketing Requires a Whole- Market Approach,” Adweek, July 1, 2014, https://www.adweek.com/ brand-marketing/multicultural-marketing-requires-whole-market- approach-158613/, accessed November 25, 2018; César Melgoza, “Mul- ticultural Marketing Is All About the Metrics,” Entrepreneur, January 22, 2016, https://www.entrepreneur.com/article/254347, accessed Novem- ber 25, 2018; SKULocal, “How to Effectively Target Multicultural Audiences in Your Marketing,” January 14, 2016, http://www.skulocal .com/insights/how-to-effectively-target-multicultural-audiences-in-your-
marketing/, accessed November 25, 2018; www.multivu.com/players/ English/7947751-buchanans-es-nuestro-momento-j-balvin/, accessed February 28, 2017; The Nielsen Co., “The Multicultural Edge: Rising Super Consumers,” March 18, 2015, https://www.nielsen.com/us/en/ insights/reports/2015/the-multicultural-edge-rising-super-consumers .html, accessed November 25, 2018; www.ana.net/blogs/show/id/ 30414 accessed February 28, 2017; http://mashable.com/2015/07/24/ multicultural-marketing-tactics/#XxeYQ1fpHGqL, accessed February 28,
2017; Glenn Llopis, “5 Steps to Capturing the Hispanic Market: The Last
True Growth Opportunity,” Forbes Magazine, September 3, 2013, https://
www.forbes.com/sites/glennllopis/2013/09/03/5-steps-to-capturing-
the-hispanic-market-the-last-true-growth-opportunity/#50707ab63406,
accessed November 25, 2018; Glenn Llopis, “Don’t Sell to Me! Hispanics
Buy Brands That Empower Their Cultural Relevancy,” Forbes Magazine,
May 14, 2012, https://www.forbes.com/sites/glennllopis/2012/05/14/
dont-sell-to-me-hispanics-buy-brands-that-empower-their-cultural-
relevancy/#60427f1c661c, accessed November 25, 2018; www.ahaa.org/
Portals/0/Research/Marketing%20&%20Advertising%20Trends/2014%
Verizon appealed to African-American target audiences with its annual music
festival called “How Sweet the Sound.”
CoverGirl introduced bold new colors into its makeup line, enhancing its brand’s
appeal to African-American target audiences.
BRANDING BRIEF 15-1
Marketing to Ethnic Groups
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 553
Buchanan’s Whisky’s “Es Neustro Momento” (It’s Our Time)
campaign in Spanish showcased how marketing to ethnic
groups should incorporate a deep understanding of the val-
ues and beliefs of different cultural and ethnic segments.
20Hispanic%20Fact%20Pack/2014%20Hispanic%20Fact%20Pack. pdf, accessed March 5, 2017; Hispanic Market Works, “Coca Cola Launches New “Orgulloso De Ser” Campaign, September 13, 2015, http://www.hispanicmarketworks.org/newsletter/coca-cola-launches- new-orgulloso-de-ser-campaign/, accessed November 25, 2018; Lisa Gevelber, “Your Next Big Opportunity: The U.S. Hispanic Market,” Think with Google, July 2014, https://www.thinkwithgoogle.com/ consumer-insights/us-hispanic-market-digital/, accessed November 25, 2018; Claudia “Havi” Goffan, “Hispanic Market Trends Forecast,” Tar- get Latino, https://targetlatino.com/hispanic-market-trends-forecast/, accessed November 25, 2018; U.S. Census Bureau, “Facts for Fea- tures: Hispanic Heritage Month 2015,” September 14, 2015, https:// www.census.gov/newsroom/facts-for-features/2015/cb15-ff18.html, accessed November 25, 2018; Eliana Murillo, “New Research Shows How to Connect with U.S. Hispanics Online,” Think with Google, June 2015, https://www.thinkwithgoogle.com/consumer-insights/new- research-shows-how-to-connect-with-digital-hispanics-online/, accessed November 25, 2018; Pew Research Center Hispanic Trends, “Hispanic Population and Origin in Select U.S. Metropolitan Areas, 2014,” Sep- tember 6, 2016, http://www.pewhispanic.org/interactives/hispanic- population-in-select-u-s-metropolitan-areas/, accessed November 25, 2018; www.ahaa.org/Portals/0/Research/The%20Hispanic%20 Consumer/Power,%20Influence%20&%20Behavior/The%20Growing %20Hispanic%20Population%202011.pdf, accessed March 5, 2017; Journey Staff, “#OrgullosoDeSer: Coke’s Hispanic Heritage Month Campaign Embraces Latino Pride,” Coca-Cola Journey, September 16, 2015, https://www.coca-colacompany.com/stories/orgullosodeser-cokes- hispanic-heritage-month-campaign-embraces-latino-pride, accessed
November 25, 2018; Roy E. Kokoyachuk, “Advertising and the Bilingual Brain,” ThinkNow Research, September 8, 2015, https://thinknowresearch .com/blog/advertising-and-the-bilingual-brain/, accessed November 25, 2018; Kristina Monllos, “Here’s Why Brands Are Speaking Spanish in General Market Ads,” Adweek, June 24, 2014, https://www.adweek.com/ brand-marketing/heres-why-brands-are-speaking-spanish-general-market- ads-158448/, accessed November 25, 2018; MP Mueller, “Marketing Tips for Reaching Hispanic Americans,” The New York Times, February 1, 2013, https://boss.blogs.nytimes.com/2013/02/01/marketing-tips-for- reaching-hispanic-americans/?mtrref=www.google.com&gwh=F25BD 0442EB9439DCAE2F14AA52BC914&gwt=pay, accessed November 25, 2018; Samantha Masunaga, “Target Takes Aim at Latinos with New Marketing Campaign,” Los Angeles Times, April 18, 2015, https://www .latimes.com/business/la-fi-target-latino-marketing-20150418-story .html, accessed November 25, 2018; Kim Souza, “Wal-Mart to Focus More On Hispanic Shoppers,” Talk Business & Politics, March 21, 2013, https://talkbusiness.net/2013/03/wal-mart-to-focus-more-on-hispanic- shoppers-2/, accessed November 25, 2018; Consumer Insights, “African- American Digital Consumers Infographic,” Think with Google, October 2011, https://www.thinkwithgoogle.com/consumer-insights/african- american-digital-consumers-infographic/, accessed November 25, 2018; Janie Boschma, “Black Consumers Have ‘Unprecedented Impact’ in 2015,” The Atlantic, February 2, 2016, https://www.theatlantic.com/ politics/archive/2016/02/black-consumers-have-unprecedented-impact- in-2015/433725/, accessed November 25, 2018; The Nielsen Co., “Con- necting Through Culture: African-Americans Favor Diverse Advertising,” October 20, 2014, https://www.nielsen.com/us/en/insights/news/2014/ connecting-through-culture-african-americans-favor-diverse-advertising .html, accessed November 25, 2018; The Nielsen Co., “Meet the Fastest- Growing Multicultural Segment in the U.S.: Asian-Americans,” June 11, 2015, https://www.nielsen.com/us/en/insights/news/2015/meet-the- fastest-growing-multicultural-segment-in-the-us-asian-americans.html, accessed November 25, 2018; Jacob M. Chacko, “Targeting Asian-Indian American Consumers,” http://www.aabri.com/manuscripts/08126.pdf, accessed November 25, 2018; MarketingMag, “How Toyota Won Over the Asian American Market with a Korean Web Series,” http://marketingmag .ca/uncategorized/how-toyota-won-over-the-asian-american-market-with- a-korean-web-series-75175/, accessed November 25, 2018; Bill Duggan, “Marketing to Asian Americans and Insights from the 3AF Conference,” ANA, May 21, 2012, https://www.ana.net/blogs/show/id/23552, accessed November 25, 2018; Luxury Daily, “Gucci Uses Actress Endorsement for China-Area Accessories Campaign,” April 25, 2012, https://www .luxurydaily.com/gucci-appeals-to-chinese-consumers-in-latest- accessories-campaign/, accessed November 25, 2018; Gravity Media, “Asian-Americans Represent Significant Opportunities for Hotels and Beverage Brands,” February 1, 2016, http://www.mediagravity.com/ blog/asian-americans-represent-significant-opportunities-hotels-and- beverage-brands, accessed November 25, 2018.
Toyota Camry featured Asian-American celebrities and actors
in their advertising targeting this ethnic group.
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554 PART V • GROWING AND SUSTAINING BRAND EQUITY
Why Should a Brand Focus on Global Markets? A number of well-known global brands such as Apple, Google, Coca-Cola, Microsoft, and Toyota have derived their sales and profits from international markets. This has encouraged many firms to market their brands internationally, for the following reasons:
• Perception of slow growth and increased competition in domestic markets • Belief in enhanced overseas growth and profit opportunities • Desire to reduce costs from economies of scale • Need to diversify risk • Recognition of global mobility of customers.
In more product categories, the ability to establish a global profile is becoming a prerequisite for success. Ideally, the marketing program for a global brand consists of one product formulation, one package design, one advertising program, one pricing schedule, one distribution plan, and so on that would prove the most effective and efficient option for every country in which the brand is sold. Unfortunately, such a uniformly optimal strategy is rarely possible.
Next, let’s consider the advantages and disadvantages of creating globally standardized mar- keting programs for brands.
Advantages of Global Marketing A number of potential advantages attach to a global marketing program (see Figure 15-1).16
Economies of Scale in Production and Distribution. From a supply-side or cost perspec- tive, the primary advantages of a global marketing program are the manufacturing efficiencies and lower costs that derive from higher volumes in production and distribution. The more that strong experience curve effects exist—driving down the cost of making and marketing a product with increases in production—the more economies of scale in production and distribution from a standardized global marketing program will prevail.17
Lower Marketing Costs. Another set of cost advantages arises from uniformity in packaging, advertising, promotion, and other marketing communication activities. The more uniform, the greater the potential savings. Branding experts maintain that using one name can save a business tens of millions of dollars a year in marketing costs.18
Power and Scope. A global brand profile can communicate credibility.19 Consumers may believe that selling in many diverse markets is an indication that a manufacturer has gained much expertise and acceptance, meaning the product is high quality and convenient to use. An admired global brand can also signal social status and prestige20 and enable consumers to signal their identity,21 particularly as global citizens.
Consistency in Brand Image. Maintaining a common marketing platform all over the world helps maintain consistency of the brand and company image; this is particularly important where customers move often, or media exposure transmits images across national boundaries. Services often desire to convey a uniform image due to consumer movements. For example, American Express communicates the prestige and utility of its card worldwide.
FIGURE 15-1
Advantages of Global
Marketing Programs
Economies of scale in production and distribution Lower marketing costs Power and scope Consistency in brand image Ability to leverage good ideas quickly and efficiently Uniformity of marketing practices
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 555
Ability to Leverage Good Ideas Quickly and Efficiently. Not having to develop strictly local versions speeds a brand’s market entry. Marketers can leverage good ideas across markets as long as the right knowledge transfer systems are put into place. MasterCard’s corporate marketing group helps facilitate information and best practices across the organization.22
Uniformity of Marketing Practices. Finally, a standardized global marketing program may simplify coordination and provide greater control of communications in different countries. By keeping the core of the marketing program constant, marketers can pay greater attention to making refinements across markets and over time to improve its effectiveness.
Disadvantages of Global Marketing Perhaps the most compelling disadvantage of standardized global marketing programs is that they often ignore fundamental differences of various kinds across countries and cultures (see Figure 15-2). Critics claim that designing one program for all possible markets results in unimagi- native and ineffective strategies geared to the lowest common denominator. Possible differences across countries come in a host of forms, as we discuss next.
Differences in Consumer Needs, Wants, and Usage Patterns for Products. Differences in cultural values, economic development, and other factors across nationalities lead customers to behave very differently. For example, the per capita consumption of alcoholic beverages varies dramatically from country to country: in liters consumed per capita annually, the Czech Republic (8.51) and Ireland (7.04) drink the most beer; France (8.14) and Portugal (6.65) drink the most wine; and South Korea (9.57) and Russia (6.88) drink the most distilled spirits.23
The Science of Branding 15-1 describes some of the research providing concrete evidence of key differences in consumers across cultures.
One consequence of the differences is that strategies that work in one country may not work in another. Here is an example highlighting the importance of understanding the local culture and customs prior to launching a global brand. When Krispy Kreme doughnuts crossed the Atlantic from the United States to the United Kingdom in 2003, it was faced with a market in the United Kingdom that was unfamiliar with doughnuts. Rather than introduce Krispy Kreme as a breakfast food, the company decided to leverage the British tradition of bringing cakes to work for special occasions. It positioned Krispy Kreme doughnuts as a communal experience that could be purchased in bulk and shared with coworkers. It also launched a gift card that would give holders a dozen doughnuts in a box, to support the idea of sharing. This novel approach to the UK market allowed Krispy Kreme to overcome potential hurdles associ- ated with launching an unfamiliar breakfast food.24
Differences in Consumer Response to Branding Elements. Linguistic differences across countries can twist or change the meaning of a brand name. Sound systems that differ across dialects can make a word problematic in one country but not another. Cultural context is key. Customers may actually respond well to a name with potentially problematic associations. The questions are how widespread the association is, how immediate it is, and how problematic it actually would be.
FIGURE 15-2
Disadvantages of Global
Marketing Programs
Differences in consumer needs, wants, and usage patterns for products Differences in consumer response to branding elements Differences in consumer response to marketing mix elements Differences in brand and product development and the competitive
environment Differences in the legal environment Differences in marketing institutions Differences in administrative procedures
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556 PART V • GROWING AND SUSTAINING BRAND EQUITY
When Krispy Kreme launched its doughnuts in the UK market, it devised a novel mar-
keting strategy to overcome the barriers to consuming doughnuts as a breakfast food.
Well-known brand consultancy Lexicon employs linguists to help make these assessments for clients.25 The agency has uncovered names that would have been a sexual insult in Colom- bian Spanish, been sacrilegious in Hindi, conveyed impotence in Japanese, and translated as “prostitute” in Hebrew.26 Given this, it is perhaps not surprising that researchers have found differences in the ways Chinese- and English-speaking consumers processed brand names. In one study, results showed that mental representations of verbal information are coded mainly visually among Chinese and in a phonological manner among English speakers. Another study showed that more positive brand attributes resulted when peripheral features of a brand name (“script” aspects, such as the type of font employed, or “sound” aspects, such as the way the name is pronounced) matched the associations or meaning of the brand. Chinese native speak- ers were affected primarily by script matching, whereas English native speakers’ attitudes were primarily affected by sound matching.
Differences in Consumer Responses to Marketing Mix Elements. Consumers in different parts of the world feel differently about marketing activity.27 U.S. consumers tend to be fairly cynical toward advertising, whereas Japanese view it much more positively. Differences also exist in advertising style: Japanese ads tend to be softer and more abstract in tone, whereas U.S. ads are often richer in product information. There are also major differences in how consumers use social media. Latin America is the fourth largest mobile market, and more than half the smartphones are used to access social media.28 In Argentina, where 62 percent of the population use social media, companies reap rich rewards from social media campaigns. Burger King conducted a social media campaign on Snapchat to “flame grill” competitors’ burgers, by asking participants to draw grill marks (e.g., Snap-King) on competitors’ burger patties in return for free vouchers. The campaign earned the company 4.1 million new fans on the Snapchat platform.29 Overall, digital marketing techniques (e.g., search engine marketing) is seen as a cost-effective alternative to traditional marketing in Latin America.
Other than advertising and social media usage, price sensitivity, promotion responsiveness, sponsorship support, and other activities all may differ by country, and these differences can motivate consumers’ behavior and decision-making.
Differences in Brand and Product Development and the Competitive Environment. Products may be at various stages of their life cycle in different countries. For example, consider the detergent category and how P&G modified its strategy for its detergent brand Tide. When entering the India market, P&G had to grapple with the fact that only 10 percent of India’s
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 557
1. Cultures place varying emphasis on the self versus the group, with implications for consumer-brand relation- ships: Academic researchers have also focused on how cul-
tural dimensions that define a culture could impact how
consumers form relationships with brands. One important
dimension on which cultures are different is whether the
emphasis is on the independent self (or a focus on the indi-
vidual rather than the group) or whether the culture focuses
on the interdependent self (focus on the group as opposed
to the individual). Researchers have shown that consumers
in independent cultures may use brands because it strength-
ens their individual identity, whereas consumers in interde-
pendent cultures may use brands because it strengthens
their relationship with their social group. Perhaps attuned
to these differences, Harley-Davidson (which has a brand
personality associated with ruggedness and individualism)
in Japan organizes a number of rallies and get-togethers
to provide a sense of fun and community for their riders.
2. Vertical and horizontal cultural contexts cause differ- ences in how consumers relate to high-status brands: Cross-cultural differences based on power-distance can also
play a role in how consumers react to brands. The power
distance dimension is defined as the extent to which soci-
ety accepts inequality in power distribution and reflects the
hierarchical or vertical nature of society. When power dis-
tance is larger, each individual has a unique social status,
and comparisons with those in higher or lower social status
are more common. In high power distance cultures, global
brands—such as Armani and Mercedes—can help consumers
reflect social status. In contrast, research findings reveal that
those in horizontal cultures place a great deal of emphasis on
equality. This could lead to a differential preference for brand
names that convey uniqueness without being of high status
(e.g., Abercrombie and Fitch, and Hollister).
3. Brands can be symbolic of culture, and this has strategic implications for managers: Brands can be symbolic of cul-
tural identity, and such symbolism can influence global brand
strategy. For example, brands such as Budweiser and Levi’s
are more symbolic of the American culture, whereas New
Balance and JanSport are examples of brands that are neutral
in cultural symbolism. Academic researchers have found that
culturally symbolic brands are preferred when consumers had
a high level of cultural identification with a given culture,
or when their social identity was threatened. Research also
shows that a brand’s cultural symbolism (or the degree to
which a brand symbolizes a cultural group) is an important
contextual factor influencing how individuals react to adver-
tising using multiple languages (i.e., bilingual advertising).
4. Brands have different personalities across cultures: An important finding is that consumers project their own
personality preferences in various cultures onto global
brands. One large cross-national study have suggested that
meanings derived from brands and brand personalities are
culture-specific with “ruggedness” traits being more specific
to the United States, “peacefulness” in Japan, and “passion”
in Spain.
Sources: J. B. Nezlek, K. Kafetsios, and V. Smith, “Emotions in Every- day Social Encounters,” Journal of Cross-Cultural Psychology 39, no. 4, (2008): 366–372; Marieke de Mooij and Geert Hofstede, “Cross-Cultural Consumer Behavior: A Review of Research Findings,” Journal of Inter- national Consumer Marketing 23, no. 3–4, (2011): 181–192; Vanitha Swaminathan, Karen Page, and Zeynep Gürhan-Canli, “My Brand or Our Brand: Individual- and Group-Based Brand Relationships and Self- Construal Effects on Brand Evaluations,” Journal of Consumer Research 34, no. 2 (2007): 248–259; Chris Betros, “Harley-Davidson Gains Popularity in Japan,” Japan Today, August 10, 2009, www.japantoday.com/category/ executive-impact/view/harley-davidson-gains-popularity-in-japan; Sara Loughran Dommer, Vanitha Swaminathan, and Rohini Ahluwalia, “Using Differentiated Brands to Deflect Exclusion and Protect Inclusion: The Moderating Role of Self-Esteem on Attachment to Differentiated Brands,” Journal of Consumer Research 40, no. 4, 657–675.; Angela Y. Lee and Carlos J. Torelli, “Crosscultural Issues in Consumer Behavior,” Frontiers of Social Psychology (2008): 227; Sharon Shavitt, Carlos J. Torelli, and Jimmy Wong, “Identity-Based Motivation: Constraints and Opportunities in Consumer Research,” Journal of Consumer Psychology 19, no. 3 (2009): 261; Marieke De Mooij and Geert Hofstede, “The Hof- stede Model: Applications to Global Branding and Advertising Strategy and Research,” International Journal of Advertising 29, no. 1 (2010): 85–110; Theodore M. Singelis, Harry C. Triandis, Dharm PS Bhawuk, and Michele J. Gelfand, “Horizontal and Vertical Dimensions of Individu- alism and Collectivism: A Theoretical and Measurement Refinement,” Cross-Cultural Research 29, no. 3 (1995): 240–275; H. C. Triandis, Indi- vidualism and Collectivism (Boulder, CO: Westview, 1995); Michelle R. Nelson and Sharon Shavitt, “Horizontal and Vertical Individualism and Achievement Values: A Multimethod Examination of Denmark and the United States,” Journal of Cross-Cultural Psychology 33, no. 5 (2002): 439–458; Carlos J. Torelli and Rohini Ahluwalia, “Extending Cultur- ally Symbolic Brands: A Blessing or a Curse?,” Journal of Consumer Research 38, no. 5 (2012): 933–947; Umut Kubat and Vanitha Swamina- than, “Crossing the Cultural Divide through Bilingual Advertising: The Moderating Role of Brand Cultural Symbolism,” International Journal of Research in Marketing 32, no. 4 (2015): 354–362; C. J. Torelli, H. T. Keh, and C. Y. Chiu, “Cultural Symbolism of Brands,” in Brands and Brand Management: Contemporary Research Perspectives, B. Loken, R. Ahluwalia, and M. J. Houston (Eds.) (Psychology Press, 2009); Jen- nifer Aaker, Veronica Benet-Martinez, and Jordi-Garolera, “Consumption Symbols as Carriers of Culture: A Study of Japanese and Spanish Brand Personality Constructs,” Journal of Personality and Social Psychology 81, no. 3 (2001): 492–508.
THE SCIENCE OF BRANDING 15-1
Key Insights Regarding Global Brand Strategies Based on Research Findings
consumers have access to a washing machine.30 Most consumers wash their clothes with detergent bars and water.
Tide targeted the middle-class consumer who preferred to wash clothes on their own, even though Tide detergent is a washing machine-based detergent in many developed markets. Tide
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558 PART V • GROWING AND SUSTAINING BRAND EQUITY
also introduced variants with local appeal (e.g., Jasmine and Rose-scented detergent), and Tide Naturals was launched to appeal to consumers who preferred a lower price point. Due to these changes in local market strategy, Tide became a market leader in the detergents category in India, even though the category was dominated by other well-entrenched competitors.31 This example highlights the importance of understanding the stage of development of a given product category prior to launching a global brand. Moreover, the perceptions and positions of particular brands may also differ considerably across countries, based on local market conditions. For example, McDonald’s and KFC are regarded as inexpensive fast food restaurants in the United States, but in India and China they have a premium positioning.32
The nature of competition may also differ, and brand managers must be prepared to reexamine their competitive positioning carefully for each country and devise a plan to account for unexpected rivals in the marketplace.
Differences in the Legal Environment. One of the challenges in developing a global advertis- ing campaign is the maze of constantly changing legal restrictions from country to country. For example, Canada banned prescription drug advertising on television. Poland required commercial lyrics to be sung in Polish. Sweden prohibited advertising to children, and Brazil recently insti- tuted similar laws. Malaysia did not allow lawyers or law firms to advertise. Advertising restricts the use of children in commercials in Austria, comparative ads in Singapore, and product place- ment on public television channels in Germany.
In the context of social media advertising, the U.S. Federal Trade Commission requires that paid testimonials and endorsements made by a consumer or any third party for a brand or company on social media be clearly revealed, a rule which is also found in other countries (e.g., Singapore).33 Many data privacy laws have been instituted in the European Union, which may impact the ability of marketers to utilize individual consumer-level data to develop and implement digital marketing strategies.34
Although some of these laws have been challenged or are being relaxed, numerous legal differences still exist.
Differences in Marketing Institutions. Channels of distribution, retail practices, media avail- ability, and media costs all may vary significantly from country to country, making implementa- tion of the same marketing strategy difficult. Foreign companies struggled for years to break into Japan’s rigid distribution system that locks out many foreign goods. The prevalence of online shopping, smartphones, supermarkets, and so on may also vary considerably, especially in devel- oping countries.
Tide’s variants are modified to suit local market tastes.
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Differences in Administrative Procedures. In practice, it may be difficult to achieve the control necessary to implement a standardized global marketing program. Local offices may resist having their autonomy threatened. Local managers may suffer from the “not invented here” syndrome and raise objections—rightly or wrongly—that the global marketing program misses some key dimension of the local market. Local managers who feel their autonomy reduced may lose motivation and feel doomed to failure.
STRATEGIES FOR CREATING & MANAGING GLOBAL BRANDS We previously showed the rationale associated with global markets along with the pros and cons of a global marketing program. We next describe a set of key principles to building global brand equity. Before we dive into strategic considerations, it may be worthwhile defining a global brand. Although many definitions exist, most experts agree that, to be regarded as a successful global brand, you should derive at least half your revenue outside their domestic market and have much of their growth derived from these global markets.35
Creating Global Brand Equity A brand can create strong global brand equity using the same approaches to creating brand reso- nance as in Chapter 3. Global brand equity can be built by achieving the following for each global
market:
1. Establishing breadth and depth of brand awareness
2. Creating points-of-parity and points-of-difference
3. Eliciting positive, accessible brand responses
4. Forging intense, active brand relationships
In each and every market in which marketers sell the brand, they must consider how to
achieve brand salience, brand performance, brand imagery, brand judgments, brand feelings,
and brand resonance, which are the key building blocks associated with achieving the previously
outlined goals. For example, brand managers should be aware of how the sequential timing of
introduction can impact brand salience and brand perceptions across different markets. Differ-
ent orders of introduction can profoundly affect consumer perceptions about what products the
brand offers, the benefits supplied, and the needs satisfied. Brand imagery associations may vary
considerably across markets because of variations in brand history and heritage. Further, in craft-
ing brand image strategies, it is important to remember that a desirable brand personality in one
market may be less desirable in another. Nike’s competitive, aggressive user imagery proved a
detriment in its introduction into European markets in the early 1990s. The company achieved
greater success when it dialed down its image somewhat and emphasized team concepts more.
Brand judgments must be positive in new markets—consumers must find the brand to be
of good quality, credible, worthy of consideration, and superior. Finally, achieving brand reso- nance in new markets means that consumers must have sufficient opportunities and incentives
to buy and use the product, interact with other consumers and the company itself, and actively
learn and experience the brand and its marketing. Digital marketing and social media commu-
nications can be deployed to strengthen brand resonance. Nevertheless, digital efforts cannot
completely replace grassroots marketing efforts that help connect the consumer with the brand.
Global Brand Positioning To best capture differences in consumer behavior, and to guide our efforts in revising the market-
ing program, it is highly recommended that companies evolve a global brand positioning which
derives from a deep understanding of how brands must be positioned across various markets.
Recall that brand positioning means creating mental maps, defining core brand associations, iden-
tifying points-of-parity and points-of-difference, and crafting a brand mantra. Many companies
have a global brand positioning document that typically addresses a number of questions. The
answers to these questions will guide how to structure a global brand positioning and will help
identify which aspects of a brand’s positioning can be modified based on local considerations.
These questions include:
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560 PART V • GROWING AND SUSTAINING BRAND EQUITY
1. How valid is the brand’s mental map based in the home market relevant to a new market? How appropriate is the positioning? What is the existing level of awareness? How valuable are the core brand associations, points-of-parity, and points-of-difference?
2. What changes should we make to the positioning? Do we need to create any new asso- ciations? Should we not recreate any existing associations? Should we modify any existing associations?
3. How should we create this new mental map? Can we still use the same marketing activities? What changes should we make? What new marketing activities are necessary?
In evolving a brand’s global positioning, we need to define a hierarchy of brand associations in the global context that defines which associations we want consumers in all countries to hold, and which we want consumers only in certain countries to have. We have to determine how to cre- ate these associations in various markets to account for diverse consumer perceptions, tastes, and environments. Thus, we must be attuned to similarities and differences across markets. Häagen- Dazs provides a good example of a global brand positioning which is then executed using locally relevant strategies. We follow that up with a brief set of recommendations for how a brand can modify different aspects of its marketing mix to improve its appeal to various global markets.
HÄAGEN-DAZS GLOBAL BRAND: MANY FLAVORS OF INDULGENCE
Häagen-Dazs, a well-known brand of ice cream, is in more than 50 markets and has sales revenue of $2.09
trillion. Häagen-Dazs is owned by General Mills and marketed by Nestlé in some markets.36 Its global
advertising campaign leverages its super-premium image, and has a unified global positioning around
three key themes: indulgence, affordable luxury, and intense sensuality. This standardized positioning
strategy globally is combined with customized flavors and line extensions as well as diversified advertis-
ing executions around the world. For example, the brand uses distinctive flavors in different countries,
including Green Tea in Asia, Banana Caramel Crêpe and Macadamia Nut Brittle in France, Mooncakes in
China, and different flavors for various European markets. In China (which is among the largest global
markets for ice cream, along with Brazil), you will find sushi ice cream, consisting of ice cream scoops
wrapped in chocolate and served like sushi. Soft serves at the Shanghai store cost seven times that of the
nearby McDonald’s, reaffirming Häagen-Dazs position as a super-premium ice cream that is meant for
only those who crave its indulgence. As this discussion suggests, although firms are increasingly adopting
an international marketing perspective, numerous aspects of the marketing strategy need to be adapted
to suit local market conditions. Before providing some specific tactical guidelines on how to build global
Häagen-Dazs introduced a new ice cream bar in a variety of flavors to
suit local market tastes.
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 561
The most recognized brand name in the
world got its start in an Atlanta pharmacy,
where it sold for five cents a glass. The name
Coca-Cola was registered as a trademark on
January 31, 1893. The drink soon became a
national phenomenon; by 1895, the com-
pany had established syrup plants in Chi-
cago, Dallas, and Los Angeles.
In the 1920s, Coca-Cola pursued aggres-
sive global branding, finding such creative
placements for its logo on dogsleds in Can-
ada and on the walls of bullfighting are-
nas in Spain. Its popularity throughout the
world was fueled by colorful and persuasive
advertising that cemented its image as the
“all-American” beverage. Coca-Cola’s early
moves into formerly restricted markets, such
as China in 1978 and the Soviet Union in
1979, bolstered its image as a global com-
pany. By 1988, Coca-Cola was voted the best
known and most admired brand in the world.
Perhaps the most consistently standardized element of Coca-Cola
is its product appearance. Coke essentially keeps the same basic
look and packaging of the product everywhere (except in countries
where laws dictate use of the local language). The company simul-
taneously stresses that the brand be relevant and well positioned
against the competition. To keep it relevant, Coca-Cola uses differ-
ent advertising agencies in different countries in order to make the
brand feel local.
In 1999, Coca-Cola’s new global marketing mantra became
“Think Local. Act Local”—an important twist on its old mantra,
“Think Global. Act Local.” Intended to get Coca-Cola back to the
basics, the strategy meant hiring more local staff and allowing field
managers to tailor marketing to their regions. The results of this
hyperlocal focus were missed sales targets and local advertising
that, in some cases, did not fit with the carefully crafted Coke
image, such as an Italian ad featuring skinny-dippers running along
a beach. The company scrapped the “Think Local. Act Local”
mantra in favor of a hybrid strategy, in which a global market-
ing network of local executives took direction from Coke’s Atlanta
headquarters, with some room for interpretation at the local level.
In 2016, Coca-Cola announced a unified creative campaign
titled “Taste the Feeling” which underscores that Coca-Cola is
a simple pleasure which makes everyday moments special. The
ad campaign focuses on authentic moments in a consumer’s life.
Coca-Cola has an international network of advertising agencies to
bring this campaign theme to life in various ways in different local
markets via TV commercials, digital advertising, print, and shopper
materials.
Today, Coca-Cola conducts business with more than 400
brands in more than 200 countries. About three-quarters of its
revenues come from outside the United States. For example, while
Coca-Cola sells Coke to a growing group of consumers in Asia, it
also sells local brands there, such as the hugely successful Geor-
gia iced coffee in Japan, which actually outsells Coke, as well as
new drinks, such as Ayataka green tea. In India, a big seller for
Coca-Cola is Thums Up, an indigenous variant that it purchased. In
South America, Coca-Cola test-marketed a new flavor called Coca-
Cola Life, which was then launched in Argentina and expanded to
Chile, United Kingdom, and to some outlets in the United States.
This was in response to studies which showed that Argentineans
demonstrated concern for the environment. The Coca-Cola Life
brand contains a mix of sugar and stevia (an indigenous herb) and
is a reduced-calorie beverage which is in a recyclable bottle. Since
its launch, Coca-Cola Life has garnered a large following, as seen
in the number of Twitter followers, Facebook likes, and YouTube
views. Its combination of local and global brands enables Coca-Cola
to exploit the benefits of global branding and global trends in tastes
while tapping into traditional domestic markets at the same time.
Sources: Duane Stanford, “Africa: Coke’s Last Frontier,” Bloomberg BusinessWeek, October 28, 2010, https://www.bloomberg.com/news/ articles/2010-10-28/africa-cokes-last-frontier, accessed November 25, 2018; Mehul Srivastava, “For India’s Consumers, Pepsi Is the Real Thing,” Bloom- berg BusinessWeek, September 16, 2010, https://www.bloomberg.com/news/ articles/2010-09-16/for-indias-consumers-pepsi-is-the-real-thing, accessed November 25, 2018; “Coke Profit Fails to Meet Expectations,” The New York Times, April 20, 2010; “The Story of Coca-Cola,” www.coca-cola.com;
BRANDING BRIEF 15-2
Coca-Cola’s Global Brand Strategy with Local Elements
Coca-Cola’s hybrid marketing strategy for global markets involved a global mar-
keting strategy combined with local market activations.
customer-based brand equity, we highlight the debate regarding standardization versus customization
next. As an example, the Branding Brief 15-2 on Coca-Cola provides an overview of how to balance global
branding with local execution.
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562 PART V • GROWING AND SUSTAINING BRAND EQUITY
Betsy McKay, “Coca-Cola Restructuring Effort Has Yet to Prove Effective,” Asian Wall Street Journal, March 2, 2001; Kate MacArthur, “Coke Commits $400M to Fix It,” Advertising Age, November 15, 2004; Theresa Howard, “Coca-Cola Hopes Taking New Path Leads to Success,” USA Today, March 6, 2001, 6B; Michael Flagg, “Coca-Cola Adopts Local-Drinks Strategy in Asia,” The Wall Street Journal, July 30, 2001; Dylan Kissane, “Four Tips for Marketing to Australians,” DOZ.com, January 27, 2016, https://www.doz .com/marketing-resources/tips-marketing-australian, accessed November 25, 2018; The Coca-Cola Company, “Coca-Cola Announces “One Brand” Global Marketing Approach,” January 19, 2016, https://www.coca-colacompany .com/press-center/press-releases/coca-cola-announces-one-brand-global- marketing-approach, accessed November 25, 2018; Kristin Kovner, “6 Market- ing Lessons Learned in Argentina,” Mashable, April 15, 2015, https://mashable .com/2015/04/15/marketing-argentina/#7MzggoonhOqf, accessed November 25, 2018; Yuri Kageyama, “Coca-Cola No. 1 in Japan with Drinks Galore, But Not Coke,” December 1, 2016, https://japantoday.com/category/features/ food/coca-cola-no-1-in-japan-with-drinks-galore-but-not-coke, accessed
November 25, 2018; Kent Landers, “Coke VP on Assignment in Japan Gushes About Vending Variety,” The Coca-Cola Co., September 17, 2014, https:// www.coca-colacompany.com/stories/coke-vp-on-assignment-in-japan- gushes-about-vending-variety, accessed November 25, 2018; Campaign Asia, “Coke Tightens Grip on Drinks Market,” February 16, 2001, https://www .campaignasia.com/article/coke-tightens-grip-on-drinks-market/180665, accessed November 25, 2018; The Coca-Cola Co., “2012 Per Capita Con- sumption of Company Beverage Products,” www.coca-colacompany.com/ cs/tccc-yir2012/pdf/2012-per-capita-consumption.pdf; Soni Satpathy- Singh, “A Big ‘Thums Up’ to India’s Beloved Cola: A Brief History and Recipe,” April 1, 2016, www.india.com/food-2/a-big-thums-up-to-indias-
beloved-cola-a-brief-history-and-recipe-1058524/; Coca-Cola India,
“Maaza Mango Juice,” www.coca-colaindia.com/our-products/product-list-
descriptions/maaza/; Statista, “Annual Per Capita Consumption of Coca-Cola
Company’s Beverage Products from 1991 to 2012 (in servings of 8-fluid ounce
beverages),” www.statista.com/statistics/271156/per-capita-consumption-
of-soft-drinks-of-the-coca-cola-company-by-country/.
CUSTOMIZING MARKETING MIX ELEMENTS IN LOCAL MARKETS FOR GLOBAL BRANDS Many brands need to customize specific aspects of the marketing mix to better appeal to local
market conditions. We next review the four major elements of a marketing program—product,
communications, distribution, and pricing strategies—in terms of adaptation issues.
Product Strategy One reason so many companies ran into trouble initially going overseas is that they unknowingly—
or perhaps even deliberately—overlooked differences in consumer behavior. Because of the relative
expense and lack of a developed marketing research industry in smaller markets, many companies
chose to forgo basic consumer research and put products on the shelf to see what would happen. As a
result, they sometimes became aware of consumer differences only after the fact. To avoid these types of
mistakes, marketers may need to conduct research into local markets. For instance, Nestlé’s Kit Kat has
researched and developed more than 300 flavors, many of which are unique to the Japanese market.37
In many cases, however, marketing research reveals that product differences are not justified
for certain countries. At one time, Palmolive soap was sold globally with 22 different fragrances,
17 packages, nine shapes, and numerous positionings. After conducting marketing analyses to
reap the benefits of global marketing, the company chose to employ just seven fragrances, one
core packaging design, and three main shapes, all executed around two related positionings (one
for developing markets and one for developed markets).38
Nestle’s Green Tea-flavored Kit Kat in Japan illustrates how products can
be customized to appeal to consumers in different international markets.
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From a corporate perspective, one obvious solution to the trade-off between global and local brands is to sell both types of brands as part of the brand portfolio in a category. Even companies that have succeeded with global brands maintain that standardized international marketing pro- grams work with only some products, in some places, and at some times, and will never totally replace brands and ads with local appeal.39 Thus, despite the trend toward globalization, it seems that there will always be opportunities for good local brands.
Communication Strategy Advertising is one area of marketing communications in which many firms face challenges interna- tionally. Although the brand positioning may be the same in different countries, creative strategies in advertising may have to differ to some degree. Different countries can be more or less receptive to different creative styles. For example, humor is more common in U.S. and U.K. ads than, say, in German ads. European countries such as France and Italy are more tolerant of sex appeal and nudity in advertising.40 In India, many ads feature family and “mother-child” themes, because family orien- tation and belongingness are a cornerstone of the collectivistic Indian culture. For example, Horlicks, a brand from Smithkline Beecham, used the “mother-child” relationship in its advertisements to drive its proposition of nurturing the all-around growth of children (“taller, stronger, and sharper”).41
With the growth of social media and digital marketing, companies should carefully evaluate their options for communicating with consumers using online media. A common misconception is that many consumers in lower income levels do not have access to the Internet. However, the proliferation of smartphones has made the Internet more accessible. For example, the World Bank reported that by 2012, 98 percent of the Latin American population had access to a mobile cell signal, and most households had subscribed to some form of a mobile service plan. Further, Internet kiosks, community access centers, and multimedia communication booths in countries such as Peru, Mexico, and Ecuador have increased access to the Internet.42
The penetration of satellite and cable TV has expanded broadcast media options, making it easier to simultaneously air the same television commercial in many different countries. U.S. cable networks such as CNN, MTV, ESPN, and the Cartoon Network, and other networks such as Sky Broadcasting from the United Kingdom, and Star/Zee TV in Asia have increased advertisers’ global reach.
Each country has its own unique media challenges and opportunities. When Colgate-Pal- molive decided to further penetrate the market of the 630 million or so people who lived in rural India, the company had to overcome the fact that more than half of all Indian villagers are illiter- ate, and only one-third live in households with television sets. Its solution was to create half-hour infomercials carried through the countryside in video vans.43 Sponsorship programs have a long tradition in many countries outside the United States because of a historical lack of advertising media there. Increasingly, marketers can execute sponsorship on a global basis. For example, FIFA World Cup Soccer has a long list of prominent partners and sponsors including global brands such as Adidas, Coca-Cola, Hyundai, Sony, and Visa. Entertainment and sports sponsorships can be an especially effective way to reach a younger audience.
Distribution Strategy Distribution channels present challenges to many firms because there are few global retailers, espe- cially supermarkets and grocery stores.44 There are many distribution challenges, particularly in conti- nents such as Africa where consumers live in urban and rural areas. To address distribution challenges, Weetabix, a UK-based brand of breakfast cereal, has adopted a unique distribution system in Kenya. It employs a sales force that distributes small sachets comprising only two biscuits to retail shops via bicycle. These efforts have paid off, as Weetabix enjoys 70 percent of the market share of the cereal market in Kenya.45 Similarly, in East Africa, Coca-Cola has developed a network of micro distribu- tion centers (MDCs) which provide distribution to thousands of small, rural outlets which are poorly connected via roads. The MDC owners use handcarts to transport Coca-Cola products to smaller, rural outlets in their region. Coca-Cola says that its MDC network handles the distribution of more than 80 percent of its business in some East African countries, providing employment for 13,500 people.46
Pricing Strategy When it comes to designing a global pricing strategy, the value-pricing principle from Chapter 5 still generally applies. Marketers need to understand in each country what consumer perceptions of the value of the brand are, their willingness to pay, and their elasticities with respect to price changes. Sometimes differences in these considerations permit variations in pricing strategies.
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564 PART V • GROWING AND SUSTAINING BRAND EQUITY
Brands such as Levi’s, Heineken, and Perrier have been able to command a much higher price out- side their domestic market because in other countries they have a distinctly different brand image— and thus, sources of brand equity—that consumers value. But setting drastically different prices across countries can be difficult.47 Pressures for international price alignment have arisen, in part because of the increasing numbers of legitimate imports and exports and the ability of retailers and suppliers to exploit price differences through “gray imports” across borders. There are three options for varying prices offered in different global markets. The first is to create an international “price corridor” that takes into account both the inherent differences between countries and alignment pressures. Specifically, the corridor is calculated by company headquarters and its country sub- sidiaries by considering market data for the individual countries, price elasticities in the countries, parallel imports resulting from price differentials, currency exchange rates, costs in countries and arbitrage costs between them, and data on competition and distribution. No country is then allowed to set its price outside the corridor. The second is to introduce different brands in high-price, high- income countries and in low-price, low-income countries, depending on the relative cost trade-offs of standardization versus customization.48 Third, developing a completely new product for a local market using indigenous materials is another way to provide competitive offerings. For instance, in order to offer an affordable alternative to hospitals, GE Healthcare developed a portable ultrasound machine, which is significantly cheaper than existing alternatives, for emerging markets.49
MARKETING TO CONSUMERS IN DEVELOPING AND DEVELOPED MARKETS Perhaps the most basic distinction we make between the countries that global brands enter is whether they are developing or have developed markets. The distinction between developing and developed markets is increasingly blurring, as some markets such as China have a large GDP, even though their infrastructure and resources are limited, relative to their more developed counterparts. Some of the most important developing markets are captured by the acronym BRICS (for Brazil, Russia, India, China, and South Africa).50 A few interesting facts about consumers in emerging and developing markets are the following:
1. Eighty percent of consumers in emerging markets buy their products from tiny bodegas, stalls, kiosks, and mom-and-pop stores not much bigger than a closet.
2. Smaller packaging and lower sales prices are often critical when incomes and housing spaces are limited.
3. Many companies (e.g., Procter & Gamble and Unilever) have devised cheaper, clever ways to make the right kinds of products to suit consumer demand.
4. Mobile and digital strategies may take on greater importance given the relatively high smart phone penetration.
TEN COMMANDMENTS TO BUILDING GLOBAL CUSTOMER- BASED BRAND EQUITY In designing and implementing a global brand marketing program, marketers want to realize the advantages while suffering as few of the disadvantages as possible.51 This section explores in more detail how to tactically build strong global brands, relying on the “Ten Commandments of Global Branding” (see Figure 15-3).
FIGURE 15-3
The Commandments of
Global Branding
1. Understand similarities and differences in the global branding landscape.
2. Do not take shortcuts in brand building. 3. Establish marketing infrastructure. 4. Embrace integrated marketing communications. 5. Cultivate brand partnerships. 6. Balance standardization and customization. 7. Balance global and local control. 8. Establish operable guidelines. 9. Implement a global brand equity measurement system. 10. Leverage brand elements.
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 565
1. Understand Similarities and Differences in the Global Branding Landscape
The first—and most fundamental—guideline is to recognize that international markets can vary in terms of brand development, consumer behavior, marketing infrastructure, competi- tive activity, legal restrictions, and so on. Virtually every top global brand and company adjusts its marketing program in some way across some markets but holds the parameters fixed in other markets. The best examples of global brands often retain a thematic consistency and alter specific elements of the marketing mix in accordance with consumer behavior and the competitive situation in each country. Marketers should also resist the attempt to view a single continent or country as a unified market with similar tastes. For example, Latin America consists of many country-specific and regional differences. Many companies such as McDonald’s, Coca-Cola, and Puma have realized the benefits of local and regional campaigns when it comes to Latin-American markets.52
2. Do Not Take Shortcuts in Brand Building
In terms of building global customer-based brand equity, many of the basic tactics we dis- cussed in Part II of the text still apply. In particular, we must create brand awareness and a positive brand image in each country in which a brand is sold. The means may differ from country to country, or the actual sources of brand equity themselves may vary. Nevertheless, it is critically important to have sufficient levels of brand awareness and strong, favorable, and unique brand associations to provide sources of brand equity in each country. Volkswagen has struggled to gain a strong foothold in the U.S. market because, unlike its Asian import competitors, it has been less willing to modify its designs for U.S. buyers. Although it has ambitious goals for global auto supremacy, one industry analyst noted, “They need to spend much more time understanding the U.S. consumer.”53
Building a brand in new markets must be done from the bottom up. Strategically, that means concentrating on building awareness first, before the brand image. Tactically, or opera- tionally, it means determining how to best create sources of brand equity in new markets. Dis- tribution, communication, and pricing strategies may not be appropriate in any two markets, even if the same overall brand image is desired in both. If the brand is at an earlier stage of development, rather than alter it or the advertising to conform to local tastes, marketers will try to influence local behavior to fit the established uses of the brand. Consumer education then accompanies brand-development efforts.
This guideline suggests the need for patience, and the possibility of backtracking on brand development, to engage in a set of marketing programs and activities that the brand has long since moved beyond in its original markets. Marketers sometimes fail to realize that in their own country, they are building on a foundation of perhaps decades of carefully compiled associations in customers’ minds. Although the period needed to build the brand in new markets may be compressed, it will still take some time.
The temptation—and often the mistake—is to export the current marketing program because it seems to work. Although that may be the case, the fact that a marketing program can meet with acceptance or even some success doesn’t mean it is the best way to build strong, sustainable, global brand equity. An important key to success is to understand each consumer, recognize what he or she knows or could value about the brand, and tailor market- ing programs to his or her desires.
3. Establish Marketing Infrastructure
A critical success factor for many global brands is their manufacturing, distribution, and logistical advantages. These brands have created the appropriate marketing infrastructure, from scratch if necessary, and adapted to capitalize on the existing marketing infrastructure in other countries. We noted that channels especially vary in their stages of development. Chain grocers have a 50 percent share in China, 40 percent in Russia, but only 15 percent in India.54 Concerned about poor refrigeration in European stores, Häagen-Dazs ended up supplying thousands of free freezers to retailers across the continent.55
Companies go to great lengths to ensure consistency in product quality across markets. McDonald’s gets more than 90 percent of its raw materials from local suppliers and will even expend resources to create the necessary inputs if they are not locally available. Hence, invest- ing to improve potato farms in Russia is standard practice because French fries are one of McDonald’s core products and a key source of brand equity. More often, however, companies
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566 PART V • GROWING AND SUSTAINING BRAND EQUITY
have to adapt production and distribution operations, invest in foreign partners, or both in order to succeed abroad. General Motors’s success in Brazil—in the 1990s, after years of mediocre performance—came about in part because of its concerted efforts to develop a lean manufac- turing program and a sound dealership strategy to create the proper marketing infrastructure.56
4. Embrace Integrated Marketing Communications
Many top global firms have introduced extensive integrated marketing communications pro- grams. Overseas markets do not have the same advertising opportunities as the expansive, well-developed U.S. media market. As a result, U.S.-based marketers have had to embrace other forms of communication in those markets—such as sponsorship, promotions, public relations, merchandising activity, and so on—to a much greater extent.
To help make the quintessentially Vermont brand Ben & Jerry’s more locally relevant in Britain, the company ran a contest to create the “quintessential British ice cream flavor.” Finalists covered the gamut of the British cultural spectrum and included references to royalty (Cream Victoria and Queen Yum Mum), rock and roll (John Lemon and Ruby Chewsday), literature (Grape Expectations and Agatha Crispie), and Scottish heritage (Nessie’s Nectar and Choc Ness Monster). Other finalists included Minty Python, Cashew Grant, and James Bomb. The winning flavor, Cool Britannia, was a play on the popular British military anthem Rule Britannia and consisted of vanilla ice cream, English strawberries, and chocolate-covered Scottish shortbread.57
A global firm can utilize an integrated marketing communications approach to address the needs of multilingual populations. For instance, many Hispanic-American households speak a mix of Spanish and English. While there are potential pitfalls of appealing to mul- tiple ethnic and cultural identities with a single ad, this approach can also yield rich rewards. In Branding Brief 15-3, we showcase some research on marketing to bicultural consumers using communications that are bilingual, which highlights the importance of this approach.
5. Cultivate Brand Partnerships
Most global brands have marketing partners of some form in their international markets, ranging from joint venture partners, licensees or franchisees, and distributors, to advertising
Consider María Perez who lives in New York City with her hus-
band and two young children under two. María and her husband
Miguel both moved from Mexico when they were in their teens
and speak fluent Spanish. They watch the Spanish-language tele-
vision network, Univision, and stay in touch with their extended
family in Mexico via Facebook. The multicultural consumer land-
scape comprising individuals like María and Miguel is large, makes
up nearly 40 percent of the U.S. population, and globally, includes
nearly 232 million people living outside their home countries. This
population poses a unique challenge to companies.
In deciding how to advertise to multiculturals, the first con-
sideration is that members of these ethnically diverse populations
may be at different stages of assimilation into the host culture,
meaning they will have varying degrees of receptiveness to bicul-
tural marketing efforts. Bicultural people are those who identify
equally with both their home and host cultures, and bilingual
advertisements—ads involving the blending of words from the
home language—can be extra appealing to the bicultural popula-
tion under certain circumstances.
However, it is important to realize that bilingual ads only work
when paired with the right type of brand, or brands which do not
have strong monocultural connotations. For example, McDon-
ald’s and Coca-Cola are strong cultural symbols of the American
identity; when people see McDonald’s and Coca-Cola, they are
reminded of what it means to be “American.” In contrast, Coors
Brewing Co. and GAP clothing are neutral in cultural symbolism.
Research has identified sharp contrasts in how biculturals living
in the United States responded to advertising. Advertisements
with bilingual messaging fell flat among these consumers when
used with brands with high cultural symbolism, and they were
better received when paired with less culturally symbolic brands.
In essence, marketing to a bicultural audience means appeal-
ing to two identities, and it is important to ensure the associa-
tions of the brand mesh well with the themes of the bilingual or
multicultural advertising. It is also important to evolve an inte-
grated communications approach which incorporates bilingual
and multicultural themes across a range of marketing activations
including traditional advertising, sponsorships, promotions and
online digital and social media advertising.
Sources: “Number of International Migrants Rises Above 23 Million, UN Reports,” UN News, September 11, 2013, www.un.org/appsnewsstory .aspNewsID=45819#.VeRmS5eYFSN; Umut Kubat and Vanitha Swami- nathan, “Crossing the Cultural Divide through Bilingual Advertising: The Moderating Role of Brand Cultural Symbolism,” International Journal of Research in Marketing 32, no. 4 (2015): 354–362.
BRANDING BRIEF 15-3
Marketing to Bicultural Consumers Using Bilingual Advertising
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 567
agencies and other marketing support people. Barwise and Robertson identify three alterna- tive ways to enter a new global market:58
1. By exporting existing brands of the firm into the new market (introducing a “geographic extension”)
2. By acquiring existing brands already sold in the new market but not owned by the firm 3. By creating some form of brand alliance with another firm (joint ventures, partnerships,
or licensing agreements)
The choice of entry strategy depends in part on how the resources and objectives of the firm match up with each strategy’s costs and benefits. Procter & Gamble would enter new markets in categories in which it excels (diapers, detergents, and sanitary pads), building its infrastructure and then bringing in other categories such as personal care or health care. Heineken’s sequential strategy was slightly different. The company first entered a new market by exporting to build brand awareness and image. If the market response was deemed satisfactory, the company licensed its brands to a local brewer in hopes of expanding volume. If that relationship were successful, Heineken might then take an equity stake or forge a joint venture, piggybacking sales of its high-priced brand with an established local brand.59 As a result, Heineken is the world’s third-largest brewer in volume, selling in more than 170 countries with a product portfolio of more than 250 brands. With brewing operations in about 70 countries and export activities all over the world, Heineken is the most international brewery group in the world.60
One common reason for establishing brand partnerships is to gain access to distribution. When Starbucks made its entry into the India market, it entered into a joint venture with the India’s conglomerate Tata. Tata Starbucks Ltd. is a 50:50 joint venture company, co-owned by both Tata Global Beverages and Starbucks Corporation, that jointly owns and operates Starbucks outlets in India. This is one example of how involving a local partner (Tata) helped Starbucks use their partner’s extensive distribution expertise and knowledge to enter into the India market.61
Another goal of partnerships could be to leverage the partner’s equity and associations to establish brand presence in a foreign market. For example, Under Armour replaced Puma in supplying footwear and equipment to Tottenam Hotspur, which is a well-known professional football club based in North London. This was launched in 2012 as a five-year campaign and helped Under Armour gain immediate brand recognition.
Companies are sometimes legally required to partner with a local company, as in many Middle Eastern countries, or when entering certain markets, such as insurance and telecoms in India. In other cases, companies elect to establish a joint venture with a corporate partner as a fast and convenient way to enter complex foreign markets. Joint ventures have been popu- lar in Japan, where convoluted distribution systems, tightly knit supplier relationships, and
TATA Global Beverages and Starbucks Corporation formed a joint venture called
TATA-Starbucks Private Limited to own and operate Starbucks retail outlets in India.
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568 PART V • GROWING AND SUSTAINING BRAND EQUITY
close business–government cooperation have long encouraged foreign companies to link up with knowledgeable local partners.62 Sometimes, the mode of entry could involve a merger.
As these examples illustrate, different entry strategies have been adopted by different firms, by the same firm in different countries, or even in combination by one firm in the same country. Entry strategies can also evolve over time. Branding Brief 15-4 describes how global brand powerhouse Nestlé has entered new markets.
6. Balance Standardization and Customization
As we discussed earlier, one implication of similarities and differences across international markets is that marketers need to blend local and global elements in their marketing programs. The challenge, of course, is to get the right balance—to know which elements to customize or adapt and which to standardize. Some of the factors often suggested in favor of a more standardized global marketing program include the following:
• Common customer needs • Global customers and channels • Favorable trade policies and common regulations • Compatible technical standards • Transferable marketing skills
For about 15 years, starting in 1984, Nestlé spent more than $30
billion on acquisitions in different countries, including such major
brands as Carnation dairy (and other) products (United States),
Perrier (France) and San Pellegrino (Italy) mineral water, Stouffer’s
frozen foods (United States), Rowntree confectionery (United King-
dom), Ralston Purina pet food (United States), and Buitoni-Perugina
pasta and chocolate (Italy). Thus, major acquisitions yielded valu-
able economies of scale to Nestlé in developed markets.
In less-developed markets, however, the company adopted
a different strategy. Its entry strategy there was to manipulate
ingredients or processing technology for local conditions and then
apply the appropriate brand name—existing brands like Nescafé
coffee, in some cases, and new brands, such as Bear brand con-
densed milk in Asia, in others. Nestlé strove to get into markets
first and was patient; it negotiated for more than a decade to
enter China. To limit risks and simplify its efforts in new markets,
the company attacked with a handful of labels selected from a
set of strategic brand groups. Then, it concentrated its advertising
and marketing money on just two or three brands.
Nestlé attempts to balance global and local control in man-
aging its brands. Some decisions, such as branding, follow strict
corporate guidelines. The company has six strategic corporate
brands—Nestlé, Nescafé, Nestea, Maggi, Buitoni, and Purina.
There are 70 different strategic international brands, includ-
ing Nesquik line of chocolate milk products, as well as product
brands Kit Kat, Friskies, and Perrier. There are 83 strategic regional
brands, including Aquarel and Contrex. Finally, there are a host
of local brands that are only important to particular countries.
Their portfolio strategy is one that has a strong focus on nutrition,
health, and wellness.
Nestlé had used a decentralized management approach, in
which most decisions—apart from decisions about the worldwide
and corporate brands—were primarily made by the local manag-
ers. In 1997, following many acquisitions, a new CEO determined
that Nestlé needed more formal central and regional control.
The company consolidated factory management by region and
combined oversight of similar products into strategic business
units. Still, local managers retained the decision-making power
necessary to adapt products to local tastes. For example, Nestlé
continued to make 200 different varieties of its Nescafé instant
coffee, each tuned to local palates.
Nestlé’s more centralized management approach enabled
the company to focus on growing its core brands at each level.
From 1999 to 2003, organic growth (excluding acquisitions) was
5.1 percent, almost double competitor Unilever’s organic growth
rate of 2.7 percent. The rest of the decade saw Nestlé enjoy even
more above-average market performance. Despite tough eco-
nomic conditions, the company experienced organic growth of
approximately 4.2 percent in 2015.
Sources: Carla Rapoport, “Nestlé’s Brand Building Machine,” Fortune, September 19, 1994, 147–156; The Economist, “Nestle: Daring, Defy- ing, To Grow,” August 5, 2004, https://www.economist.com/special- report/2004/08/05/daring-defying-to-grow, accessed November 25, 2018; Laura MacInnis, “Nestlé Outshines Peers, Expects Stronger 2010,” Reuters, February 19, 2010, https://uk.reuters.com/article/us-nestle/nestle- outshines-peers-expects-stronger-2010-idUSTRE61I1MK20100219, accessed November 25, 2018; Nestle Press Release, “Full Year 2011: 7.5% Organic Growth, +60 Basis Points Margin Improvement,” February 16, 2012, https://www.nestle.com/media/pressreleases/allpressreleases/full- year-results-2011, accessed November 25, 2018; Jean-Nöel Kapferer, The New Strategic Brand Management: Advanced Insights and Strate- gic Thinking, 5th ed. (London: Kogan-Page, 2012); www.nestle.com/ asset-library/documents/library/documents/annual_reports/2015-annual- review-en.pdf; Corinne Gretler, “Nestle Sales Beat Estimates on Coffee as Competition Heats Up,” Bloomberg Businessweek, April 14, 2016, Nestle Press Release, “Nestle Nine-Month Sales: 3.3% Organic Growth, 2.5% Real Internal Growth | Full-Year Outlook: Organic Growth Around 3.5% with Margin Improvement,” October 20, 2016, www.nestle.com/media/ pressreleases/allpressreleases/nine-month-sales-2016.
BRANDING BRIEF 15-4
Managing Global Nestlé Brands
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 569
What types of products are likely to sell through standardized global marketing pro- grams? The following are likely candidates for global campaigns that retain a similar market- ing strategy worldwide:
1. High-technology products with strong functional images: Examples are computers, watches, digital cameras, and automobiles.
2. High-image products with strong associations to fashionability, sensuality, wealth,
or status: Examples are cosmetics, clothes, jewelry, and liquor. 3. Services and business-to-business products that emphasize corporate images in their
global marketing campaigns: Examples are airlines and banks. 4. Retailers that sell to upper-class individuals or that specialize in a salient but unful-
filled need: By offering a wide variety of toys at affordable prices, Toys“R”Us trans- formed the European toy market, getting Europeans to buy toys for children at any time of the year, not just Christmas, and forcing competitors to level prices across countries.63
5. Brands positioned primarily on the basis of their country of origin: An example is Australia’s Foster’s beer, which ran the “How to Speak Australian” ad campaign for years in the United States.
6. Products that do not need customization or other special products to be able to func-
tion properly: ITT Corporation found that stand-alone products such as heart pacemakers could easily be sold the same way worldwide, but that integrated products such as tele- communications equipment have to be tailored to function within local phone systems.64
7. Balance Global and Local Control
Building brand equity in a global context must be a carefully designed and implemented process. A key decision in developing a global marketing program is choosing the most appropriate organizational structure for managing global brands. In general, there are three main approaches to organizing for a global marketing effort:
1. Centralization at home office or headquarters 2. Decentralization of decision making to local foreign markets 3. Some combination of centralization and decentralization.
In general, firms tend to adopt a combination of centralization and decentralization to better balance local adaptation and global standardization.65 Organizationally, Kimberly- Clark created mechanisms which facilitated information sharing across regions, including the creation of a global marketing Web site which provides information about best practices within the organization across various regions. Further, they also instituted a Global Market- ing University which brought together executives from various regions and was also a method to enhance sharing of knowledge and best practice information. The overall approach was to provide autonomy to subsidiaries while at the same time utilizing centralized approaches to strengthen brand consistency.
In a similar approach to Kimberly-Clark, Lexus also overhauled its global marketing approach.66 Its NX compact crossover and RC sporty coupe were launched using a new uni- fied global approach. Previously, ad and brand messages were developed separately in each country. For the NX and RC launches, however, brand positioning was developed jointly by global marketers to ensure consistency of theme and message. The shared strategy and creative executions also resulted in significant efficiencies. Lexus U.S. sales results rose 19 percent in 2014 and exceeded BMW and Mercedes, despite lagging behind these rivals earlier in the year.
Some firms such as GE, Intel, and AstraZeneca have adopted a T-shaped country organi- zation that localizes customer-facing operations to allow for fast, detailed marketing actions while at the same distributing back-end activities (manufacturing, product development, R&D) across countries.67 Cost and revenue should be the primary considerations in decid- ing which elements of the marketing program will be adapted for which country.
Many global companies divide their markets into five or so regions—for example, Europe, Asia, Latin America, North America, and Africa/Middle East. A key theme is the need to balance global and local control. Coca-Cola, for example, distinguishes between local marketing activities that would appear to dilute brand equity and those that are not as effective as desired. Headquarters would stop the first from occurring but would not stop the latter, leaving the activity’s appropriateness to the local manager’s judgment but also holding
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570 PART V • GROWING AND SUSTAINING BRAND EQUITY
him or her responsible for its success. Similarly, Levi Strauss & Co. has balanced global and local control with a “thermometer” model. Marketing elements below the “freezing point” are fixed: “brand soul” (akin to brand essence or mantra) and logos are standardized worldwide. Above the freezing point, product quality, pricing, advertising, distribution, and promotions are all fluid, meaning each international division can handle the marketing mix elements in any way that it feels is appropriate for its region.
8. Establish Operable Guidelines
Brand definitions and guidelines must be established, communicated, and properly enforced so marketers in different regions have a good understanding of what they are and are not expected to do. The goal is for everyone within the organization to understand the brand’s meaning and be able to translate it to satisfy local consumer preferences. Brand definition and communication often revolve around two related issues. First, some sort of document, such as a brand charter or a global brand positioning statement document, should detail what the brand is and what it is not. Second, the product line should reflect only those products consistent with the brand definition
As an example of deriving product strategy from a brand definition, consider Disney. Everyone at the company is exposed to the Disney brand mantra, “fun family entertainment” (see Branding Brief 2-4). To establish global guidelines, Disney’s centralized marketing group worked with members of the consumer products group for months to assign virtually every possible product to one of three categories:
• Acceptable to license without permission (such as T-shirts) • Not permissible to ever license (such as toilet paper) • Requires validation from headquarters to license (about 20 categories, including air
fresheners)
Finally, for all this planning to work, there must be effective lines of communication. Coca-Cola stresses the importance of having people on the ground who can effectively man- age the brand in concert with headquarters in Atlanta. To facilitate coordination, much train- ing occurs at the company’s headquarters; a sophisticated communication system is in place; and global databases are available. The goal of this heavily integrated information system is to facilitate the local manager’s ability to tap into what constitutes “relevance” in any particular country and then communicate those ideals to headquarters.
9. Implement a Global Brand Equity Measurement System
As the guidelines in Chapter 9 indicate, a global brand equity measurement system is a set of research procedures designed to provide timely, accurate, and actionable information for marketers on brands, so they can make the best possible tactical decisions in the short run and strategic decisions in the long run in all relevant markets. As part of this system, a global brand equity management system defines the brand equity charter in a global context, outlin- ing how to interpret the brand positioning and resulting marketing program in different mar- kets, as suggested by the previous global branding commandment.68 With the global brand strategy template in place, brand tracking can assess progress, especially in terms of creating the desired positioning, eliciting the proper responses, and developing brand resonance.
LEVI STRAUSS
Levi Strauss & Co. continually monitors its brand equity among consumers in most of its key markets around
the world. The company developed “Brand Value Propositions” for each of its major brands. These are a set
of enduring strategies that define each brand and differentiate it from competition. They succinctly list the
brand’s global positioning (including frame of reference and point-of-difference), its global character, and
its global “building blocks” or desired state regarding consumer wants and needs. The Brand Value Proposi-
tions drive all brand strategies and actions and provide a globally consistent platform for regionally relevant
product and marketing execution. In tracking each brand’s equity via ongoing consumer surveys, Levi Strauss
& Co. monitors the consumer’s perceptions and interactions with its brands; the impact that its clothes,
retail distribution, marketing, and other touchpoints are having on consumers; and whether the results of
its efforts are in line with its Brand Value Propositions. Through these efforts, Levi Strauss & Co. is able to
tailor brand strategies to ensure each brand is meeting consumer needs while being true to its essence.
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 571
FIGURE 15-4
Self-Evaluation
Ratings for the
10 Commandments of
Global Branding
1. Understand similarities and differences in the global branding landscape. • Have you tried to find as many commonalities as possible across markets? • Have you identified what is unique about different markets? • Have you examined all aspects of the marketing environment (e.g.,
stages of brand development, consumer behavior, marketing infrastructure, competitive activity, legal restrictions)?
• Have you reconciled these similarities and differences in the most cost-effective and brand-building manner possible?
2. Do not take shortcuts in brand building. • Have you ensured that the brand is being built from the bottom up
strategically by creating brand awareness first before crafting the brand image?
• Have you ensured that the brand is being built from the bottom up tactically by determining the appropriate marketing programs and activity for the brand in each market given the particular strategic goals?
3. Establish marketing infrastructure. • Have you created the appropriate marketing infrastructure—in terms of
manufacturing, distribution, and logistics—from scratch, if necessary? • Have you adapted to capitalize on the existing marketing infrastructure
in other countries? 4. Embrace integrated marketing communications. • Have you considered nontraditional forms of communication that go
beyond conventional advertising? • Have you ensured that all communications are integrated in each market
and are consistent with the brand’s desired positioning and heritage? 5. Cultivate brand partnerships. • Have you formed partnerships with global and local partners to improve
possible deficiencies in your marketing programs? • Have you ensured that all partnerships avoid compromising the brand
promise and do not harm brand equity in any way? 6. Balance standardization and customization. • Have you been careful to retain elements of marketing programs that are
relevant and add value to the brand across all markets? • Have you sought to find local adaptations and additions that
complement and supplement these global elements to achieve greater local appeal?
7. Balance global and local control. • Have you established clear managerial guidelines as to principles and
actions that all global managers must adhere to? • Have you carefully delineated the areas in which local managers are
given discretion and autonomy in their decision making? 8. Establish operable guidelines. • Have you explicated brand management guidelines in a clear and concise
fashion in a document to be used by all global marketers? • Have you established means of seamless communication between
headquarters and local and regional marketing organizations? 9. Implement a global brand equity measurement system. • Do you conduct brand audits when appropriate in overseas markets? • Have you devised a brand tracking system to provide timely, accurate,
and actionable information on brands in relevant markets? • Have you established a global brand equity management system with
brand equity charters, brand equity reports, and brand equity overseers? 10. Leverage brand elements. • Have you checked the relevance of brand elements in global markets? • Have you established visual brand identities that transfer across market
boundaries?
10. Leverage Brand Elements
Proper design and implementation of brand elements can often be critical to the successful building of global brand equity. As Figure 15-2 showed, a number of brands have encountered resistance because of difficulty in translating their name, packaging, slogans, or other brand elements to another culture. In general, nonverbal brand elements such as logos, symbols, and characters are more likely to directly transfer well—at least as long as their meaning is visually clear—than verbal brand elements that may need to be translated into another
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572 PART V • GROWING AND SUSTAINING BRAND EQUITY
REVIEW
Increasingly, marketers must properly define and implement a global branding strategy. Some advantages of a global marketing program are economies of scale in production and distribution, lower marketing costs, communication of power and scope, consistency in brand image, an ability to leverage good ideas quickly and efficiently, and uniformity of marketing practices, and thus, greater competitiveness. The more standardized the marketing program, in general, the more the firm can actually realize these different advantages.
At the same time, the primary disadvantages of a standardized global marketing program are that it may ignore important differences across countries in various areas: consumer needs, wants, and usage patterns for products; consumer response to marketing mix elements; product development and the competitive environment; the legal environment; marketing institutions; and administrative procedures.
In developing a global marketing program, marketers attempt to obtain as many of these advantages as possible while minimizing any possible disadvantages. Building global customer- based brand equity means creating brand awareness and a positive brand image in each country in which the brand is sold.
Marketers are blending global objectives with local or regional concerns. The means by which brand equity is built may differ from country to country, or the actual sources of brand equity themselves may vary across countries in terms of specific attribute or benefit associa- tions. Nevertheless, there must be sufficient levels of brand awareness and strong, favorable, and unique brand associations in each country in which the brand is sold to provide sources of brand equity.
Some of the biggest differences in global marketing occur between developed and developing or emerging markets. Because of the extremely low incomes and differences in consumer behavior in developing markets, marketers must fundamentally rethink every aspect of their marketing program.
In general, in entering a new market of any kind, it is necessary to identify differences in consumer behavior (how consumers purchase and use products and what they know and feel about brands) and adjust the branding program accordingly (through the choice of brand elements, nature of the supporting marketing program, and leverage of secondary associations).
Figure 15-4 lists the “Ten Commandments of Global Branding” along with a series of ques- tions that can be asked to help guide effective global brand management.
language. Nonverbal brand elements are more likely to be helpful in creating brand awareness than brand image, however, which may require more explicit meaning and direct statements. If the meaning of a brand element is visually clear, it can be an invaluable source of brand equity worldwide. Even Web sites dedicated to brands can be an important source of brand equity, and standardizing some aspects of the Web site, while varying others, is an important consideration in managing a brand for a global market.
DISCUSSION QUESTIONS
1. Pick a product category. How are different leading brands targeting different geodemographic market segments? How are brands targeting different ethnic groups with their advertising?
2. Pick a car brand. How is this brand targeting different demographic market segments? 3. Pick a product category. Consider the strategies of market leaders in different countries. How
are they the same, and how are they different? 4. Identify how consumers’ usage of social media and digital marketing channels varies across
markets. How can a brand manager utilize this information to improve their brand presence in different global markets?
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CHAPTER 15 • MANAGING BRANDS OVER GEOGRAPHIC BOUNDARIES AND MARKET SEGMENTS 573
Growth at Home
China, the world’s most populous country, with more than
1.3 billion people, was essentially closed to the West during
the period from the Communist overthrow of the govern-
ment in 1949 until gradual economic reforms began in 1978,
culminating with China’s admission into the World Trade Orga-
nization in 2001. Since reforms began, China has industrial-
ized at a remarkable rate and is now the world’s second-largest
economy, a manufacturing giant boasting a record $41 billion
trade surplus in 2016.69
The statistics of China’s production are staggering. China
accounts for 25 percent of all manufacturing worldwide; further,
it produces about 80 percent of the world’s air conditioners,
70 percent of its mobile phones, and 60 percent of its shoes.70
The primary reason for China’s manufacturing prowess is its
remarkably cheap labor pool. Recently, due to labor shortages
and strikes, there has been a push to increase wages. In the
financial capital of Shanghai, which has the highest minimum
wage in China, the monthly rate increased from 1,120 yuan in
2010 to 2,190 yuan (US $327) in 2016.71 The following sec-
tions will illustrate the successes and difficulties that characterize
modern China.
A Growing Consumer Class
China’s rise to a global economic superpower enriched many of
its citizens; it has the world’s largest number of billionaires, and
nearly four million are now millionaires.72 With this newfound
wealth came an interest in consuming conspicuously, which
precipitated a windfall for foreign luxury-goods manufactur-
ers. With a rapidly expanding middle class, China went from
consuming 1 percent of the world’s luxury goods in 2001 to 20
percent in 2015, making the country the world’s largest luxury
market.73 Roughly half these luxuries are being bought on the
mainland; the other half, abroad.74 China’s vast population of
only children—called “Little Emperors” for the way many are
doted on by their parents—are expected to drive demand for
luxury goods for years to come.75
Luxury brands have flocked to China to try to cash in.
L’Oréal purchased the country’s most popular cosmetics brand,
Yue Sai, and bought bargain brand Mininurse, with an envi-
able distribution network of more than 250,000 small stores.
L’Oréal also invested in a 32,000-square-foot laboratory in
Pudong to develop products specific to the Chinese market and
containing local ingredients such as ginkgo leaf and ginseng.
One of the company’s big challenges in China was educating
consumers about the benefits of different cosmetic products.
“In other countries, women learn how to use cosmetics from
the mom,” said Paolo Gasparrini, president of L’Oréal China.
“That’s not the case in China. We have to substitute [for the]
mom.” Still, L’Oréal experienced double-digit sales increases for
11 years, approaching $2.3 billion in sales in 2015.76 L’Oréal
also effectively leveraged digital marketing strategies to cata-
pult its sales. Most Chinese consumers use mobile phones to
search for information (80 percent of Baidu’s searches take place
on mobile devices), buy products, or even get food delivered.
L’Oréal leveraged this by creating a unique app called Makeup
Genius (https://youtu.be/iSdU9jmscBg), in which women can try
on makeup products virtually and wait for the “Magic” (the
name of a L’Oréal brand) to happen.77
Despite the fortunate wealthy few, vast numbers of urban
and (especially) rural poor have been left behind. Rural workers
earn half the average salary of urban factory workers, often not
China’s Global Brand Ambitions
BRAND FOCUS 15.0
Lenovo, a brand which originated in China, is the largest PC manufacturer in terms of
market share worldwide.
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574 PART V • GROWING AND SUSTAINING BRAND EQUITY
enough to send their children to school. Consequently, rural
Chinese are migrating to cities in search of better-paying jobs,
increasing urban congestion and unemployment rates. By 2016,
an estimated 55 percent of the population lived in cities, aggra-
vating these problems.78 Despite the concerns generated by this
wealth polarization, China’s consumer class still harbors enough
purchasing power to attract foreign brands, as the next section
describes.
A number of foreign brands have entered the Chinese mar-
ket. Popular U.S. brands include General Motors’ automobile
brands such as Chevrolet, Buick, and Cadillac. GM China (co-
owned by Shanghai Automotive Industry Corp) had 15 percent
market share and sold more than 3.6 million cars in China.79
Another dominant brand in China is Apple with 83 percent mar-
ket share of the tablet category. Starbucks currently has 2,300
stores in China but is expected to increase to more than 5,000
stores by 2021. In the words of Howard Schultz, ex-CEO and
chairman of Starbucks,“ There’s no doubt at some point China
will exceed the U.S.”80 The next section highlights the strength
of one Chinese brand, Lenovo, which effectively competes with
and beats foreign competition.
Lenovo in China
If you were to visit Zhongguancun—the electronics district in
Beijing—you would find a Lenovo store at every turn. It is no won-
der that the ubiquitous Lenovo (with more than 100 stores in this
electronics district) is the number one PC seller in China, with a
network of more than 15,000 stores, an international workforce
of 27,000 employees (including 4,000 engineers worldwide as of
2017), 10 international laboratories, and a global presence in more
than 160 countries. Worldwide, Lenovo is the largest PC manu-
facturer with nearly 19 percent of the worldwide market share. It
recently introduced a gaming laptop (called Legion) in countries
like Korea, Taiwan, Thailand, and India where there is a large con-
sumer demand for gaming. In addition to PCs, laptops (Think-
Pad), and phones (Motorola smartphones), it also has a series of
products such as the VR headset and Lenovo Smart Assistant that
show that it has diversified into related categories. The Lenovo
Smart Assistant (expected to be sold for $129 and launched in
2017) is part of a line of new products called Smart Home. Overall,
Lenovo’s product portfolio demonstrates its readiness to maintain
its leadership position in PCs and other electronics.
Founder Liu Chuanzhi (Chairman Liu) in 1984 started the Chi-
nese Academy of Sciences Computer Technology Research Institute
New Technology Development Co., which formed a partnership
with AST. The company was reorganized in 1990, and by 1997,
Lenovo was the top selling PC maker in China. In 2005, Lenovo
paid $1.75 billion for IBM’s PC business, an acquisition which made
Liu a national hero. Speed of decision-making is key to the com-
pany’s success. “Fu pan” (which translates to replaying the chess
board), or the emphasis on examining every strategic move with a
view toward improving it, is a key to their success. They also exam-
ine every strategic move of their competitors such as Dell and HP in
an effort to improve their success. Their global approach includes
meetings of top 100 executives from various countries.
Their ad campaign was built around the slogan, “For Those
Who Do,” and features computers as “do machines” that
empower people to use them in different ways. Various markets
featured different executions of the same theme. For Japan, the
advertising campaign turned laptop into a Japanese train ter-
minal, while in Indonesia, billboards featured a Lenovo-branded
climbing wall that “doers” could use.
Overall, Lenovo approaches its global market with a great
deal of care and caution, identifying the right markets for its prod-
ucts and deploying its global advertising strategy with a mix of
local executions. This “protect and attack” approach has yielded
rich rewards and will likely secure Lenovo’s future.
Sources: http://economictimes.indiatimes.com/magazines/panache/ motorola; Gartner, Inc., “Gartner Says Worldwide PC Shipments Declined 9.6 Percent in First Quarter of 2016,” April 11, 2016, www.gartner.com/newsroom/ id/3280626; Patrick Moorhead, “Lenovo Enters the Smart Home, Gets Aggressive in Gaming, AR and Premium X1 Line at CES 2017,” Forbes Maga- zine, January 3, 2017, www.forbes.com/sites/partrickmoorhead/2017/01/03/ lenovo-enters-the-smart-home-gets-aggressive-in-gaming-ar-and-premium- x1-line-at-ces2017/#6f93f23c2471; Chuck Salter, “Protect and Attack: Lenovo’s New Strategy,” Fast Company, November 22, 2011, Issue 161, pp. 116–155, https://www.fastcompany.com/1793529/protect-and-attack-
lenovos-new-strategy, accessed November 25, 2018.
NOTES
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77. Olivier Verot “The Digital Strategy of L’Oreal in China,” July 21, 2016, http://marketingtochina.com/powerful- digital-strategy-loreal/, accessed January 9, 2017.
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579
Learning Objectives
After reading this chapter, you should be able to
1. Understand the six future brand imperatives.
2. Identify the ten criteria for the brand report card.
3. Outline the seven deadly sins of brand management.
Closing Observations
16 PART V I C L O S I N G P E R S P E C T I V E S
Strategic brand
management needs
to be a well thought
out, carefully
conducted process,
helped by tools
such as The Brand
Report Card.
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580 PART VI • CLOSING PERSPECTIVES
STRATEGIC BRAND MANAGEMENT GUIDELINES
Summary of Customer-Based Brand Equity Framework Strategic brand management includes the design and implementation of marketing programs
and activities to build, measure, and manage brand equity. Before we review some guidelines for
strategic brand management, let’s briefly summarize—one last time!— the customer-based brand
equity framework.
The rationale behind the framework is to recognize the importance of the customer in the
creation and management of brand equity. As one top marketing executive put it, “Consumers own
brands, and your brand is what consumers will permit you to have.” Consistent with this view, we
defined customer-based brand equity in Chapter 2 as the differential effect that consumers’ brand
knowledge has on their response to the marketing of that brand. A brand has positive customer-
based brand equity if customers react more favorably to a product and the way it is marketed when
the brand is identified than when the product carries a fictitious name or no name.
The basic premise of customer-based brand equity is thus that the power of a brand lies in the
minds and hearts of consumers, and what they have experienced, learned, and felt about the brand
over time. More formally, we described brand knowledge in Chapter 2 in terms of an associative
network memory model, in which the brand is like a node in memory with a variety of different
types of associations linked to it. As summarized in Figure 16-1, brand knowledge has two com-
ponents: brand awareness and brand image.
Brand awareness is related to the strength of the brand node or trace in memory, as reflected
by consumers’ ability to recall or recognize the brand under different conditions. Brand awareness
has depth and breadth. Depth describes the likelihood that consumers can recognize or recall the
brand. Breadth describes the variety of purchase and consumption situations in which the brand
comes to mind.
This final chapter provides some closing observations concerning strategic brand management.
First, we will briefly review the customer-based brand equity (CBBE) framework. Next, we
highlight managerial guidelines and key themes that emerged in previous chapters and summarize
some success factors for branding. Toward that goal, we will present the brand report card to help
brand managers understand and rate their brands’ performance on key branding dimensions, as
well as the seven deadly sins of brand management. We conclude by considering specific applica-
tions of branding in different types of industries in Brand Focus 16.0.
PREVIEW
FIGURE 16-1
Summary of Brand
Knowledge
Attributes
Benefits
Attitudes
Brand awareness
Brand image
Price
User and usage imagery
Brand personality
Feelings and experiences
Non-product- related
Product-related
Functional
Experiential
Symbolic
Brand recognition
Brand recall
Types of brand association
Favorability of brand associations
Strength of brand associations
Uniqueness of brand associations
Brand knowledge
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CHAPTER 16 • CLOSING OBSERVATIONS 581
Brand image is consumer perceptions of and preferences for a brand, measured by the various
types of brand associations held in memory. Although brand associations come in many forms,
we can usefully distinguish between product-related or performance-related versus non-product-
related or imagery-related attributes. A useful distinction with benefits is between functional
(intrinsic product advantages), symbolic (extrinsic product advantages), or experiential (product
consumption advantages) benefits. Some of these attribute and benefit associations may be more
rational or cognitive in nature; others, more emotional or affective.
Sources of Brand Equity. Customer-based brand equity occurs when the consumer has a high
level of awareness and familiarity with the brand and holds some strong, favorable, and unique
brand associations in memory. In some cases, brand awareness alone is sufficient to result in more
favorable consumer response—for example, in low-involvement decision settings in which con-
sumers lack motivation or ability and are willing to base their choices merely on familiar brands.
In other cases, the strength, favorability, and uniqueness of the brand associations help determine
the differential response making up the brand equity. The dimensions of brand associations depend
on three factors:
1. Strength: The strength of a brand association is a function of both the amount, or quantity, of
processing that information initially receives, and the nature, or quality, of the processing. The
more deeply a person thinks about brand information and relates it to existing brand knowl-
edge, the stronger the resulting brand associations. The personal relevance of the information
and the consistency with which the consumer sees it over time both strengthen the association.
2. Favorability: Favorable associations for a brand are those that are desirable to customers,
successfully delivered by the product, and conveyed by the supporting marketing program.
They can relate to the product or to intangible, non-product-related aspects like usage or
user imagery. However, consumers will not deem all brand associations important or view
them all favorably, nor will they value them equally across different purchase or consump-
tion situations.
3. Uniqueness: To create the differential response that leads to customer-based brand equity,
marketers need to associate unique, meaningful points-of-difference (PODs) to the brand
that provide a competitive advantage and a reason why consumers should buy it. For other
brand associations, however, being comparable or roughly equal in favorability to compet-
ing associations might be enough. The brand’s associations function as points-of-parity
in consumers’ minds to establish category membership and negate potential points-of-
difference for competitors. In other words, they are designed to provide no reason why not
to choose the brand.
Figure 16-2 summarizes these broad conceptual guidelines for creating desired brand knowl-
edge structures.
FIGURE 16-2
Determinants of Desired
Brand Knowledge
Structures
1. Depth of brand awareness: Determined by the ease of brand recognition and recall.
2. Breadth of brand awareness: Determined by the number of purchase and consumption situations for which the brand comes to mind.
3. Strong brand associations: Created by marketing programs that convey relevant information to consumers in a consistent fashion at any one point in time, as well as over time.
4. Favorable brand associations: Created when marketing programs effectively deliver product-related and non-product-related benefits that are desired by consumers.
5. Unique brand associations: Strong and favorable associations create points of difference that distinguish the brand from other brands. Brand associations that are not unique, however, can create valuable points-of-parity to establish necessary category associations or to neutralize competitive points-of-difference.
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582 PART VI • CLOSING PERSPECTIVES
Outcomes of Brand Equity. Assuming we can create a positive brand image, with marketing
programs that register the brand in memory and link it to strong, favorable, and unique associa-
tions, we can realize a number of benefits for the brand, as follows:
• Improved perceptions of product performance
• Greater customer loyalty
• Less vulnerability to competitive marketing actions
• Less vulnerability to marketing crises
• Higher margins
• More inelastic consumer response to price increases
• More elastic consumer response to price decreases
• Greater trade cooperation and support
• Increased marketing communication effectiveness
• Possible licensing opportunities
• Additional brand extension opportunities
• Improved attraction and retention of employees.
Tactical Guidelines Chapter 1 highlighted the chief ingredients of the CBBE framework in terms of how to build,
measure, and manage brand equity. The specific themes and recommendations we developed in
subsequent chapters are as follows.
Building Brand Equity. Tactically, we can build brand equity in three major ways: (1) through
the initial choice of the brand elements making up the brand, (2) through marketing activities and
the design of the marketing program, and (3) through the leverage of secondary associations that
link the brand to other entities like a company, geographic region, channel of distribution, other
brand, person, or event. Guidelines emerged in Chapters 4 to 7 for each of these approaches, as
summarized in Figures 16-3 and 16-4.
Developing Marketing Programs
Choosing Brand Elements
Brand-Building Tools and Objectives Consumer Knowledge Effects Branding Benefits
Brand name Logo Symbol Character Packaging Slogan
Memorability Meaningfulness Appeal Transferability Adaptability Protectability
Product Price Distribution channels Communications
Tangible and intangible benefits Value perceptions Integrate “push” and “pull” Mix and match options
Greater loyalty
Less vulnerability to competitive marketing actions and crises
Larger margins
More elastic response to price decreases
More inelastic response to price increases
Greater trade cooperation and support
Increased marketing communication efficiency and effectiveness
Possible licensing opportunities
More favorable brand extension evaluations
Possible OutcomesBrand Awareness
Brand Associations
Recall Recognition
Purchase Consumption
Relevant Consistent
Desirable Deliverable
Points-of-parity Points-of-difference
Strong
Favorable
Unique
Depth
Breadth
Leverage of Secondary Associations
Company Country of origin Channel of distribution Other brands Endorser Event
Awareness Meaningfulness Transferability
FIGURE 16-3 Building Customer-Based Brand Equity
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CHAPTER 16 • CLOSING OBSERVATIONS 583
Themes. A dominant theme across many of these various ways to build brand equity is the
importance of complementarity and consistency. Ensuring complementarity means choosing a
variety of brand elements and supporting marketing activities so that the potential contribution
to brand equity of one compensates for the shortcomings of others. For example, some brand el-
ements may primarily enhance awareness through a memorable brand logo, whereas others may
facilitate the linkage of brand associations with a meaningful brand name or a clever slogan.
Similarly, an ad campaign might create a certain point-of-difference association, whereas a retail
promotion creates a vital point-of-parity association. Finally, we can link certain other entities
to the brand to leverage secondary associations, provide other sources of brand equity, or further
reinforce existing associations.
Thus, it is important to put into place a varied set of brand elements and marketing activities
and programs in order to create the desired level of awareness and type of image that leads to
brand equity. At the same time, a high degree of consistency across these elements helps create the
highest level of awareness and the strongest and most favorable associations possible. Consistency
ensures that diverse brand and marketing mix elements share a common core meaning, perhaps
by conveying the same information, such as a benefit association that is reinforced by a highly
integrated, well-branded marketing communications program.
Measuring Brand Equity. We can gauge brand equity indirectly by measuring its potential
sources, and directly by measuring its possible outcomes. This means measuring aspects of
brand awareness and brand image leading to the differential customer response that creates
brand equity: breadth and depth of brand awareness; the strength, favorability, and uniqueness
of brand associations; the valence of brand responses; and the nature of brand relationships.
Measuring outcomes requires us to estimate the various benefits from creating these sources
of brand equity. The brand value chain depicts this relationship more broadly by considering
how marketing activity affects these sources of brand equity, and how the resulting outcomes
influence the investment community, as well as how various filters or multipliers intervene
between the stages.
Marketers need to properly design and implement a brand equity measurement system,
a set of research procedures designed to provide timely, accurate, and actionable information
for marketers about their brands. Implementing a brand equity measurement system has three
FIGURE 16-4
Guidelines for Building
Brand Equity
1. Mix and match brand elements—brand names, logos, symbols, characters, slogans, jingles, and packages—by choosing different brand elements to achieve different objectives and by designing brand elements to be as mutually reinforcing as possible.
2. Ensure a high level of perceived quality and create a rich brand image by linking tangible and intangible product-related and non-product-related associations to the brand.
3. Adopt value-based pricing strategies to set prices and guide discount pricing policies over time that reflect consumers’ perceptions of value and willingness to pay a premium.
4. Consider a range of direct and indirect distribution options and blend brand-building push strategies for retailers and other channel members with brand-building pull strategies for consumers.
5. Mix marketing communication options by choosing a broad set of communication options based on their differential ability to affect brand awareness and create, maintain, or strengthen favorable and unique brand associations. Match marketing communication options by ensuring consistency and directly reinforcing some communication options with other communication options. Effectively leverage the power of digital marketing and social media channels to connect with your customers.
6. Leverage secondary associations to compensate for otherwise missing dimensions of the marketing program by linking the brand to other entities such as companies, channels of distribution, other brands, characters, spokespeople or other endorsers, or events that reinforce and augment the brand image.
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584 PART VI • CLOSING PERSPECTIVES
steps: (1) conducting brand audits, (2) designing brand tracking studies, and (3) establishing a
brand equity management system.
Guidelines for each of these areas are summarized in Figure 16-5.
Themes. The dominant theme in measuring brand equity is the need to employ a full com-
plement of research techniques and processes that capture as much as possible the richness
and complexity of brand equity. We need multiple techniques and measures to tap into all
the various sources and outcomes of brand equity, to help interpret brand equity research,
and to ensure that we get actionable information at the right time. With social media listen-
ing growing in importance, some of the traditional brand audit and tracking activities could
employ social media listening and other digital research tools as a substitute or complement
to existing efforts.
Managing Brand Equity. Finally, managing brand equity requires taking a broad, long-term
perspective of brands. A broad view of brand equity is critically important, especially when firms
are selling a wide variety of products and brands in multiple markets. Here, brand hierarchies
must define common and distinct brand elements among various nested products. New product
and brand extension strategies also must ensure that we have optimal brand and product portfolios.
Finally, we need to manage these brands and products effectively over geographic boundaries and
target market segments by creating brand awareness and a positive brand image in each market
in which the brand is sold.
We need a long-term view of brand equity because changes in current marketing programs
and activities and in the marketing environment can affect consumers’ brand knowledge struc-
tures, and thus, their response to future marketing programs and activities. Managing brands
over time requires reinforcing the brand meaning and adjusting the branding program as needed.
For brands whose equity has eroded over time, we rely on a number of revitalization strategies.
Figures 16-6 and 16-7 highlight some important guidelines for managing brand equity.
Themes. The dominant themes in managing brand equity are the importance of maintaining
balance in marketing activities and of making moderate levels of change in the marketing pro-
gram over time. Without some modifications of the marketing program, a brand runs the risk of
becoming obsolete or irrelevant to consumers. At the same time, dramatic shifts back and forth
FIGURE 16-5
Guidelines for Measuring
Brand Equity
1. Formalize the firm’s view of brand equity into a document, the brand equity charter, that provides relevant branding guidelines to marketing managers.
2. Conduct brand inventories to profile how all of the products sold by a company are branded and marketed, and conduct brand exploratories to understand what consumers think and feel about a brand as part of periodic brand audits to assess the health of brands, understand their sources of brand equity, and suggest ways to improve and leverage that equity.
3. Conduct consumer tracking studies on a routine basis to provide current information as to how brands are performing with respect to the key sources and outcomes of brand equity as identified by the brand audit.
4. Assemble results of tracking survey and other relevant outcome measures into a brand equity report to be distributed on a regular basis to provide descriptive information as to what is happening with a brand as well as diagnostic information as to why it is happening.
5. Establish a person or department to oversee the implementation of the brand equity charter and brand equity reports to make sure that, as much as possible, product and marketing actions across divisions and geographic boundaries are done in a way that reflects the spirit of the charter and the substance of the report to maximize the long-term equity of the brand.
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CHAPTER 16 • CLOSING OBSERVATIONS 585
FIGURE 16-6
Managing Customer-
Based Brand Equity
1. Define Brand Hierarchy
A. Principle of Simplicity: Employ as few levels as possible. B. Principle of Clarity: Logic and relationship of all brand elements employed must be obvious and transparent. C. Principle of Relevance: Create abstract associations relevant to as many products as possible. D. Principle of Differentiation: Differentiate individual products and brands. E. Principle of Growth: Investments in market penetration or expansion vs. product development should be made according to ROI opportunities. F. Principle of Survival: Brand extensions must achieve brand equity in their categories. G. Principle of Synergy: Brand extensions should enhance the equity of the parent brand. H. Principle of Prominence: Adjust prominence to affect perceptions of product distance. I. Principle of Commonality: Link common products through shared brand elements.
2. Define Brand–Product Matrix A. Brand Extensions: Establish new equity and enhance existing equity. B. Brand Portfolio: Maximize coverage and minimize overlap.
3. Enhance Brand Equity over Time A. Brand Reinforcement: Innovation in product design, manufacturing, and merchandising. Relevance in user and usage imagery. B. Brand Revitalization: “Back to basics” strategy. “Reinvention” strategy.
4. Establish Brand Equity over Market Segments A. Identify Differences in Consumer Behavior: How they purchase and use products. What they know and feel about different brands. B. Adjust Branding Program: Choice of brand elements. Nature of supporting marketing program. Leverage of secondary associations.
FIGURE 16-7
Guidelines for Managing
Brand Equity
1. Define the brand hierarchy in terms of the number of levels to use and the relative prominence that brands at different levels will receive when combined to brand any one product.
2. Create brand associations relevant to as many brands nested at the level below in the hierarchy as possible but sharply differentiate brands at the same level of the hierarchy.
3. Introduce brand extensions that complement the product mix of the firm, leverage parent brand associations, and enhance parent brand equity.
4. Clearly establish the roles of brands in the brand portfolio, adding, deleting, and modifying brands as necessary.
5. Reinforce brand equity over time through marketing actions that consistently convey the meaning of the brand in terms of what products the brand represents, what benefits it supplies, what needs it satisfies, and why it is superior to competitive brands.
6. Enhance brand equity over time through innovation in product design, manufacturing, and merchandising and continued relevance in user and usage imagery.
7. Identify differences in consumer behavior in various market segments, and adjust the branding program accordingly on a cost-benefit basis.
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586 PART VI • CLOSING PERSPECTIVES
in brand strategies can confuse or alienate consumers. Thus, a consistent thread of meaning—
which consumers can recognize—should run through the marketing program and reflect the key
sources of equity for the brand and its core brand associations.
WHAT MAKES A STRONG BRAND? To create a strong brand and maximize brand equity, marketing managers must:
• Understand brand meaning and market the company’s products and services in an appropri-
ate manner.
• Properly position the brand.
• Provide superior delivery of desired benefits.
• Employ a full range of complementary brand elements, supporting marketing activities, and
secondary associations.
• Embrace integrated marketing communications and communicate with a consistent voice.
• Measure consumer perceptions of value and develop a pricing strategy accordingly.
• Establish credibility and appropriate brand personality and imagery.
• Maintain innovation and relevance for the brand.
• Strategically design and implement a brand architecture strategy.
• Implement a brand equity management system to ensure that marketing actions properly
reflect the brand equity concept.
Branding Brief 16-1 provides more detail on these requirements for successful brand manage-
ment in the form of the brand report card.1
The brand report card can reveal how well you are managing
your brand. Rate your brand on a scale of 1 to 10 (1 = extremely
poor; 10 = extremely good) for each of the following character-
istics. Create a similar report card for your major competitors.
Compare and contrast the results with all the relevant participants
in the management of your brand. Doing so should help you
identify where you excel, pinpoint areas that need improvement,
and learn more about how your particular brand is configured.
Be brutally honest in answering the questions—approach them
as an outsider and from a consumer’s perspective.
Score
1. _________________ Managers understand what the brand means to consumers.
• Have you created detailed, research-driven mental maps
of your target customers?
• Have you attempted to define a brand mantra?
• Have you outlined customer-driven boundaries for brand
extensions and guidelines for marketing programs?
2. _________________ The brand is properly positioned.
• Have you established category, competitive, and correla-
tional points-of-parity?
• Have you established desirable, deliverable, and differenti-
ated points-of-difference?
3. _________________ Customers receive superior delivery of the benefits they value most.
• Have you attempted to uncover unmet consumer needs
and wants?
• Do you relentlessly focus on maximizing your customers’
product and service experiences?
4. _________________ The brand takes advantage of the full repertoire of branding and marketing activities available to build brand equity.
• Have you strategically chosen and designed your brand
name, logo, symbol, slogan packaging, signage, URL, and
other brand elements to build brand awareness and image?
• Have you implemented integrated push and pull strategies
that target intermediaries and end customers, respectively?
5. _________________ Marketing and communications efforts are seamlessly integrated (or as close to it as humanly possible). The brand communicates with one voice.
• Have you considered all the alternative ways to create
brand awareness and link brand associations?
• Have you ensured that common meaning is contained
throughout your marketing communication program?
• Have you capitalized on the unique capabilities of each
communication option?
BRANDING BRIEF 16-1
The Brand Report Card
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CHAPTER 16 • CLOSING OBSERVATIONS 587
FIGURE 16-8
Seven Deadly Sins of
Brand Management
1. Failure to fully understand the meaning of the brand
2. Failure to live up to the brand promise
3. Failure to adequately support the brand
4. Failure to be patient with the brand
5. Failure to adequately control the brand
6. Failure to properly balance consistency and change with the brand
7. Failure to understand the complexity of brand equity measurement and management
• Have you been careful to preserve important brand values
in your communications over time?
• Have you leveraged digital and social media channels
optimally to communicate your intended message to the
target audience?
• Have you utilized the capabilities of mobile marketing to
communicate with your desired target audience at a time,
place, and manner that are most appropriate?
6. _________________ The brand’s pricing strategy is based on consumer perceptions of value.
• Have you estimated the added value perceived by customers?
• Have you optimized price, cost, and quality to meet or
exceed consumer expectations?
7. _________________ The brand uses appropriate imagery to support its personality.
• Have you established credibility by ensuring that the brand
and the people behind it are seen as expert, trustworthy,
and likable?
• Have you established appropriate user and usage imagery?
• Have you crafted the right brand personality?
8. _________________ The brand is innovative and relevant.
• Have you invested in product and marketing improve-
ments that provide improved benefits and better solutions
for your customers?
• Have you stayed up-to-date and in touch with your
customers?
9. _________________ For a multiproduct, multibrand com- pany, the brand architecture is strategically sound.
• For the brand hierarchy, are associations at the highest lev-
els relevant to as many products as possible at the next
lower levels, and are brands well-differentiated at any one
level?
• For the brand portfolio, do the brands maximize mar-
ket coverage while minimizing their overlap at the same
time?
10. _________________ The company has a system in place to monitor brand equity and performance.
• Have you created a brand charter that defines the mean-
ing and equity of the brand and how it should be treated?
• Do you conduct periodic brand audits to assess the health
of your brands and to set strategic direction?
• Do you conduct routine tracking studies to evaluate current
marketing performance?
• Do you regularly distribute brand equity reports that sum-
marize all brand-relevant research and information to assist
marketing decision making?
• Have you assigned people within the organization
the responsibility of monitoring and preserving brand
equity?
On the flip side of the coin, what common branding mistakes prevent firms from creating
strong, powerful brands? The seven deadly sins of brand management include the following
(see Figure 16-8):2
1. Failure to fully understand the meaning of the brand: Given that consumers “own” brands,
it is critical to understand what they think and feel about them and then plan and implement
marketing programs accordingly. Too often, managers convince themselves of the validity of
marketing actions—for example, a new brand extension, ad campaign, or price hike—based
on a mistaken belief about what consumers know or what marketers would like them to know
about the brand. Managers often ignore the full range of associations—both tangible and
intangible—that may characterize the brand.
2. Failure to live up to the brand promise: A brand should be a promise and a commitment
to consumers, but too often, that promise is broken. A common mistake is to set brand
expectations too high and then fail to live up to them in the marketing program. By over-
promising and not delivering, a firm is worse off in many ways than if it had not set
expectations at all.
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588 PART VI • CLOSING PERSPECTIVES
3. Failure to adequately support the brand: Creating and maintaining brand knowledge
structures requires marketing investments. Too often, managers want to get something
for nothing by building brand equity without providing proper marketing support or, once
brand equity has been built, by expecting the brand to remain strong despite the lack of
further investments.
4. Failure to be patient with the brand: Brand equity must be carefully and patiently built
from the ground up. A firm foundation requires that consumers have the proper depth and
breadth of awareness and strong, favorable, and unique associations in memory. Manag-
ers should avoid taking shortcuts that bypass more basic branding considerations—such as
achieving the necessary level of brand awareness—to concentrate on flashier aspects of brand
building related to its image.
5. Failure to adequately control the brand: All employees of the firm must understand brand
equity, and the firm’s actions must reflect a broader corporate perspective as well as a more
specific product perspective. Firms sometimes make decisions haphazardly, without a true
understanding of the current and desired brand equity or recognition of the impact these deci-
sions have on other brands or brand-related activities. Given the possibility of a social media
crisis that almost every brand seemingly faces, it is important that company personnel across
different functional areas (marketing, PR, sales) be prepared to launch a coordinated com-
munications effort in the aftermath of a social media crisis to ensure that the public relations
fallout does not harm the brand’s equity in the long run.
6. Failure to properly balance consistency and change with the brand: Managing a brand
necessitates striking the delicate, but crucial, balance between maintaining continuity in mar-
keting activities and keeping the product or image of a brand up-to-date. If managers do not
make adjustments in their marketing program to reflect changes in the marketing environ-
ment, they can be left behind. Or they may make so many changes that the brand becomes a
moving target without any meaning to consumers.
7. Failure to understand the complexity of brand equity measurement and management:
Effective brand management requires discipline, creativity, focus, and the ability to make
hundreds of decisions in the best possible manner. Sometimes marketers oversimplify the
process and try to equate success in branding with taking one particular action or approach.
Brand equity is not optimized as a result.
Historically, one of the most skilled brand builders is Procter & Gamble (P&G). Branding
Brief 16-2 describes some of the ways it has changed its marketing processes and philosophy in
recent years to reflect new marketing challenges and realities.
Procter & Gamble has been a leader in marketing for much of
its 160-plus years of existence. It has been referred to as the single
greatest marketing company in the world. Already the world’s
largest consumer packaged-goods company, P&G became even
larger with the $57 billion acquisition of Gillette in 2005. Despite
its overall success, P&G has been struggling to maintain its leader-
ship status due to the dramatic shifts taking place in marketing. In
order to adapt to these changes, P&G is trying to blend the best
of their old practices with new practices to create a modern blue-
print for successful brand management in the coming years. There
were many changes made to branding strategies by the leader-
ship of P&G—first by Bob McDonald (CEO until 2013) and then
by David Taylor who became the CEO in 2015. These changes
have allowed P&G to evolve with the changes taking place in
marketing. The priorities of P&G in recent years are described in
the following section:
Building category growth: Changing consumer hab-
its could be key to category growth, and a key feature of
P&G’s strategy is to fundamentally rethink how consum-
ers are interacting with products in a given category. For
instance, their blockbuster product Swiffer was based on a
deep understanding of how consumers cleaned their homes,
and the amount of time consumers spent on cleaning the
mops themselves—an insight which led to the creation of
the Swiffer product. In this way, P&G has approached each
category in which they do business with a view to finding
novel approaches to generating category growth.
Streamlining its product portfolio: P&G has been aggres-
sively pruning its product portfolio and also re-evaluating its
presence in many businesses. For example, it decided to divest
many of its beauty brands including CoverGirl, Clairol, and
Wella by selling these brands to Coty. By divesting these brands,
BRANDING BRIEF 16-2
Reinvigorating Branding at Procter & Gamble
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CHAPTER 16 • CLOSING OBSERVATIONS 589
P&G was able to rid itself of those categories where they felt
challenged to develop winning strategies, which represented a
drag on its profitability and growth, thus, allowing it to be more
focused and nimble with other, more promising categories.
Driving innovation and new products: New product devel-
opment continues to be an important focus for P&G. While it
has been credited with highly successful innovations such as
Head and Shoulders’ new Smooth and Silky 3 Action Formula
and Tide PODS, P&G has also been successful in innovating
in smaller categories. For example, Febreze odor eliminators
became a member of P&G’s “billion dollar revenue club”
based on innovating in a relatively small product category.
Embracing new communications strategies: P&G increas-
ingly balances online and offline communication channels
to promote their brands. The company’s “Like a Girl” ad
campaign for their Always brand struck a chord with its
target audiences by taking what was previously seen as a
patronizing remark—the phrase “like a girl”—and making it
into a statement of strength that would provide encourage-
ment and confidence to young girls everywhere. While the
campaign has leveraged traditional media efforts (including
advertising during the Super Bowl), it has also effectively uti-
lized social media advertising including creating a hashtag
(#LikeAGirl), which garnered a large online following, along
with numerous female athletes endorsing the campaign.
While P&G has embraced new digital media to communicate
with its audiences, it also has done so carefully, to ensure that
its brand’s positioning and appeal are not compromised. For
example, in 2017, P&G announced a cut of nearly $150 mil-
lion in digital ads, citing concerns over brand safety—that is,
brands were not being placed in media platforms or vehicles
consistent with their intended positioning. Another feature
of P&G’s digital strategy is to focus on search and to ensure
digital ad placement in online retail Web sites such as Ama-
zon and brick-and-mortar retailers’ Web sites. This thought-
ful and results-driven approach to the use of digital media
is likely to continue to be a feature of P&G’s digital strategy.
Adopting a new brand management structure: P&G
reorganized its marketing function in 2014 and replaced its
marketing organization (and the titles of marketing direc-
tors) with a brand management structure. While previously,
P&G’s focus in marketing was on revenue generation and
promotional spending, the switch to brand management
was meant to increase focus on developing brand identity
and enhancing brand valuation. P&G’s marketing directors
became brand directors. A key part of this shift is that P&G
was reorganized around four major divisions including baby,
feminine and family care, homecare, beauty, health and
grooming And brands that are closely aligned in terms of
their target audiences as well as competitors were organized
within the same division. The changes helped create a single-
point responsibility for the strategies, plans and results for the
brands, thus, making way for faster decision-making, and
allowing for better execution of their strategy.
Sources: Sofia Pitt, “One Year Later: How P&G Has Changed under New
CEO David Taylor,” October 27, 2016, https://www.cnbc.com/2016/10/27/
one-year-later-how-pg-has-changed-under-new-ceo-david-taylor
.html; Jack Neff, “P&G Makes It Official with Beauty Divestiture to
Coty,” July 9, 2015, http://adage.com/article/adroll/p-g-makes-official-
beauty- divestiture-coty/299408/; Leonie Roderick, “P&G: We Need to
Build Stronger Brand Identities Online,” July 27, 2017, https://www
.marketingweek.com/2017/07/27/pg-digital-investment/; Michael Lee,
“Does P&G’s Reorganized Marketing Department Go Far Enough?,”
July 8, 2014, www.forbes.com/sites/michaellee/2014/07/08/does-pgs-
reorganized-marketing-department-go-far-enough/#6441b62c5e88;
Jack Neff, “It’s the End of ‘Marketing’ as We Know It at Procter &
Gamble,” June 30, 2014, http://adage.com/article/cmo-strategy/end-
marketing-procter-gamble/293918/.
Products such as Tide PODS, Febreze, and Head & Shoulders Smooth and Silky 3 Action Formula,
are examples of recent innovations from P&G which have been highly successful.
P&G balances online and offline communication
channels to promote its brands.
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590 PART VI • CLOSING PERSPECTIVES
FUTURE BRAND PRIORITIES Our journey to better understand strategic brand management is about over, but it’s worth consid-
ering a few final questions. How will branding change in the coming years? What are the biggest
branding challenges? What will make a successful twenty-first-century brand?
The importance of branding seems unlikely to change for one critical reason: Consumers
will continue to value the functions that brands provide. In an increasingly complex world, well-
managed brands can simplify, communicate, reassure, and provide important meaning to consum-
ers.3 Brands have survived for centuries because they serve a very fundamental purpose. At their
best, they allow consumers to reduce risk and gain greater satisfaction in their lives. Strong brands
can make consumers’ lives a little—or sometimes even a lot—better. The role and functions of
brands are so fundamentally pervasive and valued by consumers that it is difficult to see their
potential importance diminishing.
However, managing brands to achieve that potential is as challenging as ever.4 The marketing
environment always changes, but the pace of change has greatly accelerated in the past decade.
Consumers are increasingly diverse, enlightened, and empowered. Virtually every market has
experienced heightened competition as a result of the entrance of global firms, private labels, and
megabrands from related categories. Rapidly changing technology has profoundly affected how
consumers live and shop, and how marketers learn about consumer needs and wants and manage
their brands. Finally, serious environmental, community, and social concerns exist all over the world.
As a result, the rules of the branding game have changed.5 Marketers are rethinking—and
sometimes fundamentally altering—their branding policies and practices. Using the princi-
ples reflected in the brand report card and avoiding the seven deadly sins of brand manage-
ment reviewed earlier should help in the pursuit of brand management. Building on prior
concepts and examples from the book, this final section highlights six branding imperatives
to help managers navigate the challenges of brand management in the years to come, as sum-
marized in Figure 16-9.6
Fully and Accurately Factor the Consumer into the Branding Equation One of the most important rules of branding is the consumer owns the brand. The power of con-
sumer perceptions and beliefs to make or break brands has been demonstrated time and again
in the lab and in the real world. From the New Coke debacle to the modern challenges some
companies face in convincing consumers of the quality of their products in the face of negative
reviews, consumer sovereignty rules.
Nowadays, the growth of social media platforms as a stage for customer-to-customer interac-
tions increases the power of customers to express positive sentiment towards a brand (through
FIGURE 16-9
Future Brand
Imperatives
1. Fully and accurately factor the consumer into the branding equation. Focus on the consumer and recognize what they know and don’t know about brands and what they want and don’t want from brands. Engage in “participation marketing” in the process.
2. Go beyond product performance and rational benefits. Craft well-designed products and services that provide a full set of rational and emotional benefits.
3. Make the whole of the marketing program greater than the sum of the parts. Develop fully integrated channel and communication strategies that optimally blend their strengths and weaknesses.
4. Understand where you can take a brand (and how). Design and implement a new product development and brand architecture strategy that maximizes long-term growth across product offerings, customer segments, and geographical markets.
5. Do the “right thing” with brands. Embrace corporate social responsibility and manage brands for the long run.
6. Take a big picture view of branding effects. Know what is working (and why). Justify brand investments and achieve deeper understanding of the power of brands.
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CHAPTER 16 • CLOSING OBSERVATIONS 591
sharing of positive word-of-mouth) or detract from or even completely destroy a brand (through
sharing of negative word-of-mouth). Such unprecedented power in consumers’ hands has shifted
the equation for brand managers considerably. They have to view consumers as potential produc-
ers of brand meaning and incorporate their interpretations of the brand into their strategic thinking
regarding the brand.
From a managerial perspective, it is beneficial to incorporate the consumer voice in every
branding decision. To illustrate, consider brand architecture decisions. Managers frequently err
in naming new products by taking an internal company perspective and arriving at overly compli-
cated solutions with many different layers and levels of branding. Consumers then try to simplify
the branding, or worse, they may move to a competitor with a straightforward, more easily grasped
set of offerings. Part of the appeal of Colgate Total has undoubtedly been that its name suggests
a very simple solution to navigating the toothpaste aisle, a section of the store consumers often
find bewildering.
In naming products and services—and in developing marketing programs and activities to
build those brands—managers must fully incorporate a consumer point of view. This requires
illuminating consumer research and a sharp marketing mind-set to properly interpret and act on
the findings. The best marketers use consumer insights to skillfully manage customers and brands
and to maximize brand equity and customer equity. Brands serve as the bait that retailers and other
channel intermediaries use to attract customers from whom they extract value. Customers serve
as the tangible profit engine for marketers to monetize their brand value.
However, for even the most customer-centric companies, the increasing diversity and empow-
erment of customers offer significant branding challenges.
Customer Diversity. Multiple segments and subseg-
ments of consumers typically make up a customer franchise
for a brand. We define these segments using many dimen-
sions; some of the most challenging are cultures and geogra-
phies. A multicultural perspective in branding is a necessity
in today’s diverse world in order to directly affect all types
of target consumers or groups. It also helps marketers focus
on the overall relevance of their brand and how they can
effectively adapt it to all segments in their target market. As
we showed in Chapter 15, there are many ways that brands
try to adapt their offerings to suit the needs of different types
of target segments.
In recognition of customer diversity and increasing
segmentation, marketing pundits have introduced concepts
such as permission marketing, one-to-one marketing, brand
journalism, and digital personalization. These concepts
all reinforce the fact that any brand franchise has multi-
ple constituents we need to understand and address in the
marketplace.
We need to apply these concepts with care, however.
Brand journalism, for example, suggests that—just as jour-
nalists tell many facets of a story to capture the interests of
diverse groups of readers—marketers should communicate
different messages to different market segments. Digital per-
sonalization involves using vast troves of data on consumers’
browsing history and online buyer behavior to offer a set of
benefits uniquely suited to individual customers. However,
while these trends may provide the basis for highly distinc-
tive branding segmentation and differentiation, the common
core of the brand promise is found in virtually all aspects
of the marketing program. Ritz-Carlton’s brand mantra of
“ladies and gentlemen serving ladies and gentlemen” affects
how the hotel chain delivers service to all its guests as they
come into contact with the brand.
Macrumors.com provides a place for customers to discuss
issues relevant to consumers of all Apple products.
Web sites such as Twitch are a live streaming video platform
which allows for video game live streaming and broadcasts of
eSports competitions. It is a platform that enables avid video
gamers to learn about and discuss new video games.
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592 PART VI • CLOSING PERSPECTIVES
Customer Empowerment. Much has been made of the newly empowered consumer. One of
the driving factors behind this trend is the greater transparency that now prevails in the market-
ing environment. The emergence of the Internet and social media—as well as the expansion and
pervasiveness of traditional media—have given consumers the ability, for better or worse, to seek
information and arrive at what they feel is “the truth” about products, services, and brands like
never before. By merely being observant or proactive, consumers can find out and judge how well
a product or service works or what a company is doing (or not doing) to the environment or their
local community. Information and opinions can now travel around the world in mere minutes.
Marketers must anticipate that any actions they take or claims they make will be scrutinized,
deemed truthful or not, and shared with others almost instantaneously.
With this new transparency, consumers can undoubtedly be more actively involved in the
fortunes of brands than ever before. But the reality is that only some of the consumers want to get
involved with some of the brands they use and, even then, only some of the time. For consumers
who do choose to become engaged at a deeper level, marketers must do everything they can to
encourage them with social media and other marketing tools. But many consumers will choose
not to do so, and it is crucially important to understand how to best market a brand given such
diversity in consumer propensities, interests, and activity levels.
Moreover, even consumers who choose to become more engaged with a brand have unde-
fined, ambiguous, or even conflicting preferences. They may need guidance and assistance in
forming and conveying their preferences to firms. “Participation marketing” may then be a more
appropriate concept for marketers to employ, because marketers and consumers need to work
together to find out how the firm can best satisfy consumer goals. In participation marketing,
consumers and firms freely exchange information to arrive at mutually beneficial solutions.7 A
highly successful premium brand, King Arthur Flour, has created a loyal online brand community
by recognizing that baking is an activity consumers want to learn about and discuss with other
consumers and company experts.
Go Beyond Product Performance and Rational Benefits At the heart of a great brand is a great product or service. This is even more true in today’s
highly transparent world. Many firms make the design aspects of products and services an
increasingly crucial component of their value proposition, including adept marketers such
as Apple, Nike, Ritz-Carlton, Singapore Airlines, and Samsung. Developing better-designed
products and services, however, requires a clear, comprehensive, up-to-date understanding
of consumers and how they purchase and use products and services and think and feel about
brands.
Product design encompasses not only how a product works, but also how it looks, feels,
and even sounds and smells. Similarly, service design is a function of all sensory aspects that
consumers encounter and experience with a brand. Designing products and services that can
more efficiently and effectively deliver the full range of category benefits is still of paramount
importance and provides a powerful means to gain competitive advantage. This is true even
in many mature categories, as illustrated by P&G’s recent success with brands such as Tide,
Swiffer, and Venus.
Great product and service design comes from keen consumer insight and inspired, creative
solutions. A well-designed brand offers advantages in product and service performance, and in the
imagery that creates significant functional and psychological benefits. Emotional benefits will be
most impactful, in particular, when they are directly linked to a functional benefit.
Consider P&G’s successful repositioning of its Pampers brand. The disposable diaper had
been positioned for years on the basis of dryness and absorbency via classic product comparison
advertising. As a result of insights gained from consumer research, the company leveraged those
functional product benefits to create a powerful emotional benefit. It based the new Pampers
positioning on consumers’ beliefs that: (1) a dry baby sleeps better, and (2) a well-rested baby
will play and learn more the next day. In other words, to parents, the functional benefit “dry-
ness” leads directly to the emotional benefit of “caring for your baby.” The new positioning
thus celebrated Pampers as “caring for baby’s development”—the emotional payoff from the
brand’s rational product benefits.
Design considerations will increasingly drive the innovation pipeline. Competitive advantages
and brand strength will come from having better-designed products and services than competitors,
providing a wider range of compelling consumer benefits as a result.
King Arthur Flour has
built a loyal online brand
community among con-
sumers highly involved
with baking. It also uses
online video tutorials to
help address customers’
issues related to baking.
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CHAPTER 16 • CLOSING OBSERVATIONS 593
Make the Whole of the Marketing Program Greater Than the Sum of the Parts The diversity of means to communicate about and sell products and services to consumers has
grown exponentially in recent years. Major shifts in the media industry have emerged due to a
number of factors: the rise of digital media channels, fragmentation of TV viewership, the growing
use of streaming services, video gaming, the increasing use of mobile phones, the explosion of
social media, online blogs and social communities, and the greater importance of events, experi-
ence, and buzz marketing.
These developments have fundamentally affected how companies communicate about their
products and services. Firms now have a host of ways to distribute and sell their products online
or offline, directly or indirectly. Marketers are embracing different types of personal and mass
media and combining digital marketing techniques, real-world experiential communications, and
traditional mass media practices. They are also merging online and offline channels to maximize
coverage and impact. In turn, digital brands are embracing ways of connecting with consumers in
offline worlds—including such tactics as popup stores, delivery services, and so on—while also
acquiring brick-and-mortar outlets.
The challenge for top brands is assembling the best set of channel and communication options
to maximize sales in the short run and brand equity in the long run. The art and science of inte-
grated marketing is to optimally design and implement any one channel or communication activity
so that it creates not only direct effects, but also indirect effects that increase the impact of other
channel or communication options. A breathtaking TV ad may change a viewer’s opinions of a
brand, but it may also make that viewer more likely to visit the branded Web site or respond more
favorably to a tweet posted by a brand on Twitter, or a company’s Facebook post.
As a result of the increasingly diverse communications options available to companies today,
consumers have different channel and communications histo-
ries, and, as a result, very different levels of brand knowledge.
This creates a challenge—and an opportunity—for the wise
brand marketer. Ideally, a channel or communication option or
activity would be versatile enough to work effectively regardless
of consumer history or past experience. Indeed, one advantage
of a well-designed Web site is that, because of its interactivity, it
can successfully communicate and sell to consumers regardless
of their personal shopping or communications history.
For example, Nike’s amazing marketing success is partly
due to its combination of a broad range of distribution channels
with an extensive online and offline communication program,
as relevant to the world’s elite athletes looking to excel in their
sport as it is to the average person who just wants to incorporate
Nike into everyday recreational life.
Digital Communications. As more consumers spend more
time on the Internet, it is crucial to use online, interactive com-
munications to affect consumers directly at all stages of the con-
sumer decision funnel, and thus, to reinforce offline marketing
efforts. An online, interactive communications program typically
includes some or all of the following: a well-designed Web site
(with customer-generated content and feedback) linked to a solid
search engine optimization strategy; search advertising; e-mail
marketing; banner ads and rich media; video ads; and social
media advertising. Of these, the newest and most challenging
component is social media.
Social media programs—encompassing social media
advertising including Facebook, Twitter, Instagram, You-
Tube, and so on, along with other outlets such as online com-
munities (e.g., Facebook groups), utilizing blogs (including
sponsored blogging)—provide an effective means to creating
active customer engagement and involvement. By offering P&G was successful in repositioning Pampers on the
emotional benefits of “caring for your baby.”
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594 PART VI • CLOSING PERSPECTIVES
the right online information, experiences, and platforms
for brands, marketers can help consumers learn from each
other about a brand as well as express their brand loy-
alty and observe that of others. However, engaging and
involving consumers brings potential dangers as well, such
as subversive behavior by a small group of consumers or
undeservedly negative feedback. Undesirable branding
effects can occur with or without a social media campaign,
of course, although being online and providing a positive
point of view may help counterbalance or even overcome
them. Adopting a “thick-skin” stance online is imperative,
given that a caustic comment or unpleasant review is only
one consumer click away, and some negativity is to be
expected and tolerated.
Mobile platforms allow marketers to connect with
consumers and provide the right brand information at the
right time and right place. Similarly, companies use tech-
nologies such as geofencing and location-based advertising
to send coupons and promotions to customers as they are
in close proximity to a retail outlet. Further, mobile mes-
saging is available to consumers around the world and is
a powerful tool for sending branded offers to consumers.
One innovative use of mobile marketing is an app offered
by Home Depot which was launched in collaboration with
The Weather Channel. Based on the weather in a given
region, Home Depot would change the recommended do-
it-yourself projects, tailoring the projects and advice to the
weather in a given location. The Weather Channel interac-
tive app—with more than 10 million consumers—has the
ability to segment its audiences and is able to target its
audiences in a precise fashion, making it highly attractive
to advertisers.8
Location-based marketing uses mobile devices to make
offers available to consumers at the right time and right
place. Fortunately, an increasingly robust and detailed set
of online metrics exist by which marketers can track the
nature, extent, and valence of public sentiment. By moni-
toring online buzz and activities in this way, marketers can
more effectively assess and determine the proper response
to any potentially damaging online or even offline episode.
Dove was subjected to backlash on social media when it
decided to redesign its shampoo bottles to reflect differ-
ent body types, which inadvertently seemed to suggest that
there was an optimal body type.9 This example points to the
importance of paying close attention to unfolding crises (if
they were to occur) and to make sure that the social media
and public relations teams are able to respond to these crises
in an appropriate manner.
Understand Where You Can Take a Brand (and How) For long-term financial prosperity, the successful launch of
new products and services and the entry of existing products
and services into new markets and customer segments are of paramount importance. From a
branding standpoint, growth requires a well-thought-out and well-implemented brand architec-
ture strategy that clarifies three key issues: (1) the potential of a brand in terms of the breadth of
The growing use of event sponsorships and branded experi-
ences shows the transformation of media and marketing.
Brands such as Gap, Volkswagen, United Airlines, Pepsi,
Adidas, and Uber were all at the receiving end of social media
attacks.
Technologies such as geofencing and location-based advertis-
ing enable companies to send coupons to customers as they
approach (or are in close proximity to) a retail outlet.
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CHAPTER 16 • CLOSING OBSERVATIONS 595
its market footprint; (2) the types of product and service extensions that would allow a brand to
achieve that potential; and (3) the brand elements, positioning, and images that identify and are
associated with all the offerings of a brand in different markets and to different consumers.
Brand Potential. A good brand architecture defines brand boundaries: What products or ser-
vices the brand could represent; what benefits it could supply; and what needs it could satisfy. It
provides guardrails for appropriate—and inappropriate—line and category extensions. It clarifies
the meaning and promise of the brand to consumers and helps consumers choose the right version
of the product or service for themselves.
Understanding the brand promise and how it should best be translated and adapted to differ-
ent products and markets is challenging, but critical. Every product or service sharing the brand
name should deliver on the unique brand promise. If you can replace the specific brand in any of
its marketing with a competitive brand, and its marketing would still essentially make sense and
work with consumers, then the marketing is probably not aligned sharply enough with the brand
promise and meaning.
By adhering to the brand promise and growing the brand carefully through little steps, market-
ers can cover a lot of ground. Take Lego, which illustrates the value of a well-thought-out brand
strategy to expand a brand and allow it to better reach its potential. Their success with The Lego
Movie opened up a new source of revenue through theatrical entertainment, while also increas-
ing sales of the Lego brand by around 25 percent.10 The movie helped reinforce the brand’s key
associations including creativity, joy, and fun, thereby deepening the target customer’s affinity
for the brand.
Brand Extensions. The vast majority of new products are extensions, and the vast majority of
new products fail. In other words, too many brand extensions fail. Why? They are not creating
sufficient relevance and differentiation in their new product or service categories. An increasingly
competitive marketplace will be even more unforgiving to poorly positioned and marketed exten-
sions in the years to come. To succeed, marketers must be rigorous and disciplined in analyzing
and developing brand extensions.
We’ve looked at some of the academic research on brand
extensions. Based on this and other inputs, Figure 13-8 pre-
sented a scorecard with criteria for evaluating a proposed brand
extension. The specifications there are intended to offer a start-
ing point; particular items or the weights applied to them can be
adjusted to the specific marketing context. The key point is that,
by adopting some type of formal model or scorecard, we can
apply systematic thinking to judging the merits of a proposed
extension and increase its likelihood of success.
Brand Elements. The third aspect in a brand architecture
strategy encompasses the name, look, and other branding ele-
ments applied to new products. A key concept here is the proper
use of sub-branding. By combining new brand elements with
existing parent brand elements, we can use sub-branding effec-
tively to signal the intended similarity or fit of a new extension
with its parent brand. Consumers are very literal. For example,
putting the parent brand name before a new, individual name
makes it more like the parent brand than putting it second. Mar-
riott’s Courtyard is seen as much more of a Marriott hotel than
Courtyard by Marriott by having the corporate name first.
A good sub-branding strategy can facilitate access to
associations and attitudes to the company or family brand as
a whole, while allowing for the creation of new brand beliefs
to position the extension in the new category. Moreover, sub-
branding can also help protect or shield the parent brand
from any negative feedback that might be associated with an Tide PODS is a successful line extension by the Tide laun-
dry detergent brand.
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596 PART VI • CLOSING PERSPECTIVES
extension. In a carefully researched study, the sudden acceleration problems
experienced by the Audi 5000 a number of years ago were found to sig-
nificantly hurt the sales of its sibling Audi 4000, but they had a much less
pronounced effect on sales of the Audi Quattro, in part because of its more
distinctive sub-branding.
To realize the benefits of association, however, sub-branding typically
requires significant investments and disciplined and consistent marketing to
establish the proper brand meanings with consumers. Without such financial
commitments, marketers may be well advised to adopt the simplest brand
hierarchy possible, such as using the company or family brand name with
product descriptors.11
Do the “Right Thing” with Brands Increased media coverage of business has brought greater transparency
and awareness of companies’ internal and external actions and state-
ments. Many consumers believe companies should have a higher purpose
that would somehow benefit local communities, society as a whole, or the
broader natural environment. At the same time, heightened scrutiny from
the investment community has caused many companies to adopt an overly
myopic short-term planning horizon for their brands. Brand marketers need
to address both these marketplace realities.
Cause Marketing. Brand marketers must embrace social responsibility
and ethically and morally proper behavior at all times. In particular, they
need to find win–win solutions with cause marketing programs and other
activities that allow them to enhance the welfare of consumers, society, or
the environment while still profitably running their businesses. Effective
cause marketing programs can accomplish a number of objectives for a
brand: build brand awareness, enhance brand image, establish brand cred-
ibility, evoke brand feelings, create a sense of brand community, and elicit
brand engagement. A good long-running example of a successful cause marketing program is
General Mills’ “Box Tops for Education” program, which has benefitted schools by raising nearly
$800 million since 1996.12
Protecting Brand Equity. Doing the right things with brands sometimes means doing some-
thing even simpler and more straight forward: protecting and respecting the brand promise and
meaning to consumers. Even a simple typeface or font change can create massive negative
sentiment among consumers, as brands such as Twitter and The Gap have found out, suggest-
ing the sensitive nature of consumers’ relationships with their brands. Problems arise when
managers engage in overexposing, overextending, overmodernizing, and overdiscounting, and
in doing so, take advantage of a brand. The best and most widely admired marketers treat their
brands with understanding and respect and a clear sense of commercial and social purpose.
They take their brands on a well-mapped-out journey that allows them to profitably grow while
preserving close bonds with consumers and benefits to society as a whole. Disney launched
an internal brand mantra of “fun family entertainment” to help employees judge whether any
marketing or other action was “on brand.” The worry was not that any single decision would be
fatal or even damaging to the brand, but that a number of little concessions and compromises
would eventually add up to significantly erode the equity of the Disney brand.
Take a Big Picture View of Branding Effects. Know What Is Working (and Why)
Justifying Brand Investments. Increasingly, marketers have had to do more with less in their
marketing budgets and persuasively justify all marketing expenditures. One challenge in achiev-
ing brand accountability is that brand marketing activities are intended to have long-term, broad,
and varied effects. Any particular marketing activity may increase the breadth or depth of brand
General Mills’ “Box Tops for Education”
program has benefitted schools and raised
engagement with participating brands such as
Cheerios cereal.
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CHAPTER 16 • CLOSING OBSERVATIONS 597
awareness; establish or strengthen performance-related or imagery-related brand associations;
elicit positive judgments or feelings; create stronger ties or bonds with the brand; initiate brand-
related actions such as search, word-of-mouth, and purchase; or many or even all the above. And
its effects may be enduring as well as short-term.
Marketers must adopt comprehensive, cohesive, and actionable models to help them develop
ROI insights and interpretations. As an example, three linked, interlocking models in Chapters 2
and 3 that marketers can use in brand planning, tracking, and measurement are:
1. The brand positioning model describes how to establish competitive advantages via points-
of-difference (associations unique to the brand that are also strongly held and favorably
evaluated by consumers) and points-of-parity (associations shared with other brands that are
designed to negate competitors’ points-of-difference, overcome perceived vulnerabilities of
the brand, or establish category credentials).
2. The brand resonance model considers how intense, active loyalty relationships are created
with customers. The basic premise is that building a strong brand requires a series of steps as
part of a “branding ladder” and a set of logically constructed “brand-building blocks.” Brand
resonance occurs when consumers feels completely “in sync” with the brand. The second
level of the model is where the output from the brand positioning model appears, in terms
of which points-of-parity and points-of-difference are to be created with which performance
and/or imagery associations.
3. The brand value chain model describes how to trace the value creation process to better
understand the financial impact of marketing expenditures and investments. The model exam-
ines four different stages in the value creation process for a brand. It considers how market-
ing activities affect the customer mind-set—as measured by all the building blocks in the
brand resonance model—which, in turn, creates various marketplace outcomes and ultimately
shareholder value.
The specific components of these three models are not as important as their purpose and
scope. The models can both assist planning and measurement, and they can capture a full range
of marketing activities for any type of brand. In particular, by tracing the effects of marketing
activities through the customer mind-set, and on to various marketplace outcomes such as price
premiums, loyalty, sales, market share, and profitability, marketers can gain a clearer picture of
how well their marketing is doing and why.
Achieving Deeper Brand Understanding. Branding is clearly a complex marketing endeavor.
To better grasp all its dimensions, we adopt a multidisciplinary view to interpret branding effects
and more completely understand brands, the value they have created, and how they should be
managed as a result. We can develop marketing guidelines for branding from a variety of different
perspectives, including economic, psychological, and sociological.
Fundamentally, marketing should help create or enhance the equity and value of a brand to
all its various constituents. The stronger the brand, the more power brand marketers have with
distributors and retailers, and the easier it is to implement marketplace programs to capitalize on
brand equity. Extracting proper price premiums that reflect the value of the brand—and not over-
or underpricing—is one of the most critical financial considerations for branding.
Finding the Branding Sweet Spot Given their substantial intangible value, brands are likely to remain a top priority for organiza-
tions. The branding area continues to receive intense research attention, as researchers tackle old
problems and address new challenges in important ways. Successful branding in the twenty-first
century requires new areas of emphasis and new skills as described in the preceding six impera-
tives. We conclude by discussing one broad theme that cuts across all six: achieving balance in
managing brands by finding the branding sweet spot.
Brand Balance. To find the branding sweet spot, managers must reconcile trade-offs in brand
management and strike the balance between simplicity and complexity in all brand decision-
making and activity. Trade-offs are pervasive in marketing a brand—short-run sales versus long-run
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598 PART VI • CLOSING PERSPECTIVES
brand equity, global control versus local customization,
retaining versus acquiring customers, and investing in online
versus offline advertising, to name just a few.
The art and science of modern brand marketing is to
fully understand and creatively address these significant
branding trade-offs. To do so, companies have employed a
variety of strategies: breakthrough product or service inno-
vations, improved business models, expanded or leveraged
resources, enhanced or embellished marketing, perceptual
framing to overcome misperceptions, or just sheer creativity
and inspiration.
For example, the trade-off between sales-generating and
brand-building activities requires that marketing communica-
tions affect both the short run (sales) and the long run (brand
building). Firms have addressed this in different ways. Some
classic examples include: California’s “Got milk?” campaign
that entertained consumers and sold milk; P&G’s Ivory pro-
motional campaign challenged consumers to find one of the few bars that was weighted to sink in the
bathtub, reinforcing the key attribute of floating; Old Spice’s video ad campaign featuring the ad “The
Man Your Man Could Smell Like” was a viral sensation. With Old Spice, P&G followed it up with
an interactive video asking fans to post questions, and this interactive approach to marketing resulted
in more than 65 million views. The Old Spice campaign is an excellent example of how to engage
younger audiences in your brand.13
Another trade-off focuses on points-of-difference and points-of-parity. To be effectively posi-
tioned, the brand must have points-of-difference where it excels, and at least points-of-parity
versus competitors where it may be seen as inferior. Volvo and Southwest Airlines approached
this challenge by developing unique PODs (safety and low price/value, respectively), as well as
parity with competitors on key points (for Volvo, style; for Southwest Airlines, good service, on-
time arrivals). When the first Apple computer launched, it was so easy to use, the market thought
it must not be powerful. Apple reframed that negative perception by redefining the idea of power:
power is not what is inside the computer, but what you can do with it.
In developing solutions to achieve balance in branding, it is important: (1) not to oversimplify
branding so that all the richness is stripped away, but, at the same time; (2) not to overcomplicate
branding such that marketers and other employees are overwhelmed by the complexity. The opti-
mal branding approach recognizes that many different aspects of branding matter; the imperatives
we’ve previously discussed point the way to the most critical.
New Capabilities for Brand Marketers Brand management is undergoing a transformation, and the chapters in this book have shone a
spotlight on various aspects of brand management and the shifting roles of brand managers. Many
of the skills that are needed to manage brands are also skills that are required in leadership roles
within companies and organizations. We highlight a few of these critical skills:
1. Analytical and quantitative capabilities: As we have discussed throughout the book,
brand management is increasingly data-driven. Managers of brands should have the capacity
to interface with data scientists, statistical modelers, and computational social scientists in
order to generate insights from data. Data can provide useful guidance to brand managers
who wish to personalize their brands to suit individual customers’ needs and wants. To do
so, the brand manager of the future should be able to envision what types of data they need
to improve their customer interface, and liaison with the data scientists to ensure access
to the right types of metrics and data. Chapter 7 provides a broad overview of the types
of tools and techniques that brand managers would use in the context of digital marketing
and social media.
2. Storytelling and creativity: Consumers use brands as a way of communicating with
others and for performing key roles in their lives. The brand story is thus a critical fac-
tor in its appeal. Brand managers should be creative in articulating a value proposition
Old Spice used a video ad campaign to engage younger audi-
ences with the brand.
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CHAPTER 16 • CLOSING OBSERVATIONS 599
that captivates customers’ attention. Chapters 2 to 4
highlight several examples of brands that have created
equity and resonance with their consumers, and Chap-
ter 7 outlines the various channel options to commu-
nicate the brand story.
3. Collaboration and teamwork: Brand management
is all about coordination and collaboration. Be it
with sales personnel, ad agencies, digital marketing
partners, R&D, supply chain, production, or consum-
ers, brand managers are typically mini-CEOs whose
role is to manage the profit-and-loss statement for a
given brand. Thus, collaboration and teamwork are
integral to this role. In the future, brand management
may be incorporated in various C-level jobs such as
chief experience officer, chief design officer, and so
on. Many digital-only companies now have a chief
experience officer who is tasked with managing the
customer experience from beginning to end, and this
role may interface with more traditional brand management functions to help strengthen
a company’s customer interactions. Chapters 5 and 6 discuss how brand managers can
implement marketing programs to build brand equity, and better leverage communication
channel options.
4. Strategic thinking, understanding current and future trends: Success in brand manage-
ment requires staying abreast of customer trends and modifying brands to incorporate these
new trends. In fact, successful brands will be those that can successfully interpret trends and
incorporate these insights into brand attributes and benefits. Brand managers should be able
to see the big picture and evolve brand strategy to keep up with changing times. Chapters
12 to 15 describe how brands can be managed strategically and leverage marketplace trends
effectively.
5. Empathy and understanding: A key role of brand managers is to acquire and retain custom-
ers. Customer retention, in particular, depends on satisfying customer needs, and resolving
complaints, in a satisfactory way. Brand managers of the future should have empathy and deep
understanding of issues from a customer perspective in order to maximize customer experiences
and generate the highest customer satisfaction. Key account managers and sales personnel are
often customer-facing, and brand managers should be able to work well with sales to improve a
brand’s appeal to the customer or end-consumer. Chapters 8 to 10 describe ways of measuring
outcomes in the marketplace, so that brand managers can keep track of customer satisfaction
and brand equity.
6. Digital marketing and technological and computing
skills: Given the shift in advertising to digital and social
media channels, advertising is increasingly becoming
algorithmic in nature. Large companies are increasingly
automating the process of placing advertisements on
various digital, social and mobile platforms. Using
search engine optimization/search engine advertising
requires a great deal of skill in social media application
programming interfaces (APIs) to understand analytics
reports and so on. Further, brand managers should be
nimble and respond quickly to changes in the digital and
social marketing landscape. Brand managers should be
knowledgeable about the functions performed by these
entities and also effectively liaison with them. Chapter 7,
in particular, showcases the role of digital marketing
and social media, and across all the other chapters, we
highlight various examples of brands that are reinvent-
ing themselves.
Chief experience officer and chief design officer are some of
the new designations in organizations that provide support for
brand management roles and responsibilities.
Developments in digital marketing offer great promise and
pose significant challenges to brand managers in the future.
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600 PART VI • CLOSING PERSPECTIVES
REVIEW
The challenges and complexities of the modern marketplace make efficient and effective market-
ing an imperative. The businesses that win in the twenty-first century will be those whose market-
ers successfully build, measure, and manage brand equity. This final chapter reviewed some of
the important guidelines put forth in this text to help in that endeavor.
Effective brand management requires consistent application of these guidelines across all
aspects of the marketing program. Nevertheless, to some extent, rules are made to be broken, and
the guidelines can be only a point of departure in the challenging process of creating a world-
class brand. Each branding situation and application is unique and requires careful scrutiny and
analysis about how best to apply, or perhaps in some cases ignore, these various recommendations
and guidelines. Smart marketers will capitalize on every tool at their disposal—and devise new
ones—in their relentless pursuit of brand preeminence.
DISCUSSION QUESTIONS
1. What do you think makes a strong brand? Can you add any criteria to the list provided?
2. Consider the deadly sins of brand management. Do you see anything missing from the list
of seven in Figure 16-8?
3. Pick one of the special applications of branding and choose a representative brand within that
category. How well do the five guidelines for that category apply? Can you think of others
not listed?
4. What do you see as the future of branding? How will the roles of brands change? What dif-
ferent strategies might emerge for building, measuring, and managing brand equity in the
coming years? What do you see as the biggest challenges? How have the advent of social
media and the availability of digital marketing tools changed brand management?
5. Consider the trade-offs involved with achieving marketing balance. Can you identify a com-
pany that has excelled in achieving balance on various trade-offs?
In Chapter 1, we deliberately defined product as encompassing
not only physical goods, but also services, retail stores, people,
organizations, places, and ideas. While the themes and guide-
lines for building, measuring, and managing brand equity that we
have presented are appropriate for virtually all types of products,
here, we’ll consider in greater detail some specific issues for some
less conventional types of products—online brands, industrial
and business-to-business products, high-technology products,
services, retailers, and small businesses.
ONLINE Creating a brand online brings a special set of challenges. Many
of the guidelines for business-to-business, high-tech, retailing,
and small businesses—identified in the following discussion—will
apply, but a few others are worth reinforcing (as summarized in
Figure 16-10).
Don’t forget the brand-building basics. Remember brand-
building basics such as establishing points-of-parity (convenience,
Special Applications
BRAND FOCUS 16.0
FIGURE 16-10
Additional Guidelines
for Online Brands
1. Don’t forget the brand-building basics.
2. Create strong brand identity.
3. Generate strong consumer pull.
4. Selectively choose brand partnerships.
5. Maximize relationship marketing.
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CHAPTER 16 • CLOSING OBSERVATIONS 601
price, and variety) and points-of-difference (customer service,
credibility, and personality). As we noted in earlier chapters, one
mistake of many failed dot-com brands was being impatient
to build their brands and failing to build from the bottom up.
Research undertaken to understand online service quality,
defined as the extent to which a Web site facilitates effi-
cient and effective shopping, purchasing, and delivery, has
shown that it is driven by four types of factors, that is, Web
site design, fulfillment, customer service, and security.14
Lands’ End became a top-selling company online by treating
its online operations as a digital translation of its successful
catalog, ensuring that merchandise was presented properly,
and excellent customer service prevailed.
Create strong brand identity. Given that consumers aren’t
physically confronted by brands online as they are in a store,
brand awareness and recall are critical. Choosing the best
URL and devising an effective search term strategy are there-
fore critical. Keep the basic brand element criteria in mind,
perhaps with greater emphasis on brand recall as an objective
(1-800-FLOWERS took its brand directly to the Web). A simple
but evocative name can also be useful, like Amazon Mom,
an information and commerce Web site providing content
on pregnancy and babies to young parents who are current
customers of Amazon.
Generate strong consumer pull. An important lesson
for online brands was the need to create demand off-line
in order to drive consumers online. Online marketers must
introduce the best possible integrated marketing communica-
tion program, using sampling and other trial devices, as well
as social media; public relations; sponsorships; and television,
radio, and print advertising.
Selectively choose brand partnerships. Brand partner-
ships that satisfy brand-building and profit criteria can drive
traffic, signal credibility, and help enhance image. In Australia,
Seniors Club Online, which caters to consumers aged 60-plus
with various entertainment and promotional offers, partnered
with Reader’s Digest magazine to offer free issues.15
Maximize relationship marketing. Finally, to leverage
the advantages of customization and interactivity, market-
ers must engage in one-to-one, participatory, experiential,
and other forms of relationship marketing. Creating a strong
online brand community between the consumer and the
brand, as well as with other consumers, through blogs, online
contests, and social media can help achieve brand resonance.
Online brands can offer much potentially relevant customer
information; for example, Amazon provides professional and
customer reviews, purchase circles and overall sales rankings,
text samples, and personalized recommendations.
INDUSTRIAL AND BUSINESS-TO-BUSINESS PRODUCTS
Industrial goods and business-to-business marketing sometimes
call for different branding practices.16 Here are some basic brand-
ing guidelines (see Figure 16-11).
Adopt a corporate or family branding strategy, and cre- ate a well-defined brand hierarchy. Because companies sell-
ing industrial goods often carry a large and complex number of
product lines and variations, marketers should devise a logical
and well-organized brand hierarchy. Given the breadth and
complexity of their product mix, companies selling industrial
goods—like GE, Hewlett-Packard, IBM, BASF, and John Deere—
are more likely to emphasize corporate or family brands. Thus,
a particularly effective branding strategy for industrial goods is
to create sub-brands by combining a well-known and respected
corporate name with descriptive product modifiers.
Link non-product-related imagery associations. Pro-
grams to build brand equity for industrial goods can be dif-
ferent from those for consumer goods, because, given the
nature of the organizational buying process, product-related
associations may play a relatively more important role than
non-product-related associations. Industrial brands often
emphasize functionality and cost–benefit comparisons. Nev-
ertheless, even non-performance-related associations can be
useful for forming other perceptions of the firm, such as pres-
tige or the type of companies that use its products.
Corporate or family brands must convey credibility and pos-
sess favorable overall associations. Corporate credibility is
often a primary risk reduction heuristic adopted by industrial
buyers. For years, one of the key sources of brand equity for
IBM was the perception that “you’ll never get fired for buying
IBM.” Once that special cachet faded, the brand found itself
in a much more competitive situation. Creating a feeling of
security for industrial buyers can thus be an important source
of brand equity. Many industrial firms distinguish themselves
on the basis of the customer service they provide, in addition
to the quality of their products.
Employ a full range of marketing communication options. Another difference between industrial and consumer products
is the way they are sold (see Figure 16-12). Industrial market-
ing communications tend to convey more detailed product
information in a more direct or face-to-face manner. Thus,
personal selling plays an important role. At the same time,
other communication options can enhance awareness or the
formation of brand associations. One effective industrial mar-
keting communication approach is to combine direct hard-sell
messages with indirect image-related messages that convey
who and what the company is all about.
FIGURE 16-11
Additional Guidelines
for Industrial Products
1. Adopt a corporate or family branding strategy and create a well-defined brand hierarchy.
2. Link non-product-related imagery associations.
3. Employ a full range of marketing communication options.
4. Leverage equity of other companies that are customers.
5. Segment markets carefully and develop tailored branding and marketing programs.
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602 PART VI • CLOSING PERSPECTIVES
FIGURE 16-13
Additional Guidelines
for High-Tech Products
1. Establish brand awareness and a rich brand image.
2. Create corporate credibility associations.
3. Leverage secondary associations of quality.
4. Avoid overbranding products.
5. Selectively introduce new products as new brands, and clearly identify the nature of brand extensions.
Leverage equity of other companies that are customers. Industrial brands can leverage secondary associations differ-
ently; for example, identifying other companies that are cus-
tomers for their products or services conveys credibility. The
challenge in advertising that fact, however, is ensuring these
other companies do not distract from the message about the
advertised company and its brands.
Segment customers carefully, and develop tailored branding and marketing programs. Finally, as for any brand,
understand how different customer segments view products
and brands. For industrial goods, different customer segments
such as engineers, accountants, and purchasing managers may
exist within, as well as across, organizations and have differ-
ent associations that serve as sources of brand equity. It may
be particularly important to achieve points-of-parity with these
different constituencies, so that key points-of-difference can
come into play.
Marketing programs must reflect the role of individu-
als in the buying center, or the process-initiator, influencer,
purchaser, user, and so on. Some individuals within the orga-
nization may be more concerned with developing a deep rela-
tionship with the company, and therefore, place greater value
on trustworthiness and corporate credibility; others may seek
merely to make transactions, and therefore, place greater
value on product performance and expertise.
HIGH-TECH PRODUCTS
One special category of physical goods, in both consumer and
industrial markets, is technologically intensive or high-tech prod-
ucts. The distinguishing feature of high-tech products is that they
change rapidly over time because of innovations and R&D break-
throughs. Technology isn’t limited to computer-related products:
it has played an important role in the branding and marketing of
products as diverse as razor blades for Gillette and athletic shoes
for Nike.
The short product life cycles for high-tech products have sev-
eral significant branding implications (see Figure 16-13 for specific
guidelines).
Establish brand awareness and a rich brand image. Many
high-tech companies have learned the hard way the impor-
tance of branding their products and not relying on product
specifications alone to drive their sales. It’s typically not true
that “if you build a great product, they will come.” You need
well-designed and well-funded marketing programs to create
brand awareness and a strong brand image. Non- product-
related associations concerning brand personality or other
imagery may be important, especially in distinguishing near-
parity products.
Create corporate credibility associations. One implication
of rapid product turnover is the need to create a corporate
or family brand with strong credibility associations. Because
of the often-complex nature of high-tech products and the
continual introduction of new products or modifications of
existing products, consumer perceptions of the expertise and
trustworthiness of the firm are particularly important. In a
high-tech setting, trustworthiness also relates to consumers’
perceptions of the firm’s longevity and staying power. For
technology companies, the president or CEO often is a key
component of the brand and performs an important brand-
building and communication function, in some cases as an
advocate of the technology. Consider the late Steve Jobs,
for example.
Leverage secondary associations of quality. Lacking the
ability to judge the quality of high-tech products, consum-
ers may use brand reputation as a means to reduce risk.
This means secondary associations may better communicate
FIGURE 16-12
Alternative Communication
Options: Business-to-Business
Market
Media advertising (TV, radio, newspaper, magazines)
Trade journal advertising
Directories
Direct mail
Brochures and sales literature
Audiovisual presentation tapes
Giveaways
Sponsorship or event marketing
Exhibitions, trade shows, and conventions
Publicity or public relations
M16_KELL4969_05_GE_C16.indd 602 03/05/19 9:46 AM
CHAPTER 16 • CLOSING OBSERVATIONS 603
FIGURE 16-14
Additional Guidelines
for Services
1. Maximize service quality by recognizing the myriad ways to affect consumer service perceptions.
2. Employ a full range of brand elements to enhance brand recall and signal more tangible aspects of the brand.
3. Create and communicate strong organizational associations.
4. Design corporate communication programs that augment consumers’ service encounters and experiences.
5. Establish a brand hierarchy by creating distinct family brands or individual brands as well as meaningful ingredient brands.
product quality, such as third-party endorsements from top
companies, leading consumer magazines, or industry experts.
To garner these endorsements, however, products need to
achieve demonstrable differences in product performance,
suggesting the importance of innovative product develop-
ment over time.
Avoid overbranding products. One mistake high-tech
firms often make is to “overbrand” products by using too
many ingredient and endorser brands. In a kind of “NASCAR
effect,” so many brands and logos are present for all the dif-
ferent product ingredients that the consumer can be over-
whelmed or confused, and no individual brand element adds
much value.
Selectively introduce new products as new brands, and clearly identify brand extensions. Short product life cycles
in high-tech industries make well-designed brand portfolios
and hierarchies even more important. With new products
continually emerging, it would be prohibitively expensive to
brand them with new names in each case. Typically, names
for new products include modifiers from existing products—
for example, alphabetical (Microsoft Xbox One X), numeri-
cal (Tesla Model 3), time-based (Intuit Premier Desktop 2018
Accounting Software), or other schemes. A new name for a
new product signals a major departure that is significantly
different from prior versions.
Thus, family brands are an important means of grouping
products. Marketers must clearly distinguish individual items
or products within those brand families, however, and define
brand migration strategies that reflect product introduction
strategies and consumer market trends. When high-tech
firms continually introduce totally new sub-brands, it grows
difficult for consumers to develop product or brand loyalty
to any one brand.
SERVICES
We noted in Chapter 1 that the level of sophistication in service
branding has greatly increased in recent years, as suggested by
the following guidelines (see Figure 16-14).
Maximize service quality by recognizing the myriad ways to affect consumer service perceptions. It is chal-
lenging to develop brands for intangible services. Consumers
may have difficulty forming their quality evaluations, and may,
therefore, base them on considerations other than their own
service experience.
Researchers have identified a number of dimensions of
service quality:17
• Tangibles: Physical facilities, equipment, and appearance
of personnel
• Reliability: Ability to perform the promised service right
the first time (standardized facilities and operations)
• Responsiveness: Willingness to help customers and
provide customer service
• Competence: Knowledge and skill of employees
• Trustworthiness: Believability and honesty (ability to
convey trust and confidence)
• Empathy: Caring, individualized attention
• Courtesy: Friendliness of customer contact
• Communication: Keeping customers informed in lan-
guage they can understand and listening to what they say.
Thus, service quality perceptions depend on a number of
specific associations that vary in how directly they relate to
the actual service experience.18
Employ a full range of brand elements to enhance brand recall and signal more tangible aspects of the brand. Because consumers often make service decisions away
from the actual service location itself (say, at home or at work),
brand recall, preferably aided by an easy-to-remember and
easy-to-pronounce brand name, becomes critically important.
Product packaging is not really relevant, although the physical
facilities of the service provider—primary and secondary sig-
nage, environmental design and reception area, apparel, col-
lateral material—serve as external packaging for the service.
Other brand elements—logos, symbols, characters, and
slogans—must pick up the slack and complement the brand
name to build awareness and image. These elements can
help make the service and some of its key benefits more tan-
gible—for example, the “friendly skies” of United, the “good
hands” of Allstate, and the “bullish” nature of Merrill Lynch.
All aspects of the service delivery process can be branded,
which is why Allied Moving Lines is concerned about the
appearance of its drivers and laborers, why UPS has devel-
oped such strong equity with the brown color of its trucks,
and why Doubletree hotels offer warm, fresh-baked cookies
to symbolize the company’s caring and friendliness.
Create and communicate strong organizational associ- ations. Organizational associations are particularly important
in creating perceptions of service quality. Relevant associa-
tions are company credibility and the perceived expertise,
trustworthiness, and likability of the people who make up
the organization and provide the service.
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604 PART VI • CLOSING PERSPECTIVES
FIGURE 16-15
Additional Guidelines
for Retailers
1. Create a brand hierarchy by branding the store as a whole, as well as individual departments, classes of service, or any other aspects of the retail service or shopping experience.
2. Enhance manufacturers’ brand equity by communicating and demonstrating their points-of-difference and other strong, favorable, and unique brand associations.
3. Establish brand equity at all levels of the brand hierarchy by offering added value in the selection, purchase, or delivery of product offerings.
4. Create multichannel shopping experiences.
5. Avoid overbranding.
Design communication programs that augment con- sumers’ service encounters and experiences. Service firms
must design marketing communications so consumers learn
more about the brand than what they glean from service
encounters alone. Advertising, direct mail, and online com-
munications are particularly effective at helping develop the
brand personality. The communication programs should be
fully integrated and evolve over time. Citigroup walked away
from a strong credibility position for its retail brand when it
dropped its “Citi Never Sleeps” ad campaign, although it
later returned to it during some tough economic times.
Establish a brand hierarchy by creating distinct family brands or individual brands as well as meaningful ingre- dient brands. Finally, services also must consider develop-
ing a brand hierarchy and brand portfolio that allow them to
position and target different market segments on the basis of
price and quality. Such vertical extensions often require sub-
branding strategies that combine the corporate name with
an individual brand name or modifier. Delta Airlines brands
its business class service as Business Elite, its frequent flier
program as SkyMiles, and its short-haul East Coast flights as
Delta Shuttle. Hilton Hotel introduced Hilton Garden Inns to
target budget-conscious business travelers and compete with
the popular Courtyard by Marriott chain.
RETAILERS
Chapters 5 and 8 reviewed how retailers and other channel inter-
mediaries can affect the brand equity of the products they sell,
as well as creating their own brand equity, by establishing aware-
ness and associations to their product assortment (breadth and
depth), pricing and credit policy, and quality of service. Walmart
has made itself a top U.S. retail brand by becoming the low-price,
high-value provider of a host of everyday consumer products. The
following are several guidelines relevant for building brand equity
for a retailer (see Figure 16-15).
Create a brand hierarchy by branding the store as a whole, as well as individual departments, classes of service, or any other noteworthy aspects of the retail service or shopping experience. Establishing a brand hier-
archy helps create synergies in brand development, including
for retailers. Walmart introduced Sam’s Club to tap into the
growing discount or warehouse retail market. Similarly, individ-
ual departments can take on unique sets of associations that
appeal to a particular target market. Nordstrom has a number
of clothing departments, each designed with distinct images
and positions, such as tbd for the latest women’s trends, BP
for teen girls, and Encore for plus-size women. The retailer
may brand these departments or even use them as “ingredient
brands,” designed and supported by a national manufacturer
(such as Polo shops in major department stores that sell only
that Ralph Lauren brand).
Enhance manufacturer’s brand equity. Retailers should
exploit as much as possible the brand equity of the manufac-
turer brands they sell, by communicating and demonstrating
their points-of-difference and other strong, favorable, and
unique brand associations. By cooperating with, and perhaps
even enhancing, manufacturers’ push strategies, retailers
should be able to sell products at higher prices and margins.
Establish brand equity at all levels of the brand hierar- chy by offering added value in the selection, purchase, or delivery of product offerings. Retailers must create
their own strong, favorable, and unique associations that go
beyond the products they sell. Victoria’s Secret has gained
popularity as a provider of stylish feminine clothing. Costco
has created a strong discount association. To communicate
these broader associations, image campaigns often focus on
the advantages to consumers of shopping at and buying from
the stores in general, rather than on promotions for specific
sale items. For example, Ace Hardware advertises itself as the
helpful hardware place.
Embrace omnichannel shopping behavior. Consumers
shop across a range of different types of channels, and often
may search for information in one channel, but make purchases
in another. Retailers are also engaged in sales in a variety of
channels, such as physical stores, catalogs, and online Web
sites. Regardless of the channel, consumers must have reward-
ing shopping experiences in searching, choosing, paying for,
and receiving products. In some cases, these experiences may
turn out to be valuable points-of-difference, or at least neces-
sary points-of-parity, with respect to competitors.
Avoid overbranding. Finally, if a retailer is selling its own
private labels, it is important not to employ too many brands.
Retailers are particularly susceptible to bottom-up branding,
in which each department creates its own set of brands. Nor-
dstrom found itself supporting scores of various brands across
its different departments, sometimes with little connection
among them. Recall from Chapter 5 that one advantage of
store brands, however, is that they often represent associa-
tions that transfer across categories. The more an abstract
association like value or fashionability is desirable and deliver-
able across categories, the more likely that the marketer can
gain efficiencies by concentrating on a few major brands.
M16_KELL4969_05_GE_C16.indd 604 03/05/19 9:46 AM
CHAPTER 16 • CLOSING OBSERVATIONS 605
Small Businesses
Building brands is a challenge for small businesses because of
their limited resources and budgets. They usually do not have
the luxury of making mistakes and must design and implement
marketing programs much more carefully.19 Nevertheless, many
entrepreneurs have built their brands into powerhouses essen-
tially from scratch.
Online footwear retailer Zappos, founded by Tony Hsieh, has
become a top brand in a little over a decade because of its relent-
less customer focus and strong corporate culture. With free ship-
ping and returns, 24/7 customer service, and fast turnaround on
a wide selection of 200,000 styles of shoes from 1,200 makers,
Zappos finds that three-fourths of its purchases during any one
day are from repeat customers. Bought by Amazon in 2009 for a
reported $850 million, but still run separately, the company now
also sells clothing, handbags, and accessories.20
Because there are usually limited resources behind a small-
business brand, marketing focus and consistency are critically
important. Creativity is also paramount for finding new ways to
market ideas about products to consumers. Figure 16-16 displays
some specific branding guidelines for small businesses.
Emphasize building one or two strong brands. Given fewer
resources, strategically, it may be necessary to emphasize build-
ing one or two strong brands. A corporate branding strategy
can be an efficient means to build brand equity, although the
focus may just be on a few family brands. For example, Intuit
concentrated its marketing efforts on building the Quicken
brand name of software.
Focus the marketing program on one or two key associa- tions. Small businesses often must rely on only one or two
key associations as points-of-difference, consistently rein-
forcing them across the marketing program and over time.
Former Navy SEAL Alden Mills created the Perfect Pushup,
adding rotation to the classic U-shaped push-up stands to
provide more natural movement and engage more muscles
while going easy on the joints. Sales-generating print ads,
direct-response TV ads, and a Web site hammered home the
founder’s exemplary Navy SEAL credentials and the significant
fitness benefits of the product’s unique design.21
Employ a well-integrated set of brand elements. Tactically,
it is important for small businesses to maximize the contribu-
tion of each of the three main ways to build brand equity.
First, a distinctive, well-integrated set of brand elements will
enhance both brand awareness and brand image, as sug-
gested by Smartfood popcorn. The company introduced its
first product without any advertising, using a unique pack-
age that served as a strong visual symbol on the shelf and
an extensive sampling program that encouraged trial. Proper
names or family names that often characterize small businesses
can provide distinctiveness, but if they lack pronounceability,
meaningfulness, memorability, and other branding consider-
ations, founders should explore other brand names and brand
elements.
Design creative brand-building push campaigns and consumer-involving pull campaigns that capture atten- tion and generate demand. Small businesses must design
creative push and pull programs that capture the attention of
consumers and other channel members alike. Clearly, this is a
sizable challenge on a limited budget. Unfortunately, without
a strong pull campaign creating product interest, retailers may
not feel enough motivation to stock and support the brand.
Conversely, without a strong push campaign that convinces
retailers of the merits of the product, the brand may fail to
achieve adequate support or even be stocked at all. Thus,
creative and cost-effective push and pull marketing programs
must increase the visibility of the brand and get both consum-
ers and retailers talking about it.
Because small businesses often must rely on word-
of-mouth to create strong, favorable, and unique brand
associations, public relations and low-cost promotions and
sponsorship can be inexpensive means to enhance brand
awareness and brand image. The use of referral programs
can transform a small business into an industry leader. Drop-
box grew 3,900 percent through a referral program between
2008 and 2017. The referral program allowed it to double its
user base in the initial years, focused on offering free space
to anyone who offered a referral. Dropbox made the referral
process extremely simple by allowing users to post invitations
on social media.22
Online footwear retailer Zappos rose to prominence within
the last decade because of its focus on offering exceptional
customer service.
FIGURE 16-16
Additional Guidelines
for Small Business
1. Emphasize building one or two strong brands.
2. Focus the marketing program on one or two key associations.
3. Employ a well-integrated set of brand elements that enhances both brand awareness and brand image.
4. Design creative brand-building push campaigns and consumer-involving pull campaigns that capture attention and generate demand.
5. Leverage as many secondary associations as possible.
M16_KELL4969_05_GE_C16.indd 605 03/05/19 9:46 AM
606 PART VI • CLOSING PERSPECTIVES
Marketers of the PowerBar, a nutrient-rich, low-fat energy
bar, used selective sponsorship of top marathon runners,
cyclists, and tennis players, and events like the Boston Mara-
thon to raise awareness and improve image. Selective distribu-
tion that targets opinion leaders can also be a cost-effective
means to implement a push strategy. Perrier bottled water and
Paul Mitchell and Nexus shampoo were initially introduced to
a carefully selected set of outlets before broadening
distribution.
Content marketing is another approach that small businesses
can use to build their reputation and to establish themselves
as a leader in an area. Content marketing efforts may involve
creating various forms of content, including videos, e-books,
Infographics, white papers and reports, and survey data, to
engage the target audience. Content marketing is among the
best approaches available for small businesses to generate
Web site traffic and build awareness.23
Leverage as many secondary associations as possible. Finally, another way for small businesses to build brand equity
is to leverage as many secondary associations as possible.
Consider any entity with potentially relevant associations—a
highly regarded location, a well-known set of customers or
any prestigious awards—especially those that help signal
quality or credibility. Along those lines, to make the company
appear bigger than it really is, a well-designed Web site can
be invaluable.
Dropbox used a referral program to double its customer base.
Source: Valentin Wolf/imageBROKER/Alamy Stock Photo
NOTES
1 Kevin Lane Keller, “The Brand Report Card,” Harvard Business Review 78, no. 1 (January 2000): 147–157.
2. Ibid. 3. Allen P. Adamson, Brand Simple (New York: Palgrave
Macmillan, 2006); Francis J. Kelly and Barry Silver- stein, The Breakaway Brand (New York: McGraw-Hill, 2005).
4. John Gerzema and Ed Lebar, The Brand Bubble (New York: Jossey-Bass, 2008).
5. For some practical tools, see Mark Sherrington, Added Value: The Alchemy of Brand-Led Growth (Hampshire,
UK: Palgrave Macmillan, 2003); David Taylor, The Brand Gym, 2nd ed. (Chichester, UK: John Wiley & Sons, 2010).
6. For some in-depth reviews, see Tim Calkins and Alice M. Tybout, Kellogg on Branding (New York: John Wiley & Sons, 2001); Rita Clifton and John Simmon, eds., The Economist on Branding, 2nd ed. (New York: Bloomberg Press, 2009); Barbara Loken, Rohini Ahlu- walia, and Michael J. Houston, eds., Brands and Brand Management: Contemporary Research Perspectives (New York: Taylor & Francis, 2010).
M16_KELL4969_05_GE_C16.indd 606 03/05/19 9:46 AM
CHAPTER 16 • CLOSING OBSERVATIONS 607
7. For some provocative discussion, see Deborah J. MacInnis, C. Whan Park, and Joseph R. Priester, eds., Handbook of Brand Relationships (Armonk, NY: M. E. Sharpe, 2009).
8. Mobilemarketer.com (2018), “Home Depot, Weather Channel Expand Partnership to Mobile,” www .mobilemarketer.com/ex/mobilemarketer/cms/news/ content/2738.html, accessed September 6, 2018; Lauren Wishom, “Unlikely Biz Collaborations: Home Depot & The Weather Channel— Part 2,” August 28, 2016, www .drlaureen.com/unlikely-biz-collaborations-home- depot-the-weather-channel-part-2/.
9. Jason DeMers, “The 7 Biggest Social Media Fails of 2017—So Far,” May 30, 2017, www.entrepreneur.com/ article/294925#.
10. Kristina Monllos, “Meet the Man Responsible for Protecting the LEGO Brand as It Became a Mega Movie Franchise,” Adweek.com, March 10, 2017, www.adweek .com/brand-marketing/meet-the-man-responsible-for- protecting-the-lego-brand-as-it-became-a-mega-movie- franchise/, accessed September 6, 2018.
11. Mary Jo Hatch and Majken Schultz, Taking Brand Initiative (San Francisco: Jossey-Bass, 2008).
12. Raja Rajamannar, “Here’s How Cause Marketing Can Make a Difference,” Forbes, July 10, 2017, www.forbes .com/sites/onmarketing/2017/07/10/heres-how-cause- marketing-can-make-a-difference/#50bef57838d4.
13. D&AD,“Case Study: Old Spice Response Campaign,” February 2010, www.dandad.org/en/d-ad-old-spice- case-study-insights/, accessed December 27, 2017.
14. Markus Blut, Nivriti Chowdhry, Vikas Mittal, and Christian Brock, “E-service Quality: A Meta-analytic Review,” Journal of Retailing 91, no. 4 (2015): 679–700; Valarie A. Zeithaml, Parsu Parasuraman, and Arvind Mal- hotra, “Understanding e-Service Quality,” presentation made at MSI Board of Trustees Meeting, “Marketing Knowledge in the Age of e-Commerce,” November 2000; William Boulding, Ajay Kalra, and Richard Staelin, “A Dynamic Process Model of Service Quality: From Expectations to Behavioral Intentions,” Journal of Marketing Research 30, no. 1 (February 1993): 7–27; Joel E. Collier and Carol C. Bienstock, “Measuring Service Quality in E-Retailing,” Journal of Service Research 8, no. 3, (February 2006): 260–275.
15. Reader’s Digest, http://www.readersdigestcom.au, accessed September 6, 2018.
16. Kevin Lane Keller and Frederick E. Webster, Jr., “A Roadmap for Branding in Industrial Markets,” Journal of Brand Management 11, no. 5 (May 2004): 388–402. See also Mark S. Glynn and Arch G. Woodside, eds., “Business-to-Business Brand Management: Theory, Research, and Executive Case Study Exercises,” in Advances in Business Marketing & Purchasing series,
Vol. 15 (Bingley, UK: Emerald Group Publishing, 2009); Philip Kotler and Waldemar Pfoertsch, B2B Brand Management (Berlin, Germany: Springer, 2006).
17. A. Parasuraman, Valarie A. Zeithaml, and Leonard L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Journal of Marketing (Fall 1985): 41–50; Michael K. Brady and J. Joseph Cronin Jr., “Some New Thoughts on Con- ceptualizing Perceived Service Quality: A Hierarchical Approach,” Journal of Marketing 65, no. 3 (July 2001): 34–49.
18. Leonard L. Berry, A. Parasuraman, and Valarie A. Zeithaml, “Ten Lessons for Improving Service Quality,” MSI Report 93–104 (Cambridge, MA: Marketing Science Institute, 1993).
19. Adam Morgan, Eating the Big Fish, 2nd ed. (Hoboken, NJ: John Wiley & Sons, 2009).
20. Helen Coster, “A Step Ahead,” Forbes Magazine, May 23, 2008, https://www.forbes.com/global/2008/ 0602/064.html#5849a0eb2efd, accessed November 27, 2018; Paula Andruss, “Delivering Wow Through Service,” Marketing News, October 15, 2008, 10, https://archive.ama.org/archive/ResourceLibrary/ MarketingNews/Pages/2008/42/17/DeliveringWow .aspx, accessed November 27, 2018; Jeffrey M. O’Brien, “Zappos Knows How to Kick It,” Fortune Magazine 159, no. 2 (February 2009): 55–60; Brian Morrissey, “Amazon to Buy Zappos,” Adweek, July 22, 2009, https://www.adweek.com/brand-marketing/ amazon- buy-zappos-99916/, accessed November 27, 2018; Christopher Palmeri, “Zappos Retails Its Culture,” December 30, 2009, https://www.bloomberg.com/news/ articles/2009-12-30/zappos-retails-its-culture, accessed November 27, 2018.
21. Inc. Magazine, Courtesy Company, “How I Did It: Alden Mills of Perfect Fitness,” September 1, 2009, https://www.inc.com/magazine/20090901/how-i-did-it- alden-mills-of-perfect-fitness.html, accessed November 27, 2018.
22. Inside Viral Loops, “How Dropbox Grew 3900% with a Simple Referral Program,” June 26, 2018, https://viral- loops.com/blog/dropbox-grew-3900-simple-referral- program/, accessed November 27, 2018.
23. Megan Totka, “4 Reasons Your Small Business Needs Content Marketing,” September 27, 2017, https://smallbi- ztrends.com/2017/01/ways-to-use-content-marketing .html, accessed November 27, 2018; Jason DeMers, “3 Steps to Creating a Killer Small Business Content Marketing Strategy,” September 2, 2016, www .forbes.com/sites/jaysondemers/2016/09/02/3- steps- to-creating-a-killer-small-business-content-marketing- strategy/#418654d82be4, accessed November 27, 2018.
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609
INDEX
A A&P, 207
Aaker, David A., 51, 157
Aaker, Jennifer, 371
A/B testing, 404
AC Nielsen, 547–548
Academy Awards, 153
Accenture, 88, 456
Accountability in marketing, 328–329
Accounting, brand valuation in,
410–411
Active engagement, 386
Activity, 122
Actual brand engagement, 387
Acura, 148, 442–443
Adaptability, 144
Adidas, 322, 487
Adobe, 43
Advertising, 218–228
in-app advertising, 278–279
bilingual advertising, 566
cooperative advertising, 201–202
coordination for brand equity,
239–240
designing campaigns, 220
in digital channels, 254
direct response, 224
display advertising, 271
empirical generalizations (EG),
243–244
local customization of global
brands, 563
media types, 56
in packaging, 163–164
place advertising, 225–228
print, 222–224
radio, 221–222
search advertising, 270–271
social media paid channels, 272–278
television, 218–221
video advertising, 276–277
Advertising retrieval cues, 239
Aflac, 157
African American market, 550–551,
552
Aftermarketing, 187–189
Agassi, Andre, 317
Age-based market segmentation,
548–550
Aided recall, 377
Airbnb, 45, 267
Aldrin, Buzz, 357
Alexa, 116
Aliexpress, 146
Allegra, 489
Allstate Insurance, 195, 317
Alphabet, 429, 457
ALS Ice Bucket Challenge, 461
Amazon, 116, 143, 201, 208, 252–254
Ambush marketing, 322–323
AMD, 130
American Airlines, 188, 189
American Eagle, 197
Andersen Consulting, 456
Andrews, Erin, 192
Angry Birds, 421
Anheuser-Busch, 100, 283–284, 296
Annie’s Homegrown, 75
Ansoff’s growth matrix, 469
Antibrand activism, 504
AOL, 393–394
Apple, 36, 71–72, 89, 147, 261, 304,
409, 436, 501–504, 574
Architecture. See Brand architecture
strategy
Arizona, 164
Armstrong, Lance, 316
Arthur Andersen, 456
Arts, branding, 47–49
Asian American market, 551, 552
Associative network memory
model, 71
AT&T, 294
Attach rate, 189
Attachment, 120
Attribute-perception based component
of brand equity, 408
Attribution modeling, 256, 383
Audi, 478, 596
Augmented product level, 33
Augmented reality, 199
B Bachrach, Ira, 147
Baidu Tieba, 277
Balvin, J, 552
Banner ads, 271
Barnes & Noble, 308, 511
Basis of fit, 493–494, 497
Bayer, 171
Beacon technology, 198
BearingPoint, 384
Beats, 227
Bedbury, Scott, 94, 349, 431
Behavioral loyalty, 120, 385
Behavioral segmentation, 78–79
Beliefs, 378
Bell, David, 63
Bell, Genevieve, 364
Ben & Jerry’s, 452, 566
Benylin, 363
Berman, Anita, 256
Best Buy, 203
Best Western, 225
Betty Crocker, 91, 158–159
Bezos, Jeff, 254
BFGoodrich, 234
Bic, 490
Big data, 341–344
data availability, 256–257
scanner data, 407–408
social media monitoring, 380–382
text mining, 366
Big Heart Pet Brands, 200–201
Big W, 487
Bilingual advertising, 566
Billboards, 225–226
Birchbox, 229
Black & Decker, 513
Black Friday, 254–255
Black Lives Matter, 262, 317
Blanchett, Cate, 58
Blattberg, Robert C., 135
Blockbuster, 444, 524
Blumenthal, Neil, 63
Blurring, 170
BMW, 90, 121, 435
Bodett, Tom, 222
Boeing, 41
Bonobos, 63
Boston Consulting Group, 204
Brand activity, 130
Brand alliances, 305–306, 420–421
Brand ambassadors, 354–355
Brand amplifiers, 235–236
Z01_KELL4969_05_GE_IDX.indd 609 30/05/19 5:25 PM
610 INDEX
Brand architecture, 61, 420
Brand architecture strategy, 426
brand hierarchy, 436–446
brand portfolio, 432–435
brand–product matrix, 427–428
corporate branding, 446–457
defining brand potential, 428–430
design principles, 446
elements of, 427
guidelines, 456–457
identifying brand extension
opportunities, 431
specifying brand elements, 431–432
Brand Asset® Valuator (BAV),
391–396, 421
Brand associations, 129. See also
Secondary brand associations
basis of fit, 493–494, 497
in brand building, 115–116
of brand names, 149–151
brand personality, 371–372
concrete versus abstract, 495
in corporate image, 448–452
examples, 379
favorability of, 77, 581
free association, 364–365
nonproduct-related imagery
associations, 524–525
product-related performance,
523–524
projective techniques, 366–368
for small businesses, 605
strength of, 76, 581
text mining, 366
uniqueness of, 77, 581
Zaltman Metaphor Elicitation
Technique (ZMET), 368–369, 370
Brand attachment, 130, 385–386
Brand attitudes, 117, 129
Brand attributes, 76
Brand audits, 60, 329, 329–337
brand exploratory, 332–336
brand inventory, 330–331
brand positioning and marketing,
336
personas, 337
Rolex example, 352–358
Brand awareness, 71, 72–76, 129,
580
advantages of, 73–74
brand names and, 148
breadth and depth, 108–110
establishing, 74–76
expanding, 531–534
in global branding, 565
for high-tech products, 602
meaningfulness, 143
measuring, 376–378
memorability, 143
Brand balance, 597–598
Brand benefits, 76
Brand boundaries, 431
Brand building. See Brand
resonance model
Brand building blocks, 107, 108,
123–124
Brand charter, 346–347
Brand communities, 120–122
Brand concept maps (BCM), 333
Brand consideration, 118
Brand context measures, 341
Brand credibility, 117
Brand crises, 519–523, 541–543
Brand development reviews, 349
Brand differentiation. See
Differentiation
Brand elements, 32–33, 142
adaptability, 144
brand identity, 167
brand names, 147–154
changing, 166–167, 536
characters, 155–158
choosing, 60, 491–492
criteria, 142–147, 169
future of branding, 595–596
in global branding, 555–556,
571–572
jingles, 161–162
legal issues, 169–171
likability, 143
logos and symbols, 154–155
meaningfulness, 143
memorability, 143
packaging, 162–166
protectability, 146–147
Rolex example, 354
for services, 603
slogans, 158–161
for small businesses, 605
specifying for new products/
services, 431–432
transferability, 143–144
URLs, 153–154
Brand endorsement strategy,
445–446
Brand engagement, 263–266,
384, 387
Brand engagement pyramid, 264
Brand equity, 58–59, 135. See also
Brand elements
advantages of, 98–100
brand extensions and, 482–484
brand knowledge, 71–72
building, 582–583
creating for global brands, 559
customer equity and, 136–137
customer-based brand equity
(CBBE), 68–71
growing and sustaining, 61
media coordination for, 239–240
outcomes of, 582
packaging and, 164
pillars of, 391–392
protecting, 519–523, 596
risk and, 419–420
sources of, 72–77, 581
Brand equity management system, 60,
61, 344, 584–586
brand audits, 329–337
brand charter, 346–347
brand equity report, 347
brand report card, 586–587
common mistakes of, 587–588
responsibilities, 348–350
Brand equity measurement system, 60,
328, 583–584. See also Brand
valuation; Customer mind-set
big data and marketing analytics,
341–344
brand tracking studies, 338–341
brand-based comparative approaches,
402–403
conjoint analysis, 405–406
establishing, 344–350
in global branding, 570
holistic methods, 406–412
marketing-based comparative
approaches, 403–405
Brand equity report, 347
Brand experience scale, 182
Brand exploratory, 332–336
digital marketing reviews, 335–336
preliminary activities, 332
qualitative research, 332–333
quantitative research, 333–334
Rolex example, 355–356
Brand Extendibility Scorecard,
484–485
Brand extensions, 100, 404–405, 420,
431, 471
advantages of, 472–477
basis of fit, 493–494, 497
brand equity and, 482–484
Brand Extendibility Scorecard,
484–485
consumer evaluations, 481–488
cultural differences and, 499–500
described, 469–472
disadvantages of, 477–481
evaluating opportunities, 488–492
future of branding, 595
Z01_KELL4969_05_GE_IDX.indd 610 30/05/19 5:25 PM
INDEX 611
guidelines based on research, 488,
492–500
for high-tech products, 603
managerial assumptions, 482
marketing programs for, 491–492
naming, 486–487
vertical brand extensions, 484–487
Brand feelings, 119–120
Brand Finance, 414
Brand flashbacks, 517–519
Brand functions, 96
Brand hierarchy, 61, 435, 435–446
Apple, 503–504
branding strategy screen, 445
commonality, 445–446
corporate branding, 436–437
designing, 439–446
family brand, 437
individual brands, 437
industrial and B2B products, 601
levels of, 436–439, 441–443
modifiers, 437–438
principles of growth, survival,
synergy, 440–441
product descriptors, 438–439
prominence, 444–445
relevance and differentiation,
443–444
for retailers, 604
for services, 604
Brand identities, 167. See also Brand
elements
Brand image, 71, 76–77, 302–303,
378–380, 472, 501–502, 534–536,
581
Brand imagery, 113–117, 524–525,
559
Brand inventory, 330–331, 353
Brand judgments, 117–118, 559
Brand knowledge, 71–72
Brand line, 427
Brand line campaigns, 454
Brand management, 40. See also
Strategic brand management process
challenges and opportunities, 52–57
of corporate brands, 452–457
skills needed in future, 598–599
structure in digital era branding,
284–285
Brand mantras, 93–97, 358
Brand marketing. See Marketing
Brand meaning, co-creation of,
259–261
Brand mergers and acquisitions, 421
Brand migration strategy, 537
Brand mix, 427
Brand momentum, 387
Brand names, 32–33, 147–154
associations, 149–151
brand awareness and, 148, 376
for brand extensions, 486–487
differentiation, 149
familiarity, 149
forms of, 147–148
linguistic issues in global branding,
555–556
procedures for, 151–152
pronunciation and spelling, 148
trademark issues, 171
Brand partnerships. See Secondary
brand associations
Brand performance, 111–113
Brand personality, 114–115, 371–372,
387–388
Brand planning, models in, 59, 133
Brand portfolio, 61, 353, 420, 427,
432, 432–435
adjusting, 537–538
cash cows, 434–435
flankers, 434
high-end, prestige brands, 435
low-end, entry-level brands, 435
roles in, 433
Brand positioning, 77–93, 431
in brand audits, 336
brand mantras, 93–97
brand values pyramid, 91
competition, nature of, 81–82
competitive frame of reference,
84–85
defined, 77–78
in global branding, 559–560
meaningfulness, 143
points-of-difference (PODs), 82–83,
85–86, 86–88
points-of-parity associations
(POPs), 83–84, 86–88
of politicians, 87
Rolex example, 357–358
straddle positions, 88–89
target market, 78–80
text mining, 366
updating over time, 89–92
Brand positioning model, 59, 68, 133,
597
Brand potential
defining, 428–430
future of branding, 595
Brand prominence, 386
Brand quality, 117, 419
Brand recall, 72, 377
Brand recognition, 72, 376–377
Brand relationship quality (BRQ),
388–389
Brand relationships, 384–389
Brand relevance. See Relevance
Brand report card, 586–587
Brand repositioning, 536
Brand resonance, 120–122, 559
Brand resonance model, 59, 68, 107,
107–128, 133, 597
brand feelings, 119–120
brand imagery, 113–117
brand judgments, 117–118
brand performance, 111–113
brand relationships, 384–389
brand resonance, 120–122
brand salience, 107–111
in global branding, 565
implications of, 122–128
measures of brand building,
123–124
Brand resonance pyramid, 108, 356,
357
Brand responses, 117, 382–384
Brand salience, 107–111, 559
Brand signature, 239
Brand superiority, 118
Brand tracking studies, 60, 338–341
brand context measures, 341
corporate or family brand tracking,
340
global tracking, 341
product–brand tracking, 338
sample survey, 339–340
Brand valuation, 408–412, 416. See
also Brand equity measurement
system
accounting of, 410–411
by Brand Finance, 414
by BrandZ, 413–414
comparison of methods, 414–416
by Interbrand, 412–413
as percentage of market capitalization,
38, 409
standards for, 416
strongest brands, 49–51
Brand value chain, 59, 128–132,
419–421
Brand value chain model, 68, 107,
133, 597
Brand values pyramid, 91
Brand vision, 428–430
Brand-aschematic consumers, 499
Brand-based comparative approaches,
402–403
Branded house, 432, 447–448
Branded variants, 201
Branding. See also Digital era branding;
Global branding; Marketing
business-to-business (B2B), 40–42
Z01_KELL4969_05_GE_IDX.indd 611 30/05/19 5:25 PM
612 INDEX
Branding (Continued)
challenges and opportunities, 52–57
commodities, 39
common mistakes, 587–588
digital brands, 44–46
failure examples, 144
future of, 590–599
geographic locations, 49
history of, 40
ideas and causes, 49
internal branding, 97, 348
marketing integration with, 180–181
people and organizations, 46–47
physical goods, 40–42
retailers, 604
retailers and distributors, 44
services, 42–44, 603–604
small businesses, 605–606
sports, arts, entertainment,
47–49
technology products, 42, 43
Branding ladder, 107
Branding seconds, 155
Branding strategy screen, 445
Brand–product matrix, 427–428
Brand–product relationships, 427
Brands
associations with, 35
counterfeit, 145–146, 170
as cultural symbols, 262–263
defined, 32
importance of, 36–38
products versus, 33–36
reinforcing, 512–525, 540
retiring, 537–538
revitalizing, 525–536, 540, 588–589
strong brand characteristics, 586
types of, 38–49
Brand-schematic consumers, 499
Brand-self connections, 385
Brandt, Louis, 356
BrandZ, 413–414
Braniff, 144
Branson, Richard, 478, 479–480
BRICS markets, 564
Bristol-Myers Squibb, 84
British Airways, 44, 450–451
Browhaus, 158
Bryant, Kobe, 314, 316, 317
Buchanan’s Whisky, 552, 553
Budweiser, 100
Burberry, 277, 529–531
Burberry, Thomas, 529
Burrell, Thomas, 550
Burt’s Bees, 296
Bush, George H. W., 87
Bush, George W., 87, 299, 316
Business-to-business (B2B) branding,
40–42, 601–602
C California Milk Processor Board, 129
California prune growers, 85
Campbell’s Soup, 85, 110–111, 371,
477, 496, 549–550
Candler, Asa, 40
Cannibalization, 478, 502
Canon, 81, 317
Caray, Harry, 283–284
Carroll, Dave, 266
Cash cows, 434
Casio G’zOne Commando, 234
Categorization, 492–493
Category coherence, 493
Category extensions, 431, 471, 481
Category membership, communicating,
84–85
Category points-of-parity, 83
Cause marketing, 232, 294, 462, 596
Celebrity endorsement, 313–319
Cena, John, 192
Champion, 160
Chan, Jackie, 317
Chanel No. 35, 86
Channel strategy, 196–205
channel design, 196–198
direct channels, 202–204
indirect channels, 198–202
many-to-many channels, 255
omnichannel integration, 197–198
online strategies, 204, 266–278
paid channels, 283–284
social media paid channels,
272–278
Characters as brand symbols, 155–158
Charmin, 167
Cheetos, 370
Chevrolet, 307–308, 435
Chicago Cubs, 283–284
Chief brand officer (CBO), 349
China
global branding, 573–574
social media usage, 277–278
trademark law, 171
Chipotle, 163, 522
Chobani, 84, 532
Choice experiments, 408
Chouinard, Yvon, 516
Christian Louboutin, 171
Christopher, David, 221
Chrysler, 444
Cisco, 369
Clairol, 144
Click-through rate, 270
CLIF Bar, 179
Clinton, Bill, 87
Clinton, Hillary, 87
Clorox, 296, 350, 495, 536
Coach, 421, 480, 533–534
Co-branded ingredient, 305
Co-branding, 303–307, 498
Coca-Cola, 35, 40, 225, 312, 476, 478,
561, 563, 566, 569
Cohen, Dorothy, 169
Coke Zero, 476
Cold Stone Creamery, 295
Coldplay, 512, 513–515
Colgate Wisp, 150
Colgate-Palmolive, 232
Colors in packaging, 165, 171
Commodities, 39
Commonality, 238–239, 295,
445–446, 502
Communicability, 86
Communications. See Marketing
communications
Community, 120–122
Companies. See Organizations
Company branding. See Corporate
branding
Company Web sites, 268
Company-owned stores, 202–203
Compaq, 306
Comparative methods, 402–406
brand-based, 402–403
conjoint analysis, 405–406
marketing-based, 403–405
Comparison tasks, 368
Competition
Apple example, 503
brand extension evaluation, 491
in brand positioning, 81–82, 84–85
global branding strategies and,
556–558
marketplace conditions, 130
sources of, 54
winner-take-all markets, 55–56
Competitive advantages, creating,
33–34
Competitive analysis, 356–357
Competitive points-of-parity, 83
Complementarity, 239–240, 295, 583
Completion tasks, 368
Conformability, 240
Conjoint analysis, 405–406
Conlon, Jerome, 94
Connectivity, 53
Consideration set, 73
Consistency, 515–519, 583
Consumer decision journey, 250–251
Consumer insights, 372
Z01_KELL4969_05_GE_IDX.indd 612 30/05/19 5:25 PM
INDEX 613
Consumer promotions, 229
Content marketing, 281–283, 606
Continental Airlines, 348
Contribution, 238
Conversion rate, 271
Cooperative advertising, 201–202
Coors, 144, 566
Copy testing, 221
Core benefit level, 33
Core brand associations, 333
Corel, 187
Corning, 131, 307
Corona Extra, 119
Corporate brand equity, 296–298, 446
Corporate brand tracking, 340
Corporate branding, 436–437,
446–457
brand management, 452–457
branded house versus house of
brands, 447–448
corporate image dimensions,
448–452
corporate reputation, 447
industrial and B2B products, 601
name changes, 455–457
Corporate credibility, 451, 602
Corporate image, 437, 448–452
Corporate image campaigns, 453–454
Corporate reputation, 447, 473
Corporate social responsibility (CSR),
460–464
Corporate trademark licensing,
312–313
Correlational points-of-parity, 83
Cosby, Bill, 316
Cost approach of brand valuation, 411
Costco, 604
Cost-per-click advertising model, 271
Counterfeit brands, 145–146, 170, 358
Countries, branding, 49
Country of origin, 298–302
Coupons, 228–229
Courtyard by Marriott, 405–406, 434
Cover Girl, 161, 552
Coverage, 237–238
Craig, Daniel, 357
Crayola, 428, 429
Creative quality, 244
Creative strategy, 219
Credence goods, 37
Crimson Hexagon, 381
Crocker, William G., 158
Crocodile Dundee, 219
Cross-category assortment, 303
Cultural differences
bilingual advertising, 566
brand extensions and, 499–500
in global branding, 555–556, 557
in marketing communications, 556
Cultural symbols, brands as, 262–263
Curry, Steph, 318
Customer behavior. See Customer
mind-set
Customer diversity, 591
Customer empowerment, 592
Customer equity, 134–137
Customer experience management
(CEM), 181
Customer experiences, 116
Customer lifetime value (CLV),
134–137, 421
Customer mind-set, 129–130
brand extension evaluation, 489–490
brand relationships, 384–389
brand responses, 382–384
qualitative research techniques,
362–375
quantitative research techniques,
375–380
social media monitoring, 380–382,
421
Customer recommendations, 384
Customer referral value (CRV), 135
Customer Satisfaction Index, 320
Customer service programs,
187–189
Customer-based brand equity (CBBE),
68–71
advantages of, 98–100, 401
as bridge, 69–71
defining, 68–69
guidelines, 582–586
summary, 580–582
Customer-focused corporate image
association, 450
Customers, 36
acquiring new, 537
advantages of brand awareness,
73–74
centricity of, 57
co-creation of brand meaning,
259–261
cultural differences, 555–556
engagement, 263–266
evaluation of brand extensions,
481–488
in future of branding, 590–592
increase in touchpoints, 256
information sharing, 53–54
Infosys, 41
loyalty, 99
in new economy, 178
post-purchase management,
187–189
price perceptions, 190
relationships with digital brands,
126–128
role of brands, 36–37
segmentation, 42
target market, 78–80
Customization, balancing with
standardization, 568–569
CVS, 80, 294
Cybersquatting, 153, 170
Cyrix, 130
Czapek, François, 357
D Daley, Tom, 323
Dannon, 368
Dante Carver, 156
Dao, David, 522
Dash, 91
Data analytics. See Big data;
Marketing analytics dashboards
Data availability, 256–257
Database marketing, 225
Davis, Scott, 348
Davis, William, 352
Day, Jason, 354
De Beers Group, 39
De Nemours, E. I. du Pont, 309
Deighton, John, 135
Deliverability, 86
Dell, 436
Delta Airlines, 275
Delta Faucet, 431, 515
Demand-side method, 235
Demographic segmentation, 79–80
Descriptive modifier, 96
Desirability, 85–86
Deutsche Telecom, 402
Developing versus developed markets,
564
Dichter, Ernest, 364
Differentiation, 51–52, 86, 149, 421,
443–444
Digital brand asset inventory,
330–331
Digital brands, 44–46
building, 600–601
customer relationships with,
126–128
user experience and, 261–262
Digital channels, advertising/
promotion in, 254
Digital era branding
advertising/promotion in digital
channels, 254
brand engagement, 263–266
Z01_KELL4969_05_GE_IDX.indd 613 30/05/19 5:25 PM
614 INDEX
Digital era branding (Continued)
brand management structure,
284–285
brands as cultural symbols, 262–263
co-creation of brand meaning,
259–261
consumer decision journey, 250–251
consumer touchpoints, 256
data availability, 256–257
many-to-many channels, 255
online retailing growth, 252
personalization, 257–259
user experience and, 261–262
Digital marketing communications,
230, 266–278
company Web sites, 268
content marketing, 281–283
e-mail marketing, 268–271
future of branding, 593–595
influencer marketing, 280–281
mobile marketing, 278–280
paid channels, 283–284
social media paid channels, 272–278
Digital marketing reviews, 335–336
Digital native vertical brands
(DNVBs), 62–64
Digital personalization, 257–259
Direct approach to brand equity
measurement, 328
Direct channels, 196, 202–204
Direct response, 224
Direct-to-consumer selling, 203–204
Discover, 79, 92
Discovery, 234
Discovery Channel, 71
Disintermediation, 54–55
Disney, 95, 97, 197, 203, 306, 311,
513, 570, 596
Disney Consumer Products (DCP), 311
Disney Store, 203
Display advertising, 271
Distribution channels
in global branding, 558, 563,
565–566
prices by, 191
secondary brand associations,
302–303
Distributors, branding, 44
Diversification, 471, 503
Diverting, 195
Djokovic, Novak, 293
Dockers, 161
Dole, Bob, 87
Dollar Shave Club (DSC), 159, 265, 435
Domain names, 153–154
Domino’s Pizza, 274, 275, 329–330
Double jeopardy, 99
Dove, 594
DowDuPont, 309
Dr. Pepper, 81
DRIVE, 129
Dropbox, 131, 192, 485, 605, 606
DuckDuckGo, 185
Dukakis, Michael, 87
Dunn, Andy, 62, 63
DuPont, 309–310, 363, 458
Durability, 113
Duracell, 385
Durant, Kevin, 318
Dylan, Bob, 297
Dynamic pricing, 195, 258
E E*TRADE, 74
Earhart, Amelia, 356
Earned channels, 266–268
Ebert, Roger, 320
Edeka, 276
EEG (electroencephalogram), 369
E-mail marketing, 268–271
Emirates Airlines, 281
Emotional associations with brand, 42
Emotional modifier, 96
Empirical generalizations (EG),
243–244
Energizer Bunny, 157
Engagement, 121, 263–266
Entertainment, branding, 47–49
Entity theorists, 494, 499
Entry-level brands, 435
Environmentally concerned corporate
image association, 450,
462–464
Equalization price, 408
EquiTrend Brand Equity Index, 117
Erickson, Gary, 179
Ernst & Young, 348
ESPN, 233–235
E.T.: The Extraterrestrial, 227
Ethnicity-based market segmentation,
550–553
Ethnographic research, 363–364,
372–374
European Union, trademark law, 171
Event marketing, 230–235, 355
Event sponsorships. See Sponsorships
Eveready, 157
Everyday low pricing (EDLP), 195, 302
Excedrin, 84
Exemplars, 85, 402
Expected product level, 33
Experience goods, 37
Experiential marketing, 181–182
Experiential research, 372–374
F Facebook, 80, 231, 272–274, 551
Facebook Connect, 185
Familiarity, 149
Family brand, 437, 471, 601
Family brand tracking, 340
Favre, Brett, 317
Feasibility, 86
Febreze, 531
Federal Trade Commission, 281, 558
Federer, Roger, 293
FedEx, 77, 118, 431
Femina, Jerry Della, 541
Fendi, 296
Fiat, 455
Financial Accounting Standards Board
(FASB), 410–411
Firms. See Organizations
First moment of truth (FMOT), 199
Flagship product, 444
Flankers, 433
Food Network, 494
Football, 319
Ford, 234, 523
Ford, Harrison, 313
Fortune, 447
Forward buying, 195
34 Ps of marketing
channel (place) strategy, 196–205
pricing strategy, 189–196
product strategy, 186–189
Fournier, Susan, 386–389
Framing, 41
competitive frame of reference,
84–85
multiple frames of reference, 81–82
Frank, Sidney, 320
Frau, Poltrona, 307
Free association, 364–365
Freemium model, 192, 485
Frequency programs, 189
Frito-Lay, 201, 236, 369–370, 374
Functional magnetic resonance
imaging (fMRI), 369
Funnel model, 79
The Furrow, 282, 283
Future of branding, 590–599
brand balance, 597–598
brand elements, 595–596
brand extensions, 595
brand potential, 595
cause marketing, 596
consumers' role in, 590–592
marketing communications, 593–595
marketing investments, 596–597
product and service design, 592
skills needed, 598–599
Z01_KELL4969_05_GE_IDX.indd 614 30/05/19 5:25 PM
INDEX 615
G The Gap, 166, 566
Garcia, Sergio, 357
Garner, James, 316
Gates, Thomas N., 542
Gatorade, 166, 381–382
GE, 322, 442, 462–463, 475–476
GE Healthcare, 384
General Mills, 75, 152, 158, 162,
454–455, 596
General Motors, 120, 566, 574
Generally Accepted Accounting
Principles (GAAP), 410
Generic product level, 33
Generics, 206
Geo-fencing, 279–280
Geographic locations, 298–302
Gilboa, David, 63
Gillette, 191–192, 411
Gilmore, James H., 181
Givenchy, 296
Gleitze, Mercedes, 352
Global brand tracking, 341
Global branding, 551
advantages of, 554–555
brand positioning, 559–560
in China, 573–574
creating brand equity, 559
cultural differences in, 555–556, 557
disadvantages of, 555–559
legal issues, 558
local customization, 562–572
Ten Commandments of Global
Branding, 564–572
GoDaddy, 153
Godin, Seth, 184–185
Godiva, 305
Goldberg, Whoopi, 316
Goodwill, 410
Google, 393–396, 429, 430, 457
Google AdWords, 270–271
Google Analytics, 383
Goose Island, 296
GoPro, 233–234
Gore, Al, 87
Gorilla Glass, 307
Gottfried, Gilbert, 157
Grab, 279
Grand Metropolitan, 411
Graves, Michael, 481
Green marketing, 462–464
Grey Goose, 320
Greyser, Stephen, 451
Groupon, 229–230
Growth matrix, 469
Grubhub, 127
Gucci, 425, 468, 480–481
H H&R Block, 110
Häagen-Dazs, 560–561, 565
Haire, Mason, 367
Harley Owners Group (H.O.G.), 121
Harley-Davidson, 121, 312–313,
526–527, 557
Harper, Bryce, 381
Harry Potter film series, 48
Hastings, Reed, 439
Haysbert, Dennis, 317
Heineken, 162, 238, 567
Heiniger, André, 353
Heinz, H. J., 40
Hello Kitty, 157
Hemsworth, Chris, 219
Hershey’s, 538
Hershey’s Kisses, 431
Heuer, Edouard, 356
Heuristic, 73
Hewlett-Packard, 523
High-end, prestige brands, 435
High-low promotional pricing (HILO),
302
High-quality corporate image
association, 448
High-tech products, 602–603
Higuchi Kanako, 156
Hilfiger, Tommy, 523
Hilton Hotels, 117
Hingis, Martina, 316
Hirshberg, Gary, 463
Hispanic market, 551, 552
History of branding, 40
Holbrook, Morris, 170
Holiday Inn, 486
Holistic methods, 406–412
residual approaches, 407–408
valuation approaches, 408–412
Home Depot, 197, 594
Home Shopping Network (HSN), 535
Honda, 148, 442–443, 494
Hoover, 363
House of brands, 431, 447–448
Hsieh, Tony, 605
Hunt, Andrew, 63
Hyatt Hotels, 115
Hyundai, 193
I IBM, 86, 88, 296–298
Ice Bucket Challenge, 461
Ideal brand engagement, 387
Ideas and causes, branding, 49
Idiosyncratic risk, 419
IKEA, 82, 197
Immelt, Jeffrey, 322, 462
Impairment, 411
In-app advertising, 278–279
Income approach of brand valuation,
412
Incremental theorists, 494, 499
Independent self-construal, 499
Indirect approach to brand equity
measurement, 328
Indirect channels, 196, 198–202
Indirect competition, 81
Individual brands, 437
Industrial products, 601–602
Influencer marketing, 236, 280–281
Influencers on social media, 319
Information processing model, 217
Information sharing, 53–54
Ingredient branding, 305–306,
307–310
Innovation rankings, 34
Innovative corporate image associa-
tion, 449
Instagram, 275, 280
In-store advertising, 227
Intangible assets, 410
Integrated marketing communication
(IMC) programs, 236–241
commonality, 238–239
complementarity, 239–240
conformability, 240
contribution, 238
cost, 240
coverage, 237–238
criteria, 237
establishing priorities, 241
evaluating options, 241
in global branding, 566
Intel, 130, 162, 306, 364, 404
Intelliquest, 99
Intensity, 122
Interbrand, 412–413
Interdependent self-construal, 499
Internal branding, 97, 348
International Accounting Standards,
410
International markets. See Global
branding
Intuit, 187, 384
Investor sentiment, 131
Isis, 147
ISO 10,698, 416
Izod, 312
J Jackson, Michael, 316
Jägermeister, 320
James, LeBron, 318, 333
JCPenney, 204, 303, 407, 524–525
Z01_KELL4969_05_GE_IDX.indd 615 30/05/19 5:25 PM
616 INDEX
J.Crew, 257
J.D. Power and Associates, 320
Jeep, 122
Jenner, Kendall, 262, 317
Jennings, Ken, 297
Jetstar, 434
Jimmy Choo, 421
Jingles, 161–162
Jobs, Steve, 36, 261, 478, 501, 502
John Deere, 155, 282, 283
Johnson & Johnson, 99, 236, 541–543
Jones, David, 282
K Kashi, 163
Kate Spade, 407, 421
KDDI Corp, 156
“Keller Bs,” 242
Kendall Oil, 165
Kenzo, 296
Kerry, John, 87
KFC, 518, 546
Khandpur, Ashish, 449
Kia Motors, 319
Kimberly-Clark, 208,
462, 569
King, Bernice, 262
King Arthur Flour, 592
King Jr., Martin Luther, 262
Kit Kat, 162, 562
Kitaouji Kinya, 156
Kleenex, 208
Klein, Russ, 262
Knowles, Beyoncé, 317
Knutson, Brian, 370
Kodak, 538
Koehn, Nancy, 538
Kohl’s, 197, 303
KPMG, 348
Kraft, 165, 518
Krispy Kreme, 555, 556
Krylon, 276
Kumar, V., 135
L Lacoste, 312
LaCroix, 56–57
Laddering, 89–92
Lancia, 455
Lands’ End, 601
Las Vegas, 49
Latino market, 551, 552
Lawson, Nigella, 46
Lee Min Ho, 552
Legal issues
in branding, 169–171
in content marketing, 282
in global branding, 558
Lego, 595
Lehmann, Donald R., 196
Lemon, Katherine N., 135
Lenovo, 573, 574
Leveraging secondary brand associa-
tions, 60, 292–293, 492
celebrity endorsement, 313–319
co-branding, 303–307
companies, 296–298
country of origin, 298–302
distribution channels, 302–303
effect on existing brand associations,
293–295
event sponsorships, 319, 322–323
guidelines, 295–296
ingredient branding, 307–310
licensing, 310–313
third-party sources, 320
Levi Strauss & Co., 497, 570
Levitt, Ted, 33, 475
Lexicon, 556
Lexus, 569
Li Ning, 322
Libeert, 147
Licensing, 100, 310–313
Likability, 143
#LikeAGirl campaign, 274
Line extensions, 100, 305–306, 431,
471, 473–474, 491, 502, 503
Linguistics
in brand names, 150–151
in global branding, 555–556
Lipton, 379
Liu Chuanzhi, 574
Liz Claiborne, 303, 407
L.L.Bean, 451–452
Loblaws, 207
Local customization of global brands,
562–572
communication strategy, 563
developing versus developed
markets, 564
pricing strategy, 563–564
product strategy, 562–563
Ten Commandments of Global
Branding, 564–572
Location-based marketing, 183, 594
Logos, 154–155
L’Oréal, 474–475, 573
Louis Vuiton Dak, 154
Louis Vuitton, 145, 146, 154, 296
Louis Vuitton Moet Hennessey
(LVMH), 296
Low-end, entry-level brands, 435
Lowry, Adam, 167
Loyalty, 99
Loyalty programs, 189
Lululemon, 237
Luxottica, 63
Luxottica Group (LG), 441
Lyft, 51, 343
M Macrumors.com, 591
Macy’s, 197, 203, 303
Maggi Noodles, 522
Mambo, 487–488
Manning, Peyton, 314
Manufacturers. See Organizations
Many-to-many channels, 255
Marc Jacobs, 296
Market, 78
Market approach of brand
valuation, 411
Market brand engagement, 387
Market capitalization, brand valuation
as percentage of, 38, 409
Market segmentation, 78–80
by age, 548–550
by ethnicity, 550–553
regionalization, 547
Marketing. See also Branding
accountability in, 328–329
alliances, 420–421
Apple example, 503
for brand extensions, 491–492
brand valuation and, 420
changes in, 178–179
channel strategy, 196–205
consistency, 515–516
database marketing, 225
designing and implementing
programs, 59–60
experiential, 181–182
integrating traditional and
personalized, 186
integration with branding, 180–181
investment in, 129
local customization of global
brands, 562–572
location-based, 183
permission, 184–185
personalizing, 181–186, 257–259
pricing strategy, 189–196
product strategy, 186–189
quality of program, 129
relationship, 182–183
social media expenditures, 421
Marketing Accountability Standards
Board (MASB), 416
Marketing analytics dashboards,
341–344
Marketing audit, 329
Z01_KELL4969_05_GE_IDX.indd 616 30/05/19 5:25 PM
INDEX 617
Marketing channels, 196
Marketing communications, 215
advertising, 218–228
brand amplifiers, 235–236
of brand extensions, 473–474
challenges in, 216–217
content marketing, 281–283
cultural differences, 556
effectiveness of, 216
e-mail marketing, 268–271
event marketing, 230–235
future of branding, 593–595
guidelines, 242
industrial and B2B products,
601–602
influencer marketing, 280–281
information processing model, 217
integrated marketing communication
(IMC) programs, 236–241
local customization of global
brands, 563
many-to-many channels, 255
mobile marketing, 278–280
new media environment, 216–218
online communications, 230,
266–278
options, 215
role of multiple communications, 218
sales promotions, 228–230
for services, 604
Marketing infrastructure
in global branding, 565–566,
569–570
justifying, 596–597
Marketing partners, managing, 350
Marketing-based comparative
approaches, 402, 403–405
Marketplace conditions, 130
Marriott, 433–434
Marriott, John and Alice, 433
Martin, Chris, 513
Maslow's hierarchy of needs, 90–91
Mass customization, 183
Mass marketing, 51–52
MasterCard, 125–126
Maxwell House, 367–368
Mayflower, 43
Mayo, William Worral, 344
Mayo Clinic, 344–346
McCain, John, 87
McDonald’s, 71, 306, 322, 341–342,
462, 463, 470–471, 565, 566
McKinsey, 88
McMein, Neysa, 158
McNeil Consumer Healthcare,
541–543
McQuarrie, Ed, 373
Meaningfulness, 143, 149
Means-end chains, 90
Measuring brand equity. See Brand
equity measurement system
Media
changes in, 216–218
types of, 56
Memorability, 143
Mental map, 333, 365
Mercedes-Benz, 72, 281
Mergers and acquisitions, 421, 455–457
Message strategy, 219
Method Products, 167–168
Meyer, Christopher, 181
Michael Kors, 421
Michelin, 144–145
Mickelson, Phil, 354
Micro distribution centers (MDCs), 563
Microsoft, 144, 188, 372, 374
Miele, 374
Milk-Bone Brushing Chews, 200–201
Millennials, 267, 548–550
Miller, 457
MillerCoors, 296, 341
Mills, Alden, 605
Millward Brown, 147
Missoni, 481
Mitchell, Kenny, 382
Mitsubishi Motors, 144
Miu Miu, 441
Mobil 31, 234
Mobile marketing, 278–280, 594
Modifiers, 437–438
Molson Ice, 146–147, 162
Momoi Kaori, 88
Mondo, 185
Morpheme, 150
Moss, Kate, 316
Motel 36, 222
Mothers Against Drunk Driving
(MADD), 236
Motorola, 307
Mountain Dew, 86, 232, 528–529
Movie franchises, 48, 473–474
Movoto, 282
MTV, 333–334
Mullins, Gay, 35
Multi-attribute attitude models, 408
Multidimensional scaling (MDS), 379
Multimedia messaging service
(MMS), 278
Murdoch, Rupert, 411
Mycoskie, Blake, 452–453
N Name changes, 455–457
NameLab, 147
National Biscuit, 40
National Westminster Bank, 155
Natural Light, 402
Negative brand engagement, 264–266
Neistat, Casey, 281
Nescafé, 367–368
Nestlé, 428, 568
Net Promoter Score (NPS), 384
Netflix, 70, 435, 439–440, 524
Netnography, 373
Neuromarketing, 369–370
New attribute expansions, 305
New Zealand
as brand, 300–301
secondary brand associations, 295
Newcastle, 89
Newman, Paul, 356
News Corporation, 411
The Newspaper Design Edition
Campaign, 223
Nexus, 606
Niche marketing, 51–52
Nike, 94, 159, 183, 196–197, 203,
304, 317, 333, 340, 431, 442, 444,
487, 559
NIKEiD program, 183
Nivea, 113, 276, 483
Nonattribute preference component of
brand equity, 408
Nonproduct-related imagery associa-
tions, 524–525, 601
Nordstrom, 348, 450, 604
Nostalgia marketing, 517–519
NTT DoCoMo, 156
Nutri-Grain, 513
Nutrish, 315–316
O Obama, Barack, 87, 300
Obsoleting products, 538
Office Depot, 374
Ogilvy, David, 222
Old Spice, 598
Olympics, 322–323, 356
OMEGA, 356–357
Omnichannel integration, 197–198,
604
One-to-many communications, 255
One-to-one communications, 255
Online brand conversations, 335–336
Online brands. See Digital brands
Online channels, 204
Online marketing communications,
230, 266–278
company Web sites, 268
content marketing, 281–283
e-mail marketing, 268–271
Z01_KELL4969_05_GE_IDX.indd 617 30/05/19 5:25 PM
618 INDEX
Online marketing communications
(Continued)
future of branding, 593–595
influencer marketing, 280–281
mobile marketing, 278–280
paid channels, 283–284
social media paid channels, 272–278
Online retailing growth, 252
Online service quality, 601
Online word-of-mouth, 286
Orbitz, 258
Oreo, 518
Organic reach, 272
Organizations
branding, 46–47
internal branding, 97
in new economy, 178
role of brands, 37–38
secondary brand associations,
296–298
Orphan brands, 538
Orville Redenbacher, 438
Oscar Mayer, 226
Oscar Selfie, 223
Otosan, 156
Out-of-home advertising, 225–228
Outpost.com, 76
Overbranding, 603, 604
#OverToYou (2013), 223
Owens-Corning Fiberglass
Corporation, 171
Owned channels, 266–268
P Pabst Blue Ribbon (PBR), 518–519
Packaging, 162–166
advertising in, 163–164
benefits, 162–163
brand equity and, 164
of brand extensions, 474
changing, 165–166
design of, 164–165
innovations in, 164
trademark issues, 171
Paddy Power, 323
Paid channels, 266–268, 272–278,
283–284
Paid reach, 272
Palmer, Arnold, 354
Palmisano, Sam, 296
Palmolive, 562
Pampers, 592, 593
Panda Express, 97
Panera Cares Community Cafes, 192
Pantene, 194
Parent brand, 471, 475–477, 478–480,
483, 492–493, 496–497
Parker, Tony, 192
Part worth, 405
Patagonia, 463, 516–517
Patek, Antoine Norbert de, 357
Patek Philippe, 357
Patrick, Danica, 314
Paul Mitchell, 606
Pay-as-you-wish pricing, 192
PayPal, 370, 483
Pepsi, 35, 144, 166, 262, 317
Perceived quality, 186–187
Perceptions of fit, 493–494
Perceptual maps, 379–380
Perdue, 144
Perfect Pushup, 605
Permission marketing, 184–185
Perrier, 606
Person brands, 46–47, 87, 318
Personalized marketing, 181–186,
257–259
in e-mail marketing, 268
experiential marketing, 181–182
integrating with traditional
marketing, 186
location-based marketing, 183
mass customization, 183
permission marketing, 184–185
relationship marketing, 182–183
Personas, 337
Pessemier, Edgar, 403
Phan, Michelle, 280, 319
Phelps, Michael, 316
Philips, 453–454
Phishing, 154
Physical goods, branding, 40–42
Physiological response to product, 35
Pine, B. Joseph, 181
Pinterest, 276
Pitt, Brad, 313
Place advertising, 225–228
Place branding, 49
Planters, 404–405
Plosives, 150
Plymouth, 364
Point-of-purchase advertising, 227
Points-of-difference (PODs), 81,
82–84
brand balance, 598
choosing, 85–86
establishing, 86–88
Rolex example, 357
Points-of-parity associations (POPs),
81, 83–84
brand balance, 598
establishing, 86–88
Rolex example, 357
Pokémon GO, 518
Politicians, brand positioning, 87
POM Wonderful, 86
Pop-up stores, 202
Porsche 911, 377, 378
Positioning. See Brand positioning
Poster advertising, 225–226
Post-purchase customer management,
187–189
Potential product level, 33
PowerBar, 606
PowerGrid, 392–393
Prada, Miuccia, 441
Precision marketing, 224
Prego, 496
Presley, Elvis, 316
Prestige brands, 435
Pret A Manger, 348
Prevention focus, 499
Price bands, 190
Price segmentation, 194–195
Price tiers, 190–191
Priceline, 317
Prices
brand equity and, 99
consumer perceptions, 190
by distribution channel, 191
downward pressure on, 52
everyday low pricing
(EDLP), 195
local customization of global
brands, 563–564
value pricing, 193–195
Pricing strategy, 189–196
Principle of commonality, 445–446,
502
Principle of differentiation, 444
Principle of growth, 440, 441
Principle of prominence, 444–445
Principle of relevance, 443
Principle of simplicity, 442
Principle of survival, 440, 441
Principle of synergy, 440, 441
Print advertising, 222–224
Privacy issues in permission market-
ing, 185
Private labels, 44, 206–208
Procter & Gamble, 40, 88, 91, 194,
195, 207, 225, 274, 322, 350, 374,
375, 411, 432, 464, 495, 537, 538,
567, 588–589, 592, 593
Product category structure, 109–110
Product descriptors, 85, 438–439
Product line, 427
Product mix, 427
Product placement, 227
Product quality
information sources for, 55, 57
perceived quality, 186–187
Product strategy, 186–189
Product–brand relationships, 427
Z01_KELL4969_05_GE_IDX.indd 618 30/05/19 5:25 PM
INDEX 619
Product–brand tracking, 338
Product-related performance associa-
tions, 523–524
Products, 600–603
brands versus, 33–36
future of branding, 592
high-tech products, 602–603
industrial and B2B products,
601–602
levels of meaning, 33–34
local customization of global
brands, 562–563
obsoleting, 538
online brands, 600–601
perceived quality, 186–187
risks in, 37
services, 603–604
types of branding, 38–49
Professional services
branding, 603–604
future of branding, 592
Professional services, branding, 44
Projective techniques, 366–368
Prominence, 444–445
Promotion focus, 499
Promotion Marketing Association
(PMA), 229
Promotions. See Sales promotions
Pronunciation and spelling of brand
names, 148
Protectability, 146–147
Proximity systems marketing, 279–280
Psychological response to brand, 35
Public relations, 235–236
Publicity, 235–236
Pucci, 296
Puerto Rico, 299
Puig Group, 441
Pulizzi, Joe, 282
Pull strategy, 199, 605
Purchase and usage imagery, 114
Purchase intentions, 383–384
Push notifications, 280
Push strategy, 199, 605
Q Q Scores, 318
Qantas, 434
Qiqi, 88
QQ, 277
Qualitative research techniques,
332–333, 362, 362–375, 390
brand personality, 371–372
ethnographic research, 363–364,
372–374
free association, 364–365
neuromarketing, 369–370
projective techniques, 366–368
Zaltman Metaphor Elicitation Tech-
nique (ZMET), 368–369, 370
Quality. See Product quality
Quantitative research techniques,
333–334, 375–380, 390
brand awareness, 376–378
brand image, 378–380
R Radio advertising, 221–222
Raider, Jeffrey, 63
Ralph Lauren, 311–312
Range brand, 437
Rashid, Karim, 167
Ray, Rachael, 315–316
Razor-and-blades pricing model,
191–192
Reacting, 89, 92
Reagan, Ronald, 313
Reasons to believe (RTBs), 83
Recalls, 420
Recommendations, 384
Red Bull, 234
Red Hat, 330, 331
Red Roof Inn, 279
RedPoints, 146
Reese’s Pieces, 227
Regionalization, 547
Regulatory focus, 499
REI, 254–255
Reichheld, Frederick, 384
Reinforcing brands, 512–525, 540
fortifying versus leveraging, 523
maintaining consistency,
515–519
nonproduct-related imagery associa-
tions, 524–525
product-related performance
associations, 523–524
protecting brand equity sources,
519–523
Reintermediation, 54–55
Relational processing, 494
Relationship equity, 135
Relationship marketing, 182–183, 601
Relevance, 51–52, 443–444
Reliability, 113
Repositioning brands, 536
Reputation Quotient (RQ), 447
Residual approaches, 406,
407–408
Retail segmentation, 201
Retailers
brand images of, 302–303
branding, 44, 604
Retargeting, 258–259
Retiring brands, 537–538
Retro-advertising, 517–519
Retro-branding, 517–519
Return on investment (ROI), 243
Return on marketing investment
(ROMI), 328
Revitalizing brands, 525–536, 540
expanding brand awareness,
531–534
improving brand image, 534–536
Procter & Gamble example,
588–589
Ritz-Carlton, 348
Roberts, John, 336
Roberts, Kevin, 119
Rolex, 352–358
Rorschach test, 366
Rust, Roland T., 135
Ryan, Eric, 167
S Sainsbury, 206
Sales promotions, 228, 228–230, 254
Sales recalls, 420
Salesforce Social Cloud, 381
Salomon, 292–293
Sampling, 229
Sam’s Club, 604
Samsung, 442, 522
Samsung Within, 223
Sasaki Hiroshi, 156
SC Johnson, 201
Scanner data, 407–408
Schmitt, Bernd, 181
Schultz, Howard, 167, 574
Schulz, Charles, 316
Schwager, Andre, 181
Schwarzenegger, Arnold, 313
Scoot, 152
Search advertising, 270–271
Search goods, 37
Sears, 203, 303
Secondary brand associations
celebrity endorsement, 313–319
co-branding, 303–307
companies, 296–298
country of origin, 298–302
distribution channels, 302–303
effect on existing brand associa-
tions, 293–295
event sponsorships, 319, 322–323
in global branding, 566–569
guidelines, 295–296
for high-tech products, 602–603
ingredient branding, 307–310
leveraging, 60, 292–293, 492
licensing, 310–313
online brands, 601
for small businesses, 606
third-party sources, 320
Z01_KELL4969_05_GE_IDX.indd 619 30/05/19 5:25 PM
620 INDEX
Secondary meaning, 171
Segmentation, 42
by age, 548–550
bases of, 78–80
criteria, 80
in e-mail marketing, 268
by ethnicity, 550–553
for industrial and B2B products, 602
by price, 194–195
regionalization, 547
by retailer, 201
Seiko, 232
Self-branded ingredient, 305
Self-construal, 499
Sephora, 121–122, 188, 296
Service effectiveness, 113
Service efficiency, 113
Service empathy, 113
Serviceability, 113
Services
branding, 42–44, 603–604
future of branding, 592
7UP, 160
Share of lifetime, 189
Shared media, 268
Shareholder value, 131, 135
Sharing information, 53–54
Shark Week, 234
Sharp, Byron, 51, 243
Shatner, William, 317
Shepherd, Cybil, 316
Sherwin-Williams, 197
Shock advertising, 76
Shopper marketing, 199
Short messaging service
(SMS), 278
Showrooming, 198, 252
Sibilants, 150
Sim, Shiela, 88
Simonson, Alex, 170
Simonson, Itamar, 170
Simplicity, 148
Simpson, O.J., 316
Sina Weibo, 277
Singapore Airlines, 97, 307–308
Singapore Tourist Board, 159
Sinje, Lee, 88
SK-II, 88
Skiko, Marla, 551
Skype, 149, 347
Slim-Fast, 305
Slogans, 158–161
Slot filler expansions, 305
Small businesses, branding,
605–606
“Smarter Planet” campaign, 296–298
Smith Corona, 523
Smucker’s, 149
Snapchat, 278, 382
Snickers, 158, 163–164
Social currency, 386
Social media
attribution modeling, 256, 383
in B2B branding, 42
brand engagement and, 263–266
data availability, 256–257
as data source, 341–344
future of branding, 594
global usage, 277–278
Hispanic and Latino market, 551
influencer marketing, 280–281
influencers on, 319
marketing expenditures on, 421
monitoring, 380–382
online brand conversations, 335–336
paid channels, 272–278
in political campaigns, 87
top brands, 257
word-of-mouth on, 286
Social media dashboard, 380
Social responsibility, 450, 452–453,
460–464, 516
SoftBank, 156
Sonic, 181
Sony, 234
Southwest Airlines, 117, 150, 193,
348, 522
Sparkfury, 152
Spartan Race, 183
Spears, Britney, 317
Spectra, 547–548
Sponsorships, 231–235, 282, 319,
322–323, 355
Spoofing, 154
Sports, branding, 47–49
Sports sponsorships. See Sponsorships
Spurious awareness, 377–378
Stadium naming rights, 233
Stainmaster, 310
Standardization, balancing with
customization, 568–569
Starbucks, 81, 167, 197, 308,
339–340, 373, 428–429, 567, 574
State Farm, 365
Stengel, Jim, 430
Stevia, 165
Stewart, David, 416
Stewart, Martha, 316
Stock market valuation, 419
Stonyfield Farm, 463
Store brands, 44, 206
Store-within-a-store, 203
Stork, Travis, 455
Straddle positions, 88–89
Strategic brand management, 59, 580
Strategic brand management
process, 59
steps in, 59–61
summary of framework, 580–582
Stuart, John, 36
Subaru, 82, 232
Subaru Palm Challenge, 231
Sub-brands, 432, 441–442, 471, 498,
595–596
Subway, 112
Supply-side method, 235
Swiffer, 375
Symbols, 154–155
Systematic risk, 419
T Taco Bell, 278, 342–343
TAG Heuer, 356
Take 35, 538
Talbots, 534–535
Tangible assets, 410
Tangoshark, 152
Target, 481
Target market, 78–80, 268, 534–536
Tarnishment, 170
Tata, 567
Taylor, David, 372, 588
Technology products
branding, 42, 43
innovations in, 52
Television advertising, 218–221, 244
Ten Commandments of Global Brand-
ing, 564–572
Tesco, 206
Tesco Clubcard, 184
Tesla, 486
Testino, Mario, 530
Text mining, 366
Third-party sources for secondary
brand associations, 320
Thomas, Dave, 317
Thompson, Joe, 352
Three, 363, 363–364
3M, 448, 449
390-degree media planning, 243–244
Ticketmaster, 195
Tide, 431, 460, 495, 556–558
Tide PODS, 593
Tim Horton’s, 295
Titan Company Limited, 476
T-Mobile, 402, 402–403
Tommy Hilfiger, 535–536
TOMS Shoes, 452–453
Tostitos, 236
Touchpoints, 256
Tough Mudder, 273
Z01_KELL4969_05_GE_IDX.indd 620 30/05/19 5:25 PM
INDEX 621
Tourism Australia, 219
Toyota, 144, 538, 552, 553
Tracking studies. See Brand tracking
studies
Trade promotions, 230
Trademark appropriation, 170
Trademark dilution, 170
Trademark Law Revision Act of 2,018,
171
Trademarks, 169–171, 312–313
Trader Joe’s, 207
Traditional marketing, integrating with
personalized marketing, 186
Transferability, 143–144
Transformational advertising, 119
Transformers, 307–308
TripAdvisor, 127, 267
Tropicana, 109, 166
Trump, Donald J., 87, 300, 457
Trump, Ivanka, 265
Twiddle, Beth, 323
Twitch, 591
Twitter, 275
Tylenol, 99, 236, 541–543
U Uber, 51, 236
Ueto Aya, 156
Ulukaya, Hamdi, 532
Umbrella brand, 437
Unaided recall, 377
Undercover Boss, 374
Uneeda Biscuits, 40
UNICEF, 47
Unilever, 208
Uniquely J, 208
United Airlines, 266, 457, 522
United States, as brand, 299–300
URLs, 153–154
US Airways, 85
U.S. Army, 162
U.S. Navy, 234
U.S. Open, 232
USA Today, 371
Usage imagery, 114
User experience
for digital brands, 261–262
online versus offline, 303
User imagery, 113–114
User manuals, 187
V V38 Splash, 85
Valuation approaches, 406, 408–412
Value equity, 135
Value pricing, 193–195
Value-based pricing strategies, 191
Van Cleef & Arpels, 182
Vera Wang, 303
Verizon, 93, 552
Vertical brand extensions, 484–487,
498
Viacom, 444
Vick, Michael, 316
Victoria’s Secret, 181, 604
Video advertising, 276–277
Viral reach, 272
Virgin, 479–480
Virgin Blue, 434
Virgin Mobile, 402
Virtual reality, 199
Vivaldi Partners, 386
Vizio, 185
Volkswagen, 520–521
Volvo, 72
W Walgreens, 207
Walker, Delanie, 236
The Wall Street Journal, 392–393, 394
Walmart, 164, 197, 463, 477, 604
Warby Parker, 63, 198, 202, 267
Warner-Lambert, 233
Washburn Crosby Company, 158
The Weather Channel, 594
Webrooming, 198
WeChat, 277
Weetabix, 563
Wei, Michelle, 357
Weibo, 277
Weldon, William, 543
Wells Fargo, 167
Weston, John, 345
Whirlpool, 461
Wickedly Prime, 208
Wienermobile, 226
Williams, Serena, 293,
333, 382
Willingness to recommend, 384
Wilsdorf, Hans, 352
Wilson, Campbell, 152
Wind, Jerry, 243
Winer, Russell S., 196
Winfrey, Oprah, 313–314
Winner-take-all markets, 55–56
Within-category assortment, 303
Wolf, Stephen, 85
Woods, Tiger, 316, 354
Word-of-mouth, 236, 286
Wozniak, Steve, 501
Wrangler, 317
Wyborowa, 148
X X Games, 233–235
X in brand names, 150
Xbox, 188
Xerox, 120, 475–476, 523
Y Yeti, 180–181
Yield management principles, 195
Yoplait, 438
Youku, 277
Young & Rubicam, 391
Yuengling, 84
Yves. St. Laurent, 171
Z Zaltman Metaphor Elicitation
Technique (ZMET), 368–369, 370
Zappos, 116, 605
Zeithaml, Valarie A., 135
Zipcar, 337
Z01_KELL4969_05_GE_IDX.indd 621 30/05/19 5:25 PM
- Cover
- Title Page
- Copyright Page
- Contents
- Preface
- About the Authors
- PART I Opening Perspectives
- Chapter 1 Brands and Brand Management
- Preview
- What Is a Brand?
- Brand Elements
- Brands versus Products
- BRANDING BRIEF 1‐1: Coca‐Cola’s Branding Lesson
- Why Do Brands Matter?
- Consumers
- Firms
- Can Anything Be Branded?
- BRANDING BRIEF 1-2: Branding Commodities
- Physical Goods
- THE SCIENCE OF BRANDING 1-1: History of Branding
- THE SCIENCE OF BRANDING 1-2: Understanding Business-to-Business Branding
- Services
- BRANDING BRIEF 1-3: Adobe
- Retailers and Distributors
- Digital Brands
- People and Organizations
- Sports, Arts, and Entertainment
- BRANDING BRIEF 1-4: Place Branding
- Geographic Locations
- Ideas and Causes
- What Are the Strongest Brands?
- THE SCIENCE OF BRANDING 1-3: On Brand Relevance and Brand Differentiation
- Branding Challenges and Opportunities
- Unparalleled Access to Information and New Technologies
- Downward Pressure on Prices
- Ubiquitous Connectivity and the Consumer Backlash
- Sharing Information and Goods
- Unexpected Sources of Competition
- Disintermediation and Reintermediation
- Alternative Sources of Information about Product Quality
- Winner-Takes-All Markets
- Media Transformation
- The Importance of Customer-Centricity
- The Brand Equity Concept
- Strategic Brand Management Process
- Identifying and Developing Brand Plans
- Designing and Implementing Brand Marketing Programs
- Measuring and Interpreting Brand Performance
- Growing and Sustaining Brand Equity
- Review
- Discussion Questions
- BRAND FOCUS 1.0: Unlocking the Secrets of Digital Native Brands
- Notes
- PART II Developing a Brand Strategy
- Chapter 2 Customer‐Based Brand Equity and Brand Positioning
- Preview
- Customer‐Based Brand Equity
- Defining Customer‐Based Brand Equity
- Brand Equity as a Bridge
- Making a Brand Strong: Brand Knowledge
- Sources of Brand Equity
- Brand Awareness
- Brand Image
- Identifying and Establishing Brand Positioning
- Basic Concepts
- Target Market
- Nature of Competition
- Points‐of‐Parity and Points‐of‐Difference
- BRANDING BRIEF 2-1: Subaru Finds Its Groove
- Positioning Guidelines
- Defining and Communicating the Competitive Frame of Reference
- Choosing Points‐of‐Difference
- Establishing Points‐of‐Parity and Points‐of‐Difference
- BRANDING BRIEF 2-2: Positioning Politicians
- Straddle Positions
- Updating Positioning over Time
- THE SCIENCE OF BRANDING 2-1: Brand Values Pyramid
- Developing a Good Positioning
- Defining a Brand Mantra
- Brand Mantras
- BRANDING BRIEF 2-3: Nike Brand Mantra
- BRANDING BRIEF 2-4: Disney Brand Mantra
- THE SCIENCE OF BRANDING 2-2: Branding Inside the Organization
- Review
- Discussion Questions
- BRAND FOCUS 2.0: The Marketing Advantages of Strong Brands
- Notes
- Chapter 3 Brand Resonance and the Brand Value Chain
- Preview
- Building a Strong Brand: The Four Steps of Brand Building
- Brand Salience
- Brand Performance
- Brand Imagery
- THE SCIENCE OF BRANDING 3-1: How Customer Experiences Define a Brand
- Brand Judgments
- Brand Feelings
- Brand Resonance
- BRANDING BRIEF 3‐1: Building Brand Communities
- Brand‐Building Implications
- BRANDING BRIEF 3-2: How Digital Platform‐Based Brands Create Customer Engagement
- The Brand Value Chain
- Value Stages
- Implications
- Review
- Discussion Questions
- BRAND FOCUS 3.0: Creating Customer Value
- Notes
- PART III Designing and Implementing Brand Marketing Programs
- Chapter 4 Choosing Brand Elements to Build Brand Equity
- Preview
- Criteria for Choosing Brand Elements
- Memorability
- Meaningfulness
- Likability
- Transferability
- Adaptability
- THE SCIENCE OF BRANDING 4-1: Counterfeit Business Is Booming
- Protectability
- Options and Tactics for Brand Elements
- Brand Names
- URLs
- Logos and Symbols
- Characters
- BRANDING BRIEF 4-1: SoftBank’s Otosan, the Talking Dog
- Slogans
- BRANDING BRIEF 4-2: Updating Betty Crocker
- Jingles
- Packaging
- Putting It All Together
- BRANDING BRIEF 4-3: Do-Overs with Brand Makeovers
- Review
- Discussion Questions
- BRAND FOCUS 4.0: Legal Branding Considerations
- Notes
- Chapter 5 Designing Marketing Programs to Build Brand Equity
- Preview
- New Perspectives on Marketing
- Integrating Marketing
- BRANDING BRIEF 5-1: Yeti Is the “Cooler” Brand
- Personalizing Marketing
- Reconciling the Different Marketing Approaches
- Product Strategy
- Perceived Quality
- Managing Customers Post-Purchase
- Pricing Strategy
- THE SCIENCE OF BRANDING 5-1: Understanding Consumer Price Perceptions
- Consumer Price Perceptions and Setting Prices
- Summary
- Channel Strategy
- Channel Design
- THE SCIENCE OF BRANDING 5-2: Research on Omnichannel
- Indirect Channels
- BRANDING BRIEF 5-2: Chew on This: How Milk‐Bone Brushing Chews Connected with Customers
- Direct Channels
- Online Strategies
- Summary
- Review
- Discussion Questions
- BRAND FOCUS 5.0: Private-Label Strategies and Responses
- Notes
- Chapter 6 Integrating Marketing Communications to Build Brand Equity
- Preview
- The New Media Environment
- Challenges in Designing Brand-Building Communications
- Role of Multiple Communications
- Three Major Marketing Communication Options
- Advertising
- THE SCIENCE OF BRANDING 6-1: The Importance of Database Marketing
- Promotion
- Online Marketing Communications
- Events and Experiences
- BRANDING BRIEF 6-1: Brand Building via the X Games
- Brand Amplifiers
- Public Relations and Publicity
- Word‐of‐Mouth
- Developing Integrated Marketing Communication Programs
- Criteria for IMC Programs
- THE SCIENCE OF BRANDING 6-2: Coordinating Media to Build Brand Equity
- Using IMC Choice Criteria
- Review
- Discussion Questions
- BRAND FOCUS 6.0: Empirical Generalizations in Advertising
- Notes
- Chapter 7 Branding in the Digital Era
- Preview
- Key Issues for Branding in the Digital Era
- Changes in the Consumer Decision Journey
- Growth of Online Retailing
- BRANDING BRIEF 7-1: The Phenomenal Rise of Amazon
- Advertising and Promotions Using Digital Channels
- BRANDING BRIEF 7-2: Igniting a Digital Firestorm
- One-to-Many to Many-to-Many Channels
- Increase in Consumer Touchpoints
- Increase in Data Availability
- Digital Personalization
- Loss of Control over Brand Message and Co-Creation of Brand Meaning
- User Experience Is the Key to Digital Brand Success
- THE SCIENCE OF BRANDING 7-1: Is Co‐Creation of Brands and Products Always Good?
- Brands as Cultural Symbols
- Brand Engagement
- Brand Engagement Pyramid
- Negative Brand Engagement
- BRANDING BRIEF 7-3: Shaving the Price of Razors
- THE SCIENCE OF BRANDING 7-2: Drivers of Brand Engagement
- Digital Communications
- Company Web Sites
- E-mail Marketing
- BRANDING BRIEF 7-4: Campaigning Using Clicks with Google AdWords
- Overview of Social Media Paid Channels
- Video
- Global Use of Social Media
- BRANDING BRIEF 7-5: On Being Social in China
- Mobile Marketing
- BRANDING BRIEF 7-6: Turning Flight Delays into Marketing Opportunities
- Influencer Marketing and Social Media Celebrities
- Content Marketing
- Guidelines for Good Content Marketing
- Case Studies
- Legal and Ethical Considerations
- The Pros and Cons of Paid Channels and the Need for Integration
- Brand Management Structure
- Review
- Discussion Questions
- BRAND FOCUS 7.0: Understanding How Online Word-of-Mouth Influences Brands and Brand Management
- Notes
- Chapter 8 Leveraging Secondary Brand Associations to Build Brand Equity
- Preview
- Conceptualizing the Leveraging Process
- Creation of New Brand Associations
- Effects on Existing Brand Knowledge
- Guidelines
- Company
- BRANDING BRIEF 8-1: IBM Promotes a Smarter Planet
- Country of Origin and Other Geographic Areas
- BRANDING BRIEF 8-2: Selling Brands the New Zealand Way
- Channels of Distribution
- THE SCIENCE OF BRANDING 8-1: Understanding Retailers’ Brand Images
- Co‐Branding
- Guidelines
- THE SCIENCE OF BRANDING 8-2: Understanding Brand Alliances
- Ingredient Branding
- BRANDING BRIEF 8-3: Ingredient Branding the DuPont Way
- Licensing
- Guidelines
- Celebrity Endorsement
- Potential Problems
- BRANDING BRIEF 8-4: Rachael Ray’s Nutrish
- Guidelines
- BRANDING BRIEF 8-5: Managing a Person Brand
- Social Influencers as the New Celebrities
- Sporting, Cultural, or Other Events
- Third‐Party Sources
- Review
- Discussion Questions
- BRAND FOCUS 8.0: Going for Corporate Gold at the Olympics
- Notes
- PART IV Measuring and Interpreting Brand Performance
- Chapter 9 Developing a Brand Equity Measurement and Management System
- Preview
- The New Accountability
- Conducting Brand Audits
- Brand Inventory
- Brand Exploratory
- Brand Positioning and the Supporting Marketing Program
- THE SCIENCE OF BRANDING 9-1: The Role of Brand Personas
- Designing Brand Tracking Studies
- What to Track
- BRANDING BRIEF 9-1: Sample Brand Tracking Survey
- Big Data and Marketing Analytics Dashboards
- Marketing Analytics Dashboards
- BRANDING BRIEF 9-2: How Taco Bell Uses Data‐Driven Social Media Marketing to Engage Its Customers
- Establishing a Brand Equity Management System
- BRANDING BRIEF 9-3: Understanding and Managing the Mayo Clinic Brand
- Brand Charter or Bible
- Brand Equity Report
- Brand Equity Responsibilities
- THE SCIENCE OF BRANDING 9-2: Maximizing Internal Branding
- Review
- Discussion Questions
- BRAND FOCUS 9.0: Sample Rolex Brand Audit
- Notes
- Chapter 10 Measuring Sources of Brand Equity: Capturing Customer Mind‐Set
- Preview
- Qualitative Research Techniques
- BRANDING BRIEF 10-1: Digging Beneath the Surface to Understand Consumer Behavior
- Free Association
- THE SCIENCE OF BRANDING 10-1: Using Text Mining to Uncover Brand Associations and Positioning
- Projective Techniques
- BRANDING BRIEF 10-2: Once Upon a Time . . . You Were What You Cooked
- Zaltman Metaphor Elicitation Technique
- Neural Research Methods
- Brand Personality and Values
- Ethnographic and Experiential Methods
- BRANDING BRIEF 10-3: Making the Most of Consumer Insights
- BRANDING BRIEF 10-4: Netnography as a Digital Research Technique
- BRANDING BRIEF 10-5: How P&G Innovates Using Qualitative Research Data
- Quantitative Research Techniques
- Brand Awareness
- Brand Image
- Social Media Listening and Monitoring
- BRANDING BRIEF 10-6: Gatorade’s Social Media Command Center
- Brand Responses
- BRANDING BRIEF 10-7: Understanding Attribution Modeling
- Brand Relationships
- THE SCIENCE OF BRANDING 10-2: Understanding Brand Engagement
- Comprehensive Models of Consumer‐Based Brand Equity
- Review
- Discussion QuestIons
- BRAND FOCUS 10.0: Young & Rubicam’s Brand Asset Valuator
- Notes
- Chapter 11 Measuring Outcomes of Brand Equity: Capturing Market Performance
- Preview
- Comparative Methods
- Brand‐Based Comparative Approaches
- Marketing‐Based Comparative Approaches
- Conjoint Analysis
- Holistic Methods
- Residual Approaches
- Valuation Approaches
- Brand Valuation: A Review of Major Approaches
- Interbrand
- BrandZ
- Brand Finance
- Comparing the Major Brand Valuation Approaches
- THE SCIENCE OF BRANDING 11-1: Understanding Brand Valuation
- Review
- Discussion Questions
- BRAND FOCUS 11.0: Financial Perspectives on Brands and the Brand Value Chain
- Notes
- PART V Growing and Sustaining Brand Equity
- Chapter 12 Designing and Implementing Brand Architecture Strategies
- Preview
- Developing a Brand Architecture Strategy
- THE SCIENCE OF BRANDING 12-1: The Brand-Product Matrix
- Step 1: Defining Brand Potential
- BRANDING BRIEF 12-1: Google: Expanding Beyond Search
- Step 2: Identifying Brand Extension Opportunities
- Step 3: Specifying Brand Elements for Branding New Products and Services
- Summary
- Brand Portfolios
- BRANDING BRIEF 12-2: Expanding the Marriott Brand
- Brand Hierarchies
- Levels of a Brand Hierarchy
- Designing a Brand Hierarchy
- BRANDING BRIEF 12-3: Netflix: Evolving a Brand Architecture to Grow the Brand
- Corporate Branding
- BRANDING BRIEF 12-4: Corporate Reputations: The Most Admired U.S. Companies
- THE SCIENCE OF BRANDING 12-2: Brand Architecture Strategies: House of Brands or Branded House?
- Corporate Image Dimensions
- BRANDING BRIEF 12-5: Corporate Innovation at 3M
- Managing the Corporate Brand
- THE SCIENCE OF BRANDING 12-3: When Brands Trade Hands
- Brand Architecture Guidelines
- Review
- Discussion Questions
- BRAND FOCUS 12.0: Corporate Social Responsibility And Brand Strategy
- Notes
- Chapter 13 Introducing and Naming New Products and Brand Extensions
- Preview
- New Products and Brand Extensions
- BRANDING BRIEF 13-1: Growing the McDonald’s Brand
- Advantages of Extensions
- Facilitate New‐Product Acceptance
- Provide Feedback Benefits to the Parent Brand
- Disadvantages of Brand Extensions
- Can Confuse or Frustrate Consumers
- Can Encounter Retailer Resistance
- Can Fail and Hurt Parent Brand Image
- Can Succeed but Cannibalize Sales of Parent Brand
- Can Succeed, but Diminish Identification with Any One Category
- BRANDING BRIEF 13-2: Are There Any Boundaries to the Virgin Brand Name?
- Can Succeed, but Hurt the Image of the Parent Brand
- Can Dilute Brand Meaning
- Can Cause the Company to Forego the Chance to Develop a New Brand
- Understanding How Consumers Evaluate Brand Extensions
- Managerial Assumptions
- Brand Extensions and Brand Equity
- Vertical Brand Extensions
- THE SCIENCE OF BRANDING 13-1: Scoring Brand Extensions
- BRANDING BRIEF 13‐3: Mambo Extends Its Brand
- Evaluating Brand Extension Opportunities
- Define Actual and Desired Consumer Knowledge about the Brand
- Identify Possible Extension Candidates
- Evaluate the Potential of the Extension Candidate
- Design Marketing Programs to Launch Extension
- Evaluate Extension Success and Effects on Parent Brand Equity
- Extension Guidelines Based on Academic Research
- Review
- Discussion Questions
- BRAND FOCUS 13.0: Apple: Creating a Tech Megabrand
- Notes
- Chapter 14 Managing Brands Over Time
- Preview
- Reinforcing Brands
- Maintaining Brand Consistency
- BRANDING BRIEF 14-1: Patagonia
- BRANDING BRIEF 14-2: Pabst
- Protecting Sources of Brand Equity
- BRANDING BRIEF 14-3: Volkswagen
- THE SCIENCE OF BRANDING 14-1: Understanding Brand Crises
- Fortifying versus Leveraging
- Fine‐Tuning the Supporting Marketing Program
- Revitalizing Brands
- BRANDING BRIEF 14-4: Harley‐Davidson Motor Company
- BRANDING BRIEF 14-5: A New Morning for Mountain Dew
- BRANDING BRIEF 14-6: Remaking Burberry’s Image
- Expanding Brand Awareness
- Improving Brand Image
- Adjustments to the Brand Portfolio
- Migration Strategies
- Acquiring New Customers
- Retiring Brands
- Obsoleting Existing Products
- Review
- Discussion Questions
- BRAND FOCUS 14.0: Responding to a Brand Crisis
- Notes
- Chapter 15 Managing Brands Over Geographic Boundaries and Market Segments
- Preview
- Regional Market Segments
- Other Demographic and Cultural Segments
- Marketing Based on Age
- Marketing Based on Ethnicity
- Global Branding
- BRANDING BRIEF 15-1: Marketing to Ethnic Groups
- Why Should a Brand Focus on Global Markets?
- Advantages of Global Marketing
- Disadvantages of Global Marketing
- THE SCIENCE OF BRANDING 15-1: Key Insights Regarding Global Brand Strategies Based on Research Findings
- Strategies for Creating & Managing Global Brands
- Creating Global Brand Equity
- Global Brand Positioning
- BRANDING BRIEF 15-2: Coca-Cola’s Global Brand Strategy with Local Elements
- Customizing Marketing Mix Elements in Local Markets for Global Brands
- Product Strategy
- Communication Strategy
- Distribution Strategy
- Pricing Strategy
- Marketing to Consumers in Developing and Developed Markets
- Ten Commandments to Building Global Customer‐Based Brand Equity
- BRANDING BRIEF 15-3: Marketing to Bicultural Consumers Using Bilingual Advertising
- BRANDING BRIEF 15-4: Managing Global NestlÉ Brands
- Review
- Discussion Questions
- BRAND FOCUS 15.0: China’s Global Brand Ambitions
- Notes
- PART VI Closing Perspectives
- Chapter 16 Closing Observations
- Preview
- Strategic Brand Management Guidelines
- Summary of Customer‐Based Brand Equity Framework
- Tactical Guidelines
- What Makes a Strong Brand?
- BRANDING BRIEF 16-1: The Brand Report Card
- BRANDING BRIEF 16-2: Reinvigorating Branding at Procter & Gamble
- Future Brand Priorities
- Fully and Accurately Factor the Consumer into the Branding Equation
- Go Beyond Product Performance and Rational Benefits
- Make the Whole of the Marketing Program Greater Than the Sum of the Parts
- Understand Where You Can Take a Brand (and How)
- Do the “Right Thing” with Brands
- Take a Big Picture View of Branding Effects. Know What Is Working (and Why)
- Finding the Branding Sweet Spot
- New Capabilities for Brand Marketers
- Review
- Discussion Questions
- BRAND FOCUS 16.0: Special Applications
- Notes
- Index
