branding iims

8/4/2019 Branding Iims

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INTRODUCTION TO

BRANDING



• Why do companies such as Coca-Cola,Microsoft, IBM and Disney seem to achieve

global marketing success so easily? Whydoes it seem such an effort for others?

• Why do we, as consumers, feel loyal tosuch brands that the mere sight of their logohas us reaching into our pockets to buy their products?



The meaning of brands

• Brands are a means of differentiating a company’s

products and services from those of its

competitors.• There is plenty of evidence to prove that customers

will pay a substantial price premium for a good

brand and remain loyal to that brand. It is

important, therefore, to understand what brands areand why they are important.



• McDonalds sums this up nicely in the followingquote emphasizing the importance of brands:

• “…it is not factories that make profits, but relationships with customers, and it is companyand brand names which secure thoserelationships”

• Businesses that invest in and sustain leading brands prosper whereas those that fail are left to fight for the lower profits available in commodity markets.



• “If Coca-Cola were to lose all of its production-related assets in a disaster, the

company would survive. By contrast, if allconsumers were to have a sudden lapse of memory and forget everything related toCoca-Cola the company would go out of

business.”

• Coca-Cola



What is a brand?• One definition of a brand is as follows:

• “A name, term, sign, symbol or design, or acombination of these, that is intended to identify the

goods and services of one business or group of businesses and to differentiate them from those of

competitors”.• Interbrand - a leading branding consultancy - define a

brand in this way:

• “A mixture of tangible and intangible attributes

symbolized in a trademark, which, if properlymanaged, creates influence and generates value”.



• “Brand equity” refers to the value of a brand. Brand

equity is based on the extent to which the brand has

high brand loyalty, name awareness, perceivedquality and strong product associations. Brand

equity also includes other “intangible” assets such as

patents, trademarks and channel relationships.

Brand Equity



Brand image

• “Brand image” refers to the set of beliefs

that customers hold about a particular

brand. These are important to develop well

since a negative brand image can be very

difficult to shake off.



Brand extension

• “Brand extension” refers to the use of a

successful brand name to launch a new or

modified product in a new market. Virgin is

perhaps the best example of how brand

extension can be applied into quite diverseand distinct markets.



Branding gives the seller several

advantages

• Seller’s brand name and trademark provide legal

protection of unique product features

•Branding gives the seller the opportunity to attract aloyal and profitable set of customers.

• Branding helps the seller segment markets.

• Strong brands help build corporate image, making it

easier to launch new brands and gain acceptance bydistributors and consumers.



Benefits of Branding

TO A BUYER

• Help buyers identify the product that theylike/dislike.

• Identify marketer

• Helps reduce the time needed for purchase.• Helps buyers evaluate quality of products

especially if unable to judge a productscharacteristics.

• Helps reduce buyers perceived risk of purchase.

• Buyer may derive a psychological reward fromowning the brand, IE Rolex or Mercedes.



BRANDS - BUILDING A BRAND

• What factors are important in building

brand value?

• Professor David Jobber identifies seven

main factors in building successful brands,

as given next:



Quality

• Quality is a vital ingredient of a good brand.

Remember the “core benefits” – the thingsconsumers expect. These must be delivered well and

consistently. The branded washing machine that

leaks, or the training shoe that often falls apart whenwet, or a watch which needs frequent adjustments

will never develop brand equity.

• Research confirms that, statistically, higher quality brands achieve a higher market share and higher

profitability than that of their inferior competitors.



Positioning• Positioning is about the position a brand occupies

in a market in the minds of consumers. Strong brands have a clear, often unique position in the

target market.

• Positioning can be achieved through several means,including brand name, image, service standards,

product guarantees, packaging and the way in

which it is delivered. In fact, successful positioning

usually requires a combination of these things.



Repositioning

•Repositioning occurs when a brandtries to change its market position to

reflect a change in consumer’s tastes.

This is often required when a brandhas become tired, perhaps because its

original market has matured or has

gone into decline.



Communications• Communications also play a key role in building a

successful brand. We suggested that brand positioning is essentially about customer perceptions

– with the objective to build a clearly defined

position in the minds of the target audience.• All elements of the promotional mix need to be used

to develop and sustain customer perceptions.

Initially, the challenge is to build awareness, then todevelop the brand personality and reinforce the

perception.



First-mover advantage

• Business strategists often talk about first-mover advantage. In terms of branddevelopment, by “first-mover” they mean

that it is possible for the first successful brand in a market to create a clear positioning in the minds of targetcustomers before the competition entersthe market. There is plenty of evidence tosupport this.



Long-term perspective

• The need to invest in the brand over thelong-term is utmost essential. Building

customer awareness, communicating the brand’s message and creating customer loyalty takes time. This means thatmanagement must “invest” in a brand,

perhaps at the expense of short-term profitability.



Internal Marketing

• Finally, management should ensure that the brand ismarketed “internally” as well as externally. By this we mean

that the whole business should understand the brand values

and positioning. This is particularly important in service

businesses where a critical part of the brand value is the typeand quality of service that a customer receives.

• Think of the brands that you value in the restaurant, hotel and

retail sectors. It is likely that your favorite brands invest

heavily in staff training so that the face-to-face contact that

you have with the brand helps secure your loyalty.



An Effective Brand Name

● Is easy to pronounce

● Is easy to recognize and remember

● Is short, distinctive, and unique

● Has a positive connotation

● Reinforces the product image

● Is legally protectable



Branding Strategies

BrandBrand No BrandNo Brand

Manufacturer’sBrand

Manufacturer’sBrand Private BrandPrivate Brand

IndividualBrand

IndividualBrand

FamilyBrand

FamilyBrand

Combi-nation

Combi-nation

IndividualBrand

IndividualBrand

FamilyBrand

FamilyBrand

Combi-nation

Combi-nation



Manufacturers’ Brands Versus

Private Brands

Manufacturers’Manufacturers’

BrandBrand

Manufacturers’Manufacturers’BrandBrand

PrivatePrivate

BrandBrand

PrivatePrivate

BrandBrand

The brand name of amanufacturer.

The brand name of amanufacturer.

A brand name owned by awholesaler or a retailer. Also

known as a private label or storebrand.

A brand name owned by awholesaler or a retailer. Also

known as a private label or storebrand.



Types of brand

• There are two main types of brand – manufacturer brands and own-label brands.

• Manufacturer brands

• Manufacturer brands are created by producers and bear their chosen brand name. The producer isresponsible for marketing the brand. The brand isowned by the producer.

• By building their brand names, manufacturers cangain widespread distribution (for example byretailers who want to sell the brand) and buildcustomer loyalty (think about the manufacturer

brands that you feel “loyal” to).



Private Label brands

• Own-label brands are created and owned by businesses that operate in the distribution channel – often referred to as “distributors”.

• Often these distributors are retailers, but notexclusively. Sometimes the retailer’s entire productrange will be own-label. Own-label branding – if

well carried out – can often offer the consumer excellent value for money and provide thedistributor with additional bargaining power when itcomes to negotiating prices and terms with

manufacturer brands.



Advantages of Private Brands

• Earn higher profits

• Less pressure to mark down prices• Ties customer to wholesaler or

retailer



Advantages of

Manufacturers’ Brands

• Develop customer loyalty

• Attract new customers

• Enhance prestige

• Ensure dealer loyalty



Individual Brands Versus

Family Brands

IndividualIndividualBrandBrand

IndividualIndividualBrandBrand

FamilyFamily

BrandBrand

FamilyFamily

BrandBrand

Using different brand names for different products.

Using different brand names for different products.

Marketing several different

products under the samebrand name.

Marketing several differentproducts under the same

brand name.



Branding Policies

• First question is whether to brand or not to brand.Homogenous products are difficult to brand Branding

policies are:

• Individual Branding: Naming each product differently P&G,

facilitates market segmentation and no overlap.• Overall Family Branding: All products are branded with the

same name, or part of a name, IE Nokia, promotion of oneitem also promotes other items.

• Line Family Branding: Within one product line.• Brand Extension Branding: Use one of its existing brand

names as part of a brand for an improved or new product,usually in the same product category.

75% new products are brand extensions!!

1 C C l



1. Coca-Cola

• $67,000 million

• Based in U.S.• Flagging appetite for soda has cut demand for Coke, but the

beverage giant has a raft of new products in the pipeline that couldreverse its recent slide.



2 Microsoft

• $56,926 million

• Based in U.S.

•Threats from Google and Apple haven't yet offset the power of itsWindows and Office monopolies.

3 IBM



3 IBM

• $56,201 million

• Based in U.S. Having off-loaded its low-profit PC business to Lenovo,

IBM is marketing on the strategic level to corporate leaders.

4 GE



4.GE

• $48,907 million

• Based in U.S. The brand Edison built has extended its reach from ovens

to credit cards, and the "Ecomagination" push is making GE look like arotector of the lanet.

5 Intel



5.Intel

• $32,319 million

• Based in U.S. Profits and market share weren't the only things slammed

by rival AMD. Intel's brand value tumbled 9%, as it loss business from-



6.Nokia

• $30,131 million

• Based in Finland .Fashionable designs and low-cost models for the

developing world enabled the mobile phone maker to regain groundagainst com etitors.



7.Toyota

• $27,941 million

• Based in Japan. Toyota is closing in on GM to become the world's biggest automaker. A slated 10% increase in U.S. sales this year willhelp even more.



8. Disney

• $27,848 million

• Based in U.S. New CEO Robert Iger expanded the brand by buyinganimation hit-maker Pixar and beefing up digital distribution of TV

shows through the Internet and iPods.



9.McDonald's

• $27,501 million

• Based in U.S. A new healthy-living marketing campaign—and the premium-priced sandwiches and salads that came with it—have led to afourth year of sales gains.

10 Mercedes Benz



10.Mercedes-Benz

• $21,795 million

• Based in Germany The new S-Class sedan and M-Class SUV arehelping repair a tarnished quality reputation. High costs and weak

margins will take longer to fix.



Here's how we calculate the power

in a name

• INTERBRAND TAKES lots of ingredients into accountwhen ranking the world's most valuable brands. To even

qualify for the list, each brand must derive about a third of its earnings outside its home country, be recognizableoutside of its base of customers, and have publicly availablemarketing and financial data. One or more of those criteria

eliminate such heavyweights as Visa, Wal-Mart, Mars, andCNN. Interbrand doesn't rank parent companies, whichexplains why Procter & Gamble doesn't show up. Andairlines are not ranked because it's too hard to separate their

brands' impact on sales from factors such as routes and

schedules.



• BUSINESSWEEK CHOSE Interbrand's methodology because itevaluates brands much the way analysts value other assets: on the basisof how much they're likely to earn in the future. The projected profitsare then discounted to a present value, taking into account the

likelihood that those earnings will actually materialize.• THE FIRST STEP IS figuring out what percentage of a company's

revenues can be credited to a brand. (The brand may be almost theentire company, as with McDonald's Corp., or just a portion, as it is for Marlboro.) Based on reports from analysts at J.P. Morgan Chase,

Citigroup, and Morgan Stanley, Interbrand projects five years of earnings and sales for the brand. It then deducts operating costs, taxes,and a charge for the capital employed to arrive at the intangibleearnings. The company strips out intangibles such as patents andmanagement strength to assess what portion of those earnings can beattributed to the brand.



• FINALLY, THE BRAND'S strength is assessed todetermine the risk profile of those earningsforecasts. Considerations include market

leadership, stability, and global reach—or theability to cross both geographic and cultural

borders. That generates a discount rate, which isapplied to brand earnings to get a net present value.

BusinessWeek and Interbrand believe this figurecomes closest to representing a brand's trueeconomic worth.

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