2 Class Def

8/8/2019 2 Class Def

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Prof. Dr. M. Bienert, Brand Management

Brand Management

Prof. Dr. Bienert

2nd class


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2Prof. Dr. M. Bienert, Brand Management

There is only one valid definition of business purpose: to create a satisfiedcustomer. It is the customer who determines what the business is. For it isthe customer, and he alone, who through being willing to pay for a goodservice, converts economic resources into wealth, things into goods.

What the business thinks it produces is not of first importance -especiallynot to the future of the business and to its success. What the customerthinks he is buying, what he condors "value", is decisive ... Because it is

its purpose to create a customer, any business enterprise has two -and onlythese two- basic functions: marketing and innovation ...

Actually marketing is so basic that it is not just enough to have a strong

sales force and to entrust marketing to it. Marketing is not only muchbroader than selling, it is not a specialised activity at all. It is the wholebusiness seen from the point of view of its final result, that is, from thecustomer`s point of view.

(Peter Drucker, 1954)

What is Business ?


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Brands as Strategic Assets

The history of brands: Greek amphoras, cattle, industrialization, productavailability and trust

Brands as the dominant factor in industries since the mid1980ies:consumers buy branded products that promise tangible and intangiblebenefits created by the efforts of a company.

Brands influenced prices paid in M&As: in the 1980ies it was usually 7 8 times earnings, now it may be as high as 20 25 times earnings.

The shift from manufacturers to distributor brands: discuss examples.

What is a brand?


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Brand Definitions

Legal Perspectivea sign or set of signs certifying the origin of a product or service anddifferentiating it from the competitionFrom the legal perspective a brand has a birthday: its registration day, they

become property. One of the sources of loss of rights is degenerescence,that is a distinctive brand name has become a generic term.

Brand as a Name that Influences Buyers (Kapferer)

- saliency- differentiability- intensity- trustIn our attention economy consumers cannot spend much time before

making choices. Brands must convey certitude, trust: they are a time andrisk reducer. A brand as existing when it has acquired power to influencethe market.Kapferers (living) brand system: brand concept (value proposition), brand

name and symbols, product or service.


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Brand Definitions

The triangle of concept, name and product or service

brand concept (value proposition),

brand name and symbols product or service

Kapferers brand system is a living system because the brand should be:

1- embodied in products, services, places

2- enacted by people at contact points

3- activated by deeds and behaviors

4- distributed


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Brand Definitions:

Assets, Strength, Value

Brand assets * Brand strength * Brand value

Brand awareness Market share Net discounted cash flow

Brand reputation (attributes, Market leadership attributable to the brand after

benefits, competence, Market penetration paying the cost of capital

know-how, etc.) Share of requirements invested to produce and run

Brand personality Growth rate the business and the cost of

Brand deep values Loyalty rate marketing

Brand imagery Price premium

Brand reference of attachmentPatents and rights

* Conditional not direct consequence


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Brand Assets, Strength, Value:

Which of these to measure?

Marketing directors consider the following characteristics important and track them:

- Brand awareness (65%)

- Strength of brand positioning (39%) (concept, personality, image)

- Strength of signs of recognition (36%) (logo, codes, packaging)

- Brand authority with consumers (24%) (brand esteem, status, loyalty)


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Functions of Brands

Function Customer Benefit

Identification To be clearly seen, to make sense of the offer, to quickly identify the

sought-after productsPracticality To allow savings of time and energythrough identical repurchasing and

loyalty.

Guarantee To be sure of finding the same qualityno matter where or when you buy

the product or service.

Optimization To be sure of buying the best productin its category, the best performer for aparticular purpose.

Badge To have confirmation of your self-imageor the imagethat you present to others.

Continuity Satisfaction created by a relationship of familiarityand intimacy with the brand

that you have been consuming for years.

Hedonistic Enchantmentlinked to the attractiveness of the brand, its logo, its

communication and its experiential rewards.

Ethical Satisfaction linked to the responsiblebehavior of the brand in its relationship

with society (ecology, employment, citizenship, advertising which doesnt shock.)


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Brand Profitability

The financial value of a brand is the difference between the extra revenue

generated by the brand and the associated costs for the next few years,

discounted.

Generators of profit:

1. price premium

2. attraction and loyalty

3. higher margin


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Brand Profitability

Corporate Resources

Investments: productivity, Mktg Investments Distribution InvestmentsKnow-how, patents forecasting changes of (proximity, availability,

consumer values and and communication)life styles

Level of objective Brand relevance and Share of Voicequality and cost adaptation to its Share of Mind

of quality present market Share of Shelf

Competition Brand saliency Customers-other brands Perceived value - involvement

- hard discounts Vis--vis competition - price sensitivity- distributor owned brands - buying criteria

Level of Incremental Cost advantagessustainable price premium attraction and loyalty due to market leadership

Extending brand equity

beyond its category and country


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Brands and Corporations

corporate brandsCompanies based their success on product brands, they are now starting to

create and sustain corporate brands in order to make company actions, values

and missions more salient and to diffuse specific added values. Stakeholder

approaches thrive: reputation among them is built. Reputation and shareperformance are linked.

Fombrun is using six factors to rank companies reputations:

1. Emotional appeal (trust, admiration, respect)

2. Products and services (quality, innovativeness, value for money, etc.)

3. Vision and leadership

4. Workplace quality ( well-managed, appealing workplace, employee talent)

5. Financial performance

6. Social responsibility

Example: Nike corporate and / or commercial brand? Nike as a company

heavily criticized.


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Corporate Reputation

and Corporate Brand

Build the brand behind the brand: companies that start building product

brands decide to create corporate brands to make company actions, values and

missions more salient (current example: Unilever).Companies reputation becomes more and more important: image has fallen into

disrepute as companies have been seen as image makers. Reputation has

more depth, is more involving, companies try to meet the expectations of

stakeholders. Reputation takes the company as a whole.

Factors of global reputation:

emotional appeal (trust, admiration, respect)

products and services (quality, innovativeness, value for money, etc.)

vision and leadership

workplace quality (well-managed, appealing, employee talent)

financial performance

social responsibility


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Corporate Reputation

and Corporate BrandDifferences to product brands:

- Product brands are more imaginary, relying on intangible values, e.g.

Marlboros intangible values are pure construction

- For companies this cannot be the same: reality leaves fewer degrees of

freedom

- Corporate brands must tailor their profile to meet expectations of multiple

publics / stakeholders: core value must be tailored for this global audience

Manage:

- Spillover effects- Different approaches: umbrella (GM, GE reveal corporation behind brand),

separation (LVMH: 41 different brands with separate

communication and marketing)

2 Class Def

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