2

Content

STRESZCZENIE ....................................................................................................................... 4

INTRODUCTION ..................................................................................................................... 6

Chapter 1. Branding vs competitive advantage ....................................................................... 10

Introduction .......................................................................................................................... 10

1.1. Elemental concepts of brad management ...................................................................... 11

1.2. Brand strategies ............................................................................................................. 25

1.2.1. Corporate branding ................................................................................................ 25

1.2.2. Product branding .................................................................................................... 26

1.3. Sources and measurement of competitive advantage ................................................... 28

Summary .............................................................................................................................. 33

Chapter 2. Brand strategies and concepts in publishing and their impact on competitive

advantage ................................................................................................................................. 34

Introduction .......................................................................................................................... 34

2.1. Specificity of branding in the publishing market .......................................................... 35

2.2. Brand strategies in publishing ....................................................................................... 41

2.2.1. Publisher branding ................................................................................................. 41

2.2.2. Author branding ..................................................................................................... 44

2.2.3. Series and character branding ................................................................................ 46

2.3. Competitive advantage of selected publishers .............................................................. 49

2.3.1. Penguin vs competitors .......................................................................................... 49

2.3.2. Avon vs competitors .............................................................................................. 52

Summary .............................................................................................................................. 55

3. Customer-based brand equity vs competitive advantage ..................................................... 56

Introduction .......................................................................................................................... 56

3.1. Problem identification ................................................................................................... 57

3.2. Research methodology .................................................................................................. 58

3

3.3. Analysis of results ......................................................................................................... 62

3.4. Conclusions ................................................................................................................... 72

Summary ............................................................................................................................... 77

SUMMARY ............................................................................................................................. 79

List of pictures .......................................................................................................................... 83

List of tables ............................................................................................................................. 83

List of charts ............................................................................................................................. 83

Appendix 1. Questionnaire for Penguin ................................................................................... 85

Appendix 2. Questionnaire for Avon ....................................................................................... 90

Appendix 3. Questionnaire for Czarna Owca ........................................................................... 95

Bibliography ........................................................................................................................... 100

4

STRESZCZENIE

Niniejsza praca powicona jest zagadnieniu kapitau marki jako rda przewagi

konkurencyjnej na rynku wydawniczym. Jej gwnym celem jest zbadanie czy kapita marki

moe wpywa na zachowania zakupowe czytelnikw, a tym samym przyczyni si

do wzrostu konkurencyjnoci wydawnictw. Do tej pory wierzono, e konsumenci tego sektora

nie zwracaj uwagi na mark wydawnictwa przy wyborze ksiek, a gwnym czynnikiem

decyzyjnym w tym wypadku jest autor. Z tego powodu firmy wydawnicze nigdy nie

zbudoway silnych marek korporacyjnych skupiajc si raczej na promocji indywidualnych

pisarzy i powieci. Jednake w ostatnim czasie rynek wydawniczy przeywa ogromne

zmiany, ktre zmuszaj wydawcw do poszukiwania nowych rde przewagi

konkurencyjnej i zwrcenia uwagi na branding.

Pierwszy rozdzia pracy ma charakter teoretyczny i jest powicony przedstawieniu

najwaniejszych zagadnie zwizanych z mark jak kapita marki, a take przewag

konkurencyjn. Oprcz zdefiniowania podstawowych terminw z tego zakresu, w czci tej

zostan rwnie przedstawione sposoby pomiary przewagi konkurencyjnej, ze szczeglnym

uwzgldnieniem miernika poziomu kapitau marki opracowanego przez Davida Aakera. Wzr

ten zostanie rwnie wykorzystany w dalszej czci pracy do zmierzenia kapitau marki

analizowanych wydawcw. W rozdziale drugim zaprezentowana zostanie specyfika

zarzdzania mark na rynku wydawniczym. Najwaniejsze strategie marki stosowane przez

wydawcw zostan opisane wraz z przykadami. Poza tym, Penguin i Avon zostan

przeanalizowane pod wzgldem wskanikw efektywnoci na podstawie raportw

prezentujcych i kondycj finansow. Rozdzia trzeci ma charakter analityczny i zostan

w nim przedstawione wyniki badania przeprowadzonego przez autork, w ktrym staraa si

zmierzy wpyw kapitau marki na zachowania zakupowe czytelnikw.

Wyniki badania dowodz, e kapita marki moe by rdem przewagi

konkurencyjnej na rynku wydawniczym. Jak oczekiwano Penguin mia najlepsze wyniki

pod tym wzgldem, a jego kapita marki okaza si prawie trzykrotnie wikszy

od redniej. Co wicej, badanie dowiodo, e istnieje silny zwizek midzy kapitaem marki,

a lojalnoci czytelnikw. Im bardziej pozytywne skojarzenia wzbudza

w konsumentach wydawca, tym bardziej s oni lojalni wobec marki, czego silnie dowodz

przykady Penguina, i Avonu. Wrd czytelnikw wydawnictwa Czarna Owca zauwaono

znacznie mniejsz korelacj midzy kapitaem, a lojalnoci marki. Wynika to w duej mierze

5

z tego, e w Polsce, ze wzgldu na nisze dochody, czciej wypoycza si ksiki

z biblioteki, a nie kupuje nowe.

Podsumowujc, wszystkie hipotezy badawcze opracowane przez autork zostay

potwierdzone i dowodz, e kapita marki wywiera ogromny wpyw na zachowania zakupowe

czytelnikw. Wysoki kapita marki skutkuje zazwyczaj du liczb kupowanych rocznie

ksiek sprzedawanych przez danego wydawc. Ponadto, wikszo czytelnikw przyznaje,

e jest gotowa poleci mark swoim znajomym co korzystnie wpywa na jego

konkurencyjno. Przykady Penguina, Avonu i Czarnej Owcy dowodz,

e zbudowanie silnej i powszechnie rozpoznawalnej marki moe sta si rdem przewagi

konkurencyjnej na rynku wydawniczym. Z tego powodu inni wydawcy powinni rwnie

stworzy swoje marki korporacyjne, ktre pozwoliby im na ustanowienie dugotrwaych

relacji z konsumentami.

6

INTRODUCTION

The following thesis focuses on the concept of customer-based brand equity

as source of competitive advantage in book publishingg market. The author has chosen this

particular topic due to her personal interest in publishing, as well as because

of the growing significance of branding in this business sector. For many years it has been

believed that readers do not pay any attention to the publisher when purchasing books

and therefore vast majority of publishing houses did not build strong corporate brands that

would carry meaning for their customers. Only few imprints managed to establish complex

brand strategies that contributed to their market success and the most notable example of such

organization is Penguin. Most of the publishers however still promote individual books and

authors rather than endeavor to build imprint brands. Nonetheless, recently traditional

publishing is experiencing relevant changes that threaten its further existence thus publishers

are forced to seek new sources of competitive advantage and branding comes to the fore as it

proved to be extremely effective for other business sectors. Corporate branding allows to

generate long-term relationships with customers that provides numerous benefits for both

parties that will be thoroughly examined in this thesis. The growing interest in branding also

derives from the fact that in case of professional books (e.g. business and academic literature),

publishers brand is not only highly recognizable, but it is also one of the most important

deciding factors. With that in mind, more and more scholars argue that the same could be

done for imprints specializing in fiction. The author will examine branding in publishing

on the examples of Penguin, Avon and Czarna Owca. These particular publishing houses have

been chosen because they managed to build strong corporate brands that are widely

recognized

by customers.

The goal of this thesis is to determine whether customer-based brand equity has

impact on purchase behaviors of readers and could be thus a relevant source of competitive

advantage in the book publishing market. This statement was also the main hypothesis tested

in primary research conducted for the purpose of this study. The whole thesis has been

divided into three chapters. The first and second chapter are theoretical and they are devoted

to definition of the most relevant aspects of branding in general, as well as in the publishing

industry. The third part of the thesis is strictly analytical and it is devoted to presenting results

of the research conducted by the author that examined relationship between customer-based

brand equity and purchase behaviors of readers of Penguin, Avon and Czarna Owca.

7

The analysis will be done with regard to predefined research hypotheses that are going to be

verified.

Chapter one is devoted to explanation of the most significant concepts related to

branding, with emphasis on brand equity and its components. The term brand will be defined

from a few different perspectives. The most suitable definition of this concept that fits to

current conditions is the one seeing it as mix of physical product, brand name, packaging,

advertising as well as a set of customers ideas, beliefs and opinions about the particular

product or service. Brands play a vital role in contemporary marketing and their basic

functions include information, identification, guarantee and promotion that will be in detail

explained along with other functions fulfilled by brands. Furthermore, the first chapter will

focus on various perspectives of brand equity that is currently a significant source of long-

term competitive advantage. Moreover, brand strategies corporate and product branding

will be explained with emphasis on the main differences between these two. The last part

of chapter one will be devoted the concept of competitive advantage its meaning, sources

and measurement particular. While presenting the latter, the author put emphasis to brand

equity score elaborated by Aaker that will be further used in chapter three to verify one

of the research hypotheses.

The second chapter of the thesis will focus on specificity of branding in the publishing

market. It has already been mentioned that for a long time it was believed that readers do not

pay attention nor take the publisher in their purchase decision regarding book products. In this

part four brand strategies used in publishing will be thoroughly discussed. These include -

publisher branding, author branding, series branding and character branding. The most

relevant assumptions and benefits generated by each of them will be presented along with the

most notable examples of publishing houses using them in practice. Furthermore, interesting

case studies of brand strategies in publishing will be examined including Penguin, Avon,

Czarna Owca and J.K. Rowling who is considered to be one of the strongest author brands

in contemporary literature. Chapter three will also cover comparative analysis of secondary

data on performance indicators of selected publisher and their main competitors which would

allow to examine their competitive advantage. The chosen imprints will be compared

with their main market competitors using Key Performance Indicators and the annual number

of bestselling books which is a particularly relevant indicator of competitive position in book

publishing industry. Publishers that will be analyzed in that method are Penguin and Avon.

Despite the fact that Czarna Owca will also be featured in research conducted by the author

8

for the purpose of this thesis, it will not be presented in the third chapter due to the lack

of available data on its market performance.

As already mentioned, the last chapter will be purely analytical and it will be devoted

to presentation of results of the research examining the impact of customer-based brand equity

on purchase behaviors of readers. The statement that equity does indeed influence customers

of publishing houses in such manner is the main hypothesis of the study. To test it the author

elaborated six supporting hypotheses that were aimed to help verify this basic assumption.

Firstly, brief description of the research problem will be provided with emphasis on the fact

that despite general reluctance towards branding, there are several publishers that have

successfully built brands that are widely recognizable among customers. These include

Penguin, Avon and Wydawnictwo Czarna Owca. Focusing on analysis of the aforementioned

publishers, the author will try to capture their customer-based brand equity and its impact

on purchase behaviors of readers. This will serve as a starting point for verifying whether

publisher is considered in purchase behaviors of readers, and whether it could therefore

become a source of competitive advantage in the publishing market. Before presenting

the research results and main conclusions, the chapter will also cover to detailed description

of applied research methodology with emphasis on research objectives, design, chosen

research methods, as well as research questions and hypotheses that have been tested in this

study. Finally, the results will be thoroughly analyzed with the use of statistical tools in order

to verify whether the predefined hypotheses stated by the author eventually turned out to be

correct. The results will be presented in graphic form of charts comparing the outcome

of the three analyzed publisher and total sample. This will serve as the basis for determining

whether the main research hypothesis stating that customer-based brand equity has impact

on purchase behaviors of readers is indeed accurate.

The thesis has been based on a variety of sources including works of renowned

specialists in the field of brand management, articles on branding in publishing, official

reports on market performance of the analyzed imprints, as well as their websites

and. The literature used in the first chapter is mostly popular books on branding written

by scholars expertising in this particular are like Keller, Kapferer, Riezobos and Aaker.

The have the greatest contribution in development of branding and their works provided the

most thorough analyses of brand management elements. The author also used Polish

elaborations Urbaneks Zarzdzanie mark and Kalls Silna marka in which all the most

important components of brands have been thoroughly studied.

9

The second chapter was more problematic with regard to professional literature

because the sources on branding in publishing are still limited because this discipline is yet to

further develop. This is way more, online forms have been used here. This part of the thesis

was largely based on a series of articles written by Ph.D. Irini Pitsaki from Northumbria

University for International Journal of the Book. Her works served as the basis for describing

brand strategies implemented in publishing, i.e. publisher, author, series and character

branding, as well as specificity of branding in this industry. Furthermore, materials available

on official websites of Penguin, Avon and Czarna Owca were also used to examine their

branding activities. The last section of the second chapter devoted to analysis of competitive

position of selected publishers was written on the basis financial statements and reports

of publishing houses as well as the annual group report of Publishers Weekly, one of the most

significant professional magazines specializing in publishing market. The third chapter is

strictly analytical and it is based on the research conducted by the author. However,

in the theoretical introduction describing implemented research methodology, a few sources

on marketing research and statistics were quoted.

To sum up, this thesis will be devoted to analyzing customer-based brand equity

in case of competitive advantage in book publishing market. The author will try to verify it

with a research among readers of Penguin, Avon and Czarna Owca that have very distinctive

brands, highly recognized by customers. The results will serve as a basis to determine whether

other publishers should follow their example and develop complex brand strategies to survive

in the highly competitive and fragmented market.

10

Chapter 1. Branding vs competitive advantage

Introduction

The main goal of this chapter is to acknowledge the reader with the most significant

concepts related to branding (in particular customer-based brand equity) and competitive

advantage. Besides presenting various definitions of the term brand and how it evolved over

time, this part of the thesis will also cover issues such as origins of branding, functions

of brands and differences between brand identity and brand image. It needs to be emphasized

that, despite similar semantics and links with customers perception, the two latter concepts are

not the same one of them is related to the actual environments perception of a specific

brand, while the other is the way in which brand wants to be seen by its stakeholders (Kall,

2006, p. 24-25). Furthermore, the first chapter of the thesis will also concentrate on various

approaches towards brand equity that is currently a crucial source of durable competitive

advantage. Currently, the perspective seeing brand equity as a marketing value constituted

by various assets linked to the brand seems to be dominating therefore it will be thoroughly

studied with the use of various models elaborated by scholars specializing in the field

of branding (Aaker D. , 1991, p. 22). The second section of this chapter will be devoted to

brand strategies, i.e. corporate and product branding. Firstly, the term strategy itself will be

defined from marketing point of view and it will serve as the basis for explaining

the importance of brand strategy for contemporary businesses. The main premises

and assumptions of both corporate and product will be presented, as well as comprehensive

comparison to indicate the most notable differences between these two approaches. The last

section will cover issues describing relationship between branding and competitive advantage.

The latter term, as well as its main sources will be defined along with methods of its

measurement. Branding will be analyzed in terms of its undeniable potential and capabilities

for building a companys beneficial position against its competitors in the market. It will be

emphasized that competitive advantage is a relative value and therefore it should be measured

as comparison of selected performance results or brand equity levels between the company

and other organizations operating in the same market and aiming at the same target group

of customers.

11

1.1. Elemental concepts of brad management

Brands in one form or another have been known to exist for centuries and due to this

fact the scope of meaning of the term brand evolved over time. What is interesting, brands have

been present ever since ancient times (Riezebos, 2003, p. 1). However, it must be stressed that

Romans and Greeks used this term to speak about stone-carved signs showing what could be

bought in certain shops. The practice of branding in the form known nowadays, had developed

in 19th and 20th century, along with concepts such as marketing, advertising and public relations,

giving rise to the so called commercial art that for many years has been at the core

of a companys communication efforts (Healey, 2008, p. 10). In short, branding can be defined

as the overall process of creating superior customer value with the use of all the brand elements

that will be thoroughly studied in this chapter. (Healey, 2008, p. 10).

Nowadays, there are two main approaches to defining brand. The first one is very

general and strictly relates to the identification function of brands. According to this approach

brand is simply a name or symbol (often a combination of both) created in order to identify

products or services, and to distinguish these goods from the offer of competitors (Kall, 2006,

p. 11-12). On the other hand, brand is also defined as a mix of physical product, brand name,

packaging, advertising as well as activities related to distribution and pricing. These are

combined together to distinguish a particular offer in the competitive market, and to provide

customers with significant benefits (both functional and symbolic) that will make them

purchase the product repeatedly (Bennet, P.D. [ed.], 1995, p. 27). The latter approach to

brands is more detailed, however, it concentrates rather on the tangible aspects, omitting the

importance of intangible factors. This is why the American Marketing Associations

definition of brand should be further developed and supplemented. According to T. Blackett

brand can also be seen as a set of customers ideas, beliefs and opinions about the particular

product or service (Blackett, 2003, p. 13) this, merged with the elements of American

Marketing Association explanation of brand, is the most suitable definition of contemporary

concept of brand. It must be noted that nowadays it is not sufficient to just create a brand

name and logo to gain success and advantage over competitors. It requires much more

advanced marketing activities and elaborated process of brand management. Brand is

a promise of high quality and satisfaction from the purchase (Healey, 2008, p. 10).

Brands are extremely multilayered and they consist of a number of elements.

However, there are two crucial groups of components that are the starting point of branding

process visual and verbal identity (Allen & Simmons, 2003, p. 113). The first term refers to

perhaps the most visible aspect of branding that is expressed through a set of graphic elements

12

that merged together constitute a system for brand identification and representation. They

include logos (logotypes), symbols, colors and typefaces that are used to communicate with

customers, and combined with one another build coherent visual identity of a specific brand

(Allen & Simmons, 2003, p. 114).

On the other hand, verbal identity is expressed through words and language that

distinguish a brand from others. The elements of verbal identity include the name, naming

system for products, subbrands and groups, a strapline, tone of voice principles and the use

of stories (Allen & Simmons, 2003, p. 115). However, for branding to be successful it is

crucial to combine both visual and verbal identity that mixed together deliver a strong

message for customers (Allen & Simmons, 2003, p. 115). This is why it is so relevant that all

the brand elements (both visual and verbal) should fulfill a number of non-negotiable criteria

that guarantee effectiveness of branding. These include the following (Keller, Strategic brand

management. Building, measuring and managing brand equity, 2003, p. 175):

Memorability;

Meaningfulness;

Aesthetic appeal;

Transferability across product categories, geographical and cultural borders;

Adaptability and flexibility over time;

Legal and competitive protectability.

In order to provide mutual benefits for customers and organizations, brands and all

their components must be easy to remember permanently, and carry a special meaning that

will evoke desired associations in the minds of buyers. What is more, the brand needs to

provide some form of aesthetical appeal for the customers so that they will appreciate

the products. Brand elements should also be easily transferable into both different product

categories, as well as all geographical, culturally diversified markets. Furthermore,

components of brand must be flexible enough to adjust to conditions changing over time.

And finally, they ought to provide legal and competitive protection for the organization.

Nowadays, branding plays a vital role in organizations communication with its target

customers. A branded product sends a coded message which if deciphered in the correct

manner, can contribute to purchase behaviors desired by the company in question. This is why

it is so important that the customers get precisely the meaning intended by the sender (Schultz

& Barnes, 1999, p. 142). It is generally assumed that there are four main functions of a brand

that are all correlated to one another. These functions are also elements of the aforementioned

13

coded message sent by the organization via branding to its customers. The basic functions

of brands are as follows (Altkorn, 1999, pp. 13-14):

Identification;

Information;

Promotion;

Guarantee.

As already mentioned, the basic role of brands is to identify a particular product

or service in the competitive market. This function is strictly related to informational role

of brands that aim not only to inform the customers about the particular items producer

or distributor, but also to help the potential buyer recognize unique traits of a product, indicate

functional and emotional benefits from the purchase and usage as well as organizational

culture represented by the product. Identification is also linked to promotion. Every

promotional effort of a brands owner must take into account the whole span of information

related to identification function of a brand. It needs to be noted that the brand is a constant

and one of the most important elements of promotion through brands producers promote

their offer thanks to creation of a set of positive associations in the minds of customers.

The last function of a brand is to guarantee the buyers with some level of quality

and satisfaction that would additionally justify higher price of the branded product and reduce

uncertainty (Altkorn, 1999, pp. 13-14).

Branding is a very dynamic discipline, rapidly changing over time. This is why some

scholars suggest that new brand functions should be added to the aforementioned

identification, information, promotion and guarantee. One of the most significant

classifications of new brand functions was provided by J.N. Kapferer and G. Laurent who

distinguished eight functions that have been presented in Table 1.

14

Table 1. The functions of brands

Brand function Benefit for the customer

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

after products

Guarantee To be sure of finding the same quality no matter where or when you buy the

product or service

Practicality To allow savings of time and energy through identical repurchasing and

loyalty

Optimization To be sure of buying the best product in its category, the best performer for a

particular purpose

Characterization To have confirmation of your self-image or the image that you present to

others

Continuity Satisfaction brought about through familiarity and intimacy with the brand

that you have been consuming for years

Hedonistic Satisfaction linked to the attractiveness of the brand, to its logo, to its

communication

Ethical Satisfaction linked to the responsible behavior of the brand in its relationship

towards society

Source: adapted from: (Kapferer N. , 2008, pp. 22-23)

As identification and guarantee have been already explained, their characterization

will not be repeated. Moving further, branding is extremely practical from the customers

point of view. Due to the fact that individuals are familiar with a specific brand, they save

both time and energy when looking for a certain product. This is because they become loyal

and tend to repurchase goods sold by the brand in question (Kapferer N. , 2008, pp. 22-23).

Another new function of brands, optimization refers to the fact that branding allows

categorization of products according to certain criteria which significantly simplifies

the process of decision making (Kapferer N. , 2008, pp. 22-23). What is more, branding

enables customer characterization which is related to the fact that buying certain brands can

reflect the users lifestyle and confirm their desired self-image. If an individual wants to

perceived in a specific manner by other, they purchase brands with specific image believing

the traits possessed by the brand will be transferred onto them (Kapferer N. , 2008, pp. 22-23).

Continuity refers to the sense of satisfaction generated by familiarity with the brand

that a person has been using for a long period of time (Kapferer N. , 2008, pp. 22-23).

The next function distinguished by Kapferer, hedonism, is related to the perceived

attractiveness and it is linked to characterization (Kapferer N. , 2008, pp. 22-23). The last

function from the new categorization, ethical is a result of customers satisfaction deriving

15

from the fact that the brand they use behaves in an appropriate manner towards society which

can be expressed through employment policy or environment-friendly operations. This is also

a very important aspect of Corporate Social Responsibility which is currently gaining

on significance. Nowadays, besides providing practical benefits for customers, brands also

need to act in a socially responsible way so that the brand users are proud of their relationship.

Branding plays a vital role in contemporary marketing. The process, if conducted

properly, strengthens the brands positive image and reputation, thus encouraging loyalty

of the clients. It must be noticed, however, that the term brand does not equate

with the symbol nor product, which both are only elements of the brand and they have no

meaning for the customers without the proper context set by the brand. It is generally believed

that most of the consumer behavior is generally driven by emotions which are strongly

exploited by brands. Brands promise the customers high quality and satisfaction from buying

and using the specific branded product, leading to loyalty and constant repetition of purchase

despite the higher price (Healey, 2008, p.10).

These days, there are numerous approaches to defining the concept of brand equity.

The term had been first briefly explained in 1989 by P. Farquhar who identified it as added

value given by the brand to a certain product (Farquhar, 1989, p. 24). High brand equity is

currently considered organizations strategic asset and a significant source of competitive

advantage as it typically leads to better brand performance in the market. However,

the concept of brand equity is a lot more complex and can be studied from a few different

perspectives. The two most common approaches analyze brand equity as value from the point

of view of the company and the customer which are strictly linked to each other. We can

therefore assume that the broad concept of brand equity consists of two elements brand

value, which refers to strictly financial assets and is related to organizations performance,

and genuine brand equity understood as equivalent of non-monetary, marketing value

of the brand (Urbanek, 2002, pp. 33-34). The correlation between these two components has

been presented in the picture 1.

16

Picture 1. Dual nature of brand equity

Source: adapted from: (Urbanek, 2002, p. 34)

Brand value, i.e. brand equity from the organizations perspective is predominantly

seen as financial value of the brand (Urbanek, 2002, p. 30). In this case, equity equals

the incremental cash flows from the sale of branded products over and above cash flows

which would result from the sale of unbranded goods (Simon & Sullivan, 1993, p. 29).

In other words, brand equity is simply brand-related profits from trading branded products

and the brands ability to generate value for the organization through speeding up growth and

enhancing prices (Doyle, 2001, pp. 26-27). Brand equity understood as monetary value can be

thus measured through a variety of strictly financial indicators including the aforementioned

cash flows from selling branded goods. The indicators of financial brand equity can be

as follows (Urbanek, 2002, p. 30):

Brand replacement cost;

Present value of future discounted cash flows related to the brand;

Current incomes from the brand multiplied by Price/Earning ratio reflecting

future risk and profits from the brand.

On the other hand, brand equity from customers perspective is equivalent

of the overall assets linked to the brand that give additional value to the core product

(Urbanek, 2002, p. 30). The most renowned studies suggest that basically there are five

resources that constitute brand equity brand awareness, brand loyalty, perceived quality,

brand associations and other (Aaker, 1991, p. 22). Established scholar in the field

of branding, D. Aaker has elaborated a comprehensive model of brand equity describing

detailed relations between its individual components and their impact on the overall brand

performance.

Broad concept of brand equity

Brand equity:

- marketing value

- non-monetary nature

Brand value:

- financial value

- strictly monetary in its nature

17

According to Aaker, brand loyalty is and indicator of customers attachment to

the brand and is expressed through intentional repurchase of certain branded products

(Urbanek, 2002, p. 40). Loyal customers are an extremely important assets of company

as they provide regular revenue and can spread their positive opinion on the brand among

their associates thus encouraging new buyers. It must be noted however, that there are several

levels of brand loyalty which can be presented in the form of a pyramid in which the bottom

category is equivalent of lowest loyalty.

Picture 2. Brand loyalty pyramid

Source: (Aaker, 1991, p. 35)

At the bottom of Aakers loyalty pyramid, there are brand switchers, that is, customer

not loyal to the brand in question, who are very price sensitive. The purchase behaviors

of switchers do not take the brand into consideration because such customers tend to buy

the least expensive offer. Habitual buyers, as the name suggests, purchase a particular brand

of products simply out of habit. They are generally satisfied, hence see no reason for looking

for alternatives and switching to another brands. It must be noted however, that when

problems with acquiring the usual brand arise, habitual buyer will relatively easily switch to

another one. Satisfied buyers are generally unwilling to change a brand due to the switching

costs that can be both financial and emotional. Brand likers are true brand enthusiasts

who buy the products of particular brand due to emotional benefits rather than factors such

as price or quality. In this case customers have a very strong positive attitude towards the

brand and such emotional attachment makes them reluctant to switch to another products,

even if they have better price or quality (Aaker D. , 1991, p. 35-37).

commited buyers

brand likers

satisfied buyers

habitual buyers

brand switchers

18

The last and most desired level of brand loyalty pyramid distinguished by Aaker, is

occupied by committed buyers that strongly identify themselves with the brand and feel proud

of being its users. The purchase of particular branded products is the outcome of the match

between ones personal values and the values prized by the brand in question. In this case

the brand plays a significant role in the committed buyers everyday lives and thus it is

practically impossible for them to switch to another brand, regardless of benefits provided

by substitutes (Aaker D. , 1991, p. 37).

High level brand loyalty provides numerous benefits and is often considered

a relevant source of competitive advantage in the market. Having loyal and committed buyers

allows the brand to reduce marketing costs and makes it less susceptible to unfavorable

actions of competitors. It results from the fact that relying on loyal customers is less expensive

than attracting new groups of buyers as the latter requires costly communication efforts. What is

more, loyal customers provide a stable source of revenue Furthermore, loyal customers generate

constant demand for products thanks to which the company has better position in distribution

channels in which they are sought out. All these elements contribute to establishing

competitive position in the market. Brands with a number of loyal customers usually have

higher market share and can afford higher markups (Urbanek, 2002, pp. 44-45).

Another element of brand equity, brand awareness, is generally perceived

as the extent of customers knowledge of a specific brands existence. However, a more

professional definition of this concept explains awareness as the potential buyers ability to

recognize a specific brand as an inseparable component of a product (Kall, 2006, p. 44). There

are however, several levels of brand awareness, all presented in the picture 3.

19

Picture 3. Levels of brand awareness

Source: (Kall, 2006, pp. 44-47)

At the bottom of the brand awareness pyramid, there is recognition that occurs when

a customer is able to correctly identify a product or service by viewing its logo, tag line,

packaging, etc. It must be noted that brand recognition requires prior knowledge and thus

the organization should constantly provide the audience with experiences enabling learning

about the brand. It is worth mentioning that according to the research carried out in 1982

by Ogilvy & Mather advertising company, the decision about purchase of everyday products

is usually made in store hence the brand recognition is there of particular importance (Kall,

2006, pp. 44). What is interesting, in research practice the concept of brand recognition is

often substituted with the term aided or assisted brand awareness. Assisted brand awareness

occurs when a researched person is presented with a set of various brands and asked to

indicate these they are already familiar with (Kall, 2006, pp. 44-47).

The next level of brand awareness is brand recall, often referred to as unaided brand

awareness. This concept relates to a customers spontaneous recall of a particular brand while

thinking about a specific product category, without other additional incentives (Kall, 2006,

pp. 44-47). Top of mind or brand salience occupies the third position in the pyramid

of awareness. It is perceived as the brand that comes to customers mind while thinking about

a specific product category as first. A brands salience is measured by the percentage

of customers who mentioned the brand as first, when asked about specific type of products

(Kall, 2006, pp. 44-47). At the peak of the brand awareness pyramid, there is brand

dominance. The concept refers to a situation when a specific product category has been

brand dominance

top of mind

brand recall

brand regocnition

20

domineered by one brand that is the only one recalled by the customers when thinking

of the specific industry (Kall, 2006, pp 44-47).

The third element of brand equity model elaborated by Aaker, brand associations,

refers to everything that is somehow related to the brand in the minds of customers like

product traits, benefits and features differentiating the brand from others (Urbanek, 2002,

p. 59). They are built through integrated brand communication and customers experiences

with the product. The stronger the associations, the better as they usually are the key factor

that establishes some kind of emotional connection between the brand and the users.

The associations are highly affected by brand identity that has been defined as the way

an organization wants to be seen, and they are in fact components of brand image and they are

formed as a result of the decoding messages sent by the brand (Urbanek, 2002, pp. 59-60).

However, we need to clearly define what the term brand image actually means

and emphasize that it is not the same as brand identity. These two terms, though strictly

related to each other, are separate entities concerning different issues. Brand identity is

commonly understood as the brand owners vision of the brand. The identity is the desired

way of customers brand perception, whereas brand image is the actual perception

of a specific brand. (Kall, 2006, p. 25-25). Brand identity is a comprehensive message

of the brand owner that, after having been received and decoded by the audience, contributes

to the brand image shaped by a synthesis of all the signals (e.g. advertising, brand name)

emitted by the brand compare Figure 5. The brand identity defines who the brand is

and what it does, thus helping the brand owner to choose the most suitable tools of effective

communication with the target group, ensure brands individuality and consistence as well

as indicate the boundaries for brand positioning (Kall, 2006, p. 24-25).

Picture 4. Relationship between brand identity and brand image

Source: adapted from: (Kall, 2006, p. 25).

21

According to K.L. Keller there are three main types of brand associations attributes,

benefits and attitudes that all can be divided into various subgroups compare picture 5

(Beech & Chadwick, 2007, p. 191).

Picture 5. Keller's typology of brand associations

Source: adapted from (Beech & Chadwick, 2007, p. 191)

The first category distinguished by Keller, attributes, refers to associations related to

features that characterize the product. These may be strictly internal traits linked to a branded

good (product related attributes) and they are unconditionally necessary for the items

functioning (Urbanek, 2002, p. 63). On the other hand, non-product related attributes refer to

external aspects of the product and they include issues such as price, packaging, user image

and typical usage situations (Keller, 1993, p. 7). Non-product related associations generate

customers appeal for the brand because they can reflect a certain lifestyle and social status

which are nowadays a particularly considerable aspect of branding (Keller, 1998, pp. 93-99).

The second element of Kellers typology, benefits, can be defined as various kinds

of values provided by the brand and they can be categorized into three groups functional,

experiential and symbolic benefits (Urbanek, 2002, p. 65). Functional benefits are the most

basic ones and they are connected to product-related attributes. This type of associations

strictly relates to functions fulfilled by a given branded item e.g. functional benefit provided

by a can of Coca-Cola is quneching thirst. Experiencial benefits, on the other hand, come

from a sense of emoitional satisfaction build over time through repeated usage of the product.

Brand associations

attributes

product related

non-product related

benefits

functional

experiential

symbolic

attitudes

22

Again, in case of the aforementioned can of Coke it may be contentedness with the drinks

flavor. The last group of benefits (symbolic) are related to satisfaction deriving from a certain

lifestyle and values represented by the brand. Its usage has a symbolic dimension

and the customer proud of their relationship with the brand (Schultz D. , Barnes, Schultz, &

Azzaro, 2009, p. 320).

The last group of association distinguished by Keller, attitudes refers to people's

beliefs and behaviors towards certain things and they are easily changed under social

influence (Johnson H. , 2011, p. 1). It is generally assumed that there are three ways of

attitudes forming that include: classical conditioning used in commercials that create pleasant

associations with particular product thus affecting the audiences attitude; operant

conditioning in which attitudes are developed on the basis of feedback given by people

around us; and observing the people in case people important to us expose a different

attitude, we are more likely to develop similar opinions (Cherry, 2014).

The fourth component of brand equity distinguished by Aaker, perceived quality can

be defined as customers opinion on a products excellence and superiority (Urbanek, 2002, p.

45). It must be stressed that the concept does not necessarily reflect he real and objective

quality provided by the brand. As the name suggests, perceived quality is buyers individual

perception based on personal experiences with the brand. What is more, perceived quality

in not equivalent of customers satisfaction with the product as a specific buyer may be

satisfied with low quality good because their expectations were low. Furthermore, they can

feel a sense of dissatisfaction with products possessing exceptional quality due to their high

price which can negatively impact customers attitude towards the brand even though quality

is above average.

Perceived quality is then a very abstract and immaterial concept rather than a firm

scientific construct reflecting certain brand attributes. Nonetheless, it is a relevant component

that highly influences brand image among certain groups of publics (Urbanek, 2002, p. 49).

The model shown in Figure 6 takes into account different levels of abstraction and presents

how perceived quality is generated in the minds of customers. Their subjective opinion on

brands quality is shaped by numerous factors that can be grouped in two categories internal

and external signals that can freely interact with each other (Urbanek, 2002, p. 51). The first

one is less abstract and it generally refers directly to product attributes that may indicate its

quality. These include functioning, traits, durability, accordance with specifications

and physical appearance of the product, as well as post-purchase service (Urbanek, 2002, p.

23

51). Whereas, external components of perceived quality comprise of the products price,

brand name and advertising (Urbanek, 2002, p. 51).

Picture 6. The influence of perceived quality on brand image

Source: adapted from: (Urbanek, 2002, p. 49)

As already mentioned, perceived quality may serve as a starting point of forming

brand image and its positioning (Urbanek, 2002, p. 59). The image is also shaped

by customers attitude towards the brand that cannot be identified with perceived quality as it

is a lot more complex and it comprises of both emotional and rational elements. The other

factor influencing brand image is perceived value that can be defined as customers overall

assessment of the products usability that is based on comparison between benefits provided

by the product and the cost (both financial and non-financial) that the buyer has to incur

(Urbanek, 2002, p. 59). Brand equity can also be shaped by other proprietary assets such

as patents, trademarks and intellectual property rights that have a direct effect on competitive

advantage (European Institute for Brand Management, 2014).

K.L. Keller proposed yet another approach towards brand equity that is customer-

based. To fully comprehend the concept, we must first clearly determine what brand

knowledge is. The term refers to a brand node to which a variety of associations are connected

(Keller, 1993, p. 3). The aforementioned brand node consists of two elements that shape

brand knowledge and influence customer response, and they are brand awareness and brand

24

image that is reflected by brand associations held in customers minds. Both components

of brand knowledge have already been explained with regard to Aakers approach towards

brand equity, and so their definitions will not be furthermore multiplied.

Returning to customer-based brand equity, it is defined as the differential effect

of brand knowledge on customer response to the marketing of the brand (Keller, 1993, p. 8).

The first element of this definition, differential effect, refers to the fact that customers

response to a specific brands marketing program is analyzed in comparison to the response to

unbranded product or service. The response itself is seen as customers perceptions, behaviors

and preferences resulting from their contact with marketing mix. Having determined

the aforementioned, high customer-based brand equity occurs when customers express more

favorable reactions to the 4Ps of a given brand than an unnamed version of the same product

(Keller, 1993, p. 8). The central role of this approach towards brand equity, is played

by favorability, strength and uniqueness of brand associations that have the greatest impact

on customer response as they affect brand image and brand awareness. These two are critical

with regard to the brans performance in the market because they rise brand choice

probability, generate greater brand loyalty and decrease potential risk arising from actions

of competition (Keller, 1993, p. 8).

Brand equity is currently a considerable aspect of achieving competitive position

in the market, as it directly affects the companys performance and effectiveness of its

communication strategy. As already stated there are currently two most important approaches

towards this theory. The first one however, sees brand equity as genuinely financial entity

and should be thus referred to as brand value that is one element of the broader concept

of equity that is a more abstract and intangible in its nature. It seems that the other approach,

equating brand equity to marketing value constituted by various assets that generate additional

value for customers is more suitable to current conditions. Questions arose concerning

measurement of equity that largely comprises of abstract, non-tangible elements that are

difficult to capture. This issue will however, be further discussed in detail in the section

devoted to competitive advantage.

25

1.2. Brand strategies

Building a strong, commonly recognized brand is a superior goal for most

organizations nowadays. Branding itself is currently an extremely relevant aspect

of an organizations strategy. The overall strategy of the company can be defined as long-term

plan determining the scope and direction of the firms actions aimed at achieving competitive

position in the market while taking into account the companys objectives and various

stakeholders expectations (Johnson, Whittington, & Scholes, 2010, p. 21). Based on this

definition, it can be assumed that brand strategy can be seen as an element of this plan and it

refers to accomplishing goals through integrated branding of products and services. It must be

emphasized that there are numerous brand strategies but two the most popular are corporate

branding and product branding. The first term refers to a situation when a company applies

its brand name to all traded goods, whereas the latter concerns creating separate brands

for each product manufactured by the company. Both strategies will be thoroughly studied

in the following sections of the thesis.

1.2.1. Corporate branding

Some scholar argue that corporate branding is one of the most significant sources

of establishing brand equity (Uggla, 2006, p. 785). They key aspect of this strategy is

building a strong and distinctive brand of the organization based on features that distinguish it

from other entities. The concept of brand identity (or corporate identity in this case) is crucial

in this approach as it the starting point of creating a corporate brand (Schroeder, Salzer-

Mrling, & Askegaard, 2006, p. 38). Such a brand constitutes a platform on which

organization expresses its identity and uses it to communicate with the environment.

In corporate branding the company itself, rather than certain product attributes, is put

in the center of the firms communication efforts. This allows to create emotional relationship

between the brand and its target customers who may start being attached and loyal (Pitsaki,

2008, pp. 105-106).

The organization is placed at the heart of brand positioning along with its values

and mission that play a vital role in the companys every day functioning. The central idea

behind corporate branding is building a consistent and attractive organizational culture that

would appeal to the general public and would be communicated through all brand elements

and promotion tools. This way the values highlighted and associated with the corporate brand

will be transferred into all the products gathered under the corporate badge (Schroeder,

Salzer-Mrling, & Askegaard, 2006, pp. 15-16). Nowadays, there is a growing tendency

26

towards corporate branding that makes the organization more visible in the environment. One

of the main reasons responsible for this trend is distribution channels which develop business

relationships with companies, not their products. Therefore, having a strong corporate brand

can give the firm a favorable position in the distribution chain which as extremely relevant

in terms of gaining and sustaining competitive advantage in the market (Kapferer N. , 2008, p.

388).

Corporate brands have long been known as an extremely valuable asset

of the organization as they can be an indicator of high quality, as well as they protect

the company from poor performance and financial risk (Schroeder, Salzer-Mrling, &

Askegaard, 2006, p. 38). Corporate branding is very simplistic as it is based on the premise

of applying the same strategy to all of the firms products which results in a more coherent

positioning and communicating with customers. The brand elements and associations are

automatically shifted from the company into goods sold by the organization in question. This

allows to incur lower costs when it comes to introducing new products in the market because

there is no need for expensive branding efforts with regard to the newly marketed item

(Hartman, 2014). To sum up, corporate branding is based on the idea that the company

and values it represents are the key elements of communicated brand identity. This allows to

build a reputation of a reliable producer whose positive perception will extend into all

manufactured goods.

1.2.2. Product branding

The basic premise of product branding is very simple and it can be presented in form

of a short equation: 1 brand=1 product=1 promise (Kapferer J. , 1997, p. 231). In this

strategy, every single product has its own unique brand that is directed towards a certain

market segment (Riezobos & van der Grinten, 2012, p. 19). Here, the organization might not

be clearly visible in the brand communication process as it focuses more on crucial product

attributes, its quality and benefits provided (Young, 2011). Each item has its own specific

identity that is somehow linked to the overall corporate identity and it is managed by middle

level managers, whereas the CEO and top management are responsible for corporate

branding. In this case, marketing communication is strictly about the product and it is

intended for customers rather than other stakeholders like corporate branding. (Dunnion &

Knox, 2004, p. 6). All the differences between these two strategies have been presented

in table 2.

27

Table 2. Product branding versus corporate branding

Product brand Corporate brand

Focus of attention The product The organization

Managed by Middle management Top management

Attract attention and gain

support of

Customers Various stakeholders

Delivered by Marketing Whole organization

Communicated by Marketing communication Multiple communications,

activities, and contacts

Time horizon Short (product life) Long (organization life)

Importance to the organization Tactical for function Strategic for organization

Source: (Dunnion & Knox, 2004, p. 6)

Nowadays however, many organizations apply hybrid brand strategies merging

elements of both corporate and product branding to leverage benefit of both (Riezobos & van

der Grinten, 2012, p. 19). Corporate and product brands are different from one another

but both seem to be equally beneficial from different perspectives. This is why choosing one

of these strategies depends on multiple factors such as organizations goal, its position

in distribution channels, type of business, number of products in portfolio, as well as target

audience. These days however, when reputation and Corporate Social Responsibility

constantly gain on importance it would be highly unwise to focus solely on creating product

brands that do not have such impact on relationship building between the company and its

customers.

28

1.3. Sources and measurement of competitive advantage

The vital goal of each business organization is not only to survive in the highly

competing environment, but also to gain constant advantage over its competitors. In order to

accomplish this, the company must choose the most appropriate strategy and when necessary

implement changes so it can continue to thrive (Urbanek, 2002, p. 68). Organizations have

now for decades endeavored to gain and maintain competitive advantage. As already

indicated, brand is on the most significant assets of company, that represents actual value

for customers. A branded product implies not only higher quality, but also has a deeper, more

emotional meaning for the buyer (Center for Simplified Strategic Planning, 2013). Through

consistent and attractive brand identity based on customers needs, expectations, values and

lifestyles, organizations build strong emotional bonds with the users. Due to such connection

it is unlikely for the customers to switch to another products, even if the latter seem to be

rationally more attractive. A strong, appealing brand encourages the buyer for repeated

purchases and thus is a very important source of competitive advantage.

Competitive advantage can be defined as a companys skill to satisfy the needs

of customers better than its competitors, resulting in higher profitability. In other words, it

means that an organization earns profits that are above average in the whole industry in which

it operates. However, it must be stressed that as much as achieving competitive advantage is

a primary goal of each company, maintaining it in the long-term period seems a lot more

difficult, thus even more significant. The situation in which one organization of a specific

sector has bigger gains than others cannot go unnoticed by the rest of the companies

from the same business that take on actions aimed at overpowering the current leader

of the market (Urbanek, 2002, p. 71).

Competitive advantage derives from an organizations internal resources and activities

directed at efficient use and development of a companys unique skills and key competences

that are crucial to succeeding in a specific industry. Such competences are difficult to copy

and are sources of both gaining and maintaining advantage over competitors. Their examples

include highly qualified employees, unique technology, marketing knowledge and strong

brand. These competences are a basis for designing business strategy that in detail describes

how the company is going to accomplish and preserve competitive advantage (Urbanek, 2002,

p. 71).

29

There are numerous sources of competitive advantage that may result from both

tangible, as well as intangible assets of the organization. These can be grouped into eight

categories including (West, Ford, & Ibrahim, 2010, p. 147):

Superior inputs;

Superior knowledge base;

Superior technology;

Superior operation;

Superior offerings and branding;

Superior access;

Superior segments;

Superior customers.

Competitive advantage is currently an issue of particular relevance. Despite the fact

that there are numerous sources of gaining competitive position in the market, not all of them

allow to sustain it in the long-run. Superior financial assets possessed by the company that

may stimulate its competitiveness can run short particularly in periods of crisis

and unfavorable fluctuations (West, Ford, & Ibrahim, 2010, p. 147). Furthermore, individual

access to innovative technologies is also unstable as in todays transfer of information

and knowledge allows other entities to relatively quickly copy such an asset and use it

for their own advantage (West, Ford, & Ibrahim, 2010, p. 147). It seems that branding is one

of very few things that can not only generate competitive advantage, but also sustain it

for a longer period as it allows to differentiate from competitors. This is particularly relevant

nowadays as most companies from the same business sectors offer basically very similar

products and it is hard to tell which ones deliver superior benefits. Brands can generate

positive associations in the minds of customers and thus affect its better position in against

competitors that will bring tangible profits (West, Ford, & Ibrahim, 2010, p. 147).

As already mentioned, branding is an extremely relevant source of long-term

competitive advantage in contemporary business. Strong brand is a particularly valuable asset

of the organization as it helps to achieve leadership that is seen as one of the most notable

indicators of competitive advantage (Urbanek, 2002, p. 75). Renowned brand allows

30

the company to cut costs related to marketing and distribution, as well as introducing new

product categories because they do not require spending as much financial means

on promotion. Thanks to this, the firm can occupy beneficial position in the market

as compared to its competitors. What is more, the company can afford higher pricing and

markups because the brand to some extent justifies bigger expenses that customer have to

incur on branded items in the opinion of customers as opposed to regular, cheaper products

of competitors (Urbanek, 2002, p. 75). Thanks to this, branding enables the organization to

achieve better performance than other companies operating in the same market.

Therefore competitive advantage can be embodied by financial values such as sales

revenues, adjusted operating profits, ROI (return on investment), market share (Apigee

Institute Survey, 213, pp. 1-8). as well as intangible assets such as brand equity scores.

It must be stressed that competitive advantage is a relative value and this is why in order to

verify it, the aforementioned ratios need to be calculated for both the organization in question,

as well as its main market competitors. This allows to make a complex comparison of Key

Performance Indicators of the most important actors in the business section that would serve

as a basis for determining which companies have competitive advantage in certain aspects

(Apigee Institute Survey, 213, pp. 1-8).

The concept of brand equity has already been thoroughly explained in one

of the previous sections of this thesis. Briefly reminding, the term refers to additional value

given to the product by assets such as brand loyalty, brand awareness, perceived quality

and brand associations that are generated in the minds of customers during their experiences

with the brand. There is no doubt that high level of brand equity can be a relevant source

of gaining advantage over competitors. However, due to the fact that the construct consists

mostly of intangible elements that are difficult to capture, problems arose in terms

of measuring brand equity. One of the most notable methods of calculating brand equity has

been developed by D. Aaker who suggested brand equity score as a way to evaluate brand

equity that can be presented in a simple mathematical equation:

=

According to Aaker brand equity can be captured by multiplying brand awareness,

brand liking and brand perceptions (Aaker & Biel, 2013, p. 36). The first element

of the equation is determined by verifying customers degree of knowledge of the brand that

can be grouped into three categories the brand I use (1,0), the brand I know but never tried

31

(0,5), the brand I do not recognize (0). Each answer is multiplied by value in the bracket

indicating the level of brand awareness, and then added to one another to establish the final

number that will be put in the equation. Using this method, we can also calculate

the standalone average brand awareness:

= 1,0 + 0,5 + 0

n

Measurement of brand liking is a lot easier as it is indicated on a 10-ponit dislike-like

scale, and it can as well be used to evaluate average brand liking.

= 1,0 + 2,0 + 10,0

n

The last component of brand equity score, i.e. brand perceptions is evaluated on a 10-

point scale by the degree to which in the customers opinion selected brands are described by

the following traits: a leading brand; worth the price; excellent quality; suits me well;

a brand I trust. Each answer is multiplied by value from 1 to 10 indicating the strength of

brand perceptions, and then added to one another to figure out the final number that will be

used in the equation.

Aakers brand equity score has been standardized and the average score has been set

at 100 (Aaker & Biel, 2013, p. 36). Thanks to this, it is easy to assess which brands perform

above and below the average. The score can also be used to measure a companys competitive

position against other organizations operating in the same market. It can be easily presented

in form of a comparative chart which will indicate which brand has higher competitive

advantage based on branding. Below, there is an exemplary comparison of brand equity

scores of Evian and its main competitors in selected countries which shows in which cases

the brand in question occupies a competitive position in the market (Aaker & Biel, 2013, p.

38).

32

Chart 1. Exemplary comparison of brand equity scores

Source: (Aaker & Biel, 2013, p. 38)

By the way of conclusion, building and maintaining competitive advantage is

a primary goal of every business organization. Alas, despite multitude of ways a company can

use to gain superior position against competitors, few allow to sustain it in the long-run.

Competitive advantage derives from unique, internal strengths of a firm that can be easily

discovered and copied by competitors. This is why applying a comprehensive brand strategy

is particularly relevant. It has been explained that branding can be an extremely valuable asset

in this issue. Brand expresses exceptional organizational culture and values, as well as builds

reputation of the company in environment which can come in helpful in managing

relationships with various stakeholders. A recognizable brand creates a number

of possibilities for the firm in terms of competitive advantage as it allows higher prices that

are easier to accept by customers who are willing to pay more for branded products that meet

their expectations and have an attractive identity. No doubt, the correlation between branding

and competitive advantage is strong. One can however not forget that building a brand is only

the starting point to achieve competitive advantage. The brand must be properly managed

and send a comprehensive message to the customers who should decode it accordingly to

the organizations intentions.

33

Summary

To sum up, branding is currently a considerable aspect of the overall marketing

activities of numerous organizations. The term brand has significantly evolved over time and

it can be currently studied from a few different perspectives. The most thorough and suitable

definition for present times seems to be the one seeing this concept as a mix of both tangible

(physical product, brand name, packaging, etc.) and intangible components (brand

associations, beliefs and opinions) about a given product or service. As indicate in this

chapter, branding provides numerous benefits for both customers and the company that gains

financial profits from the buyers loyalty towards their brand. Nonetheless, to achieve

competitive position based on branding, it must be emphasized that the brand in question

should qualify to a number of conditions including memorability, meaningfulness, aesthetic

appeal, transferability across various dimensions, adaptability and flexibility over time,

as well as legal and competitive protectability. Only strong brands that fulfill

the aforementioned conditions can have a desirable effect on customers. One of the most

crucial aspects of contemporary branding is brand equity that can be seen as a financial

and marketing value. The latter approach is however more suitable and it refers to all

the assets linked to a particular brand. It is believed that high level of brand equity can boost

companys performance and become a relevant source of competitive advantage. It must be

reminded however that branding is now a significant element of the organizations overall

business strategy. The two most notable brand strategies are corporate branding and product

branding. The first option concerns a situation when a company applies its brand name to all

traded goods, whereas the latter concerns creating separate brands for each product

manufactured by the company. Corporate branding is particularly important in contemporary

marketing as it builds the organizations reputation among stakeholders who pressure

companies to act in a more responsible manner. A strong brand is a crucial source

of competitive advantage as it allows to maintain it for a longer period of time. That is

because it allows higher pricing for customers to not mind to pay more for branded products

of superior quality that meet their expectations.

34

Chapter 2. Brand strategies and concepts in publishing and their

impact on competitive advantage

Introduction

The goal of this chapter is to explain specificity of branding in the publishing market,

and examine its correlation with competitive advantage. The reader will be acknowledged

with the essential brand concepts in this sector which has been traditionally avoiding

engagement in branding processes focusing on the publishers. This inclination derived

from a common assumption that customers do not pay attention nor take the publishing

imprint into consideration in their purchase decision regarding book products. Nonetheless,

this trend has recently started declining as the market fragmentation and growing competition

force the publishers to re-orientate on a more market-driven strategy, and start managing

and positioning publishing houses as brands. Further in this chapter, basic brand components

applied in the publishing market will be presented, based on the example of Penguin

publisher. The chapter will also cover advantages generated by branding for both the readers

and publishing houses which are in analogy with brand benefits in other consumer markets.

What is more, in this part of the thesis various brand strategies (corporate, author, series

and character branding) applied in the publishing sector will be thoroughly described

and examined, along with the most significant opportunities generated by them. The most

notable examples of different brand strategies will be presented with emphasis on those that

have been most successful, and they will include case studies of Penguin, Avon, Stephen

King, J.K. Rowling, and Wydawnictwo Czarna Owca. The last section of the chapter will be

devoted to comparative analysis of performance indicators of selected publishers which would

allow to examine their competitive advantage. The chosen imprints will be compared

with their main market competitors using Key Performance Indicators and the annual number

of bestselling books which is a particularly relevant indicator of competitive position in book

publishing industry.

35

2.1. Specificity of branding in the publishing market

Nowadays brand management has become an increasingly important issue

in the highly fragmented publishing market (Pitsaki, 2010, p. 89). The origins of this trend

date back to the last decade of the twentieth century when publishing houses have first started

pondering about purposeful management of their products as brands (Lis & Berz, 2011, p.

198). As proved in the previous chapter, brands provide numerous benefits for customers

and the company therefore most businesses have already started taking advantage of branding

their products and services many years ago, whereas publishers habitually remained more

inner-directed and product driven. It must be stressed however, that quite recently publishing

houses have applied more market-driven approach and use marketing as an essential part

of their business strategies, but pure branding itself is yet to develop in this sector (Royle,

Cooper, & Stockdale, 1999/2000, p. 9). For many years publishers strongly believed that,

unlike customers of other product types, readers do not take the publishing house brand

into consideration when purchasing books, and they do not have high recognition

of the publishers imprint (Royle, Cooper, & Stockdale, 1999/2000, pp. 4-5). Former research

conducted in this field confirm such a tendency according to the results of a customer

survey conducted by J. Royle, L. Cooper and R. Stockdale in 1998, publishers themselves are

less recognizable as brands than particular authors (Royle, Cooper, & Stockdale, 1999/2000,

pp. 4-5).

Although over a half of the respondents of the aforementioned research to some extent

have expressed recognition of the publishers brands (56 percent), only 4 percent of the

sample stated that the publisher has an impact on their purchases. On the other hand, 18

percent of the questioned said that they do indeed put attention to the imprint in their purchase

decisions regarding books (Royle, Cooper, & Stockdale, 1999/2000, pp. 4-5). Such a low

signification of the publisher contributed to the fact branding in this sector has been primarily

centered around individual books and authors, whereas creating a strong and recognizable

corporate brand of the imprint was perceived as ineffective and unnecessary (Royle, Cooper,

& Stockdale, 1999/2000, pp. 4-5). Nonetheless, the research had been conducted sixteen years

ago and since that situation in the publishing market, and consequently attitude towards

branding, has changed dramatically. Therefore, a more up to date research taking into account

new trends and market needs is required.

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In publishing brands have the same functions as in any other type of industry, i.e.

identification, information, promotion and guarantee, as well as the new brand functions

distinguished by Kapferer and Laurent (practicality, optimization, characterization, continuity,

hedonistic and ethical). It must be stressed however, that books are very specific products

with non-tangible nature (Royle, Cooper, & Stockdale, 1999/2000) which makes them equally

specific brands. What is interesting, in publishing there is a special term for brands, i.e.

imprints. The term is used to talk about brand name and brand image of a specific publisher

(Forsyth & Birn, 1997). However, it must be noted that an imprint does not necessarily refer

to the whole big publishing corporation such as Pearson PLC, but rather to specific publishing

units (brands) owned by such huge companies (Greco, 2013).

Brand components include the overall set of visual and verbal items that distinguish

one brand from another (Pitsaki, 2008, p. 109). Their functions have already been thoroughly

explained in the previous chapter of this thesis, and since they are analogical for each market,

they will not be repeated here. Brand elements can be simply applied in the publishing sector

where the most common of these are logo, graphic design of books, quality of paper, colors,

etc. Brand components in publishing can be a easily observed on the example of Penguin

one of the most identifiable publishing brands around the world (Guthrie, 2011, p. 93).

The aforementioned publisher is highly recognized through its logo which pictures a penguin,

and orange, black and white colors which are one of the publishers identification marks for

these colors come first to mind when thinking about the publisher in question (see picture 7).

Penguins brand components manage to develop a strong visual identity that contributes to

high brand awareness that is exceptional in the publishing market.

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Picture 7. Penguin's visual identification - logo (left) and popular cover design

(right)

Source: (Penguin, 2014)

Branding in publishing market provides imprints and readers with numerous benefits

that are analogical to the general advantages of this process in any other business type. First

of all, through branding products risk perceived by customers is decreased. I. Pitsaki draws

attention to the fact that in purchase decisions, readers, like other customers, face multi-

dimensional risk related to apprehension of dissatisfaction from the bought product.

The identification function of brands allows the customers to recognize that a specific book

was issued by a reputable publisher that is synonym with high quality, so that the perceived

risk associated with acquiring such a book will be significantly decreased (Pitsaki, 2010, p.

92). In consequence, publishers brand becomes a marker of quality which is in this particular

market is simply impossible to be estimated before purchase. That is because books, like other

publishing products (e.g. magazines) can be included in either of two groups experience

and credence goods (Lis & Berz, 2011, p. 197).

The first term refers to products whose quality can only be assessed after buying

and experiencing a certain good in the process of its usage, i.e. in case of publishing after

having read the book (Fourie, 2008, p. 123). On the other hand, credence products are a lot

more complex because the quality cannot be determined even after the purchase and using

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them. The reason of this is customers lack of necessary knowledge and expertise (Scott

Armstrong, 2010, p. 23). This is why reputation and image of the publisher are crucial aspects

of gaining competitive advantage in this market (Fourie, 2008, p. 123). Although the quality

of a single book issued by a specific publishing company cannot be assessed prior reading,

strong and renowned brand of the imprint in question can decrease customers risk. This is

a result of the fact that positive perception and attitude towards the books already familiar

for the reader, is transferred onto other products of the publisher.

As already mentioned, advantages of branding in publishing are mutual. The publisher

also benefits from the quality signaled by the brand, and customers decreased perception

of risk. According to I. Pitsaki publisher branding creates an unspoken pact between readers

and the imprint (Pitsaki, 2010, p. 92). The publisher provides its customers with satisfactory

works so they start to hold such an imprint in high esteem. This is why, in exchange

for products that deliver superior value, readers offer publishing houses their loyalty.

Books originate from creative processes and along with films, theatre plays, music

scores, etc., are included in the group of cultural products (Pitsaki, 2011, p. 106). Such

products are a lot more complex than average consumer goods, and through their

consumption they provide various experiences that are closely related to one another. E. Hill,

C. OSullivan and T. OSullivan elaborated a model describing the four levels of experience

generated by cultural products and tools used to achieve specific stages of experience (Pitsaki,

2011, p. 106). The model was adapted to the publishing market by I. Pitsaki and as you can

see in the picture below, branding is included among the crucial factors constituting

and shaping the central experience of the book product.

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Source: Adapted from: (Pitsaki, 2011, p. 106)

Picture 8. Levels of a publishing product with respect to the experience

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As presented in the picture 8, the core benefit of a book product is reading itself. This

level of experience refers to the overall set of aesthetic benefits, such as emotion, satisfaction

and use of imagination, that the process of reading provides (Pitsaki, 2011, pp. 106-107).

The core benefit is closely connected to central experience which is generated by branding,

ease of access to a specific book, reading circumstances, as well as graphic design and quality

of the product, etc. All these factors merged together in a coherent manner build consistent

brand image, and allow the publisher to gain appreciation of the readers and shape

relationship with them that is based on trust and confidence (Pitsaki, 2011, pp. 106-107).

Moving further, extended experience includes a vast collection of informational efforts made

by publishers that are aimed at creating memory about the book among readers. Such kind

of experience is generally developed through marketing mix and communication programs

(Pitsaki, 2011, pp. 106-107). The last level of the model is occupied by potential experience

which refers to the need of founding a deeper bond between the pu