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Transcript of SBM_Keller_Chapter 11
11.1
CHAPTER 11:
DESIGNING AND IMPLEMENTING
BRANDING STRATEGIES
Kevin Lane Keller
Tuck School of Business
Dartmouth College
Review from previous chapters
Part II and III examined strategy for building Brand
Equity
Next part takes the broader perspective and consider
how to create, maintain and enhance brand equity
under various situation and circumstances
(after that we will examine how to measure brand
equity in session 12)
This chapter will consider issues related to branding
strategies, and how to maximize brand equity accross all
the different brands and products the firm might sell.
11.2
11.3
Branding strategy
Branding strategy (or brand architecture) is critical because it is the means by which the firm can help consumers understand its products and services and organize them in their minds.
Two important strategic tools: The brand-product matrix and the brand hierarchy help to characterize and formulate branding strategies by defining various relationships among brands and products.
11.4
Branding Strategy or Brand
Architecture
The branding strategy for a firm reflects the number and nature of
common or distinctive brand elements applied to the different
products sold by the firm.
Which brand elements can be applied to which products and
the nature of new and existing brand elements to be applied to
new products
We often distinguish branding strategy by whether a firm is or
should be employing an umbrella corporate or family brand for
all its product (“branded house”) or a collection of individual
brands all with different names (“house of brands”)
Example: Federal Express
11.5
11.6
The role of defining Brand
Strategies/ Brand Architecture
Clarify: brand awareness
Improve consumer understanding and communicate
similarity and differences between individual
products
Motivate: brand image
Maximize transfer of equity to/from the brand to
individual products to improve trial and repeat
purchase
e.g. Intel Brand Architecture
11.7
11.8
Brand-Product Matrix
Must define:
Brand-Product relationships (rows)
Line and category extensions
Product-Brand relationships (columns)
Brand portfolio
1 2 3 4
A
B
C
Products
Brands
11.9
Important Definitions
Product line
A group of products within a product category that are closely related
because they function in a similar manner, are sold to the same customer
groups, are marketed t the same type of outlets or fall within given price
range
A product line may include different brands or a single family brand or
individual brand that has been line extended
Product mix (product assortment)
The set of all product lines and items that a particular seller makes
available to buyers
While product line represent differen sets of coloumns in the brand-
product matrix that, in total, make up the product mix
Brand mix (brand assortment)
The set of all brand lines that a particular seller makes available to buyers
Illustration: Product Mix and Product Line
11.10 Source: http://www.learnmarketing.net/Product%20Mix%20and%20Product%20Lines.jpg
Example product line+mix
(Disregard the Brand)
11.11
A. Breadth of a Branding Strategy
Describe the bumber and nature of different
products linked to the brand sold by a firm
The firm has to make strategic decisions about
how many different product lines it should carry
(the breadth of the product mix), as well as how
many variants to offer in each product line (the
depth of product mix)
11.12
11.13
BoBS: Breadth of Product Mix
(Lehmann and Winer)provide n in-depth consideration of factors affecting product category attractiveness (when having breadth of product mix is desirable)
Aggregate market factors: descriptive characteristics of the market itself. All else being equal, a category is atttractive if it is relatively large (measure both units and dollars), fast growing (in current and projected terms)and in growth stage of product life cycle; noncyclical and nonseasonal in sales patters; and characterized by relatively high, steady profit margins
Category factors: underlying structural factors affecting the category; and it is attractive if the treat of new entrants low (competitive barriers high), bargaining power of buyers is low, current category rivalry is low, few close product substitute and the market operating at or near capacity
Environmental factors: external forces unrelated to product’s customers and competitors that affect marketing strategies. A host of technological, economic, regulatory, and social factors will affect the duture prospects of a category
11.14
BoBS: Depth of a Product Mix Depth of product mix
once the marketers have made their broad decisions concerning appropriate product categories and market in which to compete, they need to choose the optimal product line strategy, which requires a clear understanding of the market and cost interdependencies between product, i.e.:
Examining the percentage of sales and profits contributed by each item in the product line
Deciding to increase the length of the product line by adding new variants or items typically expands market coverage and therefore market share but also increases costs. A product line is too short if managers can increase long term profits by adding items; too long if the profit increases by dropping items
The length the product line by adding new variants or items typically expand market coverage and market share but increase cost
From a branding perspective, longer product lines may decrease the consistency of the associated brand image if all items use the same brand
B. Depth of a Branding Strategy The number and nature of different brands marketed in the product
class sold by a firm ; Referred to as brand portfolio
The reason is to pursue different market (and price) segments,
different channels of distribution, or different geographic boundaries
(market coverage)
Maximize market coverage and minimize brand overlap
Many firm have to introduce multiple brands because no one brand
is view equally favorably by all different market segments
Some other reasons for introducing multiple brands in a category
include the following:
To increase shelf presence and retailer dependence in the store
To attract consumer seeking variety who may switch to another brand
To increase internal competition within the firm
To yield economies of scale in advertising, sales, merchandising, and physical
distribution 11.15
Example: Depth and Breadth of
Product Mix
11.16
11.17
Designing a Brand Portfolio
In designing optimal brand portfolio, marketers
generally need to trade off market coverage anf these
other considerations with cost and profitability
Basic principles:
Maximize market coverage so that no potential customers are
being ignored
Minimize brand overlap so that brands aren’t competing among
themselves to gain the same customer’s approval (each brand
should have a distinct target market and postioning)
Accor’s Brand Portfolio
11.18
11.19
Ford Brand Portfolio
11.20
Brand Roles in the Portfolio Flankers (as a fighter brand) the purpose is to create stronger points of
parity with competitors (e.g. Private) brand so that more important (and
more profitable) flagship brands can retain in the desired positioning (e.g.
P&G with Luvs and Pampers)
Note: flanker brand be so attractive,but not be designed so cheaply
Cash cows: despite its dwindling sales, but as long as still manage to
hold on sufficient number of customers and maintain its profitability
with no virtually marketing support – “milk” the brand by capitalizing on
their reservoir brand equity (e.g. Gillete (old) Trac II)
Low-end entry-level or High-end prestige brands these sub-brands
leverage associations from other brand while distinguishing themselves
on the basis of their price and quality dimensions. Low end is to attract
customer to the brand franchise (e.g. BMW 3-series to 1-series/retailer);
high price is to add prestige and credibility to the entire brand portfolio
(e.g Chevrolet Corvette sports car)
e.g. Role of the Brand in Portofolio
Flanker or to protect
Cash cow (despite old)
Low priced to “attract to the brand franchise”
High priced to add prestige
11.21
11.22
Brand Hierarchy The brand-product matrix helps to highlight the range of product
and brands sold by a firm.
While Brand Hierarchy is a useful means of summarizing the
branding strategy by portraying/ displaying the number and
nature of common and distinctive brand elements across the
firm’s products, revealing the explicit ordering of brand elements
A useful means of graphically portraying a firm’s branding
strategy/
It is based on the realization that we can brand a product in
different ways depening on how many new and existing brand
elements we use and how we combine them for any one product
The constructed hierarchy is to represent how (if at all) products
are nested with other product because of their common brand
elements
11.23
Brand Hierarchy Tree: Toyota
Toyota
Corporation
Toyota
(Trucks)
Toyota
(SUV/vans) Lexus Toyota
Financial
Services
Toyota
(Cars)
Corolla Prius Avalon Celica ECHO Matrix MR2
Spyder Camry
CE
S
LE
SE
LE
XLE
Platinum
Edition
XL
XLS SE
SLE
Brand Hierarchy Example Microsoft
11.24
Brand Hierarchy: Isa Knox
11.25
11.26
Brand Hierarchy Levels
Family Brand (Buick)
Corporate Brand (General Motors)
Modifier: Item or Model (Ultra)
Individual Brand (Park Avenue)
11.27
Corporate Brand
Corporate or company brand is the highest level of the brand
hierarchy; sometimes for legal reasons the company brand have to
present somewhere on the product package; either virtually
present (e.g.General Eectric, Hewlett-Packard) combine with
famiy brand or individual brand (Siemens Transportation system,
sony walkman), or virtually invisible (Black & Decker on their
high-end brand: De Walt Professional tools)
Corporate Brand Equity occurs when relevant constituents hold
strong, favorable, and unique associations about the corporate
brand in memory
Encompasses a much wider range of associations than a product
brand
11.28
Family Brands
Brands applied across a range (more than one)
of product categories but it is not necessarilly
the name of corporation or company for
example Tropicana Juices and PepsiCo’s
Gatorade Sports drink.
If the corporate brand is applied to a range of
products, then it fuctions as a family brand too,
and two level collaps to one for those products
An efficient means to link common associations
to multiple but distinct products
11.29
Individual Brands
A brand that is Restricted to essentially one
product category, although there may be
multiple product types offered on the basis of
different models, package sizes, flavors, etc. (e.g.
Frito Lay in the “salty snacks” product class
offers: Fritos corn chips, Doritos tortilla chips,
Lays and Ruffle potato chips, Rold Gold Pretels
11.30
Modifiers
A means to designate a specific item/model type or a
particular version or a configuration of the product
Signals refinements or differences in the brand related
to factors such as quality levels, attributes, functions,
etc.
Plays an important organizing role in communicating
how different products within a category that share the
same brand name are
e.g. Land O’Lakes offers: whipped, unsalted, and
regular version of its butter; Yoplait comes with “light”
and “original” or “custard style” flavours
Example levels of brand hierarchy
11.31
Building Equity at Different Hierarchy Levels Before considering how the brand hierarchy can help to formulate branding
strategies, let’s first examine some of the specific issues in building brand
knowledge structures-and thus brand equity-at each of different level of the brand
hierarchy
Corporate/Company Level : corporate BE is the differential response by
consumer, customers, employees, other firms, or any relevant constituency to the
words, action, communication, products, provided by company. It occurs when
they respond more favorably to any corporate marketing activities
Family brand (range brands/umbrella brands) level: some reasons to choose
family bands instead corporate brand e.g. Product (development) become more
dissimilar, the product meaning is ineffective, therefore need to create distinct
family brands. Family brand can be efficient means to ink common associations to
multiple but distinct product. It lower the cost of introducing a related product
under the same family brand name, and the likelihood of acceptance can be higher
(similar to corporate brand); but if the product linked is not well
developed/maintained, the family brand may become weaker and less favorable
and the failure of one product may adverse the ramificactions on other product
sold by the firm under the same brand 11.32
Building Equity at Different Hierarchy Levels contd
Individual brand level – main advantage: cuztomize the brand and all it
supporting marketing activity to meet the need of specific customer group,
and if it is failed, the risk to other brand within company is minimum.
Disadvantages: difficulty, complexity, and expense of developing separate
marketing program to build sufficient level of BE
Modifier level: regardless company/corporate or family, or idividual brand
name, modifier is to distinguish types/items/models. It may signals
refinements or differencesin brand related to factors such as: Quality levels
(Johnie walker red/black/gold/blue label scotch Whiskey); attributes
(Wringle’s spearmint, doublemint);function (kodak 100,200 speed) etc. Brand
modifier communicate the differences and how one brand with same brand
(different modifier) related, so it help to make product more understanable
and relevant to customers
Product Descriptor: not considered as brand element, but it might be
important ingredient of branding strategy – helps consumers understand what
the product is and does and also helps to define the relevant competition in
consumers’ mind
11.33
e.g. Product Descriptor
11.34
11.35
Corporate Image Dimensions Types of association that may exist at the corporate level
Common product attributes (Hershey’s w/ chocolate), benefits (type of user: BMW w/ “yuppies”)or attitudes (overall judgement: Sony w/ quality)
High-Quality corporate image association
Innovativeness
People and relationships
Customer orientation (e.g. Ritz Carlton, Wall-Mart, GE, etc)
Values and programs
Concern with the environment corporate image association (e.g Body Shop)
Social responsibility
Corporate credibility: the extent to which consumers believe a firm can design and deliver produccts that satisfy consumer needs/wants
Expertise (able to competently make and sell its products)
Trustworthiness (motivated to be hones, dependable, & sensitive to cust needs
Likability (see the company as likable,attractive, prestigious, dynamic etc.)
Designing Branding Strategy
Given different possible of brand hierarchy, a firm has a number of
branding options available, depending on how it employs each level – no
uniform agreement on the one type branding agreement on brand strategy
Brand hierarchy may not be symmentric; depends on compny objective,
consumer behavior or competitive activity faced
brand element at each level of the hierarcy may contribute to brand equity
through their ability to create awareness as well as foster strong, favorable,
ang unique brand association and positive responses
The challenge in setting up the brand hierarchy and arriving to brand
strategy:
1. Design the proper brand hierarchy with the right number and nature of brand
elements to use at each level
2. Design the optimal marketing program to create the deired amount of brand
awareness and type of brand association at each level
11.36
11.37
Brand Hierarchy Decisions The number of levels of the hierarchy to use in general
Principle of simplicity
Employ as few levels as possible
Principle of clarity
Logic and relationship of all brand elements employed must be obvious and transparent
Decide on the level of awareness and types of associations to be created at each levels
Principle of relevance
Create global associations that are relevant across as many individual items as possible
Principle of differentiation
Differentiate individual items and brands
Decide on which product tobe introduced
Principle of growth
Principle of survival
Principle of synergy
How brand elements from different levels of the hierarchy are combined (or linked), if
at all, for any one particular product
Principle of prominence
The relative prominence of brand elements affects perceptions of product distance and the type of
image created for new products
How to link a brand accross products
Principle of commonality
The more common elements shared by products, the stronger the linkages
11.38
Number of Hierarchy Levels
Most firm choose to use more than one level because each successive branding level allows the firm to communicate additional specific info about its product (The practice of combining existing brand with new brand is called: sub-branding)
Principle of simplicity: based on the need to provide right amount of branding information to consumers, no more and no less
Number of levels of hierarchy depends on the complexity of the product line/mix, and thus on the combination of shared and separated brand association the company would like to link to any one product in its product line/mix
In simple low involvement product: branding strategy often consist of an individual/family brand combined with modifier (e.g. GE softwhite/enrich lightbulbs; functionality (3way/super); performance (40/60watts)
A company with a strong corporate brand (e.g sony/philips) can easily use nondescriptive alpha numeric product names (e.g.Sony cybershot camera,Wega TV)
A complex set of products e.g. Cars, computers; requires more levels of hierarchy (although difficult if the level is more than three), one of the way out: introduce multiple brand at the same level and expand the depth of branding strategy
Brand & Sub-brand
Endorsement Corporate Brand
11.39
11.40
Levels of Awareness and Associations How much awareness and what type of association should marketers create for brand element at each level? Assuming company using sub branding for two/more brand levels; to guide the brand knowledge creation process at each level, these two principles should be considered:
Principle of relevance: based on advantages of efficiency. Marketers should create associations that are relevant to as many brands nested at the level below as possible esp. At the family/corporate brand level. The more abstract (possibly) the more relevant for different product setting, brand with strong product category association might difficult to permit new extension in different product categories (e.g. Nike’s slogan “Just do it” relevant to all producct it sells)
Principle of differentiation: based on the disadvantages of redundancy. Marketers should distinguish brand at the same level as much as possible (esp inportant at the individual and modifier levels)
11.41
Linking Brands at Different Levels If multiple brand elements from different levels are combined to brand new
product, we must decide how much emphasis to give each. e.g. If we adopt sub-
brand strategy, how much prominence should we give individual brands at the
expense of the corporate family brand? (PEPSI Vitacola of Vitacola by PEPSI?)
Principle of prominence: the relative prominence of the brand elements determines which
element /element become primary one(s) and which become secondary one(s). Primary brand
element should convey the main product positioning and point of difference.
Secondary brand element convey a more restrictes set of supporting association
such as point of parity/additional POD (and may facilitate awareness)
e.g.
RAZR (primary brand element)
[sleek, cutting-edge style]
MOTOROLA (secondary element)
[convey credibility, quality, proffesionalism]
11.42
Linking Brands Across Products Previous steps highlight the “vertical aspect” of the brand hierarchy. Now
“horizontal aspect”
Principle of Commonality: more common brand elements product share, the stronger
the linkages between the products
the simplest way to link products is to use brand element “as is” accross the
different products involved. Adapting the brand, or some part of it, to make
the connection offers additional possibilities, e.g. Hewlett-Packard capitalized
on its highly succesfull LaserJet computer printers to introduce a number of
product using “jet” suffix: DeskJet, PaintJet, OfficeJet; Sony given its portable
audio equipment a “man” suffix: Walkman and Discman; McDonalds has use
its “Mc” prefix: McNuggets, McMuffin etc
We can also create relationship between brand and multiple product with
common symbols e.g. Prominent Nabisco logo as an endorser
Other possibility: logically order the brands in product line, to communicate
how they are related ad to simplify connsumer decision making (e.g. BMW 3, 5,
7 series; American Express offers Blue, Red, Green. Gold, Platinum and Black)
11.43
Brand Architecture Guidelines
Adopt a strong customer focus
Avoid over-branding
Establish rules and conventions and be disciplined
Create broad, robust brand platforms
Selectively employ sub-brands as means of complementing and strengthening brands
Selectively extend brands to establish new brand equity and enhance existing brand equity
11.44
Adjustment to the Marketing Program
Corporate Image Campaign. Different objectives are possible:
Build awareness of the company and the nature of its business
Create favorable attitudes and perceptions of company credibility
Link beliefs that can be leveraged by product-specific marketing
Make a favorable impression on the financial community
Motivate present employees and attract better recruits
Influence public opinion on issues
Brand Line Campaign. To build brand equity at the corporate brand or family brand
level. It emphasizes the breadth of product association of the brand. Unlike a
corporate image campaign that presents the brand in abstract terms with few,
if any, references to specific products, brand line campaigns refer to the range
of products associated with a brand line. By showing the difference uses and
benefir of the multiple product offered by a brand, brand ads may be
particularly useful in building brand awareness, clarifying brand meaning and
suggesting additional usage information
11.45
Using Cause Marketing to Build Brand Equity
The process of formulating and implementing marketing activities that are characterized by an
offer from the firm to contribute a specified amount to a designated cause when customers engage in
revenue-providing exchanges that satisfy organizational and individual objectives
Advantages of Cause Marketing
Building brand awareness
Enhancing brand image
Establishing brand credibility
Evoking brand feelings
Creating a sense of brand community
Eliciting brand engagement and positive response
Example of cause-related programs:
Johnson &Johnson provide World Wildlife Fund (WWF) with a cut from sales of a special lin eof
children’s toiletries
Ronald McDOnalds Houses for sick children in 19 countries
Avon Breast Cancer Crusade
11.46
Green Marketing
A special case of cause marketing that is particularly
concerned with the environment
Explosion of environmentally friendly products and
marketing programs
Obstacles that green marketing encounter:
Overexposure and lack of credibility (create doubts, become
a backlash- consumer thinks it is only a marketing gimmicks)
Consumer Behavior (corporate environmental awareness is
often fairly complex in reality and doesnt always fully match
public perception)
11.47
Crisis Marketing Guidelines
The two keys to effectively managing a crisis are
that the firm’s response should be swift and that
it should be sincere.
Class Discussion
Hershey’s Kisses and hug
11.48
Hershey’s Company Profile
Last Updated: Oct. 1, 2012
The Hershey Company (NYSE: HSY) is the largest producer of quality chocolate in North America
and a global leader in chocolate and sugar confectionery. Headquartered in Hershey, Pa., The Hershey
Company has operations throughout the world and approximately 14,000 employees. With revenues of
more than $6 billion, Hershey offers confectionery products under more than 80 brand names,
including such iconic brands as HERSHEY'S, REESE'S, HERSHEY'S KISSES, HERSHEY'S BLISS,
HERSHEY'S SPECIAL DARK, KIT KAT, TWIZZLERS, JOLLY RANCHER and ICE
BREAKERS. Hershey also offers premium and artisan chocolate products under such brands as
SCHARFFEN BERGER and DAGOBA through the Artisan Confections Company, a wholly owned
subsidiary. The company is focused on growing its presence in key international markets such as China
and Mexico while continuing to build its competitive advantage in the United States and Canada.
For more than 100 years, The Hershey Company has been a leader in making a positive difference in
the communities where its employees live, work and do business. Corporate Social Responsibility is an
integral part of the company’s global business strategy, which includes goals and priorities focused on
fair and ethical business dealings, environmental stewardship, fostering a desirable workplace for
employees, and positively impacting society and local communities. Milton Hershey School, established
in 1909 by the company's founder and administered by Hershey Trust Company, provides a quality
education, housing, and medical care at no cost to children in social and financial need. Students of
Milton Hershey School are direct beneficiaries of The Hershey Company's success.
11.49
Corporate Brand & Sub-brand
Individual branding
11.50
Hershey’s Commercial
11.51
Hershe’s Hugs and Kisses
11.52
Hershey’s Kisses
Hershey’s chocolate has a traditional homespun image, as
reflected by its 20-pus-year old advertising slogan, “Hershey’s.
The Great American Candy Bar”. As a result of a clever ad
campaign that transforms the teardrop-shape, foil wrapped,
Hershey’s kisses into animate object and places them in the
amusing, product relevant situation, however, the Kisses sub
brand has a much more playful and fun brand image than the
company brand. The successfull Hershey’s sub-brand led to a
further extension, Hershey’s Hugs (a Hershey’s Kisses with an
outside layer of white chocolate). Additional flavor extension
included caramel, peanut, butter and dark chocolate fillings
11.53
Hershe’s Kisses commercial
11.54