Brand Management - Module 1 Notes

Brand management 2013

Module 1
Definition of 'Brand'
A distinguishing symbol, mark, logo, name, word, sentence or a combination of these items that companies use
to distinguish their product from others in the market. Once a brand has created positive sentiment among its
target audience, the firm is said to have built brand equity. Some examples of firms with brand equity possessing very recognizable brands of products - are Microsoft, Coca-Cola, Ferrari, Sony, The Gap and
Nokia.
Legal protection given to a brand name is called a trademark.
A brand is often the most valuable asset of a Corporation. Brand owners manage their brands carefully to create
shareholder value, and brand valuation is an important management technique that ascribes a money value to a
brand, and allows marketing investment to be managed (e.g.: prioritized across a portfolio of brands) to
maximize shareholder value
BRAND EQUITY
The value premium that a company realizes from a product with a recognizable name as compared to its generic
equivalent. Companies can create brand equity for their products by making them memorable, easily
recognizable and superior in quality and reliability. Mass marketing campaigns can also help to create brand
equity. If consumers are willing to pay more for a generic product than for a branded one, however, the brand is
said to have negative brand equity. This might happen if a company had a major product recall or caused a
widely publicized environmental disaster. The additional money that consumers are willing to spend to buy
Coca Cola rather than the store brand of soda is an example of brand equity.
Brand equity is a phrase used in the marketing industry which describes the value of having a wellknown brand name, based on the idea that the owner of a well-known brand name can generate more money
from products with that brand name than from products with a less well known name, as consumers believe that
a product with a well-known name is better than products with less well known names
Elements that can be included in the valuation of brand equity include (but not limited to): changing market
share, profit margins, consumer recognition of logos and other visual elements, brand language associations
made by consumers, consumers' perceptions of quality and other relevant brand values
Consumers' knowledge about a brand also governs how manufacturers and advertisers market the brand. Brand
equity is created through strategic investments in communication channelsand market education and appreciates
through economic growth in profit margins, market share, prestige value, and critical associations. Generally,
these strategic investments appreciate over time to deliver a return on investment. This is directly related
to marketing ROI. Brand equity can also appreciate without strategic direction.
Brand value
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Major brand owners like The Coca-Cola Company, Procter & Gamble, Unilever and Nestlé were aware of the
importance of their brands, as indicated by their creation of brand managers, but on the stock market, investors
focused their value assessment on the exploitation of tangible assets.
CET MBA | Prepared by Belli P K

The increasing recognition of the value of intangibles came with the continuous increase in the gap between
companies’ book values and their stock market valuations, as well as sharp increases in premiums above the
stock market value that were paid in mergers and acquisitions in the late 1980s.
The brand is a special intangible that in many businesses is the most important asset. This is because of the
economic impact that brands have. They influence the choices of customers, employees, investors and
government authorities. In a world of abundant choices, such influence is crucial for commercial success and
creation of shareholder value. Even non-profit organizations have started embracing the brand as a key asset for
obtaining donations, sponsorships and volunteers.
Some brands have also demonstrated an astonishing durability. The world’s most valuable brand,1 Coca-Cola,
is more than 118 years old; and the majority of the world’s most valuable brands have been around for more
than 60 years. This compares with an estimated average life span for a corporation of 25 years or so.2 Many
brands have survived a string of different corporate owners.
Aston Martin, Volvo and Land Rover. Samsung, a leading electronics group, invests heavily in its intangibles,
spending about 7.5 percent of annual revenues on R&D and another 5 percent on communications. 5 In
packaged consumer goods, companies spend up to 10 percent of annual revenues on marketing support.
The social value of brands
brands create substantial social as well as economic value as a result of increased competition, improved
product performance and the pressure on brand owners to behave in socially responsible ways.
Competition on the basis of performance as well as price, which is the nature of brand competition, fosters
product development and improvement. And there is evidence that companies that promote their brands more
heavily than others in their categories do also tend to be the more innovative in their categories.
The need to keep brands relevant promotes increased investments in R&D, which in turn leads to a continuous
process of product improvement and development. Brand owners are accountable for both the quality and the
performance of their branded products and services and for their ethical practices. Given the direct link between
brand value and both sales and share price, the potential costs of behaving unethically far outweigh any
benefits, and outweigh the monitoring costs associated with an ethical business.
Nike, a company once criticized for the employment practices of some of its suppliers in developing countries,
now posts results of external audits and interviews with factory workers at www.nikebiz.com. The concern of
multinational companies is understandable, considering that a 5 percent drop in sales could result in a loss of
brand value exceeding $1 billion. It is clearly in their economic interests to behave ethically
What great brands share
A compelling idea. Behind every brand is a compelling idea, which captures customers’ attention and loyalty
by filling an unmet or unsatisfied need
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A resolute core purpose and supporting values. These remain in place even though the business strategy and
tactics have to be regularly revised to address and take advantage of the circumstances of a changing, and in the
detail often largely unanticipated, world and business environment.


A central organizational principle. The brand position, purpose and values are employed as management
levers to guide decision-making. This becomes so ingrained in leading organizations that they consciously ask
themselves, “How will this decision impact upon the brand?” or “Is this on-brand?”
An ability to stay relevant. Leading brands constantly maintain their relevance to a targeted set of customers,
ensuring ownership of clear points of difference compared with the competition. They sustain their credibility
by increasing customers’ trust of and loyalty to them.

Brand building skills
Anyone with responsibility for building a brand needs to be creative, intelligent, innovative, venturesome,
nurturing, disciplined and servicefocused. They must also master three primary
tasks:





Embody the brand itself. This is the most important task. The communications and the actions of the
individual must align with the core purpose and values reflecting the brand. The organization looks to
brand managers as role models who portray appropriate behavior and act in the best interests of the
brand and company. Conversely, they must also challenge convention to keep the brand fresh by
questioning what has become the status quo.
Understand the underlying sources of brand value and protect and build on them.
Continually search out what makes the brand unique. Customer preferences, competitive frameworks
and market conditions are incredibly dynamic. Renewing and refreshing the brand to ensure continuing
relevance, differentiation and credibility are the most strategic tasks and perhaps the most consuming
tactically. Brand managers must determine what cannot change and what must change.

Keys of branding

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Brand identity is the combined effect of visual elements in your marketing materials. A basic brand identity
kit consists of a logo, business card, letterhead, and branded envelope. This basic set of materials can be
extended to include a website, brochure, folder, flyer, or any other professionally designed pieces.
A successful brand identity is built around the following 9 key characteristics:





Repetition helps potential clients—and current clients—to remember and relate to who you are and what
you do in your business. Experts say that it takes somewhere between 6 and 12 "impressions," or contacts
with your business, for customers to truly remember you and connect with your business.



Consistent use of your logo, tagline, and materials and what you say about your business. You will only be
able to build a strong brand for your company by designing unique visual and verbal elements and then
repeating those elements through all of the materials that you create.



Memorable elements help your business to stand out as well. You'll be able to create brand memorability
through consistency, repetition, and uniqueness of your graphics and materials. Make your graphics
memorable by creating a unique logo and using a consistently strong Visual Vocabulary. Create memorable
text by using alliteration (repeating similar sounds, such as using words that all start with the same letter),
repetition, unique word combinations, and lively imagery in your copy.



Meaningful graphics make your company's message come to life through symbolic graphics, colors, and
type choices in all of your marketing materials. Meaningful text will express what your business is really all
about, and help to give some depth to your developing brand. And, perhaps more importantly, your audience
will be able to understand the meaning in your graphics and text — it will be accessible to your target
market.



Clear graphics and text communicate your message in an understandable way. Make sure that your graphics
are crisp, clean, simple, and meaningful. And make sure that your text expresses your point and is not
confusing — that it explains your point well.



Honesty in your brand identity materials. If clients do engage with you and then you don't live up to
the brand promises you made in your materials, then they will feel alienated from you and your company...
or worse. This can really damage your relationships and your overall brand, so make sure you can stand
behind your brand and deliver on your promises before you distribute your branded materials.



Personality for your business helps make sure that you don't look like everyone else, so that potential clients
can immediately tell that all of your branded materials are coming from your business. If you're the owner of
a one-person business, your brand identity might resonate with your own personality. If your business is
larger, or if you want to make it appear larger, you can create your own brand personality to connect with
your potential clients.



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Unique in "look and feel" and message about your business. Make sure that your business's graphics stand
out from and cannot be confused with those of the competition, and that the ways you talk and write about
your business are uniquely yours as well.

Professionalism in all things, from the quality of your graphics, to the way your text is written
(proofreading is essential!), to your personal presentation: the way you talk, dress, and speak.
Professionalism in customer service and in the way you treat people you meet is also important. Follow
through on your offers and promises.


The Halo Effect
Thorndike discovered that when people rate someone on one trait it is correlated with their ratings on other
traits. Put simply, people tend to see a person’s performance as all good or all bad. This phenomena has come to
be called the “Halo Effect.” While Thorndike saw the Halo Effect as a source of measurement bias in his
research, the savvy marketer will recognize it as the foundation of the modern concept of brands. When we
develop a favorable impression of a firm when interacting with one partner at a firm we tend to view the whole
firm in a favorable light. Our impression of that firm’s brand is strengthened. Not surprisingly it can also work
in the other direction. Unfavorable impressions are also generalized via the “Devil Effect”.

Brand Strength Defined: The concept of a strong brand is something that we all understand on a very intuitive
level. From our own experience we know that firms with high brand strength do better in the marketplace,
whether they need new clients, business partners or employees. So what exactly is brand strength? While there
is no universal definition, we describe the brand strength of a professional services firm as the combination of a
firm’s reputation and it’s visibility. Firms that have better reputations coupled with higher visibility have
stronger brands.
Increasing Brand Strength: Your firm doesn’t need to be the best at everything. You just need to be the best
at something and the Halo Effect will help pull the rest of your services forward. Similarly, you don’t need to be
highly visible to everyone. But you do need to have a strong presence somewhere. From that starting point your
brand strength can grow.
A better approach would be to focus on an industry in which you have a strength and a service where you can
gain a true advantage. By devoting your resources to becoming the best in that segment you have a reasonable
opportunity to develop a strong reputation and high visibility. From that island of brand strength you can more
easily expand. Add additional services and move to additional industries where your visibility can be leveraged.
Changes in the Indian Consumer
When India opened its economy to the global marketplace in the early 1990s, many multinational
Corporations rushed in to pursue its middle-class consumers—an estimated 200 million people—only to
Confront low incomes, social and political conservatism, and resistance to change. It turned out that the
Indian consumer was a tough one to figure out and win over.
Things are changing. Although attitudes remain complex, they have shifted substantially toward
consumerism, particularly over the past decade. The country’s recent economic performance is a factor,
of course. For three years, GDP growth has been strong and sustained, at an average annual rate of
Around 8%. The population’s demographic profile also plays a role: Indians constitute a fifth of the
world’s citizens below age 20. So a youthful, exuberant generation, weaned on success, is joining the
ranks of Indian consumers.
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Consumer Behaviour is changing in India
Recently India is undergoing a huge change in consumer behaviour. We are undergoing huge changes in last 56 years and off course, more to come. The road of super market now opened into a trendy ‘Mall Business’.
People don’t always go to the malls only for shopping; it became a joint for a date or cool place to meet friends.

“Window Shoppers” are more than actual shoppers. The concept of “Ghost Shoppers” is yet to come here,
which will also happen eventually to keep the quality of the retail outlets. Buyers are God now, more
knowledgeable and having more options in their hands before they decide to purchase and invest their money.
View of Malls in Gurgaon Area. In a diversified country like India cultural factors exert the broadest and
deepest influence on consumer behaviour; we will look at the role played by the buyer’s culture, subculture, and
social class.
Culture: Culture is the most fundamental determinant of a person’s wants and behaviour. Whereas lower
creatures are governed by instinct, human behaviour is largely learned. The child growing up in a society leans
a basic set of values, perceptions, preferences and behaviours through a process of socialization involving the
family and other key institution .Thus a child growing up in India is exposed to the following values:
Achievement and success, activity , efficiency and practicality, progress, material comfort, individualism,
freedom, external comfort, humanitarianism, and youthfulness.
Social Factors: A consumer’s behaviour is also influenced by social factors, such as the consumer’s reference
group, family, and social roles and statuses.
Reference Group: A person’s behaviour is strongly influenced by many group .A persons reference group are
those groups that have a direct (face to face) or indirect influence on the person’s attitudes or behaviour. Group
having a direct influence on a person are called membership group. These are group to which the person
belongs and interacts. Some are primary groups. With which there is fairly continuous interaction, such as
family, friends, neighbours, and co-workers. Primary group tend to be informal. The person also belong to
secondary group, which tend to be more formal and where there is less continuous interaction: they include
religious organizations, professional associations, and trade unions.

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Family Group: Members of the buyer’s family can exercise a strong influence on the buyer’s behaviour. We
can distinguish between two families in the buyer’s life. The family of orientation consists of one’s parents.
From parents a person acquires an orientation towards religious, politics, and economics and a sense of personal
ambitions, self –worth, and love. Even if the buyer no longer interacts very much with his or her parents, the
parents influence on the unconscious behaviour of the buyer can be significant. In countries where
parents continue to live with their children, their influence can be substantial like India. In case of expensive
products and services, husband and wives engage in more joint decision making. The market needs to determine
which member normally has the greater influence in the purchase of a particular products or services. Either the
husband or the wife, or they have equal influence. The following products and services fall under such:
Husband – dominant: life insurance, automobiles, television Wife – dominant: washing machines, carpeting,
non –living – room furniture, kitchenware Equal: Living – room furniture, vacation, Housing, outside
entertainment. Their researches were made on the Indian people’s social life, personal tastes and preferences,
way of life, how they identify an effective product and what makes them get attracted towards a product. The
social and economic conditions were analyzed. The general economy of India was also researched on. They had
modified their product to suit the Indian conditions. Their technology had to be adjusted and suited to such an
extent that their car is adaptable to Indian conditions. Indians are generally prone to be rough and tough
customers and especially taking into account the road conditions and other social factors they designed the
product in such a way that it’s best suited to the conditions and it’s received by the target customers. Today
Ford is enjoying a huge market in India.



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Brand Management - Module 1 Notes

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Brand Management - Module 1 Notes