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Topics Covered
Introduction to product and brands, Importance and
characteristics of Brands, Nature of relationship of brand with
customers and Building successful brands through industry
cases.
Objectives
The learning objective: after this lecture you should be able to
understand:
Basics of Branding
a. Concepts of brand management
b. Importance of brands and
c. Characteristics of brand
After going through the Introduction to the subject in first
lesson let us now discuss the Brands and Branding basics in
detail. This is very important as if the basics are not clear you
may not be able to understand the subject well.
Have you ever given a thought that why branding gained so
much importance in the past few years? Why companies are
spending lavishly on branding their product? To understand
this we need to discuss brands in detail and importance of
branding.
Background and Introduction
The word “brand”, when used as a noun, can refer to a
company name, a product name, or a unique identifier such as a
logo or trademark. In a time before fences were used in ranching
to keep one’s cattle separate from other people’s cattle, ranch
owners branded, or marked, their cattle so they could later
identify their herd as their own.
Do you know the concept of branding also developed through
the practices of craftsmen who wanted to place a mark or
identifier on their work without detracting from the beauty of
the piece. These craftsmen used their initials, a symbol, or
another unique mark to identify their work and they usually put
these marks in a low visibility place on the product.
Today’s modern concept of branding grew out of the consumer
packaged goods industry and the process of branding
has come to include much, much more than just creating a way
to identify a product or company.
So we can say that branding today is used to create emotional
attachment to products and companies. Branding efforts create
a feeling of involvement, a sense of higher quality, and an aura
of intangible qualities that surround the brand name, mark, or
symbol.
So what exactly is the definition of “brand”? Let’s cover some
definitions first before we get too far into the branding process.
Why do we, as consumers, feel loyal to such brands that the
mere sight of their logo has us reaching into our pockets to buy
their products?
Keller’s Definition
A product, but one that adds other dimensions that
differentiate it in some way from other products designed to
satisfy the same need.
• Rational and tangible
• Symbolic, emotional and intangible
The psychological response to a brand can be as important as
the physiological response.
Product = Commodity
A product is a produced item
always possessing these
characteristics:
• Tangibility
•Attributes and Features
Brand = “Mind Set”
The sum of all communications and experiences received
by the consumer and customer resulting in a distinctive
image in their “mind set” based on perceived emotional
and functional benefits.
So we can say in short:
Brand: is a name, term, sign, symbol, design, or some
combination
that identifies the products of a firm
The Meaning of Brands
Brands are a means of differentiating a company’s products and
services from those of its competitors.
There is plenty of evidence to prove that customers will pay a
substantial price premium for a good brand and remain loyal to
that brand. It is important, therefore, to understand what
brands are and why they are important.
Example
Macdonald sums this up nicely in the following quote
emphasising the importance of brands:
“…it is not factories that make profits, but relationships with
customers, and it is company and brand names which secure
those relationships”
Businesses that invest in and sustain leading brands prosper
whereas those that fail are left to fight for the lower profits
available in commodity markets.
LESSON 2:
BRANDS AND BRANDING BASICS
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Can you Define Brand Now?
One complete definition of a brand is as follows:
“A name, term, sign, symbol or design, or a combination of
these, that is intended to identify the goods and services of one
business or group of businesses and to differentiate them from
those of competitors”.
Three other important terms relating to brands should be
defined at this stage:
As we discussed earlier it is very important to be clear about the
difference between Brands and products
Brands are rarely developed in isolation. They normally fall
within a business’ product line or product group.
A product line is a group of brands that are closely related in
terms of their functions and the benefits they provide. A good
example would be the range of desktop and laptop computers
manufactured by Dell.
A product mix relates to the total set of brands marketed by a
business. A product mix could, therefore, contain several or
many product lines. The width of the product mix can be
measured by the number of product lines that a business
offers.
For a good example, visit the web site of Hewlett-Packard
(“HP”). http://www.hp.com HP has a broad product mix that
covers many segments of the personal and business computing
market.
Activity 1
Lets see how many separate product lines can you spot from
their web site? http://www.hp.com
Managing brands is a key part of the product strategy of any
business, particularly those operating in highly competitive
consumer markets.
In its simplest form, a brand is nothing more and nothing less
than the promises of value you or your product make. These
promises can be implied or explicitly stated, but none-the-less,
value of some type is promised.
Additional Definitions
Brand image is defined as consumers’ perceptions as reflected by
the associations they hold in their minds when they think of
your brand.
Brand awareness is when people recognize your brand as yours.
This does not necessarily mean they prefer your brand (brand
preference), attach a high value to, or associate any superior
attributes to your brand, it just means they recognize your
brand and can identify it under different conditions.
Brand awareness consists of both brand recognition, which is
the ability of consumers to confirm that they have previously
been exposed to your brand, and brand recall, which reflects the
ability of consumers to name your brand when given the
product category, category need, or some other similar cue.
Aided awareness occurs when you show or read a list of brands
and the person expresses familiarity with your brand only after
they hear or see it.
Top-of-mind awareness occurs when you ask a person to name
brands within a product category and your brand pops up first
on the list.
When you think about fast foods and Luxury cars, Mc Donald’s
and Mercedes Benz come to mind? These brands enjoy strong
top-of-mind awareness in their respective categories.
What is Branding?
Branding is the business process of managing your trademark
portfolio so as to maximize the value of the experiences
associated with it, to the benefit of your key stakeholders,
especially current and prospective:
• employees
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• customers
• stock/share holders
• suppliers
• intermediaries
• opinion leaders
• local communities
• purchasers and licensees
Experts argue as to which stakeholders should be the main
focus of the branding process, but this is probably the wrong
question as their experiences are all inter-related:
• Employees - the more your employees value your brands
and understand what to do to build them, the more your
customers, suppliers, local communities and opinion
leaders will value them. The more attractive your brands are
to potential employees, the more they are likely to want to
work for you
• Customers - the more your customers value your brand,
the more they will buy your products and services, and
recommend them to other people. They will also pay a
premium for them and make the lives of your employees
easier. This, in turn, will enhance the value of your brands
to prospective purchasers and licensees. Research has shown
that strong brands are more resistant to crises of reputation
• Stock/share holders - strong brands multiply the asset
value of your company (90% of the asset value of some
major corporations lies in their intellectual property), and
assure them that your company has a profitable future.
They also allow you to afford to give competitive dividends
to your current stock/share holders
• Suppliers - suppliers like to be associated with strong
brands as this benefits their own reputation in the eyes of
other current or potential customers. You are therefore likely
to get better service at a lower total acquisition cost
• Intermediaries - retailers, distributors and wholesalers
value strong brands as they improve their own profit
margins. They are likely to give you more “air time” and
shelf space, thus enhancing further the value of your
brands in the eyes of your current and prospective
customers
• Opinion leaders - the media, politicians and nongovernment
organisations are more respectful of strong
brands
• Local communities - supportive local authorities can make
your life easier in many ways, and offer you better deals, if
you have prestigious brands. Your local communities
provide you with your work force and can be highly
disruptive if they perceive you as damaging their
environment
• Purchasers and licensees - the question prospective
purchasers and licensees ask is “how much more profit can I
get for my products and services sold under this brand than
under any brand I might build?” Strong brands can be
spectacularly valuable.
Dalrymple & Parsons/Marketing Management 7th edition: Chapter 7 3
A Brand is a ….. A Brand is a …..
Name,
Term,
Sign,
Symbol, or
Design
intended to
distinguish the goods
and services from
one another
Dalrymple & Parsons/Marketing Management 7th edition: Chapter 7 31
Adding An Item: Four Brand Adding An Item: Four Brand
Types Types
Product Category
Existing New
Existing Line
Extension
Brand
Extension Brand
Name
New Flanker
Brand
New
Product
Characteristics of Brands
Our definition of a brand adheres to a model which shows the
extent to which a product or service can be augmented to
provide added value to increasing levels of sophistication. This
model, views a brand as consisting of four levels
• generic
• expected
• augmented
• potential
The generic level is the commodity form that meets the buyer,
or user’s basic needs, for example the car satisfying a
transportation
need. This is the easiest aspect for competitors to copy and
consequently successful brands have added values over and
above this at the expected level.
Within the expected level, the commodity is value engineered to
satisfy a specific target’s minimum purchase conditions, such as
functional capabilities, availability, pricing, etc. As more buyers
enter the market and as repeat buying occurs, the brand would
evolve through a better matching of resources to meet
customers’
needs (e.g; enhanced’ customer service).
With increased experience, buyers and users become more
sophisitated, so the brand would need to be augmented in
more refined ways, with added values satisfying non-functional
(e.g. emotional) as well as functional needs. For example,
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promotions might be directed to the user’s peer group to
reinforce his or her social standing through ownership of the
brand.
With even more experience of the brand, and therefore with a
greater tendency to be more critical, it is only creativity that
limits
the extent to which the brand can mature to the potential level.
For example, grocery retail buyers once regarded the Nestle
confectionery brands as having reached the zenith of the
augmented stage. To counter the threat of their brands slipping
back to the expected brand , level, and therefore’ having to fight
on price, Nestle shifted their brands to the potential level by
developing software for retailers to manage confectionery shelf
space to maximize profitability.
Experienced consumers recognize that competing items are
often similar in terms of product formulation and that brand
owners are no longer focusing only on rational functional
issues, but are addressing the potential level of brands.
Key Action Points
We can define Brands according to the following dimensions:
1. Its central organizing thought - defining it for internal &
stakeholder use in one sentence
2. Its slogan - defining it for use with customers in one
sentence
3. Its personality - what would it be like if it were a human
being?
4. Its values - what does it stand for/against?
5. Its tastes/appearance - what does it look like? What does it
sound like? What does it like and dislike?
6. Its heritage - what are the stories you tell about how it all
came about/what sort of brand it is?
7. Its emotional benefits – how it avoids/reduces pain or
increases pleasure
8. Its hard benefits - the “pencil sell”
Brands need to provide customers with a consistent, compelling
experience in order not to confuse them, as confusion leads
to doubt. Everyone associated with the brand must understand
its key dimensions in order to deliver this consistent experience,
and it helps if customers can be given a short slogan, which
encapsulates the essence of the brand.
Central Organizing Thought
How are you going to describe the essence of the brand to your
colleagues and business partners in one short, memorable, and
motivating sentence? What makes it special?
This is the last and hardest stage of the brand definition
process. Try to create images of what the brand does, and
preferably link it to an eternal value such as friendship, status,
belonging, realizing your true self (Maslow’s Hierarchy of
Needs could be useful here).
The central organizing thought is not the same as the slogan.
The central organizing thought addresses a core customer value
whose articulation may make customers uncomfortable or even
resentful. The slogan refers to this core customer value but in
terms the customer is happy to acknowledge and discuss.
Slogan
How are you going to describe the essence of the brand to your
customers in one short, memorable, and motivating sentence?
This should hint at the central organizing thought, without
necessarily stating it.
As an example, the central organizing thought of the BMW
brand is “competitive achievement”, but the slogan is “the
ultimate driving machine”.
The Personality of the Brand
If the brand were indeed human, what sort of person would it
is - jovial, serious, sporty, aristocratic, and cunning? (Liril Girl)
The Values of the Brand
What does the brand stand for? What does it believe in? What
would it make a stand on?
Tastes/Appearance
What does the brand like? What does it look like? What does it
wear? How does it speak?
This will include the iconography of the brand - the icons, the
symbols, the trade dress, the typeface, and the look and feel.
Heritage
All great brands have stories about them. Some are favorable,
some are less favorable, but all of them work to explain what
the brand is all about. Telling stories about the brand is one of
the strongest ways of communicating the essence of your
brand.
Emotional Benefits
What does the brand do for its customers?
These can usually be classified into:
• Avoids pain
• Reduces pain
• Gives pleasure
Hard Benefits
What does the brand offer its customers in tangible,
quantifiable terms?
These are the benefits as in “Features, Advantages and Benefits”.
Brand Awareness is not Everything
Brand awareness is vitally important for all brands but high
brand awareness without an understanding of what sets you
apart from the competition does you virtually no good. Many
marketers experience confusion on this point.
Strategic awareness occurs when not only does the person
recognize your brand, but they also understand the distinctive
qualities that make it better than the competition. Strategic
awareness occurs when you have differentiated your brand in
the mind of your market. This distinction as to why your brand
is unique in your category is also referred to as your Unique
Selling Proposition or USP. Your USP tells your target market
what you do and stand for that is different from all of your
competitors.
Brand preference occurs when consumers prefer your brand to
competing brands. Brand preference might be considered “the
holy grail” of branding because it is the result of consumers
knowing your brand, understanding what is unique about your
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brand, connecting emotionally with your brand, making a
decision that your brand is superior to others for some reason
or combination of reasons, and choosing it over competing
brands.
You cannot build a strong brand solely through advertising.
Branding is also more than a logo, a color scheme, and a catchy
tag line. While these all are important components in branding,
they are simply tactical tools that help establish and build the
brand.
Establishing a Brand
Public relations are the way a strong brand is truly established
and advertising is how the brand is maintained. If a brand is
successful in making a connection with people and
communicating its distinct advantage, people will want to tell
others about it and word-of-mouth advertising will develop
naturally-not to mention writers in the press will want to write
about the brand. Once that type of differentiation is established
in the market’s mind, advertising can help maintain and shape
the brand.
What you need to do in branding is to communicate what the
brand distinctively stands for using as few words or images as
possible.
So remember, branding is all about creating singular distinction,
strategic awareness, and differentiation in the mind of the target
market-not just awareness. When you have been successful, you
will start building equity for your brand.
Points of Parity
Discussion of strategic awareness, points of singular
distinction, and brand equity would not be complete without
discussion of brand points of parity.
Points of parity are those associations that are often shared by
competing brands. Consumers view these associations as being
necessary to be considered a legitimate product offering within a
given category.
In other words, if you create what you consider to be a
wonderful point of differentiation and position, they might
not be enough if consumers do not view your product or
service as measuring up on “minimum product expectations”.
Points of parity are necessary for your brand but are not
sufficient conditions for brand choice.
For example, Maruti might produce a wonderful new automobile
that uses advanced global positioning and sensor
technologies that render a driver obsolete by automatically
routing the car, adjusting speed for traffic conditions, recognizing
and complying with all traffic laws, and delivering
passengers and cargo to the proper destination without the
need for operator intervention. They have invented the first car
with functional autopilot. What a strong position and unique
selling proposition!
However, unless they have fully consider their brand’s points of
parity with other products in the category, they probably will not
meet with success.
Consumers might expect that at minimum Maruti’s automobile
have four wheels with rubber, inflatable tires, be street legal, run
on a widely-available fuel source, be able to operate during both
night and day in most weather conditions, seat at least two
people comfortably with luggage, be able to operate on existing
roads and highways, and provide a fair level of personal safely
to occupants. If their automobile does not possess these
points of parity with competing brands, then it might be too
different and might not be seen as a viable choice or a strong
brand.
The lesson here is that differentiation and singular distinction
are necessary for strong brands, but they do not solely make for
a strong brand. Your brand must also measure up well against
the competition on expected criteria so as to neutralize those
attributes.
Once you have met the points of parity requirement and then
you provide a unique selling proposition and hold a strong,
defensible position, then you have the makings of a very strong
brand.
Brand Equity
Brand Equity is the sum total of all the different values people
attach to the brand, or the holistic value of the brand to its
owner as a corporate asset.
Brand equity can include: the monetary value or the amount of
additional income expected from a branded product over and
above what might be expected from an identical, but unbranded
product; the intangible value associated with the
product that can not be accounted for by price or features; and
the perceived quality attributed to the product independent of
its physical features.
A brand is nearly worthless unless it enjoys some equity in the
marketplace. Without brand equity, you simply have a commodity
product.
More Things to Know About Brands
As mentioned earlier, a brand is more than just a word or
symbol used to identify products and companies.
A brand also stands for the immediate image, emotions, or
perceptions people experience when they think of a company or
product. A brand represents all the tangible and intangible
qualities and aspects of a product or service. A brand represents
a collection of feelings and perceptions about quality, image,
lifestyle, and status. It is precisely because brands represent
intangible qualities that the term is often hard to define.
Intangible qualities, perceptions, and feelings are often hard to
grasp and clearly describe.
Brands create a perception in the mind of the customer that
there is no other product or service on the market that is quite
like yours. A brand promises to deliver value upon which
consumers and prospective purchasers can rely to be consistent
over long periods of time.
You Already have At Least One Brand
First of all, you must understand that you already have a brand.
Everyone has at least one brand. Your name and who you are
is, in fact, your personal brand. The brand called “you”. The
issue then is not whether you have a brand; the issue is how
well your brand is managed.
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Brand Management
If a brand is not effectively managed then a perception can be
created in the mind of your market that you do not necessarily
desire. Branding is all about perception.
Wouldn’t it be nice to have people perceive you the way you
would like them to perceive you? That is what branding and
brand management are all about.
Brand management recognizes that your market’s perceptions
may be different from what you desire while it attempts to
shape those perceptions and adjust the branding strategy to
ensure the market’s perceptions are exactly what you intend.
So you may now have a better understanding of what a brand
is and why awareness about your brand does not necessarily
mean your brand enjoys high brand equity in the marketplace.
You might even understand that brand management is all
about shaping and managing perceptions. You may still be
asking yourself, however, why you should care about branding
in the first place.
The Benefits of a Strong Brand
Here are just a few benefits you will enjoy when you create a
strong brand:
• A strong brand influences the buying decision and shapes
the ownership experience.
• Branding creates trust and an emotional attachment to your
product or company. This attachment then causes your
market to make decisions based, at least in part, upon
emotion- not necessarily just for logical or intellectual
reasons.
• A strong brand can command a premium price and
maximize the number of units that can be sold at that
premium.
• Branding helps make purchasing decisions easier. In this
way, branding delivers a very important benefit. In a
commodity market where features and benefits are virtually
indistinguishable, a strong brand will help your customers
trust you and create a set of expectations about your
products without even knowing the specifics of product
features.
• Branding will help you “fence off” your customers from the
competition and protect your market share while building
mind share. Once you have mind share, your customers will
automatically think of you first when they think of your
product category.
• A brand is something that nobody can take away from you.
Competitors may be able to copy your products, your
patents will someday expire, trade secrets will leak to the
competition, your proprietary manufacturing plant will
eventually become obsolete, but your brand will live on and
continue to be uniquely yours. In fact, a strong brand name
may be your most valuable asset. Brands help people
connect with one another.
• Have you ever witnessed the obvious bond between people
using the same brand of product? If a person wearing a
Benetton T-shirt finds another person wearing a Benetton
product, she will have instant rapport with her and
immediately begin talking about their experiences with the
brand. How is it that we can feel such a connection with
complete strangers? The answer lies in the psychological
connection people have with a particular brand.
• A strong brand can make actual product features virtually
insignificant. A solid branding strategy communicates a
strong, consistent message about the value of your
company. A strong brand helps you sell value and the
intangibles that surround your products.
• A strong brand signals that you want to build customer
loyalty, not just sell product. A strong branding campaign
will also signal that you are serious about marketing and
that you intend to be around for a while. A brand
impresses your firm’s identity upon potential customers,
not necessarily to capture an immediate sale but rather to
build a lasting impression of you and your products.
• Branding builds name recognition for your company or
product.
• A brand will help you articulate your company’s values and
explain why you are competing in your market.
People do not purchase based upon features and benefits
People do not make rational decisions. They attach to a brand
the same way they attach to each other: first emotionally and
then logically. Similarly, purchase decisions are made the same
way-first instinctively and impulsively and then those decisions
are rationalized.
The Three Cs of Branding
by William Arruda
May 20, 2003
The benefits of having a strong brand are tremendous. Strong
brands charge premium pricing; they thrive during economic
downturns; they attract great employees, partners and
customers;
and they can extend into new business areas with ease.
In addition to being able to boast these enviable benefits,
strong brands have something else in common. They all exhibit
the “three Cs” of branding.
The three Cs are: clarity, consistency, and constancy. Does your
brand pass the Three C Test?
Clarity
Strong brands are clear about what they are and what they are
not. They understand their unique promise of value. And this
promise of value sets them apart from their competitors.
It differentiates them and allows them to attract and build
loyalty among a desirable set of consumers. Volvo, for example,
is clear about their commitment to safety and security. They are
not about speedy sports cars, or about small economy cars, or
about luxury cars.
They build cars for families. Cars that are safe. And they clearly
focus their communication activities on this differentiation.
Nordstrom’s clarity is around unmatched customer service. And
it is clear from the moment you step into the store. Nordstrom
has been able to separate itself from other retailers through this
unwavering commitment to customer service and satisfaction.
There are several retailers who will sell you a black Armani suit;
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but only Nordstrom will turn it into an experience you will talk
about with friends and colleagues.
This clarity guides Nordstrom as they build on their current
business. When they developed their on-line store, they did so
in a way to ensure that customers would experience the same
level of service they have come to expect from the Nordstrom
brand.
Consistency
In addition to being clear about who they are, strong brands are
also consistent. They are always what they say they are.
For Volvo, they are always about safety. They don’t change their
focus from model to model. When new editions come out each
year, they are safe too. And Volvo consistently communicates
that.
Or look at Madonna. Madonna is the chameleon brand of
entertainment. She reinvents herself with each CD that she
produces. She didn’t change for her first five CDs and then stay
the same for the next two. She consistently changes.
And the one thing we can be sure of with regard to her
upcoming CD is that it will be nothing like any of the others
she has done before. Madonna’s ability to change consistently
throughout her career separates her from other entertainers,
thereby strengthening her brand.
Constancy
It is not enough to be clear and consistent if you are not always
visible to your target audience. Strong brands are constant; they
are always there for their customers and prospects. They don’t
go into hiding.
For Coke, the world is the target market. That is why you can’t
make it through a day without being exposed to their bright red
color or familiar script logo. Vending machines, people carrying a
coke as they walk down the street, restaurant menus, product
placement in TV shows and movies, billboards and print and
TV advertisements all scream COKE.
Coke is a constant in our lives. And Coke is the world’s
strongest brand.
Chances are, your brand’s target market is a lot smaller than
Coke’s. And that is good news, making it easier (and a lot less
expensive) for you to remain constantly connected to your target
audience.
In building and nurturing a strong brand, you have a lot more
to think about than these three C’s. But no brand is truly a
strong brand if it doesn’t pass the Three C Test.
How does your brand do?
William Arruda Dubbed the ‘Personal Branding Guru’ by
the media and clients alike, William Arruda works with
individuals and organizations to build strong, memorable
brands. Combining his 20 years of international branding
expertise with his passion for people, he founded Reach ,
the human branding company.
Notes