CHAPTER 3: DEVELOPING A BRANDING STRATEGY

3.1 Define target customers and analyse the

market
3.2 Determine brand mission and vision
3.3 Positioning the brand
3.4 Choose brand hierarchy
3.5 Develop brand extensions
3.6 Develop brand identity system
3.7 Integrated brand communications
3.8 Measure and evaluate the brand strategy
3.1. Define target customers and analyse the
market
The first step in the branding strategy is to define target
customers of the brand. Companies can use STP model to
determine.
3.1. Define target customers and analyse the
market
3.1.1 Market segmentation

Market segmentation is dividing a market into smaller

segments with distinct needs, characteristics, or behaviors
that might require separate marketing strategies/marketing
mixes.
3.1. Define target customers and analyse the
market
3.1.1 Market segmentation

Reasons for market segmentation:

Buyers are too numerous, and varied in their needs and

buying practices.

The companies cant appeal to all buyers in the marketplace,

or at least not to all buyers in the same way.
Helps companies learn the structure of the market and
discover the “market holes” – niche market (where there are
demands not satisfied yet)
3.1. Define target customers and analyse the
market
3.1.1 Market segmentation

Geographic Demographic Psychographic Behavioral

Divides the
Divides the
market into Divides buyers Divides buyers into
market into groups based on: into different groups based on:
different • age groups based on:
geographical Social class • Occasions
• gender
units such as: Lifestyle, • Benefit sought
• family size, Personality traits
• nations • User status
• family life cycle
• regions • User rate
• states, • income, • Loyalty status
• countries, • Occupation,
• cities, • Education,
• Neighborhood • religion,
• Population
• density • race,
• Climate. • Generation
• nationality
3.1. Define target customers and analyse the
market
3.1.1 Market segmentation
3.1. Define target customers and analyse the
market
3.1.1 Market segmentation
3.1. Define target customers and analyse the
market
3.1.1 Market segmentation
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy

Target market consists of a set of buyers who share

common needs or characteristics that the company decides
to serve.

Market Targeting: the process of selecting the market

segment or segments to enter and matching a specialized
marketing mix with the needs of the chosen segment(s).
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy

Undifferentiated marketing

Undifferentiated marketing (or mass

marketing) targets the whole market with one
offer.
Mass marketing
Focuses on common needs rather than what’s different
The company designs a product and a marketing
program that will appeal to the largest number of
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy
Undifferentiated marketing
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy
Undifferentiated marketing
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy

Differentiated marketing
Differentiated marketing (or segmented marketing)
targets several different market segments and designs
separate offers for each.
Goal is to achieve higher sales and stronger position
More expensive than undifferentiated marketing:
segments requires extra marketing research,
forecasting, sales analysis, promotion planning, and
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy

Differentiated marketing
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy

Differentiated marketing
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy

Concentrated marketing
Concentrated marketing (or niche
marketing) targets a large share of one or a
few segments or niches.

 Greater knowledge of consumer needs

 More effective and efficient marketing mix programs.


3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy
Concentrated marketing
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy
Micromarketing
Micromarketing is the practice of tailoring products and marketing
programs to suit the tastes of specific individuals and locations. Rather
than seeing a customer in every individual, micro marketers see the
individual in every customer.
Local marketing: tailoring brands and promotions to the needs and

wants of local customer groups—cities, neighborhoods, and even specific

stores
Individual marketing: tailoring products and marketing programs to the
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy
Local marketing

Benefits of local marketing:

– Increased marketing effectiveness in competitive markets
– More customer-specific offerings

Challenges of local marketing:

– Increased manufacturing and marketing costs
– Less economy of scale
– Logistics
– Dilution of company image
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy
Local marketing
3.1. Define target customers and analyse the
market
3.1.2 Market targeting strategy
Individual marketing
3.1. Define target customers and analyse the
market
3.1.3 Analyse the market and the industry
The purpose of evaluating the market and the industry is to understand how attractive a
segment is in fulfilling a company’s objectives.
Market Competitors’
Market size Segment marketing and
and growth structural branding
attractiveness strategies

 Current market size A segment is less A company should only

and future market attractive if it already enter segments in
growth are sufficient contains many strong which it can create
to cover marketing and aggressive superior customer
costs competitors or if it is value and gain
 The largest, easy for new entrants
advantages over its
fastest-growing to come into the
competitors.
segments are not segment
always the most
attractive ones for
3.1. Define target customers and analyse the
market
3.1.3 Analyse the market and the industry

 Competitive analysis
Considers resources, capabilities and likely intentions of other firms.
Allows marketers to choose markets where consumers can be profitably
served.

 Direct competition
 Indirect competition
Even if a brand does not face direct competition in its product category,
and thus does not share performance related attributes with other brands,
it can still share more abstract associations and face indirect competition
in a more broadly defined product category.
3.2 Defining brand mission and
vision
3.2 Defining brand mission and
vision
3.2 Defining brand mission and
vision
3.2.1 Brand mission

A brand mission statement is a statement of the brand’s

purpose—what it wants to accomplish in the larger
environment. A clear mission statement acts as an “invisible
hand” that guides people in the organization.

Brand mission should be market oriented and defined in

terms of satisfying basic customer needs. Products and
technologies eventually become outdated, but basic market
needs may last forever.
3.2 Defining brand mission and
vision
3.2.1 Brand mission
3.2 Defining brand mission and
vision
3.2.1 Brand mission

Brand mission statements should be meaningful and specific

and motivating.

Mission statements are written for public relations purposes

and lack specific, workable guidelines. Instead, they
emphasize the company’s strengths and tell forcefully how it
intends to win in the marketplace.
3.2 Defining brand mission and
vision
3.2.2 Brand vision

A brand vision is a brand's concept of its future.

Brand vision is the key message that the business wants to

send to all partners and stakeholders of the enterprise, from
shareholders, customers, suppliers, distributors, and the
publics.
3.2 Defining brand mission and
vision
3.2.2 Brand vision
3.2 Defining brand mission and
vision
3.2.2 Brand vision

Q&A: Compare Brand mission and Brand vision?

3.2 Defining brand mission and
vision
3.2.2 Brand vision
3.2 Defining brand mission and
vision
3.2.2 Brand vision
3.3 Positioning the brand
3.3.1 Definition

Act of designing the company’s offer and image so that it

occupies a distinct and valued place in the target customers’
minds

Toyota is positioned on economy

Mercedes, Cadillac are positioned on luxury

BMW, Porsche are positioned on performance

Volvo is positioned on safety

3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

Arriving at the proper positioning requires establishing the

correct points-of-difference and points-of-parity associations.

 Points-of-difference (PODs)
Are formally defined as attributes or benefits that consumers
strongly associate with a brand, positively evaluate, and
believe that they could not find to the same extent with a
competitive brand.

PODs can be functional, performance-related considerations or

abstract, imagery-related considerations.
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-difference (PODs)

 Functional related
 Performance related
 Abstract, imagery related
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-difference (PODs)
Ikea took a luxury product—home furnishings and furniture—
and made it a reasonably priced alternative for the mass
market. Ikea supports its low prices by having customers serve
themselves and deliver and assemble their own purchases.

Ikea also gains a point-of-difference through its product

offerings. As one commentator noted, “Ikea built their
reputation on the notion that Sweden produces good, safe,
well-built things for the masses. They have some of the most
innovative designs at the lowest cost out there.”
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-difference (PODs)
PODs are generally defined in terms of consumer benefits.
These benefits often have important underlying “proof points” or
reasons to believe (RTBs).

These proof points can come in many forms: functional design

concerns (a unique shaving system technology, leading to the
benefit of a “closer electric shave”); key attributes (a unique
tread design, leading to the benefit of “safer tires”); key
ingredients (contains fluoride, leading to the benefit of
“prevents dental cavities”); or key endorsements (recommended
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-difference (PODs)
A difference to promote should be:
•Important: Delivering a highly valued benefit to target buyers.
•Distinctive: Competitors do not offer the difference, or the
company can offer it in a more distinctive way.
•Superior: The difference is superior to other ways that
customers might obtain the same benefit.
•Communicable: The difference is communicable and visible to
buyers.
•Preemptive: Competitors cannot easily copy the difference.
•Affordable: Buyers can afford to pay for the difference.
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-parity (POPs)
POPs are not necessarily unique to the brand but may in fact be
shared with other brands. Points of parity are the primary points
in which you can compete with your competitor and try to stay
in the race.
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-parity (POPs)
There are three types: category, competitive, and correlational.

 Category points-of-parity: Represent necessary conditions for

brand choice.
They exist minimally at the generic product level and are most
likely at the expected product level. Category POPs may change
over time because of technological advances, legal
developments, and consumer trends.
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-parity (POPs)

 Category points-of-parity
Consumers might not consider a bank truly a “bank” unless it
offered a range of checking and savings plans; provided safety
deposit boxes, traveler’s checks, and other such services; and
had convenient hours and automated teller machines.
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-parity (POPs)

 Competitive points-of-parity: are those associations designed

to negate competitors’ points-of-difference.
In other words, if a brand can “break even” in those areas where
its competitors are trying to find an advantage and can achieve
its own advantages in some other areas, the brand should be
strong—and perhaps unbeatable.
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-parity (POPs)

 Correlational points-of-parity: are those potentially negative

associations that arise from the existence of other, more
positive associations for the brand.
One challenge for marketers is that many of the attributes or
benefits that make up their POPs or PODs are inversely related.
In the minds of consumers, if your brand is good at one thing, it
can’t be seen as also good on something else.

For example, consumers might find it hard to believe a brand is

3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-parity (POPs)

 Correlational points-of-parity:
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

 Points-of-parity (POPs)

 Correlational points-of-parity:
In the 80s of the last century, the US market had two lines of
cars with distinct advantages - one for luxury, the other for
performance. Luxury cars are not efficient in use. In contrast,
high-performance cars are not luxurious. Understanding this,
the German automaker BMW has introduced into the US market
a product line that has both elements, both luxury and high
performance. For luxury cars in the US, the performance of the
new BMW is the POD, and its luxury is the POP. For performance
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference

Q&A: Relationships between POPs and PODs?

3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference
Points-of-parity are easier to achieve than points-of-differences.

For marketing communications to be most effective, businesses

must communicate both parity and difference. POPs tell the
target market that your product or service meets their basic
need. PODs tell consumers why your product or service is the
best choice over your competitors.

POPs are compulsory in business, but PODs are the core value
and sustainable competitive advantage. To gain market share,
businesses must have clear PODs. PODs let consumers know
that the business is offering something different. POD makes an
3.3 Positioning the brand
3.3.2 Points-of-Parity and Points-of-Difference
The combination of POPs and PODs will highlight the
advantages of new products and new brands. Many companies
have launched new products with not only PODs but also well-
calculated POPs.

Marketers use POPs to negate their competitors' differences.

What you have, I also have, it makes no difference. In addition,
they use their PODs to gain competitive advantage. Thus, not
only PODs play a vital role but POPs should be taken for granted
- which are easy to find to eliminate the opponent's strengths.
The harmonious combination of these two points will bring
success to marketing campaigns.
3.4 Choosing brand hierarchy
A brand hierarchy is a useful means of graphically portraying a
firm’s branding strategy by displaying the number and nature of
common and distinctive brand elements across the firm’s
products, revealing their explicit ordering.
Levels of brand hierarchy
Company Brand Level

Family Brand Level

Individual Brand Level

Modifier Level

Product Descriptor
3.4 Choosing brand hierarchy
3.4.1 Company Brand level (Corporate Brand level)
The highest level of the hierarchy technically always consists of
one brand.

For some firms like General Electric and Hewlett-Packard, the

corporate brand is virtually the only brand.

Q&A: Pros and cons?

3.4 Choosing brand hierarchy
3.4.1 Company Brand level (Corporate Brand level)

Advantages:

 Easy in brand management

 Low cost of brand communication,
 High level of investment concentration for the brand
 The support and interaction between the product lines is very
high
 When a business introduces a new product, the market is
more receptive to that product because it knows the brand
3.4 Choosing brand hierarchy
3.4.1 Company Brand level (Corporate Brand level)

Disadvantages:

 High risk if failure

 Difficult to develop and expand brand and product portfolio
 May not be suitable when the business works in many fields
3.4 Choosing brand hierarchy
3.4.2 Family Brand level (Umbrella Brand level)
As products become more dissimilar, it may be harder for the
corporate brand to retain any product meaning or to effectively
link the disparate products

At the next-lower level, a family brand, also called a range brand

or umbrella brand, is used in more than one product category
but is not necessarily the name of the company or corporation.
3.4 Choosing brand hierarchy
3.4.2 Family Brand level (Umbrella Brand level)

Q&A: Pros and cons?

3.4 Choosing brand hierarchy
3.4.2 Family Brand level (Umbrella Brand level)

Family brands thus can be an efficient means to link common

associations to multiple but distinct products. The cost of
introducing a related new product can be lower and the
likelihood of acceptance higher when marketers apply an
existing family brand to a new product.

If the products linked to the family brand and their supporting

marketing
programs are not carefully considered and designed, the
associations to the family brand may become weaker and less
favorable. Moreover, the failure of one product may hurt other
3.4 Choosing brand hierarchy
3.4.2 Family Brand level (Umbrella Brand level)

Advantages:
 Increase brand sales
 Create a positive image of product consistency
 Help to expand products but save marketing costs
 Match the unique product

Disadvantages:
 The new product must be closely related to the current
product
 Be careful when introducing new products into the brand
3.4 Choosing brand hierarchy
3.4.3 Individual Brand level

Individual brands are restricted to essentially one product

category, although multiple product types may differ on the
basis of model, package size, flavor and so on.
3.4 Choosing brand hierarchy
3.4.3 Individual Brand level

The main advantage of creating individual brands is that we can

customize the brand and all its supporting marketing activity to
meet the needs of a specific customer group. Thus, the name,
logo, and other brand elements, as well as product design,
marketing communication programs, and pricing and
distribution strategies, can all focus on a certain target market.
Moreover, if the brand runs into difficulty or fails, the risk to
other brands and the company itself is minimal. The
disadvantages of creating individual brands, however, are the
difficulty, complexity, and expense of developing separate
marketing programs to build sufficient levels of brand equity.
3.4 Choosing brand hierarchy
3.4.3 Individual Brand level

Advantages:
 Minimize risks when one brand fails
 Helping businesses maximize market share
 Different product brands should easily meet the different needs
of consumers

Disadvantages:
 High investment, administration and communication costs for
each brand, especially those with hundreds of brands
 Requires highly skilled brand management personnel
 Limited support and interaction
 New brands cant take advantage of the reputation of the
3.4 Choosing brand hierarchy
3.4.4 Modify level

Brands should distinguish according to the different types of

items or models
Modifier: Designate a specific item or model type or a
particular version or configuration of the product
 Function of modifiers is to show how one brand variation
relates to others in the same brand family
 Help make products more understandable and relevant
to consumers
3.4 Choosing brand hierarchy
3.4.4 Modify level

Adding a modifier often can signal refinements or differences

between brands related to factors such as quality levels (Johnnie
Walker Red Label, Black Label, and Gold Label Scotch whiskey),
attributes (Wrigley’s Spearmint, Doublemint, Juicy Fruit, and
Winterfresh flavors of chewing gum), function (Dockers Relaxed
Fit, Classic Fit, Straight Fit, Slim Fit, and Extra Slim Fit pants),
and so on.
3.4 Choosing brand hierarchy
3.4.5 Product descriptor

 Helps consumers understand what the product is and does

Helps define the relevant competition in consumers’ minds

 In the case of a truly new product, introducing it with a

familiar product name may facilitate basic familiarity and
comprehension
3.5 Developing brand extension
3.5 Developing brand extension
3.5.1 Line extension

Line extensions occur when a company extends existing brand

names to new forms, colors, sizes, ingredients, or flavors of an
existing product category.

For example, over the years, KFC has extended its “finger lickin’
good” chicken lineup well beyond original recipe, bone-in
Kentucky fried chicken. It now offers grilled chicken, boneless
fried chicken, chicken tenders, hot wings, chicken bites, chicken
popcorn nuggets and a Doublicious chicken-bacon-cheese
sandwich.
3.5 Developing brand extension
3.5.1 Line extension

A company might introduce line extensions as a low-cost, low-

risk way to introduce new products. Or it might want to meet
consumer desires for variety, use excess capacity, or simply
command more shelf space from resellers.

However, line extensions involve some risks. An overextended

brand name might cause consumer confusion or lose some of its
specific meaning.
3.5 Developing brand extension
3.5.2 Brand extension

A brand extension extends a current brand name to new or

modified products in a new category.

These days, a large majority of new products are extensions of

already-successful brands. Compared with building new brands,
extensions can create immediate new-product familiarity and
acceptance at lower development costs.
3.5 Developing brand extension
3.5.2 Brand extension

A brand extension strategy involves some risk. The extension

may confuse the image of the main brand—for example, how
about Zippo perfume or Fruit of the Loom laundry detergent?
Brand extensions such as Heinz pet food met early deaths

Furthermore, a brand name may not be appropriate to a

particular new product, even if it is well made and satisfying.
And if a brand extension fails, it may harm consumer attitudes
toward other products carrying the same brand name  A good
brand extension should fit the parent brand, and the parent
brand should give the extension competitive advantage in its
3.5 Developing brand extension
3.5.3 Multi - Brand

Companies often market many different brands in a given

product category. For example, in the United States, PepsiCo
markets:
 Eight brands of soft drinks (Pepsi, Sierra Mist, Mountain Dew,
Manzanita Sol, Mirinda, IZZE, Tropicana Twister, and Mug
root beer),
 Three brands of sports and energy drinks (Gatorade, AMP
Energy, Starbucks Refreshers),
 Four brands of bottled teas and coffees (Lipton, SoBe,
Starbucks, and Tazo),
 Three brands of bottled waters (Aquafina, H2OH!, and SoBe),
3.5 Developing brand extension
3.5.3 Multi - Brand

We found Giorgio Armani, then Armani Collezione, then Emporio

Armani for the young, and then beneath these the very casual
Armani eXchange, or Armani Jeans. These lines correspond to
the price strata, the targets, the degrees of exclusivity of the
boutiques.
3.5 Developing brand extension
3.5.3 Multi - Brand

Regarding luxury brands, sub-brands names are

chosen to compensate for the lower creativity or
the handicap. For example, Saint Laurent’s
second line is known as Rive Gauche. Likewise,
Chanel cosmetics are known as Chanel Precision,
Dior’s as Dior Science.

Each brand has a range of prices and styles. Each

line having its own boutiques, in order to avoid
mixing the customers. With each of these lines,
we find accessories: leather, shoes, watches.
3.5 Developing brand extension
3.5.3 Multi - Brand

Multibranding offers a way to establish different features that

appeal to different customer segments, lock up more reseller
shelf space, and capture a larger market share.

A major drawback of multibranding is that each brand might

obtain only a small market share, and none may be very
profitable. The company may end up spreading its resources
over many brands instead of building a few brands to a highly
profitable level. These companies should reduce the number of
brands they sell in a given category and set up tighter screening
procedures for new brands.
3.5 Developing brand extension
3.5.4 New Brand

A company may create a new brand name when it enters a new

product category for which none of its current brand names is
appropriate. For example, Toyota created the separate Lexus
brand aimed at luxury car consumers and the Scion brand
targeted toward millennial consumers.
3.5 Developing brand extension
3.5.4 New Brand

As with multibranding, offering too many new brands can result

in a company spreading its resources too thin. And in some
industries, such as consumer packaged goods, consumers and
retailers have become concerned that there are already too
many brands with too few differences between them.

Thus, P&G, PepsiCo, Kraft, and other large marketers of

consumer products are now pursuing megabrand strategies—
weeding out weaker or slower-growing brands and focusing
their marketing dollars on brands that can achieve the number-
one or number-two market share positions with good growth
3.6 Evaluating branding strategy
The evaluation of the branding strategy should be based on the
brand's indicators, then comparing the achieved results with the
intended goals, thereby taking necessary measures to promote
and adjust to ensure the highest effectiveness for the brand
strategy.

Popular criteria:
 Brand awareness
 The level of product value perception
 Brand association in the mind of the customer
 Brand loyalty
 The level of sales increase
 …
3.6 Evaluating branding strategy
After reviewing and evaluating above mentioned indicators and
criteria, companies should consider whether it has achieved its
initial branding goal.

 If it is achieved, move to the next stage: Expand, develop the

brand and commercialize and exploit the brand value.
 If it failed, go back to step 1 or Re-positioning the brand