Brand Leadership

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Brand Leadership

• Aaker and Joachimsthaler

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The Birth of Brand Management

• Neil McElroy, PG 1931
• Study Brand Movement
• Study heavy sales areas and explain why
• Study light sales areas and explain why
• Study advertising and promotional strategyWork
  at the local levelPrepare Sales materialsTrack
  Results
• Consider Packaging changes

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The Birth of Brand Management

• What was Neil McElroy really doing?
• 1. Identifying Marginal Response by Segment
• 2. Identifying Hot and Cold Markets
• 3. Developing a Marketing Plan
• 4. Tracking the Results

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Brand Leadership-The Evolving Paradigm   TH
E CLASSIC THE BRAND MANAGEMENT BRAND
LEADERSHIP MODEL MODEL     From Tactical
to Strategic Management Perspective Tactical and
reactive Strategic and visionary Brand manager
status Less experienced, Higher in the
organization, shorter time horizon longer
time horizon Conceptual model Brand image Brand
equity Focus Short-term financials Brand equity
measures From a Limited to Broad
Focus Product-market scope Single
products-markets Multiple products and
markets Brand structures Simple Complex brand
architectures Number of brands Focus on single
brands Category focus-multiple brands Country
scope Single country Global perspective Brand
manager's Coordinator of limited Team leader of
multiple communication role options communicatio
n options Communication focus External/customer In
ternal as well as external From Sales to Brand
Identity as Driver of StrategyDriver of
strategy Sales and share Brand identity
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What is Brand Equity?

• Brand Equity is a set of brand assets and
  liabilities linked to a brand, its name and
  symbol, that add to or subtract from the value
  provided by a product or service to a firm and/or
  to that firms customers.
• Assets and liabilities underlying brand equity
  must be linked to the name and/or symbol of the
  brand.

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What is Brand Equity?

• When the brands name or symbol changes, some or
  all of the assets or liabilities will be affected
  and even lost, although some might be shifted to
  a new name and symbol.
• Assets and liabilities on which brand equity is
  based differs from context to context

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Brand Equity
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Value of Global Brands as Measured by
Interbrand BRAND
VALUE MARKET AS PERCENT V
ALUE CAPITALIZATION OF MARKET BRAND
BILLIONS BILLIONS CAPITALIZATION 1 Co
ca-Cola 83.8 142.2 59 2 Microsoft 56.7
271.9 21 3 IBM 43.8 158.4 28 4 GE 3
3.5 328.0 10 5 Ford 32.2 57.4 58 6 D
isney 32.3 52.6 58 7 Intel 30.0 144.1 21
8 McDonald's 26.2 40.9 64 9 ATT 24.2
102.5 24 10 Marlboro 21.0 112.4 19 11 Noki
a 20.7 46.9 44 12 Mercedes 17.8 48.3 37 13
Nescafe 17.6 77.5 23 14 Hewlett-Packard 17.1
54.9 31 15 Gillette 15.9 42.9 37 16 Kodak
14.8 24.8 60 22 BMW 11.3 16.7 77 28 Nike 8
.2 10.6 77 36 Apple 4.3 5.6 77 43 Ikea 3.5
4.7 75 54 Ralph Lauren 1.6 2.5 66
Source Raymond Perrier, "Interbrand's World's
Most Valuable Brands," report of a June 1999
study sponsored by Interbrand and Citigroup,
1999.
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Objectives of Brand Equity Research
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Brand Equity Research Objectives

• Identify the effectiveness of individual brand
  assets
• Identify the barriers to achieving a brands full
  potential
• Identify consumer relationships with the brand
• Identify the status of the brand in a competitive
  context

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Pinpoint Brand Problems

• Failure of advertising to communicate clearly
• Failure of packaging that is too non-intrusive
• Failure through unmemorable product personality
• Failure through consumers lack of value
  perceptions

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Probe the Synergy of Brand Asset Relationships

• Equity assets
• Potential consistencies in brand image and
  consumer perceptions
• Potential inconsistencies in brand image and
  consumer perception

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Products that communicate a unified image
are more likely to have a stronger shelf impact.
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Products that communicate a unified image
are more likely to have more effective
advertising and promotions.
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Products that communicate a unified image
are more likely to have a stronger brand loyalty.
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Brand Equity Research Can

• Identify unrecognized product benefits
• Identify failures of the brand to integrate into
  the consumers lifestyle
• Identify a blurred image
• Identify an elusive personality

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Pinpoint the Brand Image in Light of Competitors

• Name
• Packaging
• Concept and Uses
• Advertising
• Promotions
• Perceptions
• Target Market

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Key Benefits for Existing Brands

• Competitive Frameworking
• Comparative use patterns
• Perceptual similarities and differences
• Target market contrasts
• Perceived Brand Strengths and Weaknesses
• Motivators and Hurdles for the brand

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Key Benefits for Existing Brands

• Mindset Orientation
• Where does the brand fit on a logical or
  emotional continuum
• Product Priority
• Designation of the brand as high or low
  Management Priority

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Key Benefits in New Development Opportunities

• Build Brand Loyalty
• Strengthen current assets
• Refine obstacles
• Create more memorable product personalities or
  positions
• Adjust out-of-sync brand assets

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Key Benefits in New Development Opportunities

• Enhance Trial
• Develop packaging with more impact
• Maximize communications
• Optimize promotions

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Key Benefits in New Development Opportunities

• Expand Use
• Improve current customer relationships
• Ascertain new niches
• Add value
• Go to alternative channels of distribution

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Key Benefits in New Development Opportunities

• Increase the Product Line Synchronization With
  Current Brand Equity
• New product
• Line extensions

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Measuring Brand Equity
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Changes in Brand Equity Occur When

• Major New Products
• Product Problems
• Change in top Management
• Competitor Actions
• Legal Actions

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Asset and Liability Categories

• Brand Loyalty
• Name Awareness
• Perceived Quality
• Brand Associations in addition to perceived
  quality
• Other proprietary brand assets - patents,
  trademarks, channel relationships, etc.

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Brand Equity Perceived Value to the Customer

• Value to the customer enhances
  Interpretation/Processing of brand information
  Confidence in the purchase decision Use
  satisfaction
• Value to the firm is enhanced through
  Efficiency and effectiveness of Mkt. Programs
  Brand Loyalty Prices/margins Brand Extensions
  Trade Leverage Competitive Advantage

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Perceived Value to the Customer

• Mazda Miata introduced in 1990 low cost 2 seat
  convertible with few power options (1950
  throwback). Simple car, sporty, low cost.
  16,000
• Demand extremely high...25,000 prices in used
  car sections within first few months (Same
  pattern for Mustang...) Perceived Value Price.
• Yugoslavian made car, the Yugo Negative reports
  from consumer reports. Price Variable Costs
  Cost Car withdrawn from market.

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Methods for Calculating Customer Value

• Industrial engineering methods Value-in-use,
  economic benefits
• Overall estimates of customer value Focus
  group and Survey research questions of
  willingness to pay
• Decomposition approachesConjoint analysis
  estimating customer tradeoffs of product
  attributesBenchmarks Willingness to pay for
  incremental (fewer) attributes

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Methods for Calculating Customer Value

• Composition approach Questions to consumers
  about value of attributes
• Importance ratings Customer rank ordering or
  rating of the importance of product attributes as
  well as comparisons between competitors.

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Value-in-Use Approach

• Product manager selects a reference product
  (product used by customer or competitive
  product)
• Product manager calculates the incremental
  economic benefit to the customer of using the
  product or brand in question

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Simulating the Buying Experience

• Laboratories at or near shopping malls
• Customer groups receive different
  price/attribute treatments
• Customers select product they would choose

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Estimating Brand Equity with Conjoint Analysis

• Conjoint Analysis
• Price Thresholds
• Dollarmetric Scales

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Estimating Brand Equity using the Perceived Value
Concept

• Market Share, Perceived Value, Price Relationship
• Perceived
  Value Market Share f
  --------------------
  Price
• Increase Perceived Value by
• Improving the product itself by increasing actual
  quality or offering better service or a longer
  warranty period
• Advertise to enhance the products image
• Institute value added services in the
  distribution channels such as technical support
  or financing
• Improve sales effort by training the sales force
  to sell value rather than price

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Estimating Brand Equity with Conjoint Analysis

• Assume 3 attributes of a laptop computer
  choice4 or 8 Hour Battery PIII 500 or AMD
  1Ghz Dell or Compaq
• Task Rank order the following combinations of
  these characteristics from 8 most
  perferred to 1 least perferred4 Hours,
  PIII500, Dell _____ 4 Hours,
  PIII500, Compaq ____8 Hours, AMD1Ghz, Compaq
  _____ 8 Hours, AMD1Ghz, Dell ____8
  Hours, PIII500, Dell _____ 8
  Hours, PIII500, Compaq ____4 Hours, AMD1Ghz,
  Compaq _____ 4 Hours, AMD1Ghz, Dell ____

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Estimating Brand Equity with Dollarmetric Scales

• Rather than use 1-7 liklihood of purchase scales,
  responses are given in dollar other currency
  terms. What should the relative prices of the
  five brands be? First, the respondent chooses
  the brands most preferred, and next, how much
  extra would they be willing to pay for a six
  pack?
• Coke, Pepsi 2
• Coke, 7Up 8 Analysis
  Totals Comparative Brand Value
• Coke, Dr Pepper 5 Coke
  2 8 5 12 27 cents
• Coke, Fresca 12 Pepsi
  -2 6 3 10 17 cents
• Pepsi, 7Up 6 7Up
  -8 -6 -3 4 -13 cents
• Pepsi, Dr Pepper 3 Dr Pepper
  -5 -3 3 7 2 cents
• Pepsi, Fresca 10 Fresca
  -12 -10 -4 -7 -33 cents
• 7Up, Dr Pepper 3
• 7Up, Fresca 4
• Dr Pepper, Fresca 7

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Estimating Brand Equity Using Perceived Value

• Genentech Drug TPA clears blood clots that
  cause heart attacks 2200 per dose.
• However, an industry study showed that worked no
  better than Streptokinase, sold by a competitor
  for 200 per dose.
• Genentech (1) trained sales force to point out
  some of the limitations of the study(2) extended
  payment terms to the pharmacies and encouraged
  stock up

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Brand Equity, Perceived Value and Price

• Reducing price is more common, but often more
  expensive than adding value.
• ( of units sold) x ( Decrease in contribution
  margin) Cost of Price DecreaseVS
• Cost of providing sales training, Cost of
  improving customer service, Improved warranty,
  Improving time for delivery, Reducing phone
  waiting time.
• Value added is also distributed over all units
  sold

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