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• Why do companies such as Coca-Cola,Microsoft, IBM and Disney seem to achieve
global marketing success so easily? Whydoes it seem such an effort for others?
• Why do we, as consumers, feel loyal tosuch brands that the mere sight of their logohas us reaching into our pockets to buy their products?
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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 areand why they are important.
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• McDonalds sums this up nicely in the followingquote emphasizing the importance of brands:
• “…it is not factories that make profits, but relationships with customers, and it is companyand brand names which secure thoserelationships”
• 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.
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• “If Coca-Cola were to lose all of its production-related assets in a disaster, the
company would survive. By contrast, if allconsumers were to have a sudden lapse of memory and forget everything related toCoca-Cola the company would go out of
business.”
• Coca-Cola
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What is a brand?• One definition of a brand is as follows:
• “A name, term, sign, symbol or design, or acombination 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”.• Interbrand - a leading branding consultancy - define a
brand in this way:
• “A mixture of tangible and intangible attributes
symbolized in a trademark, which, if properlymanaged, creates influence and generates value”.
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• “Brand equity” refers to the value of a brand. Brand
equity is based on the extent to which the brand has
high brand loyalty, name awareness, perceivedquality and strong product associations. Brand
equity also includes other “intangible” assets such as
patents, trademarks and channel relationships.
Brand Equity
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Brand image
• “Brand image” refers to the set of beliefs
that customers hold about a particular
brand. These are important to develop well
since a negative brand image can be very
difficult to shake off.
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Brand extension
• “Brand extension” refers to the use of a
successful brand name to launch a new or
modified product in a new market. Virgin is
perhaps the best example of how brand
extension can be applied into quite diverseand distinct markets.
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Branding gives the seller several
advantages
• Seller’s brand name and trademark provide legal
protection of unique product features
•Branding gives the seller the opportunity to attract aloyal and profitable set of customers.
• Branding helps the seller segment markets.
• Strong brands help build corporate image, making it
easier to launch new brands and gain acceptance bydistributors and consumers.
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Benefits of Branding
TO A BUYER
• Help buyers identify the product that theylike/dislike.
• Identify marketer
• Helps reduce the time needed for purchase.• Helps buyers evaluate quality of products
especially if unable to judge a productscharacteristics.
• Helps reduce buyers perceived risk of purchase.
• Buyer may derive a psychological reward fromowning the brand, IE Rolex or Mercedes.
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BRANDS - BUILDING A BRAND
• What factors are important in building
brand value?
• Professor David Jobber identifies seven
main factors in building successful brands,
as given next:
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Quality
• Quality is a vital ingredient of a good brand.
Remember the “core benefits” – the thingsconsumers expect. These must be delivered well and
consistently. The branded washing machine that
leaks, or the training shoe that often falls apart whenwet, or a watch which needs frequent adjustments
will never develop brand equity.
• Research confirms that, statistically, higher quality brands achieve a higher market share and higher
profitability than that of their inferior competitors.
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Positioning• Positioning is about the position a brand occupies
in a market in the minds of consumers. Strong brands have a clear, often unique position in the
target market.
• Positioning can be achieved through several means,including brand name, image, service standards,
product guarantees, packaging and the way in
which it is delivered. In fact, successful positioning
usually requires a combination of these things.
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Repositioning
•Repositioning occurs when a brandtries to change its market position to
reflect a change in consumer’s tastes.
This is often required when a brandhas become tired, perhaps because its
original market has matured or has
gone into decline.
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Communications• Communications also play a key role in building a
successful brand. We suggested that brand positioning is essentially about customer perceptions
– with the objective to build a clearly defined
position in the minds of the target audience.• All elements of the promotional mix need to be used
to develop and sustain customer perceptions.
Initially, the challenge is to build awareness, then todevelop the brand personality and reinforce the
perception.
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First-mover advantage
• Business strategists often talk about first-mover advantage. In terms of branddevelopment, by “first-mover” they mean
that it is possible for the first successful brand in a market to create a clear positioning in the minds of targetcustomers before the competition entersthe market. There is plenty of evidence tosupport this.
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Long-term perspective
• The need to invest in the brand over thelong-term is utmost essential. Building
customer awareness, communicating the brand’s message and creating customer loyalty takes time. This means thatmanagement must “invest” in a brand,
perhaps at the expense of short-term profitability.
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Internal Marketing
• Finally, management should ensure that the brand ismarketed “internally” as well as externally. By this we mean
that the whole business should understand the brand values
and positioning. This is particularly important in service
businesses where a critical part of the brand value is the typeand quality of service that a customer receives.
• Think of the brands that you value in the restaurant, hotel and
retail sectors. It is likely that your favorite brands invest
heavily in staff training so that the face-to-face contact that
you have with the brand helps secure your loyalty.
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An Effective Brand Name
● Is easy to pronounce
● Is easy to recognize and remember
● Is short, distinctive, and unique
● Has a positive connotation
● Reinforces the product image
● Is legally protectable
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Branding Strategies
BrandBrand No BrandNo Brand
Manufacturer’sBrand
Manufacturer’sBrand Private BrandPrivate Brand
IndividualBrand
IndividualBrand
FamilyBrand
FamilyBrand
Combi-nation
Combi-nation
IndividualBrand
IndividualBrand
FamilyBrand
FamilyBrand
Combi-nation
Combi-nation
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Manufacturers’ Brands Versus
Private Brands
Manufacturers’Manufacturers’
BrandBrand
Manufacturers’Manufacturers’BrandBrand
PrivatePrivate
BrandBrand
PrivatePrivate
BrandBrand
The brand name of amanufacturer.
The brand name of amanufacturer.
A brand name owned by awholesaler or a retailer. Also
known as a private label or storebrand.
A brand name owned by awholesaler or a retailer. Also
known as a private label or storebrand.
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Types of brand
• There are two main types of brand – manufacturer brands and own-label brands.
• Manufacturer brands
• Manufacturer brands are created by producers and bear their chosen brand name. The producer isresponsible for marketing the brand. The brand isowned by the producer.
• By building their brand names, manufacturers cangain widespread distribution (for example byretailers who want to sell the brand) and buildcustomer loyalty (think about the manufacturer
brands that you feel “loyal” to).
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Private Label brands
• Own-label brands are created and owned by businesses that operate in the distribution channel – often referred to as “distributors”.
• Often these distributors are retailers, but notexclusively. Sometimes the retailer’s entire productrange will be own-label. Own-label branding – if
well carried out – can often offer the consumer excellent value for money and provide thedistributor with additional bargaining power when itcomes to negotiating prices and terms with
manufacturer brands.
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Advantages of Private Brands
• Earn higher profits
• Less pressure to mark down prices• Ties customer to wholesaler or
retailer
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Advantages of
Manufacturers’ Brands
• Develop customer loyalty
• Attract new customers
• Enhance prestige
• Ensure dealer loyalty
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Individual Brands Versus
Family Brands
IndividualIndividualBrandBrand
IndividualIndividualBrandBrand
FamilyFamily
BrandBrand
FamilyFamily
BrandBrand
Using different brand names for different products.
Using different brand names for different products.
Marketing several different
products under the samebrand name.
Marketing several differentproducts under the same
brand name.
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Branding Policies
• First question is whether to brand or not to brand.Homogenous products are difficult to brand Branding
policies are:
• Individual Branding: Naming each product differently P&G,
facilitates market segmentation and no overlap.• Overall Family Branding: All products are branded with the
same name, or part of a name, IE Nokia, promotion of oneitem also promotes other items.
• Line Family Branding: Within one product line.• Brand Extension Branding: Use one of its existing brand
names as part of a brand for an improved or new product,usually in the same product category.
75% new products are brand extensions!!
1 C C l
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1. Coca-Cola
• $67,000 million
• Based in U.S.• Flagging appetite for soda has cut demand for Coke, but the
beverage giant has a raft of new products in the pipeline that couldreverse its recent slide.
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2 Microsoft
• $56,926 million
• Based in U.S.
•Threats from Google and Apple haven't yet offset the power of itsWindows and Office monopolies.
3 IBM
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3 IBM
• $56,201 million
• Based in U.S. Having off-loaded its low-profit PC business to Lenovo,
IBM is marketing on the strategic level to corporate leaders.
4 GE
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4.GE
• $48,907 million
• Based in U.S. The brand Edison built has extended its reach from ovens
to credit cards, and the "Ecomagination" push is making GE look like arotector of the lanet.
5 Intel
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5.Intel
• $32,319 million
• Based in U.S. Profits and market share weren't the only things slammed
by rival AMD. Intel's brand value tumbled 9%, as it loss business from-
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6.Nokia
• $30,131 million
• Based in Finland .Fashionable designs and low-cost models for the
developing world enabled the mobile phone maker to regain groundagainst com etitors.
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7.Toyota
• $27,941 million
• Based in Japan. Toyota is closing in on GM to become the world's biggest automaker. A slated 10% increase in U.S. sales this year willhelp even more.
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8. Disney
• $27,848 million
• Based in U.S. New CEO Robert Iger expanded the brand by buyinganimation hit-maker Pixar and beefing up digital distribution of TV
shows through the Internet and iPods.
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9.McDonald's
• $27,501 million
• Based in U.S. A new healthy-living marketing campaign—and the premium-priced sandwiches and salads that came with it—have led to afourth year of sales gains.
10 Mercedes Benz
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10.Mercedes-Benz
• $21,795 million
• Based in Germany The new S-Class sedan and M-Class SUV arehelping repair a tarnished quality reputation. High costs and weak
margins will take longer to fix.
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Here's how we calculate the power
in a name
• INTERBRAND TAKES lots of ingredients into accountwhen ranking the world's most valuable brands. To even
qualify for the list, each brand must derive about a third of its earnings outside its home country, be recognizableoutside of its base of customers, and have publicly availablemarketing and financial data. One or more of those criteria
eliminate such heavyweights as Visa, Wal-Mart, Mars, andCNN. Interbrand doesn't rank parent companies, whichexplains why Procter & Gamble doesn't show up. Andairlines are not ranked because it's too hard to separate their
brands' impact on sales from factors such as routes and
schedules.
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• BUSINESSWEEK CHOSE Interbrand's methodology because itevaluates brands much the way analysts value other assets: on the basisof how much they're likely to earn in the future. The projected profitsare then discounted to a present value, taking into account the
likelihood that those earnings will actually materialize.• THE FIRST STEP IS figuring out what percentage of a company's
revenues can be credited to a brand. (The brand may be almost theentire company, as with McDonald's Corp., or just a portion, as it is for Marlboro.) Based on reports from analysts at J.P. Morgan Chase,
Citigroup, and Morgan Stanley, Interbrand projects five years of earnings and sales for the brand. It then deducts operating costs, taxes,and a charge for the capital employed to arrive at the intangibleearnings. The company strips out intangibles such as patents andmanagement strength to assess what portion of those earnings can beattributed to the brand.
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• FINALLY, THE BRAND'S strength is assessed todetermine the risk profile of those earningsforecasts. Considerations include market
leadership, stability, and global reach—or theability to cross both geographic and cultural
borders. That generates a discount rate, which isapplied to brand earnings to get a net present value.
BusinessWeek and Interbrand believe this figurecomes closest to representing a brand's trueeconomic worth.
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