Brand Brand Management Session 5 27 th April

Brand & Brand Management Session 5 27 th April 2016

Assignment 2 Brand positioning Brand Personality Brand Experiences Are the brand its competitor positioned differently? What are the points of parity? What are the points of differentiation between the brand the competitor?

Consumer Segmentation Bases Behavioral Psychographic User status Values, opinions, and attitudes Usage rate Activities and lifestyle Usage occasion Brand loyalty Benefits sought Demographic Geographic Income International Age Regional Sex Race Family

Business-to-Business Segmentation Bases Nature of Good Kind Where used Type of buy Buying Condition Purchase location Who buys Type of buy Demographic Number of employees Number of production workers Annual sales volume Number of establishments

• Criteria. A number of criteria have been offered to guide segmentation and target market decisions, such as the following: Identifiability: Can we easily identify the segment? Size: Is there adequate sales potential in the segment? Accessibility: Are specialized distribution outlets and communication media available to reach the segment? Responsiveness: How favorably will the segment respond to a tailored marketing program?

Points-of-Difference Associations. Points-of-difference (PODs) • Defined as attributes or benefits that consumers strongly associate with a brand believe the competitive brand cannot be as good. They are the attributes that make the brand unique. and give it a competitive advantage. • Brand associations broadly classified as either functional, performance-related considerations or as abstract, imagery-related considerations. • Consumers’ actual brand choices often depend on the perceived uniqueness of brand associations. Example: Swedish retailer 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. It is noted that, “Ikea built their reputation on the notion that Sweden produces good, safe, well- built things for the masses.

SUBARU : Once Subaru clarified its positioning as a rugged luxury car that drivers loved, sales took off. • By 1993, Subaru was selling only 104, 000 cars annually in the United States, down 60 percent from its earlier peak. Cumulative U. S. losses approached $1 billion. • Advertised as “Inexpensive and Built to Stay That Way, ” Subaru was seen as a me too car that was undifferentiated from Toyota, Honda, and all their followers. • To provide a clear, distinct image, Subaru decided to sell only all-wheel-drive in its passenger cars. • After upgrading its luxury image—and increasing its price—Subaru sold over 187, 000 cars by 2004. • Even more recently, the company launched its “Share the Love” ad campaign – Cause program, which focused on the fun, adventure, and experiences the vehicles afford and the strong passion and loyalty its customers have for the brand. The cause program in which it donates to one of five charities a customer can designate when he or she leases or buys a new car. Subaru’s unique emotional play for relatively upscale buyers who value freedom and frugality paid off in the 2008– 2010 recession, when it bucked the industry tide to experience record sales

• POD may rely on performance attributes (Hyundai provides six front and back seat “side curtain” airbags as standard equipment on all its models for increased safety) or performance benefits Example: electronic products have “consumer- friendly” technological features, such as television sets with “Smart Sound”, “Smart Picture” • In other cases, PODs come from imagery associations (the luxury and status imagery of Louis Vuitton or the fact that British Airways is advertised as the “world’s favourite airline”). • Many top brands attempt to create a point-of-difference on “overall superior quality, ” whereas other firms become the “low-cost provider” of a product or service.

• 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 by more audio engineers, leading to the benefit of “superior music fidelity”). • Having compelling proof points and RTBs are often critical to the deliverability aspect of a POD.

Points-of-Parity Associations. • Points-of-parity associations (POPs), are not necessarily unique to the brand but may in fact be shared with other brands. They are those elements that are considered mandatory for a brand to be considered a legitimate competitor in its specific category. It is what makes the consumer consider the brand, along with the competitors. • There are three types: category, competitive, and correlational. 1. Category points-of-parity: represent necessary—but not necessarily sufficient— conditions for brand choice. They exist minimally at the generic product level and are most likely at the expected product level. • 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 cheques, and other such services; and had convenient hours and automated teller machines. Category POPs may change over time because of technological advances, legalities and consumer trends.

2. Competitive points-of-parity : associations designed to negate competitors’ PODifference. • 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 in a strong—and perhaps unbeatable—competitive position. 3. 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 other words, 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 “inexpensive” and at the same time “of the highest quality. ”

Examples of Negatively Correlated Attributes and Benefits Low price vs. high quality Taste vs. low calories Nutritious vs. good tasting Efficacious vs. mild Powerful vs. safe Strong vs. refined Varied vs. simple Moreover, individual attributes and benefits often have both positive and negative aspects. • A long heritage could be seen as a positive attribute because it can suggest experience, wisdom, and expertise. • On the other hand, it could be a negative attribute because it might imply being old fashioned and not contemporary and up-to-date

Points-of-Parity versus Points-of-Difference: • For the brand to achieve a POP on a particular attribute or benefit, a sufficient number of consumers must believe that the brand is “good enough” on that dimension. • There is a “zone” or “range of tolerance or acceptance” with POPs. • The brand does not have to be seen as literally equal to competitors, but consumers must feel that it does sufficiently well on that particular attribute or benefit so that they do not consider it to be a negative or a problem. • Assuming consumers feel that way, they may then be willing to base their evaluations and decisions on other factors potentially more favorable to the brand. • Points-of-parity are thus easier to achieve than points-of-difference, where the brand must demonstrate clear superiority. Often, the key to positioning is not so much achieving a POD as achieving necessary, competitive and correlational POPs.

Brand Personality • Through consumer experience or marketing activities, brands may take on personality traits or human values and, like a person and appear to be “modern, ” “old-fashioned, ” “lively, ” or “exotic. ” • 5 dimensions of brand personality (with corresponding sub dimensions) are sincerity (down-to-earth, honest, wholesome, and cheerful), excitement (daring, spirited, imaginative, and up-to-date), competence (reliable, intelligent, successful), sophistication (upper class and charming), and ruggedness (outdoorsy and tough). • How does brand personality get formed? • Any aspect of a brand may be used by consumers to infer brand personality. • One research study found that consumers perceived nonprofit companies as being “warmer” than for-profit companies but as less competent.

• Further, consumers were less willing to buy a product made by a nonprofit than a for profit company because of their perception that the firm lacked competence, but those negative purchasing associations disappeared when perceptions of the competency of the nonprofit were improved. (Example, by a credible endorsement such as from the Wall Street Journal) • Marketing communications and advertising may be especially influential in creating a brand personality because of the inferences consumers make about the underlying user or usage situation depicted or reflected in an ad.

• Advertisers may inspire a brand with personality traits through anthropomorphization and product animation techniques; through the use of brand characters; and through user imagery, • The actors in an ad, the tone or style of the creative strategy, and the emotions or feelings evoked by the ad can affect brand personality. • Once brands develop a personality, it can be difficult for consumers to accept information they see as inconsistent with that personality • Brand personality and imagery are more likely to be related, as they are for cars, beer, liquor, cigarettes, and cosmetics as against most food products.

• Consumers often choose and use brands that have a brand personality consistent with their own self-concept, although in some cases the match may be based on consumers’ desired rather than their actual image. • These effects may also be more pronounced for publicly consumed products than for privately consumed goods because the signaling aspect of a brand may be more important under those conditions. • Consumers who are high “self-monitors” and sensitive to how others see them are more likely to choose brands whose personalities fit the consumption situation • User and usage imagery is often an issue in the highly competitive automotive category. • One company looking to sharpen its brand personality and imagery is Chrysler.

CHRYSLER • After a disastrous corporate marriage to Germany’s Daimler had been dissolved Chrysler’s new partner Fiat set out to revitalize the brand, in part by injecting some Italian style and sex appeal. • Determined to attract younger, hip, and wealthier customers, Fiat developed new car designs similar to the quirky little cars most likely found in Rome.

Article 5: Brand core and its management over time • All established brands have an inner core, even though it may vary in terms of content, depth and clarity. • The core of a brand is what it can be reduced to without losing its fundamental meaning or its utility as a point of reference in long-term management. • Aim – employment of a strategic brand management perspective – to develop a framework to enable continuous management, preserving the brand core while stimulating progress and development by dynamically managing change. • The research is based on a 10 -year longitudinal study of Volvo’s management of its brand covering the period from 1927 to 2015.

• Volvo brand’s core values – safety, quality and environmental care indicates their importance to the organization and its management. • The continuity with which the brand has been managed is commendable. • Volvo’s three core values have remained unchanged for decades, as has the positioning of the brand in relation to safety. • Whether “safety” is to be classified as a functional, emotional or self-expressive benefit? Volvo manager’s response: “We view our core values from different viewpoints and we do not limit them to be this or that, rather all at the same time. They all say Volvo for life”

• Volvo’s transition from a product brand to a corporate brand provides an opportunity to study the implications for its brand core ones like British Airways, Nestlé and Harley Davidson. • For the distinct category of “heritage brands” (The Nobel Prize, Louis Vuitton, SC Johnson and successful constitutional monarchies), safeguarding the brand’s core while embracing change in society and markets is essential.

• Three key questions related to the brand core sum up the formidable challenges facing strategic management and theory: Q 1. How to define what the core of the brand is, and what it is not? Q 2. How to use the brand core as a point of reference in all branding efforts? Q 3. How to stay true to the brand’s core while still adapting to change? • Most brand managers struggle to understand what their brands essentially represent. • Defining and implementing elements that are not core, or those that deviate from the core when formulating a brand strategy, can potentially derail a brand-building process and endanger brand assets.

• Not knowing what constitutes the brand core engenders risk – that change might result in the brand losing its identity and market position. • Traditionally, however, the focus of strategic brand management research has been on product branding, with corporate branding receiving less attention. Customer benefits are considered key in defining a brand’s core, rather than brand values in product branding. Core and extended core • The basic role and function of “brand statement” is to encapsulate a brand’s meaning. • In advertising and communication management, terms such as “promise”, “tagline”, “pledge”, “payoff”, “claim” and “slogan” are often used interchangeably. • Examples of brand statements are De Beers’ “Diamonds are forever” and American Express’s “Don’t leave home without it”.

• A brand statement can range from specific product features (Dove shampoo: “intense repair, Strong and smooth) to created image associations (“Welcome to Marlboro country”) and an organisation’s spirit (Adidas: “All in”). • Brand statements are more or less strongly associated with a brand’s core. Examples of deeply held (and legally and/or constitutionally bound) brand statements are, “For the greatest benefit to mankind”, used by the Nobel Prize organisation, based on Alfred Nobel’s will from 1901.

• “Customer needs and benefits” and “brand values” are presented as key dimensions of the “extended brand core”. In substance, the brand concept is management’s response to the needs and wants of the consumer. • “Brand concept” serves as an aid to brand communication and positioning to support the management of the image over time. • The principal role of brand management is to adjust image and positioning continuously to current market conditions following a market-oriented approach.

• Brand values as part of the extended brand core: A brand can be described as a “cluster of values”. A value-based understanding of a brand implies that there are values closer to its core, and other values that are peripheral. • The meanings of brands are influenced by the organization’s attempts to “manage meanings and values” in a cultural context in an “ongoing interaction” with customers and non-customer stakeholders

Three view points on brand values Brand values Definition Values related to the organization Arrangement of an organization’s more or less expressed common values, supporting ideas, positions, habits and norms, which converge to give a corporate culture its character Values that summarize the brand Values that sum up the meaning of a brand. Core values are mindsets rooted within an organization and essential perceptions held by customers and non- customer stakeholders, and define the identity of a brand Values as perceived by customers Customer values are expressions of core values, used to appeal more directly to a target group

Three types of customer needs and benefits Customer needs and benefits Definition Functional A (need) benefit based on a product attribute that provides functional utility to the customer Emotional A (need) benefit providing a positive feeling experienced by a customer through the purchase or use of a brand Self-expressive A (need) benefit providing a way for a person to communicate his or her self-image

Approaches in managing a brand’s core Product brand management Corporate brand management Market orientation: Outside-in approaches with a focus on brand image ‘Customer needs and benefits are key in defining and managing the product brand’s core’ ‘Customer needs and benefits are key in defining and managing the corporate brand’s core’ Brand orientation: Inside-out approaches with a focus on brand identity Organizational and core values are key in defining and managing the product brand’s core’ Organisational and core values are key in defining and managing the corporate brand’s core

Brand core framework Three criteria central to a usable brand core framework must: • Be applicable to different types of brands (universal criteria) • Provide a point of reference – the brand core itself (continuity criteria) • Enable adaptations and change over time (dynamic criteria).

The new brand framework PATHOS Perspective (Appealing to emotions and the will) THE BRAND CORE ETHOS perspective (Appealing through character, personality, and Trustworthiness) – core values supporting a promise LOGOS perspective: Appealing to reason and understanding

Case study analysis: • Long, semi-structured interviews were conducted with Volvo management from 2005 to 2015. • 28 interviews were conducted, including four with former CEOs. • During the period in which the fieldwork was conducted, regular contact was maintained with Volvo Cars divisions and with the Volvo Group (which produces other, larger vehicles, such as trucks and buses). • The two divisions became separate corporations in 1999, but retained common ownership of the Volvo trademark and a strong shared interest in the brand. • Different research methods were used – interviews, participant observation and content studies of documents and archival material

• In 1976 Volvo’s references to the organisation behind the brand in terms of “We at Volvo”, heralded a “corporate persona” and a shift towards corporate branding. Volvo Product Branding (1927– 1975) 1927 : Mission statement: “An automobile is made by and for people. basic principles for all manufacturing are and must remain: quality and safety” • The first international brand promise articulated for Volvo cars – “A product of superb Swedish engineering” – reflects the importance the company placed on quality, durability and reliability 1960 s: the company built its international advertising campaigns on such themes as “overbuilt to take it”, “ 100, 000 -mile reputation” and “stronger than dirt”

• The international positioning: summed up in the claim that it was “a sensible and affordable quality European car” Transition to corporate branding (1976– 1999) • Second phase: the brand reinforced Volvo’s safety position and also adopted “care for the environment” as an additional core value. • At a trade show in Washington, DC, in 1976, Volvo exhibited a safety-stressing concept car that attracted considerable media attention. This occasion was “a breakthrough for Volvo’s positioning” and created “a new category” related to the concept of safety

• To bring about this change, descriptions of the safety aspects of the car’s design and the results of crash tests became distinctive recurring elements of communications campaigns. • Brand promises were: “Drive Safely. Volvo”; “A car for people who think”; and “A car to believe in” • The introduction of the seatbelt as a standard Volvo feature in the USA was not a customer driven move, but something that the company implemented on the basis of its own convictions. In an interview in April 2005, Volvo’s CEO from 2000 to 2005 recalled that “safety was controversial, and seatbelts were ridiculed when first introduced. An organization must fight for its values”. • In 1972, Volvo adopted the core value of “environmental care”.

Corporate branding and country of origin (2000 – present) • Third stage of the brand’s evolution, Volvo based its positioning and value propositions on the core value of safety. • The company’s emotional appeals became more prominent during these two decades, and it introduced the first international brand promise in 2000: “Volvo. For life”. • Safety has become Volvo Cars’ most distinctive value and the basis of its most important emotional appeal • In 2011 Volvo Cars stressed that “passion for the product” and “the concept of Scandinavian design” are important themes for the future brand development, and could extend the brand beyond the ambition to be perceived as a “premium luxury” mark. • Identifying “safety and the human-centric approach” as pillars of the brand, Volvo envisioned new product design and marketing communication as emphasizing the “emotional side of the brand”, thereby giving Volvo the “chance to own a position for itself and stand out internationally as a Scandinavian brand”.

• During the “transition to corporate branding” stage (1976– 1999), the company behind the product became an integral element of the brand rhetoric, as reflected, for example, in the frequent use of the first-person pronoun in advertising copy: We at Volvo”. • This signaled a shift in communications strategy and in Volvo’s view of its brand. Thus, the corporation’s ethos – mission and vision, culture and competences – was being treated as a vital part of the brand. • At the “corporate branding with country of origin” stage of the brand’s evolution (2000– present), all three appeals – logos, ethos and pathos – are present. • The “Volvo. For life” promise is supported by the three established core values, forming an entity: the bran core. Such advertising taglines reflect the brand promise’s relationship with safety.

• Lately, the Volvo communication focus has been on safety communicated by pathos, in the form of appeals to the emotions. • It is expressed, in the prominence given to Scandinavian design, the corporate culture and country of origin. • A case in point is the advertising theme “Made by Sweden”, introduced in 2015 with the Swedish footballer Zlatan Ibrahimovic.

Volvo Cars’ corporate brand identity and reputation matrix, or CBIRM Reputation Communication Value proposition: ‘To protect and celebrate life’ Relationships: ‘Thoughtful ownership and driving experiences’ Position: ‘The safest and most exciting car’ Expression: ‘Attractive and distinctive Scandinavian quality design’ Volvo. For life. Quality, Safety, Environment’ Personality: ‘Caring, progressive, and humanistic’ Mission and Vision: Culture: ‘Cars are driven by people. ‘We are passionate and The guiding principle behind proud to put safety first’ everything we make at Volvo, therefore, is and must remain – safety Competences: ‘A safety philosophy supported by a track record of pioneering firsts’

The brand core grid High Externally perceived and appreciated values and promises Low Potential Consider adoption (example: ‘Swedishness’) True Fortify and build (example: ‘safety’) Hollow Revise or delete (example: ‘premium luxury’) Aspirational Communicate externally (example: ‘environmental care’) Low High

Porter’s 5 forces model • The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. • This is useful, because it helps understand both the strength of the current competitive position, and the strength of a position you're considering moving into. • Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable • With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps.

Supplier Power: • Assess how easy it is for suppliers to drive up prices. • This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another. • The fewer the supplier choices, the more suppliers' help is required, the more powerful your suppliers are. Buyer Power: • How easy it is for buyers to drive prices down. • Again, this is driven by the number of buyers, the importance of each individual buyer to the business, the cost to them of switching from your products and services to those of someone else. • If you deal with few, powerful buyers, then they are often able to dictate terms to you.

Competitive Rivalry: • What is important here is the number and capability of your competitors. • If there are many competitors, and they offer equally attractive products and services, then the business will have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from the business. • On the other hand, if no-one else can do what one business is doing, then the business strength is very high. Threat of Substitution: • This is affected by the ability of the customers to find a different way of doing what the business can’t do – for example, if the business is supplying a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. • If substitution is easy and substitution is viable, then this weakens the power.

Threat of New Entry: • Power is also affected by the ability of people to enter a business’s market. • If it costs little in time or money for the competitor to enter the market and compete effectively, if there are few economies of scale in place, or if there is little protection for key technologies, then new competitors can quickly enter the market and weaken the position. • If barriers to entry are strong and durable, then a business can preserve a favorable position and take fair advantage of it.

Brand Analysis Critique Task Rating on 10 points person (each individual must contribute to the task) Walt Disney, L’oreal, Converse, Amazon, H&M, Michael Kors, Danone, Nestle, Zara, Gucci, Ikea. Brand Identity: Elaborate and Critique 1. Vision 2. Mission 3. Values 4. Personality 5. Benefits 6. Audience 7. Offering

1. STP: Segmentation Targeting and positioning of the Brand 2. Industries of Operation of the existing company 3. Brand Potential for Brand Extension 4. Brand management through the controversies (Mention the controversy and how the brand overcame it) 5. Apply Porter’s model to the Brand