www wessexlearning com Managing Markets Strategically Professor Noel

Managing Markets Strategically www. wessexlearning. com Section 1: Marketing and the Firm Section 2:

www. wessexlearning. com CHAPTER 10 Managing Brands © Noel Capon, 2017. All rights reserved.

The Fundamental Business Model www. wessexlearning. com Shareholder Value Organizational Survival, Growth Current, Potential

Six Marketing Imperatives www. wessexlearning. com • Imperative 1: Determine, recommend which markets to

Where Would We Be Without Them? www. wessexlearning. com © Noel Capon, 2017. All

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www. wessexlearning. com Managing Markets Strategically Professor Noel Capon R. C. Kopf Professor of International Marketing Columbia Business School New York, NY © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 1

Managing Markets Strategically www. wessexlearning. com Section 1: Marketing and the Firm Section 2: Fundamental Insights for Strategic Marketing Section 3: Strategic Marketing Chapter 6: Identifying, Choosing Opportunities Chapter 7: Market Segmentation, Targeting Chapter 8: Market Strategy – Integrating Firm Efforts for Marketing Success Chapter 9: Managing through the Life Cycle Chapter 10: Managing Brands Section 4: Implementing the Market Strategy © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 2

The Fundamental Business Model www. wessexlearning. com Shareholder Value Organizational Survival, Growth Current, Potential Profits Attract, Retain, Grow Customers Competito rs Customer Value Company © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 4

Six Marketing Imperatives www. wessexlearning. com • Imperative 1: Determine, recommend which markets to address • Imperative 2: Identify, target market segments • Imperative 3: Set strategic direction, positioning • Imperative 4: Design the market offer • Imperative 5: Secure support from other functions • Imperative 6: Monitor, control execution/performance © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 5

Chapter Roadmap www. wessexlearning. com What is a Brand? Brand Equity and the Value of Brands Monetizing Brand Equity Brand Associations Customer Brand Equity (CBE) Customer Brand Equity Branding Is Not Just for Consumers… Firm Brand Equity (FBE) Firm Brand Equity …and Is Not Just About Advertising Building, Sustaining a Strong Brand Managing Brand Architecture Building a Strong Brand Multibranding versus Umbrella Branding Sustaining a Strong Brand Broadening (Leveraging) Brand Migration Strategic Alliances Aging, Defunct Brands © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 6

Managing Brands www. wessexlearning. com Session Roadmap • What is a brand? • Brand equity, the value of brands • Monetizing brand equity • Building, sustaining a strong brand • Managing brand architecture © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 9

What Is a Brand? www. wessexlearning. com The Company View Sound Symbol Name Logo Term Design Sign Package design Tradema rk © Noel Capon, 2017. All rights reserved. Spokespers on Smell Color PRESENTATION 10 OF 20 / 11

What Is a Brand? www. wessexlearning. com “What distinguishes a brand from its unbranded commodity counterpart and gives it equity is the sum total of consumer’s perceptions and feelings about the product attributes and how they perform, about the brand name and what it stands for, and about the company associated with the brand. ” — Alvin Achenbaum “A product is something that is made in a factor; a brand is something that is bought by a customer. A competitor can copy a product; a brand is unique. A product can be quickly outdated; a successful brand is timeless. ” — S. King, WPP Group, London © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 12

What Is a Brand? www. wessexlearning. com The Customer View The Primary Meaning of any Brand is Carried in the Customer Mind; Great Brands are Owned by Customers, not by Firms • A collection of perceptions and associations customers hold about a product, service, or firm • Perceptions and associations embody meaningful values for customers • Values represent a promise of the expected experience when customers have contact with the brand © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 13

What Is a Brand? www. wessexlearning. com • Brand associations • How brand associations work • Levels of branding • Basic branding concepts • Branding arenas • The CEO as brand • Branding audiences © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 15

What Is a Brand? www. wessexlearning. com Brand Associations: Illustrations Manchester United Tide Microsoft Google Singapore Apple Linked. In Syria Starbucks Facebook You. Tube New York Times Barack Obama Harley Davidson Groupon Lady Gaga Paris Hilton © Noel Capon, 2017. All rights reserved. New York Yankees PRESENTATION 10 OF 20 / 16

What Is a Brand? www. wessexlearning. com Brand Associations: Basis for beliefs about • • Product attributes Customer benefits, values, and experiences Culture Users Brand Associations: Effective if • Strong • Favorable • Unique © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 17

What Is a Brand? www. wessexlearning. com How Brand Associations Work Brand recognition Brand associations Cognitive and affective judgments Basis for decisions © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 18

What Is a Brand? www. wessexlearning. com Cognitive and Affective Judgments: Illustration Blind test …tastes better Open test indifferent …tastes better indifferent Source: Leslie de Chernatony and Malcolm Mc. Donald, Creating Powerful Brands, Oxford: Butterworth -Heinemann, 1992. © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 19

What Is a Brand? www. wessexlearning. com Levels of Branding Group of products Product line Individual product © Noel Capon, 2017. All rights reserved. Carrefour Citigroup IBM Ragu, Claritin, Chevrolet Camry, Fiesta, Leaf, MX-5 Miata PRESENTATION 10 OF 20 / 20

What Is a Brand? www. wessexlearning. com Basic Branding Concepts • Brand associations: The meanings the product has for customers • Brand personality: A set of enduring and distinct human characteristics associated with a brand • Brand vision: The set of perceptions and associations a company intends to create for a brand • Brand image: The set of perceptions and associations that customers actually have about a brand • Brand positioning: The process by which the firm attempts to align brand image with brand identity © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 22

What Is a Brand? www. wessexlearning. com Basic Personality Dimensions: Examples • Competence The Wall Street Journal • Excitement MTV, Mountain Dew • Ruggedness L. L. Bean • Sincerity Hallmark cards, Skippy peanut butter • Sophistication Chanel, Dior J. Aaker, “Dimensions of Brand Personality, ” Journal of Marketing Research, 34 (August 1997), pp. 334– 356. © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 23

What Is a Brand? www. wessexlearning. com Brand Personality Dimensions Brand Personality Examples Competence The Economist Excitement MTV, Red Bull Ruggedness Camel; Vans Sincerity Hallmark cards, Skippy peanut butter Sophistication Chanel J. Aaker, “Dimensions of Brand Personality, ” Journal of Marketing Research, 34 (August 1997), pp. 334– 356. © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 24

What Is a Brand? www. wessexlearning. com Branding Audiences Alliance partners Competitors Current and potential customers Owners/ shareholders Investment analysis Suppliers Regulators Bondholders Intermediaries © Noel Capon, 2017. All rights reserved. Government bodies Current and prospective employees Media PRESENTATION 10 OF 20 / 29

Brand Equity, the Value of Brands www. wessexlearning. com • Traditional view • Brand equity definitions • Customer brand equity • High customer brand equity: important situations • High firm brand equity: illustration • High customer brand equity: advantages • Leading global brands © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 31

Brand Equity, the Value of Brands www. wessexlearning. com Traditional view A set of brand assets and liabilities linked to a brand, its name, and its symbol that add to (or subtract from) the value provided by a product or service to a firm and/or that firm’s customers. Issues • Confounds value to the firm with value to the customer • Need to distinguish value that customers receive – customer brand equity – from value that firms receive – firm brand equity © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 32

Brand Equity, the Value of Brands www. wessexlearning. com Definitions Customer Brand Equity – brand value to customers Value received by individual customers from a branded product or service, over and above the value received from an unbranded version of the same product or service. Firm Brand Equity – brand value to the firm Ultimately measured by the cash flow streams resulting from the brand’s ability to attract, retain, and grow customers, over and above an unbranded alternative. © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 33

Brand Equity, the Value of Brands www. wessexlearning. com Customer Brand Equity Pre-purchase equity The value the customer receives by virtue of information contained in brand names or other signifiers. This value reduces both the customer’s search costs and the economic and psychological risk. Post-purchase equity The value the customer receives when the brand enhances the consumption experience. Brands transform the consumption experience by offering such psychological benefits as status and prestige. Brands may also provide the assurance of continued functional benefits, and such economic benefits as low cost of ownership. © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 34

Brand Equity, the Value of Brands www. wessexlearning. com High Customer Brand Equity: Important Situations • Comparing alternative products is difficult • Customers do not realize the value until some time after purchase • Customers are inexperienced or unfamiliar with the product class • Product quality from suppliers is variable • Product is socially visible © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 35

Brand Equity, the Value of Brands www. wessexlearning. com High Customer Brand Equity: Advantages for the Firm • Can set higher prices and earn better margins • More easily introduce similarly branded items in different product classes and markets • Use cross-selling to encourage existing customers to purchase in different product classes • Generate leverage in distribution channels • Raise entry barriers for competitors • Exploit licensing opportunities © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 36

Monetizing Brand Equity www. wessexlearning. com High Customer Brand Equity – Impact on Firm Brand Equity: Illustration – Toyota Corolla versus GM Geo Prizm $11, 500 $11, 100 Price Premium – $400 $10, 700 80, 000 200, 000 Volume Benefit 120, 000 units © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 38

Monetizing Brand Equity www. wessexlearning. com Leading Brand Values 2015: Top 15 Rank (2015) Brand Name Country of Origin Industry Firm Brand Equity ($U. S. million) 1 Apple U. S. Technology $170. 3 2 Google U. S. Technology $120. 3 3 Coca-Cola U. S. Beverages $78. 4 4 Microsoft U. S. Technology $67. 7 5 IBM U. S. Business Services $65. 1 6 Toyota Japan Automotive $49. 0 7 Samsung South Korea Technology $45. 3 8 General Electric U. S. Diversified $42. 3 9 Mc. Donald’s U. S. Restaurants $39. 8 10 Amazon U. S. Retail $37. 9 11 BMW Germany Automotive $37. 2 12 Mercedes-Benz Germany Automotive $36. 7 13 Disney U. S. Media $36. 5 14 Intel U. S. Technology $35. 4 15 Cisco U. S. Technology $29. 9 http: //interbrand. com/best-brands/best-global-brands/2015/ranking/ © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 39

Building, Sustaining a Strong Brand www. wessexlearning. com A Process View Brand vision Brand broadening © Noel Capon, 2017. All rights reserved. Brand awareness Brand loyalty Brand associations, brand image Brand quality/value perceptions PRESENTATION 10 OF 20 / 41

Building, Sustaining a Strong Brand www. wessexlearning. com Brand Health Check Type of Measure Purchasing and sales Perceptual Marketing support Measure Description of Measure Market breadth Number and type of customers purchasing the brand Market depth Extent of repeat purchase Market share Brand sales as a percentage of total market sales (units and/or dollars) Awareness Degree of brand awareness Brand image Brand associations, congruence with brand identity Quality Perception of brand quality (from blind tests) Uniqueness Extent of differentiation from competition Value Extent to which the brand provides good value for money Advertising Market share/advertising share Advertising/total marketing spend Extent of distribution coverage in target outlets Profitability © Noel Capon, 2017. All rights reserved. Distribution For retail goods, quality of display, especially key accounts Relative price Price compared to competitive brands Profit Gross margin earned from the brand Economic value added (EVA) of the brand PRESENTATION 10 OF 20 / 42

Managing Brand Architecture www. wessexlearning. com • Umbrella branding versus multibranding • Brand broadening (leveraging) • Brand migration • Associate old brand with new brand • Drop old brand • Alliances and partnerships • Aging and defunct brands • Target new market segment(s) • Change brand associations • Alter competitor target © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 44

Managing Brand Architecture www. wessexlearning. com • Umbrella branding versus multibranding • Umbrella branding • company culture • scale economies • transfer of positive customer experiences • Multibranding • minimize transfer of negative associations • targeting and positioning • intra-firm competition © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 45

Branding Choices www. wessexlearning. com Flanker Brand New Product Existin g Line Extension Brand Leveraging Existing New Brand New Product Form/Class © Noel Capon, 2017. All rights reserved. PRESENTATION 10 OF 20 / 46