BRAND MANAGEMENT Assignment

Prepared by: Md. Rahil Kirmani Isha Gothwal Yusra Jamal Samarjeet Kaur Tabrez Khan

L’Oréal India Private Limited is a wholly owned subsidiary of L’Oréal S.A. Headquartered in Paris, L’ORÉAL is the global leader in cosmetics with 5 ey expertise in hair ca re, hair color, s in care, ma e-up and fragrances. L’Oréal’s leadership is achieved th rough cutting-edge technology with a portfolio of well- nown brands that answer all beauty needs and are distributed in all channels. Each brand benefits from considerable investments in research made by the L Oréal Group. The Group s research efforts, unique in the beauty industry, permit each brand to benefit from formulas specifically adapted to the needs of men and wome n worldwide, within each mar et or distribution circuit that is present. L Oréal India has over 600 employees and has a strong trac record with consistent double digit sales growth yearly. Group profile A century of expertise in cosmetics 17.5 billion consolidated sales in 2009 23 global brands* 130 countries 64 600 employees 674 patents filed in 2009. o These brands annual sales are superior to 50 million euros Finance - Sales: 17.5 billion - Operating profit: 2.5 billion - Net earnings per share (1): 3.42 - Dividend (2): 1.55 (1) Diluted net earnings per share based on net profit excluding non-recurrent i tems after minority interest. (2) Dividend to be proposed to the Annual General Meeting of Shareholders on Apr il 27th 2009 Operations 38 factories around the world 4,9 billion units manufactured in 2009 97% of factories are ISO 14001and OHSAS 18001 or ISO 14001 and VPP certified 100% of L Oréal s industrial sites audited with standard SA 8000. PRESENT SCENARIO IN INDIA Total beauty care mar et Beauty services Rs 5,070 crores 87% Current Annual growth rate 25% L’Oreal currently mar ets L’Oreal professional, Matrix and erastase all three offer ing hair care products. It covers over 15000 salons, with L’Oreal professional hav ing tie-ups with over 600 salons. All erastase salons are exclusive since it’s a luxury brand. Matrix is most widely distributed brand with most accessible pricing , there are no exclusive partnerships.

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During next three years, L’Oreal will target entering 30000-40000 salons as India is the fastest growing mar et. CUSTOMER BASED BRAND EQUITY BUSINESS STRATEGY their strategy for leadership is based on continuous investment in rigorous sci entific research and development. This enables the brands to deliver products wh ich are innovative, highly effective, practical and pleasant to use, and which a re manufactured to the most demanding standards of quality and safety. L’Oreal aim for excellence, and constantly challenge ourselves and our methods. They place great value on honesty and clarity: their consumer advertising is based on prove n performance and scientific data. L’Oreal are committed to building strong and la sting relationships with their customers and our suppliers, founded on trust and mutual benefit. L’Oreal do business with integrity: L’Oreal respect the laws of the countries in which L’Oreal operate and adhere to good corporate governance practi ces. L’Oreal maintain high standards in accounting and reporting, and support the fight against corruption. L’Oreal deliver long-term, sustained shareholder value b y protecting and ma ing the most effective use of company assets. ETHICS THE CODE OF BUSINESS ETHICS Our Code of Business Conduct is the reference document for ethics within L ORÉAL a nd helps employees implement THE L’ORÉAL SPIRIT in their day-to day activity. The Co de of Business Ethics applies to all employees of the L ORÉAL Group and its subsid iaries worldwide. It also concerns all Officers and Directors of the L ORÉAL Group and its subsidiaries. Each employee receives a personal copy. The Code of Business Ethics was drafted with the help of employees from 22 count ries who too part in international wor ing groups in Asia, Europe, North Americ a and Latin America. The Code was then validated by 50 internal experts and revi ewed by each Country Manager, Human Resources Manager and local legal counsel. MISSION: At L’ORÉAL, L’Oreal believe that everyone aspires to beauty. Our mission is to help me n and women around the world realise that aspiration, and express their individu al personalities to the full. This is what gives meaning and value to our busine ss, and to the wor ing lives of our employees. L’Oreal are proud of our wor . Customer- based brand Equity pyramid: Two questions often arise regarding brands: ‘What ma es a brand strong?’ and ‘How do y ou build a strong brand?’ To answer these questions, this section introduces the c ustomer-based brand equity (CBBE) model. This model incorporates theoretical adv ances and managerial practices in understanding and influencing consumer behavio ur. Although useful perspectives concerning brand equity have been put forth, th e CBBE model provides a unique point of view as to what brand equity is and how it should be built, measured and managed. The CBBE model approaches brand equity from the perspective of the consumer – whether this be an individual or an organi zation. Understanding the needs and wants of consumers and organizations and dev ising products and campaigns to satisfy them are at the heart of successful mar eting. In particular, two fundamental questions faced by mar eters are: ‘What do d ifferent brands mean to consumers?’ and ‘How does the brand nowledge of consumers a ffect their response to mar eting activity?’ The basic premise of the CBBE model is that the power of a brand lies in what cu stomers have learned, felt, seen and heard about the brand as a result of their experiences. In other words, the power of a brand lies in what resides in the mi nds of customers. The challenge for mar eters in building a strong brand is ensu ring that customers have the right type of experiences with products and service s and their accompanying mar eting campaigns so that the desired thoughts, feeli ngs, images, beliefs, perceptions and opinions become lin ed to the brand. Custo mer-based brand equity is defined as the differential effect that brand nowledg

 

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e has on consumer response to the mar eting of that brand. A brand is said to ha ve positive customer-based brand equity when consumers react more favourably to a product and the way it is mar eted when the brand is identified than when it i s not (eg, when the product is attributed to a fictitious name or is unnamed). T hus, a brand with positive customer-based brand equity might result in consumers being more accepting of a brand extension, less sensitive to price increases an d withdrawal of advertising support or more willing to see the brand in a new d istribution channel. On the other hand, a brand is said to have negative custome r-based brand equity if consumers react less favourably to mar eting activity fo r the brand compared with an unnamed or fictitiously named version of the produc t. There are three ingredients to this definition: • differential effect; • brand nowledge; • consumer response to mar eting. First, brand equity arises from differences in consumer response. If no differen ces occur, then the brand name product is essentially a commodity. Competition, most li ely, would then be based on price. Second, these differences in response are a result of consumers’ nowledge and experience of the brand. Thus, although strongly influenced by the mar eting activity of the firm, brand equity ultimate ly depends on what resides in the minds of consumers. Third, the differential re sponse by consumers that ma es up the brand equity is reflected in perceptions, preferences and behavior related to all aspects of the mar eting (eg, choice of a brand, recall of copy points from an ad, actions in response to a sales promot ion or evaluations of a proposed brand extension). Brand Briefing 2.5 provides a detailed account of these. The simplest way to illustrate what is meant by cust omer-based brand equity is to consider some typical results of product sampling or comparison tests. For example, with blind taste tests, one group of consumers samples a product without nowing which brand it is, whereas another group samp les the product nowing which brand it is. Invariably, differences arise in the opinions of the two groups even though they are consuming the same product. For example, Larry Percy reports the results of a beer-tasting that showed how discr iminating consumers could be when given the names of the well- nown brands of th e beer. LOREAL’s CBBE MODEL. BRAN SALIENCE: Created in France, L Oréal Paris brings the sophistication and elegance derived fr om its French heritage to women and men all over the world. L Oréal Paris offers l eading-edge products that out-perform the competition to people who care more ab out the way they loo . Our passion for innovation, performance, style and a sens e of premium is encapsulated in the because you re worth it philosophy. Our co re values are supported by our strong investment in scientific research and tech nology. Over a third of the L Oréal Group s total turnover in this country is generated by L Oréal Paris, ma ing it the company s largest division in the UK. Today there ar e strongly established L Oréal Paris brands across all of the ey areas of the bea uty mar et, including the Plenitude s incare range, Elvive haircare and Studio L ine styling products. Other brands include L Oréal Paris Colour Cosmetics, Elnett, Rcital, Excellence, Fria, Perfect Blonde, Open, Casting and L Oréal Kids. BRAND PERFORMANCE: Branding Strategy of L Oreal has enabled the company to spread its business not only in Europe but also in Asia and Latin America. In the year 2005, the Brand L Oreal was ran ed first among all the cosmetics companies of the world. L Oreal Branding Strategy has achieved success throughout the world. Over the ye ars, the company is successfully producing and selling different cosmetic produc ts, haircare and s incare products in almost 150 countries of the world. This ha s been possible because of the well established Brand Name and Brand Image of L

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Oreal. L Oreal has been successful in generating a worldwide Brand Identity only becaus e of the company s powerful and efficient Branding Strategy. This successful Glo bal Branding Strategy of L Oreal helped the company to earn significant levels o f revenue in the past years In the year 2005, L Oreal was valued as a $18.89 bil lion company. In 2004, total value of the L Oreal Brand was $5902 million. In 20 03, the company recorded a value of $5600 million. In fact, from the year 1989, the Brand L Oreal experienced continuous growth. T he company recorded double digit growth rate in consecutive years and in the yea r 2005, it became the largest cosmetic company of the world. BRAND IMAGERY: L’Oréal has been one of the most reputed brands in the cosmetics field. The brand ha s made its presence felt in more than 100 countries, than s to its numerous acqu isitions worldwide. With several brands in its itty, L’Oréal has carved a niche for itself with its unique strategies and stands out from the other cosmetics brand s. The L’Oréal group develops several important communication campaigns every year that underline the ability and the growth of the group. It is omnipresent across sev eral media channels and the constant presence enables the brand to retain its re igning position in the mar et despite stiff competition from numerous cosmetic b randThe commercial communication of the group is made at a world level. The grou p proposes the same products and leans on the same advertising campaigns. In tha t case, visuals are the same, the text identical, the slogan is unchanged, and t he ads are only translated with respect to countries. However, in spite of its g lobal presence, the group realized that it could not sell the same product to al l its consumers. The group new how to diversify towards American, Asian or Lati n brands. BRAND JUDGEMENT Few of the women in the admiring crowd realize that the trendy New Yor Mayb elline brand belongs to French cosmetics giant L Oreal. In the battle for global beauty mar ets, $12.4 billion L Oreal has developed a winning formula: a growin g portfolio of international brands that has transformed the French company into the United Nations of beauty. Blin an eye, and L Oreal has just sold 85 produc ts around the world, from Red en hair care and Ralph Lauren perfumes to Helena R ubinstein cosmetics and Vichy s in care. Than s to this strategy, masterminded by L Oreal Chief Executive Lindsay Owen-Jo nes, the French company has not only enjoyed a decade of double-digit growth but has pioneered new ground rules for staying on top in a fiercely competitive ind ustry. L Oreal s net profits rose 12% in 1998, to $768 million, while its stoc has soared 900% in the 90s. L Oreal s success is proof that when done right, global branding can speed growt h in mature consumer-products companies even when global mar ets themselves are sha y. Asia s economy is a mess, Latin America is tottery. Other worldwide mar e ters, such as Procter & Gamble Co., are suffering partly as a result. But L Orea l is surging in mar ets stretching from China to Mexico. Its secret: conveying t he allure of different cultures through its many products. Whether it s selling Italian elegance, New Yor street smarts, or French beauty through its brands, L Oreal is reaching out to more people across a bigger range of incomes and cultu res than just about any other beauty-products company in the world. That sets L Oreal apart from one-note mar eters such as Coca-Cola Co., which has just one br and to sell globally. L Oreal s strategy positions it beautifully to profit even further when the midd le class begins to grow again in emerging mar ets. Says Veronique Adam, analyst at J.P. Morgan Securities Inc. in Paris: L Oreal is the only real global leade r in every segment of the industry. For Owen-Jones, the tric will be staying ahead in the game as his powerful riva ls see to play the global branding game. From giant P&G to niche players such a s Los Angeles-based cosmetics ma er Stila, L Oreal s competitors are hustling to catch up. L’Oreal want to become more of a global company li e L Oreal, says

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Yoshi uni Miya awa, a general manager of the cosmetics-mar eting division of Shi seido Co., Japan s No. 1 cosmetics company. Already, Shiseido is dominant at hom e and now expanding around the world. Meanwhile, the French company is No. 10 in Japan, trailing rivals such as Clinique and Estee Lauder. BRAND FEELINGS: it is customers emotional responses and reaction with respect to the brand. “L’Ore al” formed in France, Paris, brings the sophistication and elegance consequent fro m its French heritage to women and men all over the world. L’Oreal Paris offers le ading-edge products that out-perform the competition to people who care more abo ut the way they loo . The passion for innovation, performance, style and a sense of premium is sum up in the customers money spending worth and also it’s philoso phy. The core values are supported by strong investment in scientific research a nd technology. The L’Oreal Group total turnover by the Paris franchise ma ing it the company s la rgest division in the world. Today there are strongly established L’Oreal Paris br ands across all of the ey areas of the beauty mar et, including the Plnitude s incare range, Elvive hair care and Studio Line styling products. Other brands in clude L’Oreal Paris Color Cosmetics, Elnett, Rcital, Excellence, Fria, Perfect Blo nde, Open, Casting and L’Oreal Kids. The Consumer Products Division in the Europe is dedicated to offering consumers innovative, high technology beauty products f rom global brands at competitive prices. This is delivered through a global stra tegy combined with a local understanding of the needs of women and men of all ag es. BRAND RESONANCE: The L’Oreal Group has three international brands named as L’Oreal Paris, Garnier an d Maybelline that offer hair care, sun care, hair coloring, s in care and ma e-u p products. All of these available from mass mar et retail outlets such as super mar ets, drugstores and leading chemists throughout the world. L’Oreal Paris remai ns the finest mass-mar et brand. It is offering consumers reachable luxury for s in care through providing its consumers leading-edge products that outshine the competition. “Garnier”, on the other hand, Europe s no1 brand for natural beauty pr oducts in hair care category that offers a complete collection for healthy hair. Similarly, Maybelline offer world class quality for on screen requirements. The L’Oreal Group performance is marvelous due to its distribution channel too. The c ompany focuses on “go native” strategy mean hire local firms in every country to dis tribute its products. Secondly, “First landing” strategy that is first commercializa tion is bad thing if the product is not available in a particular place. It has two bad impacts on the company: one would be if product is not at a particular p lace and company runs there commercials the negative word-of-mouth generate due to the consumers effortless struggle to search the product. The other is the hug e advertising budget shatter due to pointless direction. The company by itself m onitor, control and evaluate its channel performance especially distributors. Th e company follow same mar eting mix foe the whole world with a little bit variat ion according to the economic conditions of a certain country. L’Oreal is nown fo r its strong control over its promotion, place, price and pac aging strategy, wh ich is decided from the headquarters. For these points, only minor product adapt ations are made in different countries such as labels’ languages. All controls are very frequently chec ed to comply with prices and selling places of the group m ar eting strategy.

STRATEGIC BRAND MANAGEMENT PROCESS Competitive frame of reference::

 

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Loreal Paris: POP: L Oréal Paris provides affordable luxury for people who demand excellence. POD: L Oréal Paris, one of the world s top beauty care brands, offers men and wome n on every continent beauty and personal care products that incorporate the late st scientific advances. Visionary formulas, upscale presentation and products th at are a pleasure to use Loreal Professionals: POP: Fashion POD: The brand’s hair colour products are cutting edge. In 2009, L’Oréal Professionnel launched INOA, a revolutionary odourless, ammonia-free hair colour for optimise d respect of the hair and scalp. The Série Expert, Série Nature and L’Oréal Professionne l Homme lines offer quality professional haircare products suitable for all styl ists and consumers. The Tecni.art, Play ball and Texture Expert styling ranges a re hugely popular with hair designers and the Série Expert line offers precision p rofessional haircare products. X-Tenso, a long-lasting hair straightener, is als o one of L’Oréal Professionnel’s most successful innovations. Core Brand Values: Loreal Paris L Oréal Paris provides affordable luxury for people who demand excell ence. Loreal Professionals Creativity, innovation and partnership – three reasons that p rompt leading hair stylists to choose L’Oréal Professionnel and its products Lancome Paris Years of experience and unique expertise allow the brand to develo p high-technology products that combine performance, pleasure, safety and creati vity. Vichy Laboratories the brand has imposed a new vision of cosmetics through its fo unding idea: target beauty by ma ing health the focal point of our approach, in addition to advances made by applying the rigour of a medical approach to enhanc e healthy s in. The Body Shop only one way to beautiful, nature’s way Brand Mantra: Loreal Paris because you are worth it Loreal Professionals Dream, Excel and Succeed together Lancome Paris NOTHING MOVES ME MORE THAN BEAUTY BY LANCÔME Vichy Laboratories HEALTH IS BEAUTIFUL Mixing and matching of brand elements: The most common punchline is “Because you are worth it”. It is easily recognizable a s soon as you come across this punchline that what brand you are tal ing about. Integrating brand mar eting activities: The products from Loreal promise beauty in the most natural and affordable way. Lancome has another element of Luxury in it. Leverage of secondary associations: Company: Loreal Country of origin: Paris BRAND VALUE CHAIN Brand Audits:A Brand Audit is a comprehensive assessment of an organization’s brand, in which i t’s strengths and wea nesses are assessed and opportunities are determined. The pu rpose of a brand audit is to capitalize on the opportunities in efforts to impro ve the various elements of an organization’s brand in both management and mar etin g perspectives. Brand Trac ing Understanding the three dimensions of brand health What is your brand s penetrat ion? How successful is your brand s differentiation in the mar etplace? What is the li ely future trend of your brand? All can be revealed by Brand Trac er a un ique and comprehensive framewor created for pbrands which reveals the three dim ensions of brand health: penetration, differentiation and relationship. Brand Tr

 

 

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ac er also incorporates innovative brand equity model, Brand Value Creator, a ma r et-validated system that gauges brand equity and mar et barriers. Brand Equity Management System Brand equity is defined and a comprehensive framewor is described that incorpor ates recent theoretical advances and managerial practices in understanding and i nfluencing consumer behavior.1 This framewor identifies sources and outcomes of brand equity and permits tactical guidelines as to how to build, measure, and m anage brand equity, as will be developed further in other sections of the paper. Customer-based brand equity. Understanding the needs and wants of consumers and customers is at the heart of mar eting. A brand equity framewor should therefo re recognize the importance of the customer in the creation and management of br and equity. Accordingly, customer-based brand equity is defined as the different ial effect that brand nowledge has on consumer response to the mar eting of tha t brand. A brand is said to have positive customer-based brand equity when custo mers react more favorably to a product and the way it is mar eted when the brand is identified as compared to when it is not (e.g., when it is attributed to a f ictitiously named or unnamed version of the product). Accordingly, the ey to br anding is that consumers perceive differences among different products in a cate gory. As noted above, brand differences often are related to attributes or benef its of the product itself. In other cases, however, brand differences may be rel ated to more intangible image considerations. There are three ey ingredients to this definition -- "differential effect," "br and nowledge," and "consumer response to mar eting." First, brand equity arises from differences in consumer response. If no differences occur, then the brand name product can essentially be classified as a commodity or generic version of the product. Second, these differences in response are a result of consumer s n owledge about the brand. Thus, although strongly influenced by the mar eting act ivity of the firm, brand equity ultimately depends on what resides in the minds of consumers. In other words, “customers own brands and your brand is what custome rs will permit you to have." Third, the differential response by consumers that ma es up the brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the mar eting of a brand (e.g., product evaluations o r choice, recall of copy points from an ad, actions in response to a sales promo tion, or evaluations of a proposed brand extension). Sources of brand equity What causes customer-based brand equity to exist? Customer-based brand equity oc curs when the consumer has a high level of awareness and familiarity with the br and and holds some strong, favorable, and unique brand associations in memory. T he latter consideration is critical. For branding strategies to be successful an d brand equity to be created, consumers must be convinced that there are meaning ful differences among brands in the product or service category. The ey to bran ding is that consumers must not thin that all brands in the category are the sa me. Thus, establishing brand awareness and a positive brand image in consumer memory -- in terms of strong, favorable, and unique brand associations -- produces the nowledge structures that can affect consumer response and produce different ty pes of customer-based brand equity. In some cases, brand awareness alone is suff icient to result in more favorable consumer response, e.g., in low involvement d ecision settings where consumers are willing to base their choices merely on fam iliar brands. In other cases, the strength, favorability, and uniqueness of the brand associations play a critical role in determining the differential. Benefits of brand equity Customer-based brand equity occurs when consumer response to mar eting activity differs when consumers now the brand from when they do not. The actual nature o f how that response differs will depend on the level of brand awareness and how favorably and uniquely consumers evaluate brand associations, as well as the par ticular mar eting activity under consideration. A number of benefits can result from a strong brand, both in terms of greater revenue and lower costs for the fi

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rm, including the following: 1. Greater customer loyalty, 2. Less vulnerability to competitive mar eting actions, 3. Less vulnerability to mar eting crises, 4. Larger price margins, 5. More inelastic consumer response to price increases, 6. More elastic consumer response to price decreases, 7. Greater trade cooperation and support, 8. Increased mar eting communication effectiveness, 9. Possible licensing opportunities, and 10. Additional brand extension opportunities. Measuring sources of brand equity The indirect approach to measuring customer-based brand equity attempts to asses s potential sources for customer-based brand equity by measuring brand nowledge structures, i.e., consumers brand awareness and brand associations. The indire ct approach is useful in identifying what aspects of the brand nowledge may pot entially cause the differential response that creates customer-based brand equit y. Because any one measure typically only captures one particular aspect of bran d nowledge, multiple measures need to be employed to account for the multi-dime nsional nature of brand nowledge. Brand awareness can be assessed through a var iety of aided and unaided memory measures that can be applied to test brand reca ll and recognition. The strength, favorability, and uniqueness of brand associat ions can be assessed through a variety of qualitative and quantitative technique s Measuring outcomes of brand equity. The direct approach to measuring customerbased brand equity, on the other hand, attempts to more directly assess the impa ct of brand nowledge on consumer response to different elements of the mar etin g program for the firm. The direct approach is useful in assessing the possible outcomes and benefits that arise from the differential response that ma es up cu stomer-based brand equity. The two main ways to measure the outcomes and benefit s of brand equity are comparative methods and holistic methods, as follows. Comp arative methods are a means to better assess the effects of consumer perceptions and preferences on specific aspects of the mar eting program. Comparative metho ds involve experiments that examine consumer attitudes and behaviors towards a b rand and its mar eting activity that arise from having a high level of awareness and strong, favorable, and unique associations. 1) Brand-based comparative approaches typically involve experiments where one gr oup of consumers responds to an element of the mar eting program or some mar eti ng activity (e.g., the product) when it is attributed to the brand and another g roup of identically matched consumers responds to that same element when it is a ttributed to a competitive or fictitiously named version of the product or servi ce. 2) Mar eting-based comparative approaches typically involve experiments where co nsumers respond to changes in elements of the mar eting program or mar eting act ivity for the target brand or competitive brand (e.g., different prices for a br and). Comparing responses of different groups of consumers (with the former approach) or different responses from the same consumers (with the latter approach) provid e insight into how brand nowledge affects response to mar eting activity. Holis tic methods, on the other hand, are an attempt to place an overall value for the brand in either abstract utility terms or concrete financial terms. Thus, holis tic methods attempt to "net out" various considerations to determine the unique contribution of the brand. The residual approach attempts to examine the value o f the brand by subtracting out consumers preferences for the brand based on phy sical product attributes alone from their overall brand preferences. The valuati on approach attempts to extend such analyses to place a financial value on the b rand for accounting purposes, mergers and acquisitions, or other such reasons. F or example, Interbrand has developed a two-step method of calculating brand valu e: 1) identifying the “true” brand earnings and cash flow and 2) capitalizing the ea rnings by applying a multiple to historic earnings as a discount rate to future cash flow. Both steps involve a number of different calculations, e.g., the disc

 

 

 

 

 

 

 

 

 

 

 

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ount rate that is applied to brand earnings is based on an assessment of brand s trength as a result of a detailed review of factors related to the brand, its po sitioning, the mar et in which it operates, competition, past performance, futur e plans, ris s to the brand, etc. To identify and monitor sources of brand equity, it is necessary to design and i mplement a brand equity measurement system. A brand equity measurement system is a set of activities and procedures that is designed to provide timely, accurate, and actionable information and guidelines for mar eters so that they can ma e the best possible tactical decisions in the short-run and strategic decisions in the long-run. Designing and implementing s uch a system involves four steps, as described in detail below: 1) Conducting br and audits, 2) analyzing brand positioning and brand planning, 3) employing bran d trac ing studies, and 4) creating a brand equity management system. Conducting brand audits. A brand audit is a comprehensive examination of a bran d involving activities to assess the health of the brand, uncover its sources of equity, and suggest ways to improve and leverage that equity. The brand audit c an be used to set strategic direction for the brand. Are the current sources of brand equity satisfactory? Do certain brand associations need to be strengthened ? Does the brand lac uniqueness? What brand opportunities exist and what potent ial challenges exist for brand equity? As a result of this strategic analysis, a mar eting program can be put into place to maximize long-term brand equity. A b rand audit should be conducted whenever important shifts in strategic direction are contemplated. Moreover, conducting brand audits on a regular basis (e.g., an nually) allows mar eters to eep their "fingers on the pulse" of their brands so that they can be more proactively and responsively managed. As such, they are p articularly useful bac ground for managers as they set up their mar eting plans. A brand audit requires understanding sources of brand equity from the perspectiv e of both the firm and the consumer. From the perspective of the firm, it is nec essary to understand exactly what products and services are currently being offe red to consumers and how they are being mar eted and branded. From the perspecti ve of the consumer, it is necessary to dig deeply into the minds of consumers an d tap their perceptions and beliefs to uncover the true meaning of brands and pr oducts. Specifically, the brand audit consists of two activities: 1) Brand inventory: The purpose of the brand inventory is to provide a complete, up-to-date profile of how all the products and services sold by a company are m ar eted and branded. For each product, the relevant brand elements must be ident ified, as well as the supporting mar eting program. This information should be s ummarized visually and verbally. Although primarily a descriptive exercise, some useful analysis can be conducted as to the consistency of branding and mar etin g efforts. 2) Brand exploratory:The brand exploratory is research activity designed to iden tify potential sources of brand equity. The brand exploratory provides detailed information as to what consumers thin of and feel about the brand. Although rev iewing past studies and interviewing relevant personnel inside or outside the co mpany provides some insights, additional research is often required. To allow a broader range of issues to be covered and also to permit those issues to be purs ued in-depth, the brand exploratory often employs qualitative research technique s. To provide a more specific assessment of the sources of brand equity, a follo w-up quantitative phase is often necessary. Analyzing brand positioning and bran d planning: Determining the desired brand nowledge structures involves positioning a brand in the minds of consumers. According to the customer-based brand equity model, deciding on a positioning requires determining a frame of reference -- by identi fying the target mar et and the nature of competition - and the ideal point-of-p arity and point-of-difference brand associations. Deciding on these four ingredi ents will then determine the brand positioning and dictate the desired brand no wledge structures. Points-of-difference are those associations that are unique t o the brand that are also strongly held and favorably evaluated by consumers. Po ints-of-parity, on the other hand, are those associations that are not necessari ly unique to the brand but may in fact be shared with other brands. Category poi

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

nt-of-parity associations are those associations that consumers view as being ne cessary to be a legitimate and credible product offering within a certain catego ry. Competitive point-of-parity associations are those associations designed to negate competitor s points-of-differences. Once the brand positioning is decided on as part of the brand audit or in some o ther way, a mar eting program can be put into place to build the desired brand nowledge structures and maximize the potential benefits that may result. Brand p lanning involves designing mar eting programs to create the desired brand nowle dge structures and sources and outcomes of brand equity. Once mar eters have a g ood understanding from the brand audit of current brand nowledge structures for their target consumers and have decided on the desired brand nowledge structur es for optimal positioning, additional research still may be necessary to test o ut the viability of alternative tactical programs to achieve that positioning. A s part of the brand planning process, there may be a number of different possibl e mar eting programs that, at least on the surface, may be able to achieve the s ame goals, and additional research may be useful to assess their relative effect iveness and efficiency. Employing brand trac ing studies. To chec the success o f the mar eting program that emerges from the brand plan, trac ing studies are o ften conducted. Whereas the brand audit is done on a non-recurring basis to help sharpen or change the brand positioning, trac ing studies involve information c ollected from consumers on a routine basis over time. Trac ing studies can achie ve three major objectives. First, trac ing studies can monitor consumer brand n owledge and brand awareness and the strength, favorability, and uniqueness of br and associations that represent ey sources of brand equity. Second, trac ing st udies can also measure relevant outcomes of brand equity such as overall attitud es or preference for the brand, reported past usage and intended future usage, a nd price sensitivity. Finally, trac ing studies can also analyze the mar eting p rogram with respect to its effects on the current brand image and how it can hel p to achieve the desired brand image. In summary, trac ing studies can provide u seful information as to how a brand is doing as well as why. Creating a brand eq uity management system. To fully benefit from the research findings that emerge from brand audits and brand trac ing studies and to provide proper control and d irection, a brand equity management system needs to be implemented within the fi rm. Such a system would include minimally the following three ingredients: 1) Brand Equity Charter, 2) Brand Equity Report, and 3) Brand Overseers. Brand Equity Charter:The company view of brand equity should be formalized into a document, the Brand Equity Charter that provides relevant guidelines to mar et ing managers. This document should: 1) Define the brand equity concept and expla in its importance; 2) specify what the assumed equity is for all relevant brands (e.g., in terms of ey associations); 3) explain how brand equity is measured b y the firm in terms of the content and structure of trac ing studies and the res ulting Brand Equity Reports (described below); and 4) suggest how brand equity s hould be managed in terms of general principles. The Charter should be updated a nnually to identify new opportunities and ris s and to fully reflect information gathered by the brand inventory and brand exploratory as part of any brand audi ts. Brand Equity Report: The results of the trac ing survey and other relevant outco me measures for the brand should be assembled into Brand Equity Reports that are distributed to management on a regular basis (monthly, quarterly, or annually). The report ideally would combine relevant trac ing information with other inter nal information and effectively integrate all these different measures into an i nterpretable and actionable form. In this way, the Brand Equity Report would pro vide descriptive information as to what is happening within a brand as well as d iagnostic information as to why it is happening. With advances in computer techn ology, it will be increasingly easy for firms to place the information that ma e s up the Brand Equity Report "on-line" so that it can be accessible to managers through the firm s intranet or some other means. Brand Overseers. Finally, a gro up headed by Director(s) or Vice-President(s) of Brand Management or Brand Equit y should be appointed within the organization. This group would be responsible f or overseeing the implementation of the Brand Equity Charter and Brand Equity Re

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ports. Their tas would be to ma e sure that, as much as possible, product and m ar eting actions across divisions and geographical boundaries are done in a way that reflected the spirit of the Brand Equity Charter and the substance of the B rand Equity Report to maximize the short-term performance and long-term equity o f brands Brand-product matrix:The brand-product matrix is a graphical representation of a ll the brands and products sold by the firm. The matrix or grid has the brands f or a firm as rows and the corresponding products as columns: The rows of the mat rix represent brand-product relationships and capture the brand extension strate gy of the firm with respect to a brand; the columns of the matrix represent prod uct-brand relationships and capture the brand portfolio strategy in terms of the number and nature of brands to be mar eted in each category, as follows. Brand-product relationships capture the brand extension strategy of the firm. Br and extensions are when firms use existing brand names to enter new categories ( e.g., Diet Co e, Swiss Army watches, and Ivory Shampoo). Potential extensions mu st be judged by how effectively they leverage the existing brand equity to the n ew product, as well as how well they, in turn, contribute to the equity of the e xisting brand. In other words, what is the level of awareness li ely to be and w hat is the expected strength, favorability, and uniqueness of brand associations of the particular extension product? At the same time, how does the introductio n of the extension affect the prevailing levels of awareness and strength, favor ability, and uniqueness of brand associations of the existing products associate d with the brands? In general, the closer the “fit” or similarity of an extension, t he more li ely it is that parent brand associations “transfer” to an extension but, at the same time, the more li ely it is that any unfavorable reactions to the ex tension will produce negative feedbac effects to the parent brand. Product-brand relationships capture the brand portfolio strategy in terms of the number and nature of brands to be mar eted in each category. A firm may offer m ultiple brands in a category to attract different -- and potentially mutually ex clusive -- mar et segments. Brands can also ta e on very specialized roles in th e portfolio -- as flan er brands to protect more valuable brands, as low-end ent ry level brands to expand the customer franchise, as high-end prestige brands to enhance the worth of the entire brand line, or as cash cows to mil all potenti ally realizable profits. As part of the long-term perspective in managing a bran d portfolio, it is necessary that the role of different brands and the relations hips among different brands in the portfolio be carefully considered over time. In particular, a brand migration strategy needs to be designed and implemented s o that consumers understand how various brands in the portfolio can satisfy thei r needs as they potentially change over time or as the products and brands thems elves change over time (e.g., BMW’s 3, 5, and 7 series). Brand hierarchy. The bran d hierarchy reveals an explicit ordering of brands by displaying the number and nature of common and distinctive brand components across the firm s products. By capturing the potential branding relationships among the different products sol d by the firm, a brand hierarchy is a useful means to graphically portray a firm s branding strategy. One simple representation of possible brand components and levels of a brand hierarchy, from top to bottom, are: 1. Corporate or company brand (e.g., Beiersdorf), 2. Family brand (e.g., Nivea), 3. Individual brand (e.g., Visage), 4. Individual item or model modifier (e.g., Facial Nourishing Lotion), 5. Product descriptor (e.g., facial s in creme). Brand elements at each level of the hierarchy may contribute to brand equity thr ough their ability to create awareness and foster strong, favorable, and unique brand associations. The challenge in setting up the brand hierarchy and arriving at a branding strategy is: 1) To design the proper brand hierarchy in terms of the number and nature of brand elements to use, if at all, at each level and 2) to design the optimal supporting mar eting program in terms of creating the desi red amount of brand awareness and type of brand associations at each level. In terms of designing a brand hierarchy, the number of different levels of brand s that will be employed and the relative emphasis or prominence that brands at d

 

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ifferent levels will receive when combined to brand any one product must be defi ned. In general, the number of levels employed typically is at least two or even three. For example, sub-brand strategies combine brands from two different leve ls. One particularly useful sub-branding strategy is where an existing brand nam e (either the company or family brand name) is combined with a new brand name (e .g., Levi’s Doc ers). Such a strategy offers two potential benefits in that it can both: 1) allow for leverage of secondary associations by facilitating access to perceptions and preferences toward the existing brands (e.g., the quality and c redibility perceptions of Levi’s), and 2) allow for the creation of specific brand beliefs (e.g., that Doc ers are psychologically and physically comfortable 100% cotton pants). When multiple brand names are used, as with a sub-brand, the rel ative prominence of a brand name as compared to other brand names determines its strength of association to the product. Brand visibility and prominence will de pend on factors such as the order, size, color, and other aspects of physical ap pearance of the brand name. In terms of designing the supporting mar eting program in the context of a brand hierarchy and sub-branding situation, the desired awareness of a brand at any l evel will dictate the relative prominence of the brand and the extent to which a ssociations lin ed to the brand will transfer to the product. In terms of buildi ng brand equity, determining which associations to lin at any one level should be based on principles of relevance and differentiation: Associations should be created that are relevant to as many brands nested at the level below (e.g., Son y, 3M, and Microsoft with “innovation”) and any brands at the same level should be c learly distinguished. Corporate or family brands can establish a number of valua ble associations that can help to differentiate the brand such as common product attributes, benefits, or attitudes; people and relationships; programs and valu es; and corporate credibility (i.e., perceived expertise, trustworthiness, and l i ability). A corporate image will depend on a number of factors, such as: 1) th e products a company ma es, 2) the actions it ta es, and 3) the manner with whic h it communicates to consumers. Communications may focus on the corporate brand in the abstract or on the different products ma ing up the brand line. Reinforcing brands: Managing brand equity involves reinforcing brands or, if nec essary, revitalizing brands. Brand equity is reinforced by mar eting actions tha t consistently convey the meaning of the brand to consumers in terms of: 1) What products the brand represents; what core benefits it supplies; and what needs i t satisfies; and 2) How the brand ma es those products superior and which strong , favorable, and unique brand associations exist in the minds of consumers. The most important consideration in reinforcing brands is the consistency of the mar eting support that the brand receives both in terms of the amount and nature of that support. Consistency does not mean that mar eters should avoid ma ing any changes in the mar eting program -- many tactical changes may be necessary to ma intain the strategic thrust and direction of the brand. Unless there is some cha nge in the mar eting environment, however, there is little need to deviate from a successful positioning. In such cases, the critical brand associations that re present sources of brand equity should be vigorously preserved and defended. Reinforcing the brand meaning depends on the nature of the brand association inv olved. For brands whose core associations are primarily product-related attribut es and/or functional benefits, innovation in product design, manufacturing, and merchandising is especially critical to maintaining or enhancing brand equity. F or brands whose core associations are primarily non-product-related attributes a nd symbolic or experiential benefits, relevance in user and usage imagery is esp ecially critical to maintaining or enhancing brand equity. In managing brand equ ity, it is important to recognize the trade-offs that exist between those mar et ing activities that fortify the brand and reinforce its meaning and those that a ttempt to leverage or borrow from its existing brand equity to reap some financi al benefit. At some point, failure to fortify the brand will diminish brand awar eness and wea en brand image. Without these sources of brand equity, the brand i tself may not continue to yield as valuable benefits. Revitalizing brands. Revit alizing a brand requires either that lost sources of brand equity are recaptured or that new sources of brand equity are identified and established. According t

 

 

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

o the customer-based brand equity framewor , two general approaches are possible : 1) Expand the depth and/or breadth of brand awareness by improving brand recal l and recognition of consumers during purchase or consumption settings; and 2) I mprove the strength, favorability and uniqueness of brand associations ma ing up the brand image. This latter approach may involve programs directed at existing or new brand associations. With a fading brand, the depth of brand awareness is often not as much of a prob lem as the breadth -- consumer tend to thin of the brand in very narrow ways. S trategies to increase usage of and find uses for the brand are necessary. Althou gh changes in brand awareness are probably the easiest means of creating new sou rces of brand equity, a new mar eting program often may have to be implemented t o improve the strength, favorability, and uniqueness of brand associations. As p art of this re-positioning, new mar ets may have to be tapped. The challenge in all of these efforts to modify the brand image is to not destroy the equity that already exists. A number of different possible strategies designed to both acquire new customers and retain existing ones are possible. Different possible strategies are also a vailable to retire those brands whose sources of brand equity have essentially " dried up" or who had acquired damaging and difficult-to-change also must be cons idered. Enhancing brand equity over time also requires that the branding strateg y itself may have to change somewhat. Adjustments in the branding program may in volve brand consolidations (where two brands are merged), brand deletion (where brands are dropped), and brand name changes.

 

 

 

 

 

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