Intel: Building a Technology Brand

Teaching Notes
Summary
This case concerns the marketing efforts by Intel to build brand equity in the face of a
lawsuit preventing trademark protection for their X86 microprocessor series. Intel had to
determine how to name its new generation of microprocessors, as well as how to
establish competitive advantages and consumer preference for its microprocessor lines.
number of issues are raised concerning the development of an effective branding
strategy.
The case also addresses Intel!s e"pansion of its business beyond #$ microprocessors and
the various branding strategies the company employed. fter being critici%ed for a &lack
of focus', Intel decided clean(up its product line and limit its focus on microprocessors,
servers, mobile devices, and networking equipment. s a result, the company deployed a
&platform strategy' and introduced a bundle of products, including its new &$entrino'
processor along with other chips designed for wireless communication.
)espite its success in the microprocessor business, Intel recogni%ed that the #$ market
growth is slow and competition from *) is becoming fiercer. s a result, Intel!s stock
price declined significantly and required immediate action. The new management
decided to launch a new brand strategy that attempts to reposition Intel as a &warm and
fi%%y consumer company.' The new campaign is based on a new logo, and new slogan
+,eap head-, and new platform +Intel .iiv- and four specific target markets. /ill this
campaign help the brand achieve renewed success0
$lass discussion can revolve around the following questions that students should consider
before class1
2. /hat were the strengths and weaknesses of the Intel Inside campaign0
3. 4valuate Intel!s continued use of the #entium family of processors. )id Intel
make the right decision by e"tending the name through the #entium 5 processor0
6. 7uppose you were the $hief *arketing 8fficer for *). 9ow would you
propose the company position itself to better compete with Intel0 /ould you
propose that *) institute an Inside(like ad campaign0
5. 4valuate Intel!s segmentation strategy. Is having a good:better:best product line
+$eleron, #entium, Xeon- the best positioning for Intel0 7hould it discontinue a
line+s- and focus on the other+s-0
;. In light of Intel!s move into the &digital home,' did the company!s e"ecutives
make the right decision in launching an entirely new brand identity0 )id it make
the right decision in changing a 6<(year(old Intel logo and dropping the Intel
Inside campaign for Leap Ahead? /hat other marketing strategies might the
company employ0
6. Intel moved into consumer(electronics products, such as digital cameras in 3===,
only to withdraw after receiving complaints from 84*s such as )ell. )oes Intel
8<
face a similar issue with its move into the &digital home0' )oes this move too far
outside Intel!s core competency of producing microprocessors0
Teaching Strategy
This case can generate and support discussion on a number of topics, e.g., high(tech
marketing, ingredient branding, corporate branding strategies, brand name choice criteria,
brand hierarchy, brand migration, etc. The case also can be supplemented in a number of
ways to incorporate current developments. 7pecifically, this is an e"cellent case for
demonstrating, among other things, the following1
2- dded(value that a brand can provide over and above that offered by a generic
product > less than five years after the ingredient branding program began,
Intel was ranked the third most valuable brand in the world
3- $hallenges of marketing &generations' of products and brands
6- $ritical importance of implementation
5- $omplementarity of push and pull marketing
;- $hallenges of combining an ingredient brand strategy with a corporate
umbrella brand strategy and a sub(brand strategy
6- ?ole of branding in a highly competitive, constantly changing environment
It is useful to begin the case discussion with a quick review of Intel!s history to provide
some perspective and a few quick lessons. Intel!s shift from memory to microprocessors
was a fortuitous one as their microprocessors became the industry standard. It is
worthwhile for students to understand Intel!s broader business model and how they
invested in research and development to create a competitive advantage for their products
during this time. Their marketing strategies, however, were not as strong and they faced
a number of challenges. In terms of naming, internally, a proliferation of numbers and
letters created an &alphabet soup' of brand@ e"ternally, competitors could copy &more or
less' but still use the same name. *oreover, greater competition was emerging period.
s a result, there was much consumer confusion as to who made a particular generation
microprocessor and also what level of performance to e"pect from a particular product.
,osing the court case in *arch 2AA2 and $yri"!s introduction of the 586 7,$ chip in
*arch 2AA3 brought Intel!s branding issues to the forefront.
It is also important for students to understand how Intel!s target market strategy moved
from a &push' to a &pull' strategy, with the mass market, non(technical business and
home #$ users in mind +e.g., the $ircuit $ity or Best Buy shopper-. t this point, the
Intel Inside campaign can be analy%ed. To provide some focus, it is useful to put the
Intel brand hierarchy on the board. Intel Inside was an attempt to brand microprocessors
as a whole. The word &Intel' established an umbrella brand for the company, while
&Inside' established the company as an ingredient brand. The logic of such a strategy can
be e"plored in terms of pros +e.g., efficiency of marketing e"penses, simplicity of
message, ability to transfer equity to new product categories- and cons +e.g., lack of
product specificity-. The implementation of the strategy also can be reviewed, combining
pull marketing programs directed to consumers +in the form of media advertising- with
88
push marketing programs directed to 84*s +in the form of co(op advertising-. It is
worth noting how consumer advertising and cooperation from 3
nd
and 6
rd
tier 84*s put
pressure on 2
st
tier 84*s to get with the program.
The logic of the whole campaign must be spelled out1 to create brand +and category-
awareness for Intel as a microprocessor and a key ingredient to the computer, as well as
linking two key brand associations +safety or upgradability and power or performance-.
This marketing program C designing state(of(the art chips and communicating to
consumers through a highly integrated push and pull program C was remarkably effective
in achieving those goals. Intel gained credibility in the process as a standard(bearer
worthy of consumer trust, and, due to the high(tech fantasy look of their ads, gained some
brand personality. It is instructive to ask students whether any other companies have
adopted similar marketing strategies. In some ways, Dillette, Eike, and others play a
similar game by pouring money into ?F) to achieve technological advantages, adopting
sub(branding strategies where the corporate brand is combined as a family brand with an
individual brand that designates a particular type of technology. *inor improvements, on
the other hand, are designated with a modifier as yet another brand element +e.g., Dillette
7ensor 4"cel, #entium II-.
It is also instructive at this point to broaden the discussion to have students identify
success factors for ingredient branding in general. The te"t reviews the concept of
ingredient branding in $hapter < and offers several guidelines that can serve as a
backdrop for this discussion +e.g., ingredients must matter and be instrumental to product
performance in some way@ ingredients must add value and be differentiated@ ingredients
must be noticeable or visible or there must be some means to identify and signal its
presence@ and there must be 84* or producer cooperation-. The pros and cons for the
host brand and the ingredient brand should also be considered. Gor e"ample, in terms of
the ingredient brand maker, there are many potential downsides1 the promotional cost of
the pull and push programs@ the potential loss of control@ the challenge to secure 84*
acceptance and the possible power struggle and conflict that may ensue@ the difficulty of
managing the brand meaning@ and so on.
If desired and if time permits, the evolution of Intel!s ad campaign over the years and
some of the lessons that they learned along the way can be reviewed. Gor e"ample, the
company learned how advertising can create personality and build a brand even with a
technology product +e.g., with the &graffiti' ad campaign-. It learned how focus on the
brand in an ad could enhance brand awareness +e.g., with the &measles' ad campaign-.
Intel!s initial &Intel Inside' ads had very high consumer attribution scores, which meant if
consumers remembered the ad, they also remembered the brand associated with the ad. It
learned how television can be more effective at the brand level and how print can be
more effective at the product level +e.g., with the &?oom for the Guture' ad campaign-.
In terms of this latter point, it is worth noting how tightly integrated this campaign was C
the visual of the print ad literally contains a key scene from the T. ad. 7uch
coordination made sense given their dual brand and product communication needs
+$hapter 6 of the te"t addresses issues with coordinated media-.
8A
The discussion could also touch on the launch of the #entium II chip and the &bunny
people' spots to support their **X sub(brand. **X seemed like a logical way to
communicate the new multi(media capabilities of their chip. The bunny people spots
were consistent with the technological focus of Intel advertising, but they got the brand
out of the inside of the computer and added desired personality. 8nce the characters got
&a life of their own,' and began taking road trips in advertising, they distracted
consumers from the desired message. Intel!s subsequent ads for the #entium III,
involving the performance(art collective Blue *an Droup, can be critiqued, as can the
#entium I. ads with the group and later ads with alien spacecraft. The Blue *an Droup
ads were artistic and abstract and may have been able to create brand awareness, but were
not technological or concrete. The alien ads focused solely on technology, but also
contained personality. 7tudents can debate the merits of these approaches.
fter thoroughly reviewing the rationale for ingredient branding in general and Intel!s
program in particular, the discussion can turn to Intel!s branding strategy. Intel!s criteria
for choosing a name can be enumerated and critiqued. The pros and cons of the three
candidate names can also be considered. t this point in time, given the length of time
since the introduction, most students will feel quite comfortable with the #entium name
so it is important to bring them back into the case and the fairly negative reaction that the
name initially received. It is important to remind students how almost any new name
sounds bad at first. The thoroughness of the marketing plan to transition to the new name
should be spelled out. The name certainly had merit and made sense as a lateral C but not
unrelated C move in the numbering sequence that Intel had established.
7ome fruitful discussion can focus on Intel!s long(term branding strategy. /hat should
the branding guidelines for successive generations of products be0 Intel!s subsequent
introductions of the #entium #ro, **X technology, #entium II, III, and I., Xeon,
$eleron, and Itanium microprocessors can be discussed. Intel!s investment in #entium as
a brand has undoubtedly made them want to hang on to the name as long as possible to
ma"imi%e their return on its equity. /here should they draw the line0 The potential
risks of using the #entium name too long include losing the interest of consumers in
subsequent #entium line e"tensions, lack of technological differentiation from
competitors, and building too much equity in the #entium name instead of in the Intel
umbrella brand.
It would be interesting to discuss and evaluate the new brand strategy deployed in 3==6,
which received mi"ed reviews. )o they really need to go that far and abandon the
e"isting branding0 Is the company offering the optimal product portfolio0 /ill the new
strategy turnaround the business0
)epending on the technical sophistication of the students in the class, there can also be
interesting discussion of where Intel can go as a corporate brand. Hust what boundaries
e"ist for the Intel brand0 The mental map of Intel has a lot of abstract associations,
which should enable brand movement beyond microprocessors. Iet Intel encountered
difficulty e"panding its brand, as detailed in the case. 7tudents can discuss reasons for
this difficulty and offer potential solutions. Ginally, the case can serve as a backdrop for
A=
a discussion of high(tech marketing and branding. 7ome specific guidelines for high(tech
products are included in $hapter 2; and may provide a useful starting point.
Key Lessons
7uccess factors for ingredient branding strategy
o *ust convince consumers that ingredient matters
o *ust convince consumers that branded ingredient is better
o *ust create brand logo and means of identification
o *ust support strong pull program
o *ust enlist trade and retail cooperation
.alue of brand hierarchy as planning tool
?ationale for umbrella branding in high(tech brand setting
?ationale, challenge, and synergy of push and pull strategies
?ole of different advertising media to build brand equity
o T.
o Brand
o #rint
o #roduct
Importance of creating strong brand links in advertising
dvantages of employing multiple brand elements
A2

Red Bull Building Brand Equity in Non-Traditional Ways
Teaching Notes
Summary
The ?ed Bull case is unique because it deals with a single product that found new ways
to build a brand in a very competitive category. It is a good case to supplement students!
learning about non(traditional marketing methods. ?ed Bull!s founder, )ietrich
*ateschit%, was an e"perienced marketing professional and approached the creation of
?ed Bull from a branding perspective. ?ed Bull essentially invented a new category C
energy drinks C in /estern markets, and marketed its product without much above(the(
line advertising. The product was the primary marketing tool, and as a private company
?ed Bull e"ercised control over the distribution of its product. The company e"panded
very selectively into new markets, yet still achieved e"ponential growth. ?ed Bull
became one of the maJor success stories in the highly competitive beverage market in the
2AA=s. 7tudents should consider the following questions as a basis for discussion1
2- )escribe ?ed Bull!s sources of brand equity. )o these sources change
depending on the market or country0
3- naly%e ?ed Bull!s marketing program in terms of how it contributes to the
brand!s equity. )iscuss strengths and weaknesses.
6- 9ow can ?ed Bull maintain its marketing momentum0 /ould you
recommend that ?ed Bull develops any brand e"tensions0 If so, what would
they be0 /ould you use the same marketing strategy0
5- 4valuate ?ed Bull!s move into herbal teas, fast(food chains, and maga%ines.
)oes it make sense for the company to e"pand into these areas0 /hat are the
potential benefits and dangers0
;- Because product usage was not marketed as being limited to one or even a few
occasions, ?ed Bull users could continue to use the product even as their
priorities shifted. The case states that, &a ?ed Bull consumer first attracted to
the product as a nightlife enhancer in his or her early twenties might later use
the drink as a morning pick(me(up or a revitali%er during a long day of
meetings.' 9ow effective is ?ed Bull at advertising to these varied groups0
Teaching !"ecti#es
2- To discuss how to build awareness and image using non(traditional
marketing methods
3- To analy%e channel and distribution strategies
6- To analy%e the implementation of a global marketing program
5- To e"amine the task of dealing with competition
A3
Teaching Strategy
The ?ed Bull case can be used in tandem with the 7tarbucks case, since it reinforces
many of the same points. ?ed Bull is a good case to discuss selection of brand elements,
implementation of a marketing program, building a brand using non(traditional marketing
means, and outlasting competition. 7ince the product is the star for the brand, the case
goes into much detail about the history and design of ?ed Bull. 7tudents can be asked to
describe the product, since many will be familiar with the beverage, and analy%e the
brand elements. They should come up with something along the following lines1
Glavor
o *edicinal taste reinforces efficacy
o $arbonation gives refreshment, energy, and mi"er associations
#ackaging
o Eew si%e F unusual shape creates interest
o 7ingle(serve cans, no multi(can packs, reinforced premium positioning
o .isually appealing silver(and(blue
Ingredients
o $affeine, taurine, other energy ingredients allow ?ed Bull to make claims
about health benefits
o 7ugar for flavor
#ositioning
o &?evitali%es body and mind'
o Broad positioning, drink suitable for any occasion when consumer needs a
lift
o 4arly adopters1 athletes, clubbers, hipsters, gives drink cachet:e"clusivity
#rice
o t least 2= percent greater than nearest competitor
o 7takes out premium price point
o 9igh price makes health claims plausible in minds of consumers
7tudents can be asked to analy%e these brand elements in terms of their establishing
points(of(parity and points(of(difference with other beverage brands. #oints(of(parity and
points(of(difference can be e"pressed in relation to usage occasions as well, as depicted
in Gigure 2 of the case.
?ed Bull relied on a word(of(mouth strategy to build awareness for the product in the
early stages of its launch in ustria. The company made ?ed Bull available in
convenience stores, bars, and clubs, giving access to the groups of consumers who began
drinking the product C ravers, clubbers, young people C and formed the user imagery. s
more people began drinking ?ed Bull, word of the product!s benefits spread throughout
the country and beyond its borders. Because the product was not available for sale
outside ustria for five years, a mystique developed around ?ed Bull and demand for it
led to its appearance on black markets in other countries. 9ere the discussion can touch
on topics from $hapter 6, such as bu%% marketing and mi"ing and matching
A6
communications. 7tudents can be asked what moves ?ed Bull made and what factors
were unintentional that led to a bu%% marketing effect. 7tudents can also be probed as to
what other companies can learn from the brand and how it is being marketed.
s ?ed Bull began to e"pand into other 4uropean countries, its marketing program
became more sophisticated. *any of the lessons from $hapter 251 *anaging Brands
8ver Deographical Boundaries and *arket 7egments will be useful in this part of the
discussion. 7tudents can be asked to enumerate the aspects of the marketing program1
television advertising, point(of(purchase marketing, sports marketing, sampling, event
marketing, and college marketing. 4ach aspect can be analy%ed for its contribution to
brand equity. ?ed Bull also e"ercised control over the distribution of the product, limiting
the number of locations and the type of locations in which the drink was to be sold upon
entry into a market. In the K.7., ?ed Bull adopted a &cell' approach to break the country
down into manageable geographic segments. This limited launch strategy contributed to a
bu%% marketing effect because it was designed to reach the early adopters most likely to
influence the general public. The ?ed Bull refrigerated units that appeared in bars, clubs,
and convenience stores, as well as the van teams that distributed e"clusively ?ed Bull,
served as push strategy. 7tudents can compare ?ed Bull!s push strategy with its pull
strategy.
s ?ed Bull became more widely known, a variety of competitors emerged. These
competitors pitched consumers with a number of positioning options, ranging from
energy(focused to party(focused, but none had the broad positioning of ?ed Bull.
7tudents can discuss how the competitors! limited positioning options in terms of usage
occasion could effect ?ed Bull!s positioning, as discussed in $hapter 6. 7tudents can also
e"amine ?ed Bull!s strategies for dealing with competition, which include pre(marketing,
price premiums, and adhering to its marketing program. 9ere it may also be useful to
discuss other alternatives, such as a lower(priced &fighter' brand e"tension or an
e"tension with a narrower positioning. This can lead to the broader question of how ?ed
Bull can continue its e"ponential growth as its markets near maturity. In its first market
of ustria, ?ed Bull achieved per(capita(consumption increases every year e"cept one
since its debut, but the question remains if the company can replicate this success in other
markets. ,essons from $hapter 261 &*anaging Brands over Time', can be applied here.
Key Lessons
?ed Bull was created from a strong strategic branding foundation
?ed Bull!s ability to support health benefit claims with product efficacy
helped to create a successful marketing program
By targeting specific consumer segments and employing clever push
strategies, ?ed Bull built awareness and image with little initial marketing
e"penditures
Integrated marketing communications C and much &bu%%' marketing
C helped to ma"imi%e the benefits of ?ed Bull!s marketing campaigns
A5
A;

$T% Building Brand Resonance
Teaching Notes
Summary
*T. was established in 2A82 as a maverick pioneer in the burgeoning cable television
industry. 8ver the ne"t 3= years, *T. moved from the fringe of television culture in
merica to the core of pop culture in countries all over the world. The key to *T.!s
success in each market was its ability to connect with the young consumer. s young
consumers grew older, the challenge for *T. was to establish connections with new
groups of young consumers. This led to a constant cycle of reinvention. /ith a few
e"ceptions, at each crossroads *T. was able to find the right mi" of music and culture
to capture the viewership of successive generations of young people, both domestically
and internationally. This case e"amines the key decisions and factors that enabled *T.
to accomplish its rise as a global media network from its humble origins. The following
questions will be useful as a guide for class discussion1
2. /hat is the *T. brand image0 9ow valuable are the *T. brand associations0
/hat should its core values be0
3. )escribe the current sources of *T.!s brand equity. 9ow have they changed
over time0 9ow have they remained constant0
6. /hat is the role of music within *T.0
5. Technology is changing the way viewers watch television and interact with
programs. )iscuss the role of the Internet and technology within *T.. /hat has
*T. done well to date to integrate technology with the brand and what else
should *T. do0
;. *T. Eetworks includes many sister channels such as Eickelodeon and 7pike
T.. 9ow has *T. been positioned within this network versus the other
channels0 Is this the right strategy0 /hat else would you do to optimi%e the *T.
Eetwork brand portfolio0
6. 8ver the years, *T. has evolved from a channel about music to a channel about
the culture of music to a channel about culture. /hat does the future hold for
*T.>globally and domestically0
Teaching !"ecti#es
2- To analy%e the components and key issues of building a media
entertainment brand
3- To e"amine the value of awareness(building advertising
6- To review the process of building brand resonance
5- To overview establishing points(of(parity and points(of(difference
;- To e"amine corporate branding strategies vs. product branding strategies
6- To analy%e managing a brand portfolio
A6
Teaching Strategy
The *T. case, as the title indicates, details the process by which *T. built brand
resonance with consumers. The case includes a lot of historical detail that students may
or may not be familiar with. The case also addresses many contemporary issues that may
not be familiar to older students. Iet, most everyone will have heard of and watched
*T. and will therefore be able to participate in the discussion. This is a good case to use
in the beginning of the term, since it reinforces many of the points about building brand
equity from $hapter 2 and $hapter 3.
The case begins by recounting the early history of *T.. t the time of its launch, the
concept of music videos was relatively novel and certainly the idea of an all(music video
channel had not been seriously considered by many television e"ecutives. 7tudents can
be asked to list the elements of the brand, including the music videos, the &.Hs,' the logo,
the studio from which broadcasts were taped, and so forth. ccording to company
employees, the name itself was selected for lack of better alternatives, but the visual look
of the channel, from the videos themselves to the &.H loft' to the moon landing logo,
were carefully designed and:or selected to reflect the core values and key associations of
the channel. 7tudents can be asked to enumerate these values and associations, which
include music, youth culture, subverting established culture, fun, no rules, no parents,
creativity, e"citement, and so forth. mental map is a fruitful way to capture this input.
Then students can identify how each element of the *T. brand reinforced these values
and associations. This discussion can be tied in with lessons from $hapter 51 $hoosing
4lements to Build Brand 4quity. The other two main ways to build brand equity can also
be reviewed along the same lines.
*T.!s decision to make the channel the star over the individual artists was key. It
enabled the channel to reinvent itself numerous times over the ne"t 3= years without
sacrificing equity built up in artists or genres. /hile *T. did have strong associations
with certain genres C such as 8=s pop, A=s gansta rap and grunge C that hurt the image of
the brand when these genres fell out of favor, the channel was able to capitali%e on the
ne"t trend. This is analogous to pursuing a corporate brand strategy over a product
branding strategy. 7tudents can discuss the advantages and drawbacks of a corporate
brand, as detailed in $hapter 22. The videos and the stars *T. broadcast can be thought
of entities that provided secondary associations for the channel to leverage in order to
build brand equity. 7tudents can consider what associations this channel content provided
and what contributions to equity it made.
*T.!s initial marketing program was an integral part of its success nationally. 7tudents
can be asked whether *T. needed to concentrate on image or awareness in the early
stages of brand building. The answer, as the customer(based brand equity model
indicates, is that awareness should always be the first step. *T. knew from initial results
in its first markets that the target audience would respond favorably to the channel, the
hard part was getting cable providers across the nation to carry the channel. 7o the
A<
marketing strategy was designed to elicit customer demands from the cable companies
that they carry *T.. $lass discussion can evaluate the strategy of using celebrity
endorsers in the advertising as well as the media buy schedule that attacked key markets
for a few weeks at a time until demand was high enough that cable providers adopted the
channel.

The large part of the discussion can center on how *T. achieved brand resonance in its
first era of growth in the early 2A8=s. 7tudents can apply each of the si" brand building
blocks to understand how *T. viewers took the steps from brand salience to brand
resonance. In terms of the first step, brand salience, *T. was able to establish deep
awareness in its category because of the lack of competitors and broad awareness because
of the richness of the programming available to viewers of the channel. /ith the second
step, brand performance, *T.!s stylish and artistic videos and design features, as well as
the programming of hot videos its viewers wanted to hear, led to a high perception of
brand performance among consumers. The ne"t step, brand imagery, is one area where
*T. e"celled above most other cable networks. The television medium consists of
images, which made it easy for *T. to convey a variety of imagery components and
personality traits. 7tudents can be asked to list *T. imagery associations and personality
traits, both historically and currently.
Ee"t, consumers brand Judgments of *T. were typically positive based on the following
four components1 brand quality, brand credibility, brand consideration, and brand
superiority. 7tudents can discuss how *T. achieved each of these four components. The
quality production values of the videos and other programs led to consumer perceptions
of quality. The down(to(earth .Hs lent credibility to the brand, as did the e"clusive world
premier videos and studio visits from the maJor stars. *T. had high levels of brand
consideration due to the high awareness and the uniqueness of the product. Gor similar
reasons, and for the favorable consumer response to the brand, *T. also achieved brand
superiority. s a result, *T. attained brand resonance.
The discussion can now move on to the four components of brand resonance1 behavioral
loyalty, attitudinal attachment, sense of community, and active engagement. gain, the
instructor can solicit e"amples of how *T. achieved each component. In the early years,
*T. built loyalty and attitudinal attachment primarily with the music videos and the
general look and feel of the channel. To build a sense of community and active
engagement, *T. used .Hs, held contests, hosted award shows, and ran some long(form
programming. *T. improved the sense of community and active engagement of its
viewers in the early 2AA=s by developing long(form programming such as the Real
World, Road Rules, and Beavis & Butthead. Gurther developments in the 2AA=s included
the live call(in show Total Request Live +TRL-, the Tom Green Show, and Undressed.
/ith the e"ception of T?,, none of the long(form programs mentioned above were
e"plicitly music(based. Instead, they were &musically(infused.' This can lead to
discussion of where *T. is headed and how it can maintain resonance as it added new
long(form programming such as The Osournes and !T" #ris that did not e"pressly
focus on music.
A8
mong the many other topics of discussion include the numerous *T. brand e"tensions.
This can lead to a discussion of brand hierarchy and the brand portfolio, and can be tied
in with concepts from $hapter 231 Introducing and Eaming Eew #roducts and Brand
4"tensions. *T.!s growth on the Internet, as well as competition from Internet music
sources, is another area for discussion. nother topic is *T.!s global e"pansion, which
can be related to the ideas from $hapter 251 *anaging Brands over Deographical
Boundaries and *arket 7egments. Ginally, the class can conclude with discussion of
*T.!s longevity and the future challenges of remaining relevant and reinventing the
brand repeatedly. This topic can be tied in with $hapter 261 *anaging Brands over Time.
Key Lessons
*T. used an innovative idea combined with brand management to build a
strong brand
Building awareness is the vital first step in the customer(based brand equity
model
*T. designed its brand to be more powerful than the stars featured in the
content
*T. found new ways to build brand resonance, including long(form
programming and interactive viewing
*T. used constant reinvention and changed the tastes of its viewers to
establish long(term brand resonance
AA
Ni&e: Building a 'lo!al Brand
Teaching Notes
Summary
This case concerns the development of EikeLs international marketing program. lthough
Eike met with great success in thwarting ?eebokLs competitive thrust in the K.7.,
overseas markets posed many challenges. The case concentrates on the 4uropean and
sian markets and provides some historical marketing perspectives. The issue faced by
Eike is how to best build global brand equity. The case focuses on some key marketing
decisions in 2AA3 and 2AA6 and then focuses on the subsequent challenges Eike faced,
including an image crisis as well as intensified competition. Gurther, a discussion on
e"panding Eike!s brand portfolio is presented. $lass discussion can revolve around the
following sets of questions that students should consider before class1

2. 9ow would you characteri%e Eike!s brand image and sources of brand equity in
the Knited 7tates0
3. 9ow have Eike!s efforts to become a global corporation affect its sources of
brand equity and brand image in the Knited 7tates, 4urope, and sia0
6. re sponsorships and endorsements vital to Eike!s business0 Gor instance, what
effect would Eike becoming an official sponsor for the 8lympics have on the
company!s relationship with consumers0
5. /hy did Eike become a target for critics of globali%ation0 )o you think Eike!s
response to allegations of unfair global labor practices was appropriate and:or
effective0 Is Eike truly concerned about these issues0
;. 4valuate Eike!s acquisitions and the brands now under its control. )o these
acquisitions make sense for Eike0 /hat, if any, brands should Eike try to acquire
ne"t0
6. 9ow important is &fashion' to Eike0 re they a performance apparel company, or
a fashion company0 /hat is more important for Eike when they enter a new
market like $hina0 Gashion or performance0
<. 7hould Eike do anything different to defend its position now that didas and
?eebok have Joined forces0
Teaching !"ecti#es
2==
2- To e"amine issues in global branding
3- To demonstrate the value of integrated marketing
6- To consider how to manage a strong brand
5- To e"plore #? issues for established brands
Teaching Strategy
The Eike case is similar to the ,evi!s )ockers case in that it is a brand with which every
student will no doubt have e"periences and opinions. The value to the case discussion is
that students can still learn some valuable lessons about Eike and their marketing
e"pertise. good place to start the case discussion, after a quick summary of the
historical origins of the brand, is in 2A88, a time when ?eebok held a si%able market
share lead +6=M to Eike!s 28M-. In fact, some students may have already been e"posed
to the 9B? case that deals with ?eebok!s integrated marketing communication program
from that time. 7tudents can be asked to identify ?eebok!s and Eike!s brand image at that
time. 4ssentially, ?eebok has concentrated on creating associations to &comfortable,'
&fashionable,' and &for women.' If students seem to be struggling, Just remind them that
?eebok!s growth was driven by aerobics shoes and then ask them what associations
might that suggest. #rior to 2A88, ?eebok was also seen as a hip, cool brand but, by this
time, they were seen as a much more mainstream brand.
The Eike brand image should be easier for students to elicit. Ney brand associations were
created to &performance,' &high tech,' &top athletes +e.g., *ichael Hordan-,' and &sports.'
It should be pointed out how consistent, cohesive, and reinforcing this brand image was
+and still is-. It is important to ask students how this brand image was created to provide a
point of reference for the discussion about 4urope and other areas of international
e"pansion. Basically, the brand was built from the &ground up' in a &grass roots' effort.
It is worthwhile to note the duality of the brand image and how this characteri%es strong
brands. Eike has strong product performance associations +remind students what an
innovation air technology was- as well as user and usage imagery. Eike!s advertising in
general, and the &Hust )o It' campaign in particular, can be analy%ed some in terms of its
contribution to brand equity. The power of the slogan C a three word summary of the self(
empowerment that the brand represents C can be emphasi%ed.
fter analy%ing the ?eebok and Eike brand images, their respective positionings can be
considered, time permitting. Eike!s point(of(difference is clearly performance. ?eebok!s
point(of(difference was style. Their respective points(of(parity follow from there.
7tudents can be asked to Judge the two positionings in terms of desirability and
deliverability. The former is a question of how strongly the &pyramid of influence'
operates in this market. t the top of the pyramid is the competitive athlete, which makes
up roughly ; percent of shoe buyers. Ee"t, the &weekend warrior' or casual athlete makes
up the ne"t 2; percent. 7ince the vast maJority of athletic shoes are never used for
anything more athletic than walking, the base of the pyramid C 8= percent of the total C is
the non(user. 7ome students might argue for Eike!s high(end trickle down approach of
using top athletes to represent the brand, while others will endorse ?eebok!s mass(market
2=2
approach. )eliverability is less controversial however as ?eebok!s KBK is a huge
misstep as compared to the focused, well(e"ecuted Hust )o It campaign.
The depth of the analysis of the K.7. e"perience will depend on the time available. To
address the challenge of building a global brand, students must appreciate how the brand
was built in the K.7. In particular, it is important to point out Eike!s internal brand
mantra, &authentic athletic performance,' and how it helped to guide brand(building
efforts. 8nce the merican e"perience has been covered to the degree desired, discussion
can switch to the 4uropean market. good opening question here is to ask students how
brands should be built in a different geographical market. The answer, of course, is that
they must be built from the &bottom up' Just as had been the case in the original domestic
market. The actual means by which they will built, however, may differ. In other words,
the strategy will be the same C awareness first and image ne"t C but the actual tactics in
terms of the three main ways to build brand equity may differ. /ith this backdrop,
students can then be asked what challenges e"isted for building brand equity in the
4uropean market in 2AA3. #erhaps the most important challenges were that1 2- the brand
did not have the history nor heritage in the market and was starting more from scratch
and 3- 4uropean consumers may vary in significant ways from mericans in terms of
their sports e"perience. 7tudents can be probed as to the severity of these challenges.
7tudents from 4urope may want to be asked to comment on attitudes towards sports over
there.
Ee"t, students can be asked how Eike changed its &formula' from the K.7. market. s
the case points out, they over(relied on their current K.7. marketing program, mainly for
budget reasons. key lesson for students is that Just because an ad campaign or some
other aspect of the marketing program seems to &work' in an overseas market doesn!t
mean that it the right thing to do to build brand equity. 4uropeans may have liked and
been entertained by Eike!s advertising but not reached the level of understanding about
the brand that Eike would have desired. In particular, the mantra of &authentic athletic
performance' needs to be translated in a meaningful way. Eike had to change its
sponsorship approach, making soccer a big part of this shift. Eike also had to change its
advertising, making it less aggressive and more representative of consumer tastes in
4urope. It also had to become more involved on a grassroots level with club sports,
school teams, and local events. 7tudents should be probed as to what building the brand
from the &bottom up' or with a grassroots approach entails. Eike!s approach in sia was
similar, with similar results.
The case discussion can be e"tended with a look at Eike!s image problems in the late
2AA=s. 7tudents can identify the various contributors to these problems, such as labor
relations, swoosh ubiquity, endorsement proliferation, and aggressive marketing. Eike
became a lighting rod for criticism from various citi%ens groups, both domestically and
abroad. 9ere, a discussion of the challenges of becoming a global brand in the 32
st

century can be useful. global economy enables brands to vastly e"pand their reach
geographically, yet at the same time accountability increases as well. 7tudents can
discuss Eike!s steps to remedy its various image problems, evaluating them for their
effectiveness. lso, the topic of global marketing can be addressed here. 7tudents can
2=3
enumerate the pros +e.g., economies of scale in production and distribution, lower
marketing costs, consistency in brand image, scope, etc.- and cons +e.g., differences in1
consumer behavior, consumer response to marketing, brand and product development,
competitive environment, legal environment, etc.- of global marketing. Eike!s marketing
activities can be evaluated in terms of how they dealt with these benefits and drawbacks.
$hapter 25 contains much information on managing international brands.
$omplicating Eike!s ability to grow its brand was a global economic downturn in the late
2AA=s. ?egardless of the prevailing economic conditions, Eike faced many challenges
achieving growth with its brand. In many markets, demand for its footwear was not as
high as it had historically been. Eike made successful moves into apparel, but its
equipment business was still a small piece of the business. 7tudents can discuss the
benefits and ha%ards of leveraging Eike!s brand equity over a wide range of non(
footwear products. International growth continued to be strong, however, particularly in
4urope and sia. )iscussion can include an evaluation of Eike!s future prospects for
growth in international markets. ,atin merica, frica, and sia, especially $hina, could
be thoroughly analy%ed. lso, Eike!s brand portfolio e"pansion through acquisitions is
an interesting issue to debate and analy%e..
s a high profile brand, Eike is always in the news, and students always like to talk about
the brand. The key to guiding this discussion is to make sure students are applying course
concepts to do so.
Key Lessons
Importance of creating a strong foundation for brand equity
o )epth:breadth, rich, cohesive brand image
dvantages of brand mantra for brand focus
Importance of proper positioning
.alue of strong corporate brand
)angers in taking short(cuts in building a strong global brand
2=6
i(od: )reating an Iconic Brand
Teaching Notes
Summary
This case is about the evolution of the i#od that appears as a cultural phenomenon in the
streets, schools, universities and even in the workplace. The growth of i#od all over the
world made it &the walkman of the twenty(first century'. pple had dominated the digital
music market with its i#od but it is now faced with the challenge of how to defend its
market share and prevent i#od killers. pple is currently facing fierce competition from
strong players such as 7an)isk and the software giant *icrosoft that developed its
&Oune' to compete with the i#od. The challenge is not only about the competition faced
but it also involves the lobbying and legislative pressures being put on pple to open up
its system and allow songs of any format to be played on the i#od. This could represent a
significant threat on pple!s dominant market share. $lass discussion can revolve around
the following questions that students should consider before class1
2. /hat is the most important feature of the i#od0 /hy0
3. pple continues to operate a closed system +i.e. music downloaded from iT*7
can only be played on i#ods-. )o you recommend pple continue this strategy, or
should it open its systems to users of any type of digital music player0
6. 9as pple done a good Job of marketing the i#od, or have they relied too heavily
on word of mouth and bu%% to grow the brand0
5. pple has e"tended its distribution network to include large retailers such as
$ircuit $ity and Best Buy. 9ow important are these outlets to pple0 7hould they
be concerned with not having full control over the customer retail e"perience C
control that they have in the pple 7tores0
;. /hat should pple do ne"t to sustain i#od sales0 $reate a new ad campaign0
Introduce a new version of the i#od that plays videogames0
2=5
Teaching Strategy
This case can generate and support discussion on a number of topics, e.g. high( tech
marketing, creation of an iconic brand, continuous product development, etc. The case
can also be supplemented in a number of ways to incorporate current developments.
7pecifically, this is an e"cellent case for demonstrating, among other things, the1
2. Bundled products
3. Importance of continuous product innovations
6. Eecessity of having strong and wide distribution network
5. 7trength of a brand +i#od- to the e"tent of creating new processes +#odcasting-
It is successful to begin the case with a quick review of pple!s history to provide some
perspective and a few quick lessons. pple!s early start in the home computers,
developing the *ac computers and the i*ac then launching the i#od. 9ere it would be
useful if the reasons of decline of the products preceding i#od were discussed in order to
identify the areas of weaknesses for pple and how these could be avoided in order to
prevent the i#od from facing the same destiny.
It is also important to pinpoint the differentiation strategy that was employed by pple in
its i#od and highlight its most important features. Gurthermore, the role of a fle"ible
marketing department that quickly responds to the market needs is to be presented and
how it provides an advantage. 9aving discussed this, the importance of continuous
product innovations has to be stressed upon. ?F) is of e"treme importance in order to
always stay ahead of competitors and is even of more importance in high C tech sectors
and in gadgets marketing as this area is characteri%ed with an e"tremely dynamic nature.
9aving discussed the above points, it would be instructive if the discussion moves further
to include the distribution system of the i#od. lso, it would be of benefit if i#od!s closed
system is thoroughly analy%ed with the identification of its main advantages and
disadvantages.
The economics of the i#od and its use of a &reversed ra%or' model is also a subJect that
could be tackled to provide the students of an understanding of the different models
employed for the sales of bundles products. This would reflect that there is no one and
only way of doing things. 8n the contrary, even an opposite of what has been the norm
might be a used model that yields profits.
The importance of having a strong distribution channel and its role in the success of a
product could be then discussed. )ifferent ways of distribution channels e"pansion along
with its pros and cons would be useful if discussed with the students and their input on
the best ways for distributing such an electronic innovation would be constructive.
$ompetitors! stepping in into successful markets is always an issue. 9ere, the light is to
be shed on the fact that no product always stays on the top without facing competition
from its rivals. /hat are the various ways in which a leader could defend its position and
2=;
maintain its market share0 /hat role could be played marketing0 Ginally the discussion is
to be wrapped up with the actions pple has to take in order to defend its i#od0
Key Lessons

7uccess factors for a new product
9ow to create an iconic brand
$ontinuous product innovations
dvantages of employing differentiated strategies
dvantages of having a strong and wide distribution network
Importance of having continuous strong marketing efforts
*oc&ers: )reating a Su!-!rand
Teaching Notes
Summary
This case concerns ,evi(7traussL introduction of the )ockers line of pants. lthough the
case may be taught to emphasi%e a number of different points, perhaps the most
interesting issues relate to the brand image and brand equity of ,eviLs and how they affect
and are affected by the introduction of new products. $lass discussion can center on the
following three questions that students should consider before class1
2- 9ow would you characteri%e ,evi!s branding strategy in general0 /hat are the
positive aspects0 re there any negative aspects0
3- naly%e )ockers! communication strategy at the time of the launch. 9ow did it fit
in with past ,evi!s advertising efforts0 9ow did it contribute to brand equity0
6- 9ow would you characteri%e the )ockers brand image0 /hat makes up its brand
equity0 4valuate the move to e"pand the line into the bedding, bath, and luggage
markets.
5- )escribe some of the changes in the )ockers marketing strategy from its debut.
9as ,7F$o. maintained a consistent enough marketing message0 Is it well(
positioned strategically and tactically to maintain its strong leadership status in
the coming years0
;- )ockers missed out on the &wrinkle free' trend when it first surfaced. Eot
incorporating this technology into pants hurt the company. Iears later, )ockers
embraced technology in its products, creating the Thermal dapt Nahki and
2=6
#erspiration Duard shirt. /as adding this technology to their products the right
move, or did )ockers &go too far' in adding these features to their clothes0
6- 4valuate )ockers! decision to stop selling products directly to consumers on its
website. )ockers! main competitors +e.g., Dap, H.$rew, and bercrombie F
Gitch- are heavily involved in online retailing. 7hould )ockers reconsider their
decision0
<- Imagine that you are Hohn Doodman and have Just been named as the head of the
)ockers brand. /hat are your priorities0 /hat do you do first0
Teaching !"ecti#es
2- To introduce the scope of branding decisions and the value of the customer(based
brand equity framework.
3- To demonstrate the value of multiple brand elements and sub(brands.
6- To illustrate the importance of blending &push' and &pull' in marketing a brand.
5- To e"amine the effects of changing demographics on marketing strategies.
;- To show how strategies and tactics change over the product +and brand- life cycle.
Teaching Strategy

This is a highly relevant case to students as virtually every student will have worn a pair
of ,evi!s at one time or another and generally will be aware of the brand!s marketing
efforts over the years. It is a good case to teach in one of the first classes as it generates
discussion and covers a lot of ground.
The history of the brand is an interesting one with several important lessons. good
place to start is by noting the brand!s historical roots as the first brand of tough, rugged
Jeans and its evolution to a standard bearer of the Jeans category and a symbol of freedom
and independence. ,evi!s mistake of over(diversification is worth noting, especially if
students have had the opportunity to see the out(of(print > but still available at many
schoolsP > half hour &Eot by Heans lone' video on their failed line of men!s Tailored
$lassics suits. This video can be shown before class to interested students or in(class if
the case is taught over two sessions. +It also is interesting to Ju"tapose this video with the
case video on )ockers C ,7F$o.!s since 7teve Doldstein appears in both although they
are shot 2; years apartPP- ,evi!s attempt to make apparel to suit almost any person and
any lifestyle, all under the ,evi!s name, clearly stretched the brand in too many directions
in the early 2A8=s.
,7F$o.!s &back to basics' approach to get the brand back on its feet is worth noting. To
improve profitability, ,7F$o moved in two directions1 2- improved relations with
retailers@ and 3- re(focused ,evi!s brand name and image with consumers. In other
words, ,7F$o adopted a classic &push and pull' strategy as part of their revitali%ation.
7tudents should appreciate how this was done and why it was done. This &back to basics'
approach is one that many firms need to adopt when their brands encounter troubles. 8n
2=<
the demand side, many core businesses were sold and greater emphasis was placed on
basic Jeans and corduroy lines as a means to preserve the company!s values and
traditions. dvertising played a critical role in creating the desired brand image with the
following associations1
( 9onest ( pproachable
( $lassic ( Kniversal
( $ontemporary ( Independent
( $omfortable
7tudents can be asked how easy it was be to achieve this brand image. The answer is not
easy at all C several pairs of associations would, on the surface, seem to be contradictory
+e.g., &classic' and &contemporary' as well as &universal' and &independent'-. The &;=2
Blues' campaign, described in the case, did a remarkable Job targeting 23(35 year olds
and having the desired effect.
The net result of all these new initiatives was that the brand began to thrive again. ll
was well until ,7F$o. was forced to confront their demographic destiny C the baby
boomers making up their key audience were aging and were not buying as many Jeans. t
this point in the discussion, it is important for students to recogni%e that all brands need to
bring in new customers, although some brands need to more than others. 8ther brands
that faced similar demographic challenges, such as $adillac, can be discussed. $hapter 26
of the te"t provides some useful background discussion in that regard. The needs of
,evi!s aging baby boom target market and the marketing opportunity that e"isted there
can then be discussed. The bulk of the case discussion can then turn to how ,7F$o.
branded its &Eew $asuals.' 7tudents should be encouraged to apply basic concepts from
$hapters 5(< of the book in terms of how build brand equity. The three main ways to
build brand equity should be e"amined in turn1
2- $hoosing brand elements
( Eame +)ockers-
( ,ogo +Interlocking wings and anchors-
( 9angtag +/omen lead off ship by formally dressed man but looking at
rela"ed, casually dressed man-
3- )evelop supporting marketing program
( #roduct +4mphasis on style, versatility, and comfort by inclusion of 2==M
cotton, pleated, washed fabric with &reverse silhouette' design, and variety
of colors-
( #rice +*oderate:Kpper(moderate-
( $hannels +)ockers in(store shop F unique displays-
( $ommunications +d campaign-
6- ,everage secondary associations
( Kse of sub(branding strategy with ,evi!s brand name
7tudents should consider the logic and consistency of this strategy and the role these
different tactics had in building brand equity. Gor e"ample, in terms of choosing brand
elements, some students will be skeptical as to whether or not ,7F$o really thought of
the brand elements as &empty buckets' with no inherent associations or meanings. There
is a strong nautical theme suggesting that perhaps the initial positioning with the pants
2=8
was in terms of companions to top(siders or similar products. Eevertheless, the real
equity is not being built there but in the supporting marketing program. 9ere, students
should recogni%e how well(designed and implemented the marketing program was. t the
heart of it all was the right product, and students must appreciate how important the right
product is to creating brand equity. 7ome fruitful discussion can address the &push' and
&pull' aspects of the program. The )ockers in(store shops were truly innovative and
trend(setting and should be reviewed. The &pull' side is more comple" and it is
worthwhile for students to analy%e its likely contribution to building brand equity. 7ome
thoughts along these lines are as follows. The potential contribution of the introductory
ads were to both1
( Build awareness
( $reate image
( Kser imagery +e.g., age-
( Ksage imagery +e.g., versatility-
( #roduct benefits
( $omfort
( 7tyle
ny ad can potentially work at both levels +awareness and image-, but it is rare that both
can be strongly emphasi%ed. It is hard for any one ad to be able to do so much C building
brand awareness typically involves much brand and product e"posure, which almost
necessarily comes at the e"pense of information that would enhance image. *ost likely,
the ads worked best at the awareness level1 The strong product focus +some critics
claimed it was the first use of the &buttcam' in advertising and well(constructed slogan
+&If you!re not wearing )ockers, you!re Just wearing pants'- helped to get the word out
as to what the brand is all about C a prerequisite for building brand equity. Eote too that
the ads actually referred to &,evi!s $%%& 'otton )ockers.' The inclusion of the type of
fabric cleverly served as a buffer between ,evi!s +known for Jeans- and )ockers +which
wanted to be known for pants-. It may be useful to have students diagnose the sources of
equity that ,evi!s sought to bring to )ockers +e.g., quality, physical comfort, style,
heritage- and sources of equity ,evi!s wished to create distinctly for )ockers +e.g., 2==M
cotton, dress casual, and psychological comfort-.
Eot every response to the introductory )ockers television ads was positive. In reviewing
the ads, )/44N maga%ine sniffed, &It!s like a lot of yuppie crotches talking to one
another.' 7tudents can be probed as to what is missing in the introductory marketing
program, e.g., by contrasting the image of ,evi!s Jeans to )ockers. The early ads focused
on awareness rather than image, and students can evaluate the relative importance of both
components in an introductory ad campaign. fter running variations of the introductory
campaign for a couple of years, )ockers inJected some imagery and personality to the
brand with a stylish new ad campaign using the tag line &?ela". Iou!re mong Griends.'
These ads inJected humor and portrayed a rela"ed life style by showing )ockers wearers
at work and play. These ads could be interpreted as bolstering the user and usage imagery
which had been somewhat lacking in the introductory campaign +e.g., who should wear
the pants and where-. By 2AA2, )ockers approached Q<== million in pants sales +with
another Q3== million in shirts sales-, awareness was sky high +A=M in target market, and
2=A
ownership penetration was at 5=M for men 3;(55 +owning 3 R pairs on average-. new
campaign, &Eobody )oes $olors ,ike )ockers,' targeted current users in an attempt to
get them to buy more varieties of pants. 4ach ad featured a different color. By 2AA2,
however, some cracks emerged in the )ockers image as a younger generation found the
pants as lacking in relevance +see video case-.
The younger generation of consumers felt that while )ockers addressed the needs of their
fathers, they felt that the brand did not cater to their fashion needs. This would be a good
place in the discussion to observe the difficulty of creating a positioning or positionings
of appealing to broad demographic groups. )ockers attempted to improve the image of
its pants among younger consumers with the &Eice #ants' campaign. fter the &Eice
#ants' campaign had run for three years, )ockers switched to &8ne ,eg at a Time,' a
slogan that failed to connect with consumers. In mid(2AAA, after one year of &8ne ,eg at
a Time,' )ockers reinstated the &Eice #ants' tagline. The discussion at this point could
touch back on the task of keeping the brand relevant and attracting new consumers over
time.
There are a number of ways to wrap up the case. 8ne way is to put the brand hierarchy on
the board and consider &big picture' issues of how ,7F$o. should manage their brands.
In doing so, it is important to include 7lates, ,7F$o.!s new dress slacks. Suestions can
be raised as to whether there is > or should be > a good brand migration strategy.
Suestions can also be raised about brands below the family brand level. )ockers had
many varieties of )ockers, including two sub(brands C )ockers ?ecode and )ockers
4"act C and a variety of branded pants types, including the Do Nhaki and the *obile
#ant. 7tudents can discuss the key challenge of moving a brand forward1 deciding what to
change and what to preserve. Kpdating the case, ,evi!s recent struggles in the Jeans
category can be brought up +their market share dipped considerably during the latter half
of the 2AA=s and the early 3===s-.
Key Lessons
.alue of a &back to basics' brand revitali%ation strategy
$hallenge of negatively correlated attributes
Dreat brands sei%e trends and opportunities
#roper design and implementation of sub(brands
Eecessity of mi"ing and matching brand elements
.alue of blending well(designed &push' and &pull' strategies
?eality of awareness and image tradeoffs in advertising
Importance of innovation and relevance
22=
Ni#ea: $anaging a $ulti-)ategory Brand
Teaching Notes
Summary
This case concerns the marketing program for BeiersdorfLs flagship Eivea brand. The
case addresses the issue of how to manage the brand image for a brand associated with
different products. 9ow can Eivea continue to add new customers to their brand
222
franchise without harming their brand equity0 Gurther, how can Eivea maintain its brand
equity in its core skin crTme product while also leveraging that equity into new product
categories0 number of issues are raised concerning the coordination of a branding and
communication program across e"isting and new products. $lass discussion can revolve
around the following sets of questions that students should consider before class1
2- /hat is the brand image and sources of equity for the Eivea brand0 )oes it vary
across product classes0 9ow would you characteri%e their brand hierarchy0
3- /hat are the pros and cons of the sub(brand strategy0 7hould Eivea run a
corporate brand or umbrella ad for all of their products0 /hat is the role of the
Eivea $rTme advertising0 7hould it be changed0
6- )iscuss the risks and benefits of Eivea!s brand e"tension into new product
categories and customers. 9ow have Eivea!s e"ecutives managed this e"tension0
9ave they missed opportunities such as perfume or foot care0 re there certain
boundaries that Eivea should not cross0
5- 7hould Eivea pursue a *en!s grooming category0 )oes the company risk
alienating its core consumer base of families and women or is this a natural ne"t
brand e"tension0
;- /hat would you do now0 /hat recommendations would you make to Eivea
concerning ne"t steps in their marketing program0
Teaching !"ecti#es
2- To e"amine issues in managing a brand hierarchy and brand portfolio
3- To review possible roles of brands and communication strategies for a brand
hierarchy and brand portfolio
6- To consider how to best manage a mature brand over time
5- To analy%e brand e"tension strategies for appropriateness
;- To demonstrate proper communication strategies with a brand e"tension
Teaching Strategy
This case is the one with which students may be the least familiar. Eevertheless, it can be
an e"cellent means to e"amine brand e"tensions and brand hierarchies. good way to
begin the case is to ask students what the brand image is of Eivea crTme, the flagship
product, in 4urope, e.g., if you were to stop someone in the streets of #aris, ,ondon, or
9amburg and asked what came to mind when they thought of Eivea, what would they
say0 Eivea crTme has a rich brand image, so students typically are able to elicit a number
of different brand associations, such as1
( $are
( #rotection
( *ildness:Dentleness
( ?eliable:Trustworthy
( Eatural:#ure:Basic:7imple:9onest
223
( Gamily:7hared 4"periences:*aternal
( *ulti(#urpose
( $lassic:9eritage:Timeless
( Dood .alue:Suality
( Blue:/hite
number of specific points can be made about the brand image. The association of care
and protection is an important one as it works at both the product(level as well as a more
symbolic, non(product level. This duality is one that characteri%es strong brands.
*ildness and gentleness associations are also critical as they represent a key point(of(
difference. $lassic and heritage associations present an opportunity and a threat. In terms
of the latter, a worry is that the brand will not be seen as contemporary and up(to(date, a
point we will return to. Ginally, the blue and white associations are the foundation for
brand awareness and can be leveraged in that way.
fter some discussion of the brand image of Eivea crTme, analysis can turn to the sub(
brands and brand e"tensions. s is usually the case, it helps to elicit the brand hierarchy
and put it on the board. few preliminary comments can be made concerning the range
and scope of the Eivea brand +e.g., /hich associations are most transferable0 ?elevant0
Knique0-. It is necessary to individually analy%e each maJor sub(brand, starting with ones
under skin care and moving to ones under personal care. good way to do this is to
identify, one by one, the points(of(parity and points(of(difference for each sub(brand.
7tudents may put together a list somewhat like the following1
(( (*
$rTme ll(#urpose pplication *ildness:Dentleness
Body Te"ture:pplication *ildness:Dentleness
#leasurable usage e"perience
7oft #leasurable usage:Te"ture *ildness:Dentleness:
,ighter crTme
.isage Beauty 7cientific F Technology
/ith $onfidence
.ital Beauty:nti(aging 7cientific:Dentleness
Baby 7afety:$aring:*ildness 9eritage
7un #rotection:7afety *ildness:Dentleness
Beach:Gun
Gor *en 7ensual image: *ildness:Dentleness
7oothing
226
Bath $are $onvenience: *ildness:Dentleness
$leansing
)eodorant 4fficacy *ildness:Dentleness
BeautU Beauty:$olor *ildness:Dentleness
9air $are $leansing: *ildness:Dentleness
ppearance:9old
There are a number of specific issues for each sub(brand that can be considered in the
process, time permitting. Gor e"ample, .isage is a very different type of sub(brand that
deserves closer scrutiny. 8ne role it can play is to contribute to the perceptions of the
Eivea brand as a whole +e.g., as innovative, contemporary, etc.-. 8f course, the transfer
of associations is not one(way, so a legitimate question is the effects of the Eivea parent
brand on .isage. This topic can be used to illustrate the flow of equity, which describes
how sources of equity are transferred between a parent brand and a sub(brand, and vice(
versa. lthough Eivea presumably communicates credibility, quality, and mildness, the
transfer may not be all positive. Gor e"ample, Eivea )eo raises an interesting dilemma
faced by many brands1 how can a brand be effective and therefore by implication, strong
> and mild0 The challenge of negatively correlated attributes can be addressed in this
conte"t. nother e"ample1 Eivea!s positioning as a mass(market, family brand of skin
care products complicated its e"tension into color cosmetics, which is a more
sophisticated and image(conscious category.
fter listing the positionings of the sub(brand, students can be told to step back and
critique their e"tension strategy. 9as B)G management done a good Job e"tending the
Eivea brand0 *ost students will admit that the current brand portfolio is generally
cohesive and well put together. It is also worth considering whether Eivea!s leveraging of
its brand across an array of diverse brand e"tensions could have adverse consequences
for the image of the umbrella brand. Two important points to emphasi%e about their sub(
brands is that1 2- gentleness and mildness are key points(of(difference in almost every
category@ and 3- as Eivea moves farther away from their core crTme brand, points(of(
parity become critical. It is worth noting that these two observations characteri%e many
brand e"tension strategies. These two observations have important implications for the
brand hierarchy as will be developed further.
t this point, it makes sense to return back to the brand hierarchy to get the &big picture.'
Gor the sub(brands to be successful, with the e"ception of .isage, they all need to create
a #8) on the basis of mildness and gentleness. B)G management has four basic options
to do so1
2- $reate mildness and gentleness associations to the Eivea brand as a whole
+perhaps reinforced through a family brand ad- and assume they trickle down
to the sub(brands
225
3- $reate mildness and gentleness associations to the collection of sub(brands
through a product umbrella ad that showcased all the various products and
assume that each one would pick up the associations
6- $reate mildness and gentleness associations at the skin care and:or personal
care level through a family brand:product umbrella ad at that level and assume
they trickle down
5- $reate mildness and gentleness associations at the Eivea crTme level and
assume they go &up and over' to the sub(brands
Eivea chose the fourth option by implementing the Blue 9armony campaign, which was
essentially an image campaign for Eivea $rTme. This fourth option was the most
cost(effective but, as with the first option, it is not clear that a different type of ad
will be necessary. To make this point, the Blue 9armony ad campaign should be
analy%ed. The campaign certainly moderni%es the brand and gives it a more
contemporary look. number of key associations were not, however, being
reinforced initially, especially care, protection, mildness, gentleness. These
associations are only very implicitly dealt with as the ads are more of a life style
variety and lack product e"posure. ,ater Blue 9armony ads focused more on
specific attributes of Eivea $rTme, while keeping the style of the ads consistent.
The discussion can conclude by asking the students what would they do ne"t C both
short(term and long(term. The key for Eivea is to reinforce equity in the corporate
umbrella brand while at the same time using it to support e"tensions. If the
students suggest, based on the analysis described above, changing the ads, they
should be asked how. There are many good things about the ad that probably
should be preserved. B)G!s solution was to add phrases to capture key
associations to the ad +e.g., &$are,' &#rotection'- while essentially keeping the
same visual style. lthough seemingly small and subtle, such changes may help to
provide the proper brand foundation on which the e"tensions can build.
,onger(term, a key question becomes what new product categories should Eivea enter
and how. 7tudents can be asked to generate some candidate categories and asked
to react to some actual categories in which Eivea entered. 7tudents can also
discuss the challenges of the entering the K.7. market. 8ne useful point to
consider is whether B)G should attempt to leverage their 4uropean +although not
necessarily Derman- heritage in marketing Eivea +e.g., &the 4uropean skin care
leader'-. They have not done so C is that wise0
Key Lessons
7trong brands have rich, cohesive brand images and well(entrenched brand values
n effective brand hierarchy creates relevance, differentiation and the proper
awareness and image at each level
#roperly e"tending a brand can broaden its meaning F scope
$reating a strong family or &power' brand involves choosing categories that &fit'
and developing consistent, well(positioned marketing programs
7ub(brands can create unique identities and enhance the image of the parent brand
22;
The role of flagship brands must be carefully managed to balance deposits and
withdrawals
226
+ahoo,: $anaging an nline Brand
Teaching Notes
Summary
The IahooP case details the rise of one of the Internet economy!s most visible brands.
The case focuses on managing an Internet brand, which entails numerous topics such as
Internet advertising, branding a technology product, and managing a brand in a highly
competitive category. IahooP was the poster(child and bellwether of the Internet
economy during the second half of the 2AA=s, and managed to remain independent as
many search engine and portal competitors were purchased by media companies. The
company encountered obstacles, however, as the economy worsened in the early 3===s.
fter management changes and strategic business restructuring, IahooP looked to
capitali%e on its position as a leading Internet brand moving forward. IahooP deployed a
strategy for growth based on new services, acquisitions, and partnerships to face fierce
competition. 7tudents can consider the following questions before class1
2- )escribe the sources of equity for the IahooP brand. )id these sources
change during IahooP!s history0 If so, how0
3- 9ow did IahooP!s marketing program contribute to the company!s success0
/hat changes, if any, would you recommend for the future0
6- 4valuate IahooP!s strategy of selling services. /hat impact, if any, will it
have on consumers! perceptions of the brand0 9ow can IahooP get more
people to pay for more of its services0
5- 7hould IahooP work more on growing its international presence, or should
it focus on strengthening its domestic position0
;- /hat do you think is the biggest risk to IahooP at the time of the case0
/hat should the company do about it0
Teaching !"ecti#es
2- To e"amine the selection of brand elements and creation of a marketing
program
3- To analy%e the decisions and factors involved in starting an Internet brand
6- To observe the branding issues facing technology companies
5- To review new marketing techniques, particularly Internet advertising
;- To analy%e the process of developing new products and new markets
6- To e"amine the issues of global branding

Teaching Strategy
IahooP should be a very familiar brand to everyone in the class, and most students should
have first(hand e"perience with the brand. 7tudents should certainly be encouraged, as
with most cases, to go on(line and check out the brand before the class session to increase
22<
their familiarity if need be. /ith this level of familiarity, it should be easy to construct a
mental map of the IahooP brand at the beginning of class and use this to launch class
discussion. n obvious place to start its with the origins of the brand, which can be used
to illustrate selecting brand elements and devising marketing strategy. In vintage dot(com
style, IahooP was conceived by graduate students and started from a trailer. These roots
informed the fun and user(friendly image that lay at the core of the brand. The name
IahooP is an acronym standing for &Iet nother 9ierarchical 8fficious 8racle,' which
is a tongue(in(cheek definition of the search engine in technology Jargon. The name was
meant to convey the fun and e"citement of using the Internet, without any complicated
technological associations that would dissuade the casual consumer.
IahooP!s advertising was also designed to make technology novices, termed &near
surfers' because they considered getting on the Internet but hadn!t yet, feel comfortable
using the brand. By IahooP!s way of thinking, these near surfers were more loyal and
comprised a large segment of the population. IahooP!s advertising can be analy%ed by
students for its brand equity building. IahooP had the advantage of being one of the first
Internet companies to use mainstream media buys, which further contributed to
awareness and image. IahooP also developed the &IahooP yodel,' the signature audio
cue designed to reinforce awareness of the brand and add to its image of fun and
e"citement. The &)o you IahooP0' slogan was used consistently, which the company felt
helped it stand out from competition that was changing their names, taglines, and
positionings.
nother topic for discussion is the IahooP business model, which was initially built
almost e"clusively on revenue from selling advertising space on its site. The percentage
of visitors to an ad(sponsored site who clicked on the advertisement to follow its link was
called the &click(through rate.' /hen Internet advertising first emerged, click(through
rates were above 3= percent, but rapidly fell to two or three percent in 2AA6. $urrently,
click(through rates are less than one percent. 7tudents can be asked about their /eb
surfing habits and the frequency with which they click on ads to illustrate this point. The
discussion of Internet advertising can include ideas from $hapter ; on new marketing
techniques. 8nce click(through rates bottomed out in the early 3===s, the business model
using online advertising as the primary source of revenue came into question. IahooP had
been e"panding its business in product, market, and geographic terms since it was
launched, but the need for further e"pansion and less reliance on advertising revenue was
imperative. Therefore, the ne"t area to consider is IahooP!s brand e"pansion.

IahooP!s product e"pansion is a good place to start, because many students will be
familiar with the brand!s numerous brand e"tensions. 4arly on, IahooP management
noticed that /eb surfers typically used IahooP to conduct an Internet search and then left
the site to visit the non(proprietary sites generated by the search. In order to keep
&eyeballs' glued to IahooP sites for longer, the company added homegrown content and
vastly e"panded onsite offerings, such as IahooP Ginance, IahooP Travel, or the IahooP
ligans kids! directory. These sites attracted new users and kept them on IahooP pages.
Gor all its brand e"tensions, IahooP used a sub(branding strategy. 7tudents can compare
the benefits of this strategy vs. other types of brand e"tension strategies from $hapter 23.
228
IahooP also made a number of acquisitions, including free e(mail provider Gour22 $orp.,
which became IahooP *ail, and Broadcast.com, which enabled IahooP to provide
streaming media content. 7tudents can weigh the merits of IahooP!s acquisition strategy,
in terms of its product e"pansion strategy and in terms of valuation methodology from
$hapter 2=. It might be interesting to have students describe their e"perience with the
brand, to see who uses IahooP for a search engine, for a entertainment and streaming(
media source, for an information and news source, for a shopping and e(commerce site,
and for any of its other numerous product and service offerings. IahooP licensing is
another product development topic that student may be interested in discussing. This
topic can be tied into ideas from $hapter <.
IahooP!s product e"pansion strategy paralleled its market e"pansion strategy, which can
be discussed ne"t. Grom the start, the brand e"panded rapidly into new geographical
segments. IahooP 4urope and IahooP!s first sian site C IahooP Hapan C were developed
in 2AA6. 8ver the ne"t five years, IahooP added more country and regional sites in many
languages. IahooP was the leading portal in many of the countries in which it established
a site, including Hapan, Dreat Britain, and was in the top three in every market it entered.
It had established a global brand in a short five years. 7tudents can discuss the advantages
and drawbacks of global branding, as detailed in $hapter 25. The fact that it was an
Internet company was central to IahooP!s development of a global brand, because the
medium was itself a global network. The fact that IahooP surpassed local competition in
many markets and always led big players like 8, and *7E indicates that IahooP!s
marketing program was better designed for global marketing. 7tudents can discuss how
the company!s brand elements, its advertising, its grassroots strategy, and its early
geographic e"pansion all contributed to this effect.
s the Internet economy foundered, however, IahooP!s e"pansion grew more aggressive,
particularly in the product dimension. In 3===, A= percent of IahooP!s revenues came
from advertising. This figure was reduced to 8= percent in 3==2, but advertising revenues
decreased by almost 5= percent that year. IahooP sought to achieve a ;=(;= split between
ad revenues and revenues from other sources by 3==5. IahooP!s big initiative was
e"panding its corporate services by establishing offerings such as IahooP #ortal
7olutions, which speciali%ed in building website portals for corporations such as
*c)onald!s, #fi%er, and the state of Eorth $arolina@ IahooP 4nterprise 7olutions +I47-,
which offered a customi%ed version of the IahooP portal for corporate clients@ and on(
line conference hosting. In another move to boost revenues from non(advertising sources,
IahooP began charging for services that had traditionally been free, such as e(mail
forwarding, responding to personal ads, and /eb phone applications. IahooP also raised
commission rates for sellers on its auction site. 7tudents can discuss the potential affects
on brand equity of these moves. Gor e"ample, most mass(market consumers would not
know about IahooP!s corporate offerings and their perception of the company might not
be affected. *ass(market consumers might balk, however, at being asked to pay for
traditionally(free services. $orporate clients, on the other hand, would be familiar with
IahooP!s mass(market appeal and might not perceive the company as a powerful
corporate solutions provider.
22A
The discussion can end by soliciting thoughts on IahooP!s future strategy. 7ome industry
analysts foresaw a future merger with or acquisition by a large media company. 8thers
recommended that IahooP start charging its users a fee for all services. These options can
be analy%ed for their viability and their consequences for IahooP!s brand equity. 7tudents
may also have different ideas for IahooP It should be emphasi%ed that IahooP was one
of the most recogni%ed and oft(used Internet brands, and possessed a great deal of equity
that could be leveraged as the brand sought new sources of revenue.
23=
Key Lessons
IahooP achieved success in the highly competitive Internet portal market
with the help of an innovative product and the implementation of branding
strategies
IahooP built awareness and image with a creative and integrated
marketing program
8ver(reliance on the Internet advertising model adversely affected the
company!s financial fortunes
)iversification and brand e"tensions were and are critical to IahooP!s past
and future success
IahooP has accumulated significant brand equity in its category, must find
new ways to capitali%e on it
232
Star!uc&s: $anaging a -igh 'ro.th Brand
Teaching Notes
Summary
The 7tarbucks case details the rise of the brand from a local gourmet /est $oast coffee
beanery to global retail giant. The remarkable growth of the brand was accomplished
primarily because the product and the service were e"ceptional enough to warrant
significant word(of(mouth response from consumers. s 7tarbucks grew, the company
pursued e"pansion in the market and product dimensions. Eew international markets
sprang up in 4urope, sia, ,atin merica, the *iddle 4ast, and ustralia, while
7tarbucks moved into airports, grocery stores and convenience stores. Brand e"tensions
from 7tarbucks included ice cream and iced coffee, and the company purchased a brand
of premium tea. The challenge facing 7tarbucks after more than a decade of rapid growth
was, of course, how to maintain the growth without alienating the customers that helped
the company achieve it. $lass discussion can consider the following questions1
2- /hat were the keys for success for 7tarbucks in building the brand0 /hat were
its brand values0 /hat were their sources of equity0
3- 9ow would you evaluate 7tarbucksL growth strategy0 re there things you
would do differently0 9ow would you evaluate its partnerships +e.g., with
Knited irlines-0 9ow do you know whether it is a &good' or &bad'
partnership0
6- /hat does it take to make a world class global brand0 $an 7tarbucks become
one0 /hat hurdles must it overcome0 In terms of the merican market, what
do you see as 7tarbucks! biggest challenges0
5- 4valuate 7tarbucks! move into non(coffee areas like credit cards, music, and
film. re these natural e"tensions of the 7tarbucks brand, or has the company
gone too far in creating a &lifestyle' brand0 /here should 7tarbucks go ne"t0
;- )o you agree with 7tarbucks! international e"pansion0 7hould the company
continue its aggressive e"pansion plans0 re there markets where 7tarbucks
cannot e"pand0
6- /ho represents the biggest threat to 7tarbucks0 )irect competitors in the coffee
market, such as )unkin! )onuts0 $hains like *c)onald!s that are e"panding
their coffee quality0 #anera Bread and other locations that might be the new
&third place'0
<- 9ow much are customers willing to pay for the Staru'(s )*perien'e0 $an the
company continue to raise prices on its coffees and drinks0 Is there a market for
Q5==V coffee makers0
Teaching !"ecti#es
233
2- To review the marketing imperative of designing brand(building, customer(
oriented marketing programs
3- To analy%e the process of building brand equity and review the $BB4
pyramid
6- To consider brand e"pansion strategies
5- To analy%e how to preserve brand equity as the brand grows
Teaching Strategy
The 7tarbucks case can easily support a class session on a variety of branding topics. The
case will work well early in the term as an introduction to branding issues +e.g., second
class- or later in the term as a summary and review of branding concepts. rticles from
the popular press can be handed out ahead of time to provide additional background. If
interested, reading 9oward 7chult%! #our Iour 9eart Into It provides much useful
background for class and is an easy read.
This is a good case to preview or review key concepts in building and managing brand
equity. 7tudents can be asked to apply the customer(based brand equity framework to
identify sources of brand equity and the means by which those sources were created and
the challenges in managing the brand over time. In doing so, a number of issues can be
touched upon. natural way to kick things off would be to ask students their associations
for the brand and have them attempt to construct a mental map for 7tarbucks. *ost likely
virtually all the students will have tried or at least know something about 7tarbucks
coffee. 7ome of the main perceived positive and negatives about the brand will
undoubtedly emerge. #ositive associations will likely include quality, rela"ing, break,
sophisticated, convenient, and innovative. Eegative associations might include fast food,
predatory, pretentious, e"pensive, and predictable.
To uncover how these associations came about, it will be useful to review the historical
development of the brand in terms of building brand equity. The initial selection of brand
elements is a starting point, and the 7tarbucks name, logo, and color scheme are all key
elements to review. The name, derived from a character in the classic !o+ ,i'(, was
intended to convey a mystique and magic while also e"pressing the product!s merican
heritage. The woodcut logo of a siren was designed to be seductive and e"otic, while also
welcoming and pleasant. The green of its logo and store interior was meant to convey
Italian elegance. 4ach element can be evaluated for its contribution to brand equity.
Ee"t, the discussion can turn to the design of a customer(oriented marketing program.
The customers! e"perience with the brand was the cornerstone of the 7tarbucks
marketing program. 4very aspect of the 7tarbucks retail e"perience was designed to
provide the customer the romantic feel of stopping at a 4uropean espresso bar. Grom the
premium coffee and the trained &baristas' +servers- to the well(appointed interiors and the
hip music, 7tarbucks sought to become a &third place' where customers could take a
break from both their homes and workplaces. 7tudents can be asked to describe each
component of the e"perience, as elaborated in the following two paragraphs. The product
vs. retail nature of the brand should be spelled out by considering the duality of 7tarbucks
236
selling coffee and the coffeehouse e"perience. The latter aspect of the 7tarbucks brand
can be used to start a discussion of e"periential marketing, as outlined in $hapter ;.
7tarbucks selection of what product to sell was the most important part of the e"perience.
8nly premium coffee would spark the passionate consumer response that drove
7tarbucks! awareness in the early stages of its growth. 7tarbucks maintained control over
the coffee from procurement to roasting to retail, ensuring that the customer was getting
the highest quality product available. Initially, the company also did not employ a
franchise strategy. It owned and:or leased all 7tarbucks locations, choosing only the
&high visibility' and &high traffic' locations that were likely to generate the most
business and awareness. 7tarbucks! hub strategy, wherein it clustered stores around a
selected urban or suburban region, could also be analy%ed.
7tarbucks! relations with employees is another important aspect of its marketing strategy.
4ach barista is given 35 hours of training at the time of hire, and all employees are
eligible for health coverage and &Bean 7tock' C company(issued stock options. s a
result, turnover among 7tarbucks employees was lower than for most food chains, and
the customer e"perience was enhanced by the employees! ability to educate the consumer
about the coffee products. The elements of the rich sensory e"perience at a 7tarbucks
retail location can be reviewed, covering each of the five senses.
fter a discussion of the 7tarbucks marketing program, the discussion can turn to
detailing the brand!s mental map and core brand values and evaluating the points(of(
parity and points(of(difference that enabled the brand to stand out from the competition.
They are summari%ed in the following table1
235
Competitor
Fast food chains/
convenience shops
POP
Convenience
Value
POD
Quality
Image
Experience
Variety
Supermarket brands
(for home)
Convenience
Value
Quality
Image
Experience
Variety
Freshness
Local cafe Quality
Experience
Price
Community
Convenience
Star!uc&s (ositioning
$lass discussion can ne"t touch on 7tarbucks! communication strategy. 7tarbucks used
little in the way of traditional electronic media communications to build its brand, relying
instead on word(of(mouth and brand visibility to drive awareness. This &grassroots'
approach allowed for a high degree of integration and enabled 7tarbucks to develop
consumer respect for and attachment to the brand even as it e"panded rapidly. This part
of the discussion can be tied into $hapter 6 on integrated marketing communication.
s 7tarbucks grew, it e"panded into multiple distribution channels in order to reach more
consumers. These included mail order, an e(commerce /ebsite, and a variety of retail
franchise partnerships. #artners included 9ost *arriot, Knited irlines, Eordstrom, and
Barnes F Eoble. 9ere, class discussion could touch on channel strategy, as outlined in
$hapter ;. These new channel developments can be contrasted with 7tarbucks! previous
strategy of maintaining e"clusive control over the distribution and sale of its product. The
pros +leverage secondary associations of partner, greater market coverage and
penetration, lower cost- and cons +sacrifice some control over brand, possibility of
negative associations stemming from partner- of channel partnerships can be discussed.
7tarbucks licensing of its name to e"pand its brand in the product dimension can also be
reviewed. Its development of the Grappucino blended iced coffee beverage with #epsi$o
was a very successful brand e"tension. 7o too was its coffee ice cream e"tension with
)reyer!s. 7tarbucks also licensed its name in a Joint venture with Nraft to bring packaged
ground coffee to grocery stores. $lass discussion can evaluate 7tarbucks! licensing
strategy and its leveraging of secondary associations as part of its product e"pansion,
using ideas from $hapter < as a guide. Gor e"ample, students can discuss whether the
licensed products fit with the 7tarbucks image and how they contribute to brand equity.
9ere it might be useful to have students define the 7tarbucks brand hierarchy and brand
portfolio, so that the recent product development can be thoroughly analy%ed.
Ginally, the class can cover the challenges faced by 7tarbucks as a brand leader in its
category. These include overe"posure C which is partially a result of a clustering strategy
that in some cases leads to two 7tarbucks locations opening across the street from one
another C and subsequent consumer backlash. 7tarbucks also faces greater competition,
both domestically and abroad. The task of remaining ahead of the competition and
retaining the loyalty of its valued customers is one of 7tarbucks! biggest challenges.
Key Lessons
7tarbucks grew the brand through aggressive1
o #roduct )evelopment
Brand 4"tensions1 Ney issue1 #erceived Git
#roduct cquisitions1 Ney issue1 $omplementarity
o *arket )evelopment
23;
Eew $hannels F 8utlets1 Ney Issue1 ?elative 7trength of
Images F $onsumer bility to $ompartmentali%e
Eew Deographies1 Ney Issue1 Transferability F ?elevance of
Brand .alues F #8)
7tarbucks faces typical brand leader challenges
o *ore focused competition
o $onsumer backlash
7ome possible advice1
o Beware of over(e"pansion F over(e"posure
o )on!t lose sight of flagship products
o )evelop stronger communications
236