Dr.Neeraj Anand
Associae Pro!essor" CMES" UPES
ANS$UL TOMAR (R%&%&%'%%()
UTSA) NE*I (R%&%&%'%+%)
)I)E, -A)ERI (R%&%&%'%+()
MBA (Oi. & *as)" II Se/eser

Acknowledgement I
Certificate from the candidate II
Certificate from the Guide III
Preface IV
Executive summary V

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It gives us a great sense of achievement and pleasure to present
this report on out MBA research project undertaken during the
second semester (Ist year) as a part of our curriculum !e o"e
special de#t and gratitude to $r %eeraj Anand (&rogram $irector'
()*M) for his consistent support and invalua#le guidance
throughout this endeavor !henever "e "ere pu++led and
confused a#out the concepts' his innovative ideas gave us a "ay
to proceed ,is sincerity' thoroughness and perseverance had
#een a great source of inspiration for us It is only his cogni+ant
guidance and motivation that our e-orts sa" light of the day
!e also take this opportunity to ackno"ledge the contri#ution of
all the faculty mem#ers of the *M.) engineering department "ho
are guiding us during our MBA "ithout "hich "e "ouldn/t have
#een a#le to understand the concepts involved
0inally' "e ackno"ledge ourselves for our individual e-orts in the
completion of this project
23)A4 %.5I
4I4.6 7A4.1I
!e here#y declare that the project entitled 1Co/2arison o!
Brand Fai.3res & Brand S3ccess4Se.eced Cases5 su#mitted
for the 1esearch in our MBA &rogram is our original "ork and the
project has not formed the #asis for the a"ard of any degree'
associateship' fello"ship or any other similar titles
)ignature 9f the *andidate:
&lace: $ehradun
$ate: 31;<3;2<<=
2tsav %egi
4ivek 7averi
3his is to certify that the "ork contained in this report on
?*omparison of Brand 0ailures @ )uccessA)elected *asesB #y
Anshul' 2tsav %egi and 4ivek 7averi student of MBA(9il @ 5as
Management)'*ollege of Management @ .conomic )tudies '
2niversity 9f &etroleum @ .nergy )tudies' $ehradun "as done
under my guidance and supervision for their 1esearch &roject
(Brand Management) during the IInd semester
3he "ork has #een completed to my satisfaction
$r %eeraj Anand
&lace: CCCCCCCCCCCCC (*ollege 9f Management @
.conomic )tudies)
2niversity of &etroleum @ .nergy
!e feel a sense of achievement on completion of our 1esearch &roject(Brand
Management) on *omparison of Brand 0ailures @ )uccess
!e undertook the Brand Management for t"o reasons 0irstly' it involves
nearly all the marketing concepts "hich is very essential for no"AaAdays
competitive "orld of glo#alised era
)econdly' as a management students it is very important for us to
understand that "hat is the necessity of #rand @ ho" a #rand management
aids the organi+ation to increase its market share ' to generate trust @ faith
in customer perception
!e have tried to present a #lend of Eualitative and Euantittive aspects
pertaining to #rand management #y giving the inputs and learnings given in
our MBA @ acEuired #y us through our "ork eFperience !e have tried our
#est to keep our "ork a"ay from errors #ut still "e apologise if "e made any
3his report has seen the daylight due to the e-orts of our project guide $r
%eeraj Anand and the faculty mem#ers of the *M.) $epartment of 2&.) '
$ehradun and "e thank them dearly
!e hope "e could come up "ith a report that "ill #e a true reGection of the
e-orts put in #y us

Building and properly managing #rand eEuity has #ecome a priority for
companies of all si+es' in all types of industries' in all types of markets After
all' strong #rand eEuity Go" customer loyalty and proIts 3he re"ards of
having a strong #rand are clear
3he concept of #rand management hinges on the use of marketing
techniEues that "ould optimi+e #rand recognition 3hese include activities
designed to increase the perceived value of #rand names to target
customers !ith eJcient #rand management' an increase in #ranch eEuity
and #ranch franchise can #e eFpected Brand eEuity is commonly deIned as
an asset that is dependent on the mind associations of consumers It can #e
measured through Inancial data' through #rand eFtension and consumerA
#ased attitudes Brand eEuity can #e measured Inancially #y determining
ho" much a customer is "illing to pay for a particular product or service It
may also #e measured through #rand eFtension or the use of the same
#rand name for a product or service that can #e classiIed in another
category (astly' #rand eEuity can #e assessed #ased on the general attitude
of consumers to"ard a particular #rand name 9nce a #rand has already
gained "idespread recognition' companies can #eneIt from reduced
promotional costs and larger market shares
Brand evaluation is crucial in e-ective #rand management 3his process
ena#les marketers to o#tain a more accurate idea a#out ho" po"erful a
#rand name is In turn' this "ill help marketers decide "hat their future
marketing strategy "ould #e )ome of the more common metrics used in
measuring a #rand are #rand perception' #rand Inancial value and #rand
089 !oc3s on !ai.3re:
3he aim of this research is to provide Lho" not to/ advice #y dra"ing on
some of the largest #randing #lunders of all time Brands "hich set sail "ith
the help of multiAmillion dollar advertising campaigns shortly #efore sinking
"ithout trace are clear contenders ,o"ever' the research "ill also look at
ackno"ledged #rand mistakes made #y usually successful companies such
as 4irgin' Mc$onald/s' IBM' *ocaA*ola' 5eneral Motors and many others
!elcome' then' to the #rand graveyard "here companies have either put
their Gagging #rand to rest or have allo"ed it to stagger around "ith no
direction in a state of lim#o !hile these #randing Lhorror stories/ may
suggest that failure is inevita#le' their eFample has helped to identify the key
danger areas It is hoped then' that this research "ill provide an illuminating'
if rather frightening read $on/t have nightmares
3he process of #randing "as developed to protect products from failure 3his
is easy to see if "e trace this process #ack to its 1=thAcentury origins In the
1KK<s' companies such as *amp#ell/s' ,ein+ and Muaker 9ats "ere gro"ing
ever more concerned a#out the consumer/s reaction to massAproduced
products Brand identities "ere designed not only to help these products
stand out' #ut also to reassure a pu#lic anFious a#out the "hole concept of
factoryAproduced goods By adding a Lhuman/ element to the product'
#randing put the 1=thcentury shoppers/ minds at rest 3hey may have once
placed their trust in their friendly shopkeeper' #ut no" they could place it in
the #rands themselves' and the smiling faces of 2ncle Ben or Aunt Nemima
"hich #eamed do"n from the shop shelves 3he failure of massAproduced
items that the factory o"ners had dreaded never happened 3he #rands had
saved the day 0astAfor"ard to the 21st century and a di-erent picture
emerge %o" it is the #rands themselves that are in trou#le 3hey have
#ecome a victim of their o"n success If a product fails' it/s the #rand that/s
at fault 3hey may have helped companies such as Mc$onald/s' %ike' *ocaA
*ola and Microsoft #uild glo#al empires' #ut #rands have also transformed
the process of marketing into one of perceptionA#uilding 3hat is to say'
image is no" everything *onsumers make #uying decisions #ased around
the perception of the #rand rather than the reality of the product !hile this
means #rands can #ecome more valua#le than their physical assets' it also
means they can lose this value overnight After all' perception is a fragile
If the #rand image #ecomes tarnished through a media scandal or
controversial incident or even a rumour spread via the Internet' then the
company as a "hole can Ind itself in deep trou#le Oet companies cannot opt
out of this situation 3hey cannot turn the clock #ack to an age "hen
#randing didn/t matter And #esides' they can gro" faster than ever #efore
through the creation of a strong #rand identity
)o #randing is no longer simply a "ay of averting failure It is everything
*ompanies live or die on the strength of their #rand Oet despite the fact that
#randing is more important than at any previous time' companies are still
getting it "rong In fact' they are "orse at it than ever #efore Brands are
failing every single day and the company eFecutives are left scratching their
heads in #aPement
As the eFamples sho"' #rand failure is not the preserve of one certain type
of #usiness 5lo#al giants such as *ocaA*ola and Mc$onald/s have proved
just as likely to create #rand Gops as smaller and younger companies "ith
little marketing eFperience It "ill also #ecome clear that companies do not
learn from each other/s mistakes In fact' the opposite seems to happen
0ailure is an epidemic It is contagious Brands "atch each other and
replicate their mistakes 0or instance' "hen the themed restaurant &lanet
,olly"ood "as still struggling to make a proIt' a group of supermodels
thought they should follo" the formula "ith their o"n 0ashion *afQ
*ompanies are starting to su-er from Llemming syndrome/ 3hey are so #usy
follo"ing the competition that they don/t reali+e "hen they are heading
to"ards the cli-Aedge 3hey see rival companies apply their #rand name to
ne" products' so they decide to do the same 3hey see others dive into ne"
untested markets' so they do too !hile *ocaA*ola and Mc$onald/s may #e
a#le to a-ord the odd costly #randing mistake' smaller companies cannot
0or them' failure can #e fatal
3he #randing process "hich "as once designed to protect products is no"
itself Illed "ith danger !hile this danger can never #e completely
eliminated' #y learning from the #ad eFamples of others it is at least possi#le
to identify "here the main threats lie
089 <rands !ai.:
A long' long time ago in a galaFy far a"ay' products "ere responsi#le for the
fate of a company !hen a company noticed that its sales "ere Gagging' it
"ould come to one conclusion: its product "as starting to fail %o" things
have changed *ompanies don/t #lame the product' they #lame the brand It
isn/t the physical item sitting on the shop shelf at fault' #ut rather "hat that
item represents' "hat it conjures up in the #uyer/s mind 3his shift in
thinking' from productA#lame to #randA#lame' is therefore related to the "ay
#uyer #ehavior has changed L3oday most products are #ought' not sold'/
"rite Al and (aura 1ies in The 22 Immutable Laws of Branding LBranding
?presellsB the product or service to the user Branding is simply a more
eJcient "ay to sell things/ Although this is true' this ne" focus means that
perfectly good products can fail as a result of #ad #randing )o "hile
#randing raises the re"ards' it also heightens the risks )cott Bed#ury'
)tar#ucks/ former viceApresident of marketing' controversially admitted that
Lconsumers don/t truly #elieve there/s a huge di-erence #et"een products'/
"hich means #rands have to esta#lish Lemotional ties/ "ith their customers
,o"ever' emotions aren/t to #e messed "ith 9nce a #rand has created that
necessary #ond' it has to handle it "ith care 9ne step out of line and the
customer may not #e "illing to forgive 3his is ultimately "hy all #rands fail
)omething happens to #reak the #ond #et"een the customer and the #rand
3his is not al"ays the fault of the company' as some things really are #eyond
their immediate control (glo#al recession' technological advances'
international disasters etc) ,o"ever' more often than not' "hen #rands
struggle or fail it is usually do"n to a distorted perception of either the
#rand' the competition or the market 3his altered vie" is a result of one of
the follo"ing seven deadly sins of #randing:
Brand amnesia- 0or old #rands' as for old people' memory #ecomes an
increasing issue !hen a #rand forgets "hat it is supposed to stand for' it
runs into trou#le 3he most o#vious case of #rand amnesia occurs "hen a
venera#le' longAstanding #rand tries to create a radical ne" identity' such as
"hen *ocaA*ola tried to replace its original formula "ith %e" *oke 3he
results "ere disastrous
Brand ego- Brands sometimes develop a tendency for overAestimating their
o"n importance' and their o"n capa#ility 3his is evident "hen a #rand
#elieves it can support a market singleAhandedly' as &olaroid did "ith the
instant photography market It is also apparent "hen a #rand enters a ne"
market for "hich it is clearly illAsuited' such as ,arley $avidson trying to sell
Brand megalomaniaA .gotism can lead to megalomania !hen this happens'
#rands "ant to take over the "orld #y eFpanding into every product category
imagina#le )ome' such as 4irgin' get a"ay "ith it Most (esser #rands'
ho"ever' do not
Brand deceptionA L,uman kind cannot #ear very much reality'/ "rote 3 )
.liot %either can #rands Indeed' some #rands see the "hole marketing
process as an act of covering up the reality of their product In eFtreme
cases' the trend to"ards #rand Iction can lead to do"nright lies 0or
eFample' in an attempt to promote the Ilm A Knight’s Tale one )ony
marketing eFecutive invented a critic' and a suita#le Euote' to put onto the
promotional poster In an age "here markets are increasingly connected' via
the Internet and other technologies' consumers can no longer #e deceived
Brand fatigue- )ome companies get #ored "ith their o"n #rands Oou can
see this happening to products "hich have #een on the shelves for many
years' collecting dust !hen #rand fatigue sets in creativity su-ers' and so
do sales
Brand paranoia- 3his is the opposite of #rand ego and is most likely to occur
"hen a #rand faces increased competition 3ypical symptoms include: a
tendency to Ile la"suits against rival companies' a "illingness to reinvent
the #rand every siF months' and a longing to imitate competitors
Brand irrelevanceA !hen a market radically evolves' the #rands associated
"ith it risk #ecoming irrelevant and o#solete Brand managers must strive to
maintain relevance #y staying ahead of the category' as 6odak is trying to do
"ith digital photography
Brand /98s
!hen their #rands fail companies are al"ays taken #y surprise 3his is
#ecause they have had faith in their #rand from the start' other"ise it "ould
never have #een launched in the Irst place ,o"ever' this #rand faith often
stems from an o#scured attitude to"ards #randing' #ased around one or a
com#ination of the follo"ing #rand myths:
If a product is good, it will succeed 3his is #latantly untrue In fact' good
products are as likely to fail as #ad products BetamaF' for instance' had
#etter picture and audio Euality than 4,) video recorders But it failed
Brands are more liel! to succeed than fail !rong Brands fail every single
day According to some estimates' K< per cent of all ne" products fail upon
introduction' and a further 1< per cent die "ithin Ive years By launching a
product you are taking a one in ten chance of longAterm success As 1o#ert
McMath' a former &rocter @ 5am#le marketing eFecutive' once put it: Lit/s
easier for a product to fail than it is to survive/
Big companies will alwa!s have brand success 3his myth can #e dismantled
"ith t"o "ords: %e" *oke As this report "ill sho"' #ig companies have
managed to have at least as much failure as success %o company is #ig
enough to #e immune to #rand disaster In fact' many of the eFamples "ill
highlight one of the main paradoFes of #randing R namely' that as #rands get
#igger and more successful' they also #ecome more vulnera#le and eFposed
"trong brands are built on advertising Advertising can support #rands' #ut it
can/t #uild them from scratch Many of the "orld/s #iggest #rand failures
accompanied eFtremely eFpensive advertising campaigns
If it’s something new, it’s going to sell 3here may #e a gap in the market'
#ut it doesn/t mean it has to #e Illed 3his lesson "as learnt the hard "ay for
1N1 %a#isco ,oldings "hen they decided to launch a Lsmokeless/ cigaretteLIt
took them a "hile to Igure out that smokers actually like the smoke part of
smoking'/ one commentator said at the time
"trong brands protect products 3his may have once #een the case' #ut no"
the situation is reversed )trong products no" help to protect #rands As the
cases sho"' the product has #ecome the am#assador of the #rand and even
the slightest decrease in Euality or a hint of trou#le "ill a-ect the #rand
identity as a "hole 3he consumer can cause the most ela#orate #rand
strategy to end in failure
.very company venturing into a ne" international market has to tread very
carefully In a #id to rush into uncharted territories' they often commit grave
errors "hich prove very diJcult to undo later on )ome of these errors are
a#solutely un"arranted and provide no logic as to "hy the #est marketing
companies across the "orld committed them A fe" eFamples
)candinavian vacuum manufacturer .lectroluF used the follo"ing in an
American ad campaign: ?%othing sucks like an .lectroluFB
3he name *ocaA*ola in *hina "as Irst rendered as 6eAkouAkeAla
2nfortunately' the *oke company did not discover until after thousands of
signs had #een printed that the phrase means ?#ite the "aF tadpoleB or
?female horse stu-ed "ith "aFB depending on the dialect *oke then
researched 8<'<<< *hinese characters and found a close phonetic
eEuivalent' kokouAkoAle' "hich can #e loosely translated as ?happiness in the
In 3ai"an' the translation of the &epsi slogan ?*ome alive "ith the &epsi
5enerationB came out as ?&epsi "ill #ring your ancestors #ack from the
Also in *hinese' the 6entucky 0ried *hicken slogan ?IngerAlickin/ goodB came
out as ?eat your Ingers o-B
3he American slogan for )alem cigarettes' ?)alem A 0eeling 0ree'B =o
translated in the Napanese market into ?!hen smoking )alem' you feel so
refreshed that your mind seems to #e free and emptyB
!hen 5eneral Motors introduced the *hevy %ova in )outh America' it "as
apparently una"are that ?no vaB means ?it "on/t goB After the company
Igured out "hy it "asn/t selling any cars' it renamed the car in its )panish
markets to the *ari#e 0ord had a similar pro#lem in Bra+il "hen the &into
Gopped 3he company found out that &into "as Bra+ilian slang for ?tiny male
genitalsB 0ord pried all the nameplates o- and su#stituted *orcel' "hich
means horse
!hen &arker &en marketed a #allApoint pen in MeFico' its ads "ere supposed
to say ?It "on/t leak in your pocket and em#arrass youB ,o"ever' the
company mistakenly thought the )panish "ord ?em#ara+arB meant
em#arrass Instead the ads said that ?It "ont leak in your pocket and make
you pregnantB
An American 3Ashirt maker in Miami printed shirts for the )panish market
"hich promoted the &ope/s visit Instead of the desired ?I )a" the &opeB in
)panish' the shirts proclaimed ?I )a" the &otatoB
*hickenAMan 0rank &erdue/s slogan' ?It takes a tough man to make a tender
chicken'B got terri#ly mangled in another )panish translation A photo of
&erdue "ith one of his #irds appeared on #ill#oards all over MeFico "ith a
caption that eFplained ?It takes a hard man to get a chicken arousedB
,untA!esson introduced its Big Nohn products in 0rench *anada as 5ros Nos
#efore Inding out that the phrase' in slang' means ?#ig #reastsB In this
case' ho"ever' the name pro#lem did not have a noticea#le e-ect on sales
*olgate introduced a toothpaste in 0rance called *ue' the name of a
notorious porno mag In Italy' a campaign for )ch"eppes 3onic !ater
translated the name into )ch"eppes 3oilet !ater
Napan/s secondAlargest tourist agency "as mystiIed "hen it entered .nglishA
speaking markets and #egan receiving reEuests for unusual seF tours 2pon
Inding out "hy' the o"ners of 6inki %ippon 3ourist *ompany changed its
• Brand I/a=e
)ome people distinguish the psychological aspect of a #rand from the
eFperiential aspect 3he eFperiential aspect consists of the sum of all points
of contact "ith the #rand and is kno"n as the <rand e>2erience 3he
psychological aspect' sometimes referred to as the <rand i/a=e' is a
sym#olic construct created "ithin the minds of people and consists of all the
information and eFpectations associated "ith a product or service
• Brand Reco=niion
A #rand "hich is "idely kno"n in the marketplace acEuires <rand
reco=niion !hen #rand recognition #uilds up to a point "here a #rand
enjoys a critical mass of positive sentiment in the marketplace' it is said to
have achieved <rand !ranc8ise 9ne goal in #rand recognition is the
identiIcation of a #rand "ithout the name of the company present 0or
eFample' $isney has #een successful at #randing "ith their particular script
font (originally created for !alt $isneySs TsignatureT logo)' "hich it used in
the logo for gocom *onsumers may look on #randing as an important value
added aspect of products or services' as it often serves to denote a certain
attractive Euality or characteristic (see also #rand promise) 0rom the
perspective of #rand o"ners' #randed products or services also command
higher prices !here t"o products resem#le each other' #ut one of the
products has no associated #randing (such as a generic' storeA#randed
product)' people may often select the more eFpensive #randed product on
the #asis of the Euality of the #rand or the reputation of the #rand o"ner
• Brand na/e
3he #rand name is often used interchangea#ly "ithin T#randT' although it is
more correctly used to speciIcally denote "ritten or spoken linguistic
elements of any product In this conteFt a T#rand nameT constitutes a type of
trademark' if the #rand name eFclusively identiIes the #rand o"ner as the
commercial source of products or services A #rand o"ner may seek to
protect proprietary rights in relation to a #rand name through trademark
registration Advertising spokespersons have also #ecome part of some
#rands' for eFample: Mr !hipple of *harmin toilet tissue and 3ony the 3iger
of 6elloggSs3he act of associating a product or service "ith a #rand has
#ecome part of pop culture Most products have some kind of #rand identity'
from common ta#le salt to designer clothes
• Brand ideni9
,o" the #rand o"ner "ants the consumer to perceive the #rand A and #y
eFtension the #randed company' organi+ation' product or service 3he #rand
o"ner "ill seek to #ridge the gap #et"een the #rand image and the #rand
identity Brand identity is fundamental to consumer recognition and
sym#oli+es the #randSs di-erentiation from competitors
• Brandin= a22roac8es
 Co/2an9 na/e
9ften' especially in the industrial sector' it is just the companySs name "hich
is promoted (leading to one of the most po"erful statements of T#randingTU
the saying' #efore the companySs do"ngrading' T%o one ever got Ired for
#uying IBMT)
In this case a very strong #rand name (or company name) is made the
vehicle for a range of products (for eFample' MercedesABen+ or Black @
$ecker) or even a range of su#sidiary #rands (such as *ad#ury $airy Milk'
*ad#ury 0lake or *ad#ury 0ingers in the 2nited )tates)
 Indi?id3a. <randin=
.ach #rand has a separate name (such as )evenA2p or %ivea )un
(Beiersdorf))' "hich may even compete against other #rands from the same
company (for eFample' &ersil' 9mo' )urf and (ynF are all o"ned #y 2nilever)
 Ai3de <randin=
Ai3de <randin= is the choice to represent a larger feeling' "hich is not
necessarily connected "ith the product or consumption of the product at all
Marketing la#eled as attitude #randing include that of %ike' )tar#ucks' 3he
Body )hop' )afe"ay' and Apple *omputer
In the 2<<< #ook' %o (ogo'
attitude #randing is descri#ed #y %aomi 6lein as a Tfetish strategyT
TA great #rand raises the #ar AA it adds a greater sense of purpose to the
eFperience' "hether itSs the challenge to do your #est in sports and Itness'
or the aJrmation that the cup of co-ee youSre drinking really mattersT A
,o"ard )chult+ (president' ceo and chairman of )tar#ucks
 @No4<rand@ <randin=
1ecently a num#er of companies have successfully pursued T%oABrandT
strategies' eFamples include the Napanese company Muji' "hich means T%o
la#el' Euality goodsT in .nglish Although there is a distinct Muji #rand' Muji
products are not #randed 3his noA#rand strategy means that little is spent
on advertisement or classical marketing and MujiSs success is attri#uted to
the "ordAofAmouth' a simple shopping eFperience and the antiA#rand
movement Another #rand "hich is thought to follo" a noA#rand strategy is
American Apparel' "hich like Muji' does not #rand its products
 Deri?ed <rands
In this case the supplier of a key component' used #y a num#er of suppliers
of the endAproduct' may "ish to guarantee its o"n position #y promoting
that component as a #rand in its o"n right 3he most freEuently Euoted
eFample is Intel' "hich secures its position in the &* market "ith the slogan
TIntel InsideT
• Brand e>ension
3he eFisting strong #rand name can #e used as a vehicle for ne" or modiIed
productsU for eFample' many fashion and designer companies eFtended
#rands into fragrances' shoes and accessories' home teFtile' home decor'
luggage' (sunA) glasses' furniture' hotels' etc
Mars eFtended its #rand to ice cream' *aterpillar to shoes and "atches'
Michelin to a restaurant guide' Adidas and &uma to personal hygiene $unlop
eFtended its #rand from tires to other ru##er products such as shoes' golf
#alls' tennis racEuets and adhesives
3here is a di-erence #et"een #rand eFtension and line eFtension !hen
*ocaA*ola launched T$iet *okeT and T*herry *okeT they stayed "ithin the
originating product category: nonAalcoholic car#onated #everages &rocter @
5am#le (&@5) did like"ise eFtending its strong lines (such as 0airy )oap) into
neigh#oring products (0airy (iEuid and 0airy Automatic) "ithin the same
category' dish "ashing detergents
• M3.i4<rands
Alternatively' in a market that is fragmented amongst a num#er of #rands a
supplier can choose deli#erately to launch totally ne" #rands in apparent
competition "ith its o"n eFisting strong #rand (and often "ith identical
product characteristics)U simply to soak up some of the share of the market
"hich "ill in any case go to minor #rands 3he rationale is that having 3 out
of 12 #rands in such a market "ill give a greater overall share than having 1
out of 1< (even if much of the share of these ne" #rands is taken from the
eFisting one) In its most eFtreme manifestation' a supplier pioneering a ne"
market "hich it #elieves "ill #e particularly attractive may choose
immediately to launch a second #rand in competition "ith its Irst' in order to
preAempt others entering the market
Individual #rand names naturally allo" greater GeFi#ility #y permitting a
variety of di-erent products' of di-ering Euality' to #e sold "ithout confusing
the consumerSs perception of "hat #usiness the company is in or diluting
higher Euality products
9nce again' &rocter @ 5am#le is a leading eFponent of this philosophy'
running as many as ten detergent #rands in the 2) market 3his also
increases the total num#er of TfacingsT it receives on supermarket shelves
)ara (ee' on the other hand' uses it to keep the very di-erent parts of the
#usiness separate X from )ara (ee cakes through 6i"i polishes to (S.ggs
pantyhose In the hotel #usiness' Marriott uses the name 0airIeld Inns for its
#udget chain (and 1amada uses 1ode"ay for its o"n cheaper hotels)
*anni#ali+ation is a particular pro#lem of a Tmulti#randT approach' in "hich
the ne" #rand takes #usiness a"ay from an esta#lished one "hich the
organi+ation also o"ns 3his may #e accepta#le (indeed to #e eFpected) if
there is a net gain overall Alternatively' it may #e the price the organi+ation
is "illing to pay for shifting its position in the marketU the ne" product #eing
one stage in this process
• OAn <rands and =enerics
!ith the emergence of strong retailers the To"n #randT' a retailerSs o"n
#randed product (or service)' also emerged as a major factor in the
marketplace !here the retailer has a particularly strong identity (such as
Marks @ )pencer in the 26 clothing sector) this To"n #randT may #e a#le to
compete against even the strongest #rand leaders' and may outperform
those products that are not other"ise strongly #randed *oncerns "ere
raised that such To"n #randsT might displace all other #rands (as they have
done in Marks @ )pencer outlets)' #ut the evidence is that X at least in
supermarkets and department stores X consumers generally eFpect to see
on display something over >< per cent (and prefera#ly over D< per cent) of
#rands other than those of the retailer Indeed' even the strongest o"n
#rands in the 26 rarely achieve #etter than third place in the overall market
3his means that strong independent #rands (such as 6elloggSs and ,ein+)'
"hich have maintained their marketing investments' are likely to continue
their strong performance More than >< per cent of 26 0M*5 #rand leaders
have held their position for more than t"o decades' although it is argua#le
that those "hich have s"itched their #udgets to T#uy spaceT in the retailers
may #e more eFposed
3he strength of the retailers has' perhaps' #een seen more in the pressure
they have #een a#le to eFert on the o"ners of even the strongest #rands
(and in particular on the o"ners of the "eaker third and fourth #rands)
1elationship marketing has #een applied most often to meet the "ishes of
such large customers (and indeed has #een demanded #y them as
recognition of their #uying po"er) )ome of the more active marketers have
no" also s"itched to Scategory marketingS A in "hich they take into account
all the needs of a retailer in a product category rather than more narro"ly
focusing on their o"n #rand
At the same time' pro#a#ly as an outgro"th of consumerism' TgenericT (that
is' e-ectively un#randed) goods have also emerged 3hese made a positive
virtue of saving the cost of almost all marketing activitiesU emphasi+ing the
lack of advertising and' especially' the plain packaging ("hich "as' ho"ever'
often simply a vehicle for a di-erent kind of image) It "ould appear that the
penetration of such generic products peaked in the early 1=K<s' and most
consumers still appear to #e looking for the Eualities that the conventional
#rand provides
!hether you reali+e it or not' every #usiness has a #rand ,o" you develop
it is the di-erence #et"een creating your point of distinction or #lending in
"ith the cro"dU projecting a positive image or eliciting a negative oneU
gro"ing your #usiness or merely eFistingU successfully reaching your target
audience or missing the mark altogether Brand does matter 3hose "ho
#uild their #rand and manage it successfully can proIt mightily ,ere are siF
principles for creating and #uilding #rand as "ell as realA"orld eFamples of
"hy it matters
;) Sron= <rands ri==er 8o <3ons in 8e cons3/er.
!e #uy for emotional reasons and then rationali+e those purchases 6no"
"hat triggers your target audience 0or 4olvo #uyers' it/s safety In fact' 4olvo
and safety have #ecome synonymous 4olvo has taken this emotional
connection and strategically #uilt its #rand around safety 3he company/s
!e# site says' ?.Fplore the #eauty of safety "ith 2<<D 4olvosB 3he site even
has a ?4olvo )aved My (ife *lu#B section "ith stories of real people "ho "ere
protected #y their 4olvos in car accidents 3hese stories are emotional' #ut
also underscore ho" the 4olvo #rand is associated "ith safety As a result'
the company has developed a very loyal customer #ase
&) Brand isnB j3s a s/ar .o=o and a=.ine.
3hese are merely applications of the true #randXa concept that eFists in the
mind of your consumer Oour #rand is an eFperience for the customer
%o#ody delivers this idea #etter than Master*ardY "ith their ?&ricelessB
advertising campaign Although they rely on consumers to purchase items
"ith their Master*ardY credit cards' they kno" that #uyers "ant to feel
good a#out their purchases !hat "ill make them feel that "ayZ 3he
eFperience tied to that purchase ?3here are some things money can/t #uy
0or everything else there/s Master*ardYB Although they ackno"ledge that
there are some eFperiences you can/t #uy' they also elude to the fact that
there are many more eFperiences that you can #uy In other "ords' they
make the consumer feel as though Master*ardY can give them the
eFperiences they desire .Fperiences are reinforced through the company/s
regular promotions in "hich cardholders can "in trips' cars' cash and in a
recent promotion' a house
A #rilliant ad campaign: 3housands of dollars
A D< second television commercial: ,undreds of thousand of dollars
Building a #rand that makes customers feel good a#out their purchases and
in dou#leAdigit revenue gro"th for Master*ardY: &riceless
C) ,noA A8a c3so/ers associae Ai8 9o3r <rand and 8oA o
ca2ia.iDe on i.
Oou kno" that #rand taps into emotion )ince customers #uy for emotional
reasons' their perceptions color your #rand 3ake Martha )te"art )he is "ell
a"are that living "ell appeals to consumers on an emotional level ,er
company' Martha )te"art (iving 9mnimedia (M)(9)' has #randed itself
accordingly' stating on the !e# site that ?Martha )te"art shares the
creative principles and practical ideas that have made her America/s most
trusted guide to stylish livingB .ven "hen Martha "as charged "ith insider
trading' she continued to reinforceXeven capitali+e onXthe ?stylish livingB
#rand from #ehind #ars: making delicious meals in the prison micro"ave'
collecting apples from the prison grounds to make applesauce' entering
*hristmas decorating contests' etc In the process' she "on the admiration of
her fello" inmates and the continued #rand loyalty of her customers 3he
M)(9 #rand remained strong in spite of the challenges the company faced
3oday' it is a nearly [><< million empire "ith television sho"s' #ooks' a
maga+ine' house "ares merchandised through 6mart' a catalog #usiness and
a furniture line "ith Bernhardt M)(9 has deftly mastered the art of
convincing consumers that they can live the good life 1einforcing'
capitali+ing and continuing to #uild on that #rand has "orked and ?it/s a
good thingB for M)(9
Brand is 2ar ar" 2ar science.
3he #alance is a delicate one *reativity strengthens and enlivens #rand But
the science of #randing is eEually important Oou can/t #uild a successful
#rand "ithout #oth Oou must understand your target audience/s likes and
dislikes as "ell as their hot #uttons A #rand campaign can #e artistically
presented' #ut if the consumer doesn/t kno" "hat you/re selling or can/t
identify "ith it' your campaign has failed 3he $isney *ompany has done a
masterful jo# of creating a #rand that #lends art and science 4isit the
company/s overvie" section on their "e# site and you "ill understand "hy
this approach has created a po"erful #rand "orld"ide ?3he !alt $isney
*ompany has remained faithful in its commitment to producing unparalleled
entertainment eFperiences #ased on its rich legacy of Euality creative
content and eFceptional storytelling 3oday' $isney is divided into four major
#usiness segments: )tudio .ntertainment' &arks and 1esorts' *onsumer
&roducts' and Media %et"orks .ach segment consists of integrated' "ellA
connected #usinesses that 9perate in concert to maFimi+e eFposure and
gro"th "orld"ideB
*areful market research' focus groups' maFimi+ing #rand eFposure' continual
education and advanced technologies are all part of $isney/s #rand science
3he organi+ation is in tune "ith "hat their target audience "ants:
"holesome' family entertainment in a "orld of imagination And' they are
constantly measuring' evaluating and adjusting their e-orts to maintain this
#rand 3he artistic component of their #rand o#viously can #e found in the
creativity and Euality of amusement parks' movies' merchandise and media
channels (ie television' "e#' maga+ines) that have represented the $isney
#rand since 1=23 3ogether' art and science have #uilt the "orld/s largest
entertainment company
+) S3ccess!3. <rands are 8e s3/ o! a.. o! is 2ars.
As illustrated a#ove' $isney has #een a#le to address all aspects of the
#randing process to create a po"erful #rand and an organi+ation that has
continued to gro" in si+e' o-erings and sales over the last K3 years
(ike"ise' multiple aspects of your #usiness must integrate to drive the
e-ectiveness of your #rand )ome of these aspects include:
Undersandin= 9o3r /arEe and 9o3r c3so/er.
Brands should #e customerAdriven !hat does the customer "ant or needZ
!hat kind of eFperience does the customer "ant to have "ith my #randZ
,o" does my product;service make the customer feelZ Oou cannot a-ect
#rand perceptions of your #usiness "ithout understanding your customers
Ens3rin= 8a <rand is rein!orced Ai8in 8e cor2oraion as Ae.. as
A strong #rand is represented in every customer touch point including
customer service' direct sales' call center interactions' product;service
delivery and all other direct and indirect contact "ith your customers and;or
the media Marketing alone cannot carry a #rand Moreover' your #rand is
#uilt on customer eFperience and perception 3he #est marketing and
advertising means nothing if your #rand isn/t carried #eyond it or the
promises don/t ring true
ReFecin= 9o3r <3siness ?a.3es and =oa.s 8ro3=8 9o3r <rand.
It is one thing to imply that your #rand reGects these philosophies or valuesU
ho"ever' it is Euite another to #ack up those assertions "ith speciIc actions
In doing so' you "ill strengthen your #rand as "ell as customer loyalty
$isney presents a great eFample 3he company has a "orld"ide outreach
program' "hich supports pu#lic service initiatives' community outreach and
volunteer programs helping families' children and the arts' as "ell as a
program that supports environmental e-orts $isney/s environmental #eliefs
have led the company to create 3he $isney !ildlife *onservation 0und 3he
fund has distri#uted more than [D million among 2<< environmental
conservation projects in more than t"o do+en countries 3heir "orld"ide
outreach program has donated more than [1=< million in cash' pu#lic service
announcements and volunteerism glo#ally $isney employees volunteer
their time and talents in their communities' contri#uting more than 8<2'<<<
hours of service to outreach projects 3hese actions are deli#erate and help
project a communityAfocused and environmentally conscious image In turn'
this concept drives customers/ perceptions of the $isney #rand as a magical
kingdom "here all is good
Cra!in= e>erna. co//3nicaions" <o8 ora. and Arien" o 2ro2er.9
re2resen 9o3r <rand.
3he message and tone in these communications should align "ith your
#rand .very opportunity in front of your customer is an opportunity to
reinforce #rand A visit to any of the $isney properties reinforces the
importance of consistently representing your #rand *ast mem#ers (as they
call their employees) adhere to strict #rand guidelinesXfrom meticulous
detail a#out their appearance to ho" they communicate "ith park guests
&ark cast mem#ers and characters are "arm' friendly and helpful 3heir
interactions "ith customers convey the notion that they truly care a#out
children and families
Moreover' $isney/s career site states' ?Oes' there really are dream jo#s,ere'
the #ottom line is imagination' our culture is magic and "onder' and reEuired
previous "ork eFperience: childhood dreamsB !hen employees feel that
they are living out a dream' they "ill perform #etter and customer
interactions "ill #e stronger As a result' guests "ill "alk a"ay "ith a ?feel
goodB impression and the notion that they really did live out a dream
Re2resenin= 9o3r <rand 8ro3=8 9o3r 2rod3cs and ser?ices.
Mc$onald/s golden arches represent more than ham#urgers 3hey reGect the
company/s commitment to Euality across the #oardXEuality in its food
products as "ell as Euality in its employees' franchises and community
outreach programs 3o reinforce their #rand' the company maintains high
standards throughout the organi+ation 0ranchise operations are held to
rigorous Euality assurance reEuirements 3he company recogni+es ho"
crucial these franchises are to representing the Mc$onald/s #rand As
founder 1ay 6roc once said' ?Mc$onald/s doesn/t confer success on anyone
It takes guts and staying po"er to make it "ith one of our restaurantsB It is
that commitment to superior service that consistently has made Mc$onald/s
the premier franchising company around the "orld 3his same philosophy
eFtends to its community outreach programs like the 1onald Mc$onald
,ouse )ince its inception in 1=H8' more than 1< million families have
#eneIted from the company/s dedication to this program throughout the
() Brands =ain ?a.3e o?er i/eGi! 8e9 are consisen.9 <3i. and
It "orked for %ike (ess than 1> years after their entrance into the
marketplace' the athletic shoe giant #ecame a glo#al #rand 3heir success
came from an intimate understanding of their consumers/ needs and desiresU
continuously introducing innovative productsU esta#lishing good
management practices and' of course' great #randing 3o #uild #rand value
over time' you must give careful attention to ongoing assessment and
management of your #rand' eFploring Euestions such as: $oes my #rand
have a su#stantial and positive impact on salesZ 9n gro"ing market shareZ
*an my customer relate to my #randZ Are "e #uilding #rand loyalty "ith
every customer interactionZ Building your #rand is an evolving process that
should #e a constant driver for your #usiness Oou can/t "ait until something
goes "rong or sales start to plummet Oou must #e proactive in #uilding on
your #rand thoughtfully and consistently 0ollo" %ike/s lead on #uilding
#rand: ?Nust $o ItB Oou "on/t #e sorry
2ltimately' #rand matters And not just for the #ig consumer product giants
like *ocaAcola' %ike and $isney 0or service companies' it is all a#out #rand
Oour company/s success is determined #y the perception your customers
have a#out your services In short' your #rand must gro" "ith your #usiness
Oou need to continuously reevaluate "hat is and isn/t "orking "ith your
#rand in your customer/s mind Brand is not static It needs to evolve in order
to thrive It must also reGect philosophical and operational changes "ithin
the company It is easy to implement a #rand strategy and then leave it to its
o"n devices ,o"ever' if you seek to #uild strength and longevity in
#usiness' then your #rand must #e tended to carefully and regularly
;. NeA CoEe
3hink of a #rand success story and you may "ell think of *ocaA*ola Indeed'
"ith nearly 1 #illion *ocaA*ola drinks sold every single day' it is the "orld/s
most recogni+ed #rand Oet in 1=K> the *ocaA*ola *ompany decided to
terminate its most popular soft drink and replace it "ith a formula it "ould
market as %e" *oke 3o understand "hy this potentially disastrous decision
"as made' it is necessary to appreciate "hat "as happening in the soft
drinks marketplace In particular' "e must take a closer look at the gro"ing
competition #et"een *ocaA*ola and &epsiA*ola in the years and even
decades prior to the launch of %e" *oke 3he relationship #et"een the archA
rivals had not #een a healthy one
Although marketing eFperts have #elieved for a long time that the
competition #et"een the t"o companies had made consumers more colaA
conscious' the Irms themselves rarely sa" it like that Indeed' the *ocaA*ola
company had even fought &epsiA*ola in a legal #attle over the use of the
"ord Lcola/ in its name' and lost 9utside the courts though' *ocaA*ola had
al"ays #een ahead )hortly after !orld !ar II' Time maga+ine "as already
cele#rating *oke/s Lpeaceful nearAconEuest of the "orld/ In the late 1=><s'
*oke outsold &epsi #y a ratio of more than Ive to one ,o"ever' during the
neFt decade &epsi repositioned itself as a youth #rand 3his strategy "as a
risky one as it meant sacriIcing its older customers to *ocaA*ola' #ut
ultimately it proved successful By narro"ing its focus' &epsi "as a#le to
position its #rand against the old and classic image of its competitor As it
#ecame increasingly seen as Lthe drink of youth/ &epsi managed to narro"
the gap In the 1=H<s' *oke/s chief rival raised the stakes even further #y
introducing the &epsi *hallenge R testing consumers #lind on the di-erence
#et"een its o"n #rand and Lthe real thing/ 3o the horror of *ocaA*ola/s
longstanding company president' 1o#ert !oodru-' most of those "ho
participated preferred &epsi/s s"eeter formula In the 1=K<s &epsi continued
its o-ensive' taking the &epsi *hallenge around the glo#e and heralding the
arrival of the L&epsi 5eneration/ It also signed up cele#rities likely to appeal
to its target market such as $on Nohnson and Michael Nackson (this tactic has
survived into the ne" millennium' "ith Igures like Britney )pears and 1o##ie
!illiams providing more recent endorsements)
By the time 1o#erto 5oi+ueta #ecame chairman in 1=K1' *oke/s num#er one
status "as starting to look vulnera#le It "as losing market share not only to
&epsi #ut also to some of the drinks produced #y the *ocaA*ola company
itself' such as 0anta and )prite In particular the runa"ay success of $iet
*oke "as a dou#leAedged s"ord' as it helped to shrink the sugar cola
market In 1=K3' the year $iet *oke moved into the num#er three position
#ehind standard *oke and &epsi' *oke/s market share had slipped to an allA
time lo" of just under 28 per cent )omething clearly had to #e done to
secure *oke/s supremacy 5oi+ueta/s Irst response to the L&epsi *hallenge/
phenomenon "as to launch an advertising campaign in 1=K8' praising *oke
for #eing less s"eet than &epsi 3he television ads "ere fronted #y Bill
*os#y' at that time one of the most familiar faces on the planet' and clearly
someone "ho "as too old to #e part of the &epsi 5eneration 3he impact of
such e-orts to set *ocaA*ola apart from its rival "as limited *oke/s share of
the market remained the same "hile &epsi "as catching up
Another "orry "as that "hen shoppers had the choice' such as in their local
supermarket' they tended to plump for &epsi It "as only *oke/s more
e-ective distri#ution "hich kept it ahead 0or instance' there "ere still
considera#ly more vending machines selling *oke than &epsi .ven so' there
"as no getting a"ay from the fact that despite the proliferation of soft drink
#rands' &epsi "as "inning ne" customers ,aving already lost on taste' the
last thing *ocaA*ola could a-ord "as to lose its num#er one status 3he
pro#lem' as *ocaA*ola perceived it' came do"n to the product itself
As the &epsi *hallenge had highlighted millions of times over' *oke could
al"ays #e defeated "hen it came do"n to taste 3his seemed to #e
conIrmed #y the success of $iet *oke "hich "as closer to &epsi in terms of
Gavour )o in "hat must have #een seen as a logical step' *ocaA*ola started
"orking on a ne" formula A year later they had arrived at %e" *oke ,aving
produced its ne" formula' the AtlantaA#ased company conducted 2<<'<<<
taste tests to see ho" it fared 3he results "ere over"helming %ot only did it
taste #etter than the original' #ut people preferred it to &epsiA*ola as "ell
,o"ever' if *ocaA*ola "as to stay ahead of &epsiA*ola it couldn/t have t"o
directly competing products on the shelves at the same time It therefore
decided to scrap the original *ocaA*ola and introduced %e" *oke in its place
3he trou#le "as that the *ocaA*ola company had severely underestimated
the po"er of its Irst #rand As soon as the decision "as announced' a large
percentage of the 2) population immediately decided to #oycott the ne"
product 9n 23 April 1=K> %e" *oke "as introduced and a fe" days later the
production of original *oke "as stopped 3his joint decision has since #een
referred to as Lthe #iggest marketing #lunder of all time/ )ales of %e" *oke
"ere lo" and pu#lic outrage "as high at the fact that the original "as no
longer availa#le
It soon #ecame clear that *ocaA*ola had little choice #ut to #ring #ack its
original #rand and formula L!e have heard you'/ said 5oi+ueta at a press
conference on 11 Nuly 1=K> ,e then left it to the company/s chief operating
oJcer $onald 6eough to announce the return of the product
6eough admitted: 3he simple fact is that all the time and money and skill
poured into consumer research on the ne" *ocaA*ola could not measure or
reveal the deep and a#iding emotional attachment to original *ocaA*ola felt
#y so many people 3he passion for original *ocaA*ola R and that is the "ord
for it' passion R "as something that caught us #y surprise It is a "onderful
American mystery' a lovely American enigma' and you cannot measure it
any more than you can measure love' pride or patriotism In other "ords'
*ocaA*ola had learnt that marketing is a#out much more than the product
itself 3he majority of the tests had #een carried out #lind' and therefore
taste "as the only factor under assessment 3he company had Inally taken
&epsi/s #ait and' in doing so' conceded its key #rand asset:
!hen *ocaA*ola "as launched in the 1KK<s it "as the only product in the
market As such' it invented a ne" category and the #rand name #ecame the
name of the product itself 3hroughout most of the last century' *ocaA *ola
capitali+ed on its Loriginal/ status in various advertising campaigns In 1=82'
maga+ine adverts appeared across the 2nited )tates declaring: L3he only
thing like *ocaA*ola is *ocaA*ola itself It/s the real thing/ By launching %e"
*oke' *ocaA*ola "as therefore contradicting its previous marketing e-orts
Its central product hadn/t #een called ne" since the very Irst advert
appeared in the Atlanta #ournal in 1KKD' #illing *ocaA*ola as L3he %e" &op
)oda 0ountain $rink' containing the properties of the "onderful *ocaAplant
and the famous *ola nuts/
In 1=K>' a century after the product launched the last "ord people
associated "ith *ocaA*ola "as Lne"/ 3his "as the company "ith more
allusions to 2) heritage than any other 0ifty years previously' the &ulit+er
&ri+e "inning editor of a 6ansas ne"spaper' !illiam Allen !hite had
referred to the soft drink as the Lsu#limated essence of all America stands for
R a decent thing' honestly made' universally distri#uted' and conscientiously
improved "ith the years/ *ocaA*ola had even #een involved "ith the history
of 2) space travel' famously greeting Apollo astronauts "ith a sign reading
L!elcome #ack to earth' home of *ocaA*ola/ 3o conIne the #rand/s
signiIcance to a Euestion of taste "as therefore completely misguided As
"ith many #ig #rands' the representation "as more signiIcant than the thing
represented' and if any soft drink represented Lne"/ it "as &epsi' not *ocaA
*ola (even though &epsi is a mere decade younger) If you tell the "orld you
have the Lreal thing/ you cannot then come up "ith a Lne" real thing/ 3o
#orro" the comparison of marketing guru Al 1ies it/s Llike introducing a %e"
5od/ 3his contradictory marketing message "as accentuated #y the fact
that' since 1=K2' *oke/s strap line had #een L*oke is it/ %o" it "as telling
consumers that they had got it "rong' as if they had discovered *oke wasn’t
it' #ut rather %e" *oke "as instead
)o despite the tremendous amount of hype "hich surrounded the launch of
%e" *oke (one estimate puts the value of %e" *oke/s free pu#licity at over
2) [1< million)' it "as destined to fail Although *ocaA*ola/s market
researchers kne" enough a#out #randing to understand that consumers
"ould go "ith their #rand preference if the taste tests "eren/t #lind' they
failed to make the connection that these #rand preferences "ould still eFist
once the product "as launched
&epsi "as' perhaps unsurprisingly' the Irst to recogni+e *ocaA*ola/s mistake
!ithin "eeks of the launch' it ran a 34 ad "ith an old man sitting on a park
#ench' staring at the can in his hand L3hey changed my *oke'/ he said'
clearly distressed LI can/t #elieve it/ ,o"ever' "hen *ocaA*ola relaunched
its original coke' redu##ed L*lassic *oke/ for the 2) market' the media
interest s"ung #ack in the #rand/s favor It "as considered a signiIcant
enough event to "arrant a ne"sGash on AB* %e"s and other 2) net"orks
!ithin months *oke had returned to the num#er one spot and %e" *oke had
all #ut faded a"ay Ironically' through the #rand failure of %e" *oke loyalty
to Lthe real thing/ intensiIed In fact' certain conspiracy theorists have even
gone so far as to say the "hole thing had #een planned as a deli#erate
marketing ploy to reaJrm pu#lic a-ection for *ocaA*ola After all' "hat
#etter "ay to make someone appreciate the value of your glo#al #rand than
to "ithdra" it completelyZ 9f course' *ocaA*ola has denied that this "as the
company/s intention
L)ome critics "ill say *ocaA*ola made a marketing mistake' some cynics "ill
say that "e planned the "hole thing'/ said $onald 6eough at the time L3he
truth is "e are not that dum#' and "e are not that smart/ But vie"ed in the
conteFt of its competition "ith &epsi' the decision to launch %e" *oke "as
understanda#le 0or years' &epsi/s key "eapon had #een the taste of its
product By launching %e" *oke' the *ocaA*ola *ompany clearly hoped to
"eaken its main rival/s marketing o-ensive
)o "hat "as &epsi/s verdict on the "hole episodeZ In his #ook' The $ther
%u! Blined' &epsi/s *.9 1oger .nrico #elieves the error of %e" *oke proved
to #e a valua#le lesson for *ocaA*ola LI think' #y the end of their nightmare'
they Igured out "ho they really are *aretakers 3hey can/t change the taste
of their Gagship #rand 3hey can/t change its imagery All they can do is
defend the heritage they nearly a#andoned in 1=K>
Lessons !ro/ NeA CoEe
&oncentrate on the brand’s perception In the "ords of Nack 3rout' author of
'i(erentiate or 'ie' Lmarketing is a #attle of perceptions' not products/
'on’t clone !our rivals In creating %e" *oke' *ocaA*ola "as reversing its
#rand image to overlap "ith that of &epsi 3he company has made similar
mistakes #oth #efore and after' launching Mr &i## to rival $r &epper and
0ruitopia to compete "ith )napple
)eel the love According to )aatchi and )aatchi/s "orld"ide chief eFecutive
oJcer' 6evin 1o#erts' successful #rands don/t have Ltrademarks/ 3hey have
Llovemarks/ instead In #uilding #rand loyalty' companies are also creating an
emotional attachment that often has little to do "ith the Euality of the
'on’t be scared to *-turn By going #ack on its decision to scrap original
*oke' the company ended up creating an even stronger #ond #et"een the
product and the consumer
'o the right maret research+ $espite the thousands of taste tests *ocaA*ola
carried out on its ne" formula' it failed to conduct adeEuate research into
the pu#lic perception of the original #rand
&. T8e Ford Edse.
Among many 2) marketing professors' the story of the .dsel car is
considered the classic #rand failure of all time $u##ed Lthe 3itanic of
automo#iles/' the .dsel is certainly one of the #iggest #randing disasters to
aPict the 0ord Motor *ompany As "ith other' more recent #rand failures
featured in the report' the .dsel car "as launched amid a vast amount of
hype Although the car didn/t appear in sho"rooms until )eptem#er 1=>H'
ads promoting it had #egun to appear months previously #earing the teaser
slogan: L3he .dsel is coming / 0ord decided though' to fuel pu#lic interest'
the car itself should not #e seen in the ads' and even "hen 0ord dealers
started stocking the car in their sho"rooms' they "ere told they had to keep
the vehicles undercover If they did not they risked a Ine and the loss of their
franchise "ith the company
As 0ord hoped' interest "as fuelled 3he company did not think for one
moment that the product "ould not #e a#le to match the hype' and "ould
lead to a consumer #acklash After all' more "ork and research had gone into
the development of this car than almost any previously ,o"ever' some of
the research had already proven futile #y the time of the launch 0or
instance' part of the market research process had #een to Ind a suita#le
name for the ne" car 3his should have #een a good idea After all' the highly
popular 0ord 3hunder#ird car' "hich had #een launched in 1=>8' had gained
its evocative name as a result of market research Indings 3his time'
research teams "ere sent out to %e" Oork' *hicago and Michigan' "here
mem#ers of the pu#lic "ere asked "hat they thought of certain names and
to come up "ith their o"n suggestions 3here "as also a competition among
employees to come up "ith the #est name' and the company even contacted
the popular poet Marianne Moore ,er #rief "as to Ind a name "hich "ould
signify a Lvisceral feeling of elegance' Geetness' advanced features and
design/ ,er rather eccentric suggestions included Mongoose *iviEue'
1esilient Bullet' 2topian 3urtle top and the 4arsity )troke Altogether' the
company no" had a pool of 1<'<<< names to choose from
3oo many' according to company chairman' .rnest Breech' as he scanned
through the names during a meeting of the 0ord .Fecutive *ommittee in
%ovem#er 1=>D L!hy don/t "e just call it .dselZ/ he asked' eFasperated
,enry 0ord II' the grandson of ,enry 0ord' agreed .dsel "as the name of his
father' and the 0ord founder/s only son %ot everyone held the same opinion
though 3he &1 director' * 5ayle !arnock' kne" that .dsel "as not the right
name It had #een an early suggestion' and had not #een liked #y those
mem#ers of the pu#lic "ho had taken part in the market research (in "ordA
association tests' it had #een associated "ith L"easel/ and Lpret+el/ R hardly
the #est associations for a dynamic ne" car) !arnock had preferred other
names on the list' such as &acer' 1anger' *orsair or *itation !hen the
decision "as made' !arnock made his feelings perfectly clear According to
1o#ert (acey in his #ook )ord, The -en and the -achine' !arnock
responded to the ne" .dsel name #y declaring: L!e have just lost 2<<'<<<
sales/ 0or !arnock' a rose #y any other name clearly didn/t smell as s"eet
As it turned out' the name "as the least of the .dsel/s pro#lems 3here "as
also the design 3he Irst #lueprint for the .dsel looked truly impressive' as
1o#ert (acey "rites in his #ook on 0ord L!ith concealed air scoops #elo" the
#umpers' this Irst version of the car "as original and dramatic R a dreamlike'
ethereal creation "hich struck those "ho sa" it as the very em#odiment of
the future/ ,o"ever' this magniIcent design never got to see the light of
day 3he people "ho held onto the purse strings at 0ord decided it "ould
simply #e too eFpensive to manufacture
3he design that eventually emerged "as certainly uniEue .dsel/s chief
designer' 1oy Bro"n Nr had al"ays set out to design a car that "ould #e
recogni+a#le instantly' from any direction And indeed' there is no denying
that the Irst .dsel to emerge in 1=>H fulIlled this o#jective In particular' the
car/s frontAend #onnet and grille commanded the most attention L3he front
end design "as the most prominent feature'/ conIrms &hil )kinner' a
respected .dsel historian' LIf you consider other cars from the midA1=><s'
they all looked some"hat alike Basically it "as t"o headlights and a
hori+ontal grille By having the #ig impact ring in the middle R "hat "e no"
call a horse collar R it really set the .dsel apart/
Although some mem#ers of the automotive press commended this
distinctive look' most "ere unappreciative 9ne revie"er famously remarked
that it looked Llike an 9ldsmo#ile sucking a lemon/ !hile another thought
the frontAend grille "as less like a horse collar' and more like a toilet seat
(3he customer comments later proved to #e even "orse "ith some saying
that the grille looked like a Lvagina "ith teeth/ ,o"ever' 0ord had good
relations "ith the press and !arnock' the &1 director "as determined to
maFimi+e the media coverage immediately #efore and after the launch date
Articles su#seEuently appeared in #oth Time and Life maga+ines heralding
the .dsel as a #reakthrough and eFplaining ho" it had #een planned for over
a decade R a #latant eFaggeration on the part of !arnock as 1oy Bro"n had
only #egun designing the car in 1=>8 3he promotional #rochure to mark the
)eptem#er launch of the .dsel also promised a great deal L3here has never
#een a car like the .dsel'/ it promised
3his "as a #ig claim' #ut 0ord had eEually #ig am#itions 3he company
eFpected to produce 2<<'<<< units in the car/s Irst year 3his constituted
around Ive per cent of the entire market Any"ay' the preApu#licity had
initially seemed to "ork *ar sho"rooms #ecame packed "ith curious
visitors' desperately seeking their Irst glance of the car In the Irst "eek of
its launch' almost three million mem#ers of the 2) pu#lic visited .dsel
sho"rooms 3he .dsels they sa" had a num#er of distinct features' in
addition to the LloveAitAorAhateAit/ frontAend grille 0or instance' the car "as
the Irst ever to have selfAadjusting #rakes and an electronic hood release It
also had a very po"erful engine for a medium range car ,o"ever' these
features "eren/t enough In the minds of the pu#lic' the car simply didn/t live
up to the hype And unfortunately for 0ord' neither did the sales .dsel sold
only D8'<<< units in its Irst year' "ay #elo" the num#er anticipated 0ord
launched 1=>= and 1=D< .dsel models #ut sales fell even further (to 88'K=1
and 2'K8D respectively) In %ovem#er 1=>= 0ord printed the last ever ad for
the car and halted production
)o "hat had gone "rongZ In the case of .dsel there are almost too many
reasons to identify In fact' it "ould #e easier to ask: "hat hadn’t gone
"rongZ 3he marketing campaign "as certainly a key factor In simple terms'
0ord had overstated its case Buoyed #y the success of the 3hunder#ird only
a fe" years previously the company must have felt invinci#le' and this "as
reGected in the rather too selfAassured advertising material ,o"ever' noAone
can eFcuse 0ord of undereFposure 9n 13 9ct 1=>H the marketing campaign
for .dsel took product promotion to ne" heights "hen 0ord joined forces "ith
the *B) television net"ork' to run a oneAhour special called The .dsel "how
3he sho"' a parody of 1=><s favorite The .d"ullivan "how featured
cele#rities such as 0rank )inatra and Bing *ros#y But even "ith such primeA
time promotion 0ord "as una#le to shift any"here near enough units of the
car *onsumers didn/t care "hether it "as Lrevolutionary/ or not All they
kne" "as that it looked ugly and had a name that sounded like L"easel/
0urthermore' in an age "hen all the successful cars had tailIns' the .dsel
"as Inless According to Bo# *asey' curator of transportation at the ,enry
0ord Museum' this fact meant that the .dsel Ldidn/t Euite It into people/s
vision of a car/ In addition to misguided advertising' #ad looks and a stupid
name' .dsel faced a further pro#lem R it "as too eFpensive As )heila Mello
eFplains in her informative #ook' &ustomer &entric /roduct 'e0nition' the
launch of the .dsel coincided "ith a move to"ards cheaper models:
0ord/s decision to highlight the .dsel/s po"erful engine during a period "hen
the #uying pu#lic "as gravitating to"ard smaller' more fuel eJcient cars
alienated potential customers 3he Irst models in the sho"room "ere the
most eFpensive' topAofAtheAline models' resulting in "hat "e refer to today as
sticker shock 2nfortunately' too' "hile some .dsel models "ere more
eFpensive than compara#le cars' they had an eEuivalent or greater num#er
of Euality pro#lems 9ften parts did not It properly or "ere simply missing'
since 0ord freEuently #uilt .dsels #et"een 0ords and Mercurys on the same
assem#ly line Many dealers "ere ill eEuipped to replace these parts or add
accessories 3he car ended up looking more eFpensive than it actually "as
#ecause of poor timing In the 1=><s' 2) ne" car models typically appeared
in %ovem#er for the follo"ing year 0or instance' a 1=>D 3hunder#ird "ould
have come out in %ovem#er 1=>> ,o"ever' .dsel "as launched in
)eptem#er' t"o months #efore the other ne" models arrived It "as
therefore a 1=>K car competing against 1=>H models R and more
importantly' 1=>H prices In fact' the situation "as even "orse than that %ot
only had .dsel decided to push its most eFpensive models Irst' #ut the 1=>H
models it "as competing "ith "ere #eing o-ered at a discounted price in
order to sell them #efore neFt year/s models "ere "heeled into the
A high price may have #een accepta#le if it had #een "orth paying
,o"ever' the eFperience of those fe" early .dsel customers Euickly gave the
car a reputation for mechanical pro#lems .dsel no" popularly stood for
.very $ay )omething .lse (eaks 9ne thing though "as completely #eyond
0ord/s control After a #oom period for the 2) car industry during the midA
1=><s' the end of 1=>H sa" the start of a recession In 1=>K almost all car
models sa" a drop in sales' some #y as much as >< per cent Ironically' one
of the very fe" models to "itness an increase in sales that year "as the 0ord
In a )eptem#er 1=K= article for The )reeman' a pu#lication of 3he
0oundation for .conomic .ducation' car industry journalist Anthony Ooung
eFplained ho" 0ord had paid little attention to market research' and that this
"as the true reason "hy the .dsel failed:
3he .dsel serves as a teFt#ook eFample of corporate presumption and
disregard for market realities It also demonstrates that advertising and preA
delivery hype have their limits in inducing consumers to #uy a ne" and
unproven car In a free market economy' it is the carA#uying pu#lic' not the
manufacturer' "hich determines the success or failure of an automo#ile A
manufacturer shouldn/t oversell a ne" car' or unrealistic eFpectations "ill #e
#uilt up in the minds of consumers If the ne"ly introduced car doesn/t live
up to eFpectations' it is practically doomed on the sho"room Goor
,o"ever' 0ord Euickly learnt its lesson A fe" years later the spectacular
failure of the .dsel "as counter#alanced #y the eEually spectacular success
of the 0ord Mustang (aunched in 1=D8' the Mustang sold half a million
vehicles in its Irst year of production %ot only did it have a #etter name and
a goodAlooking #onnet' the Mustang had one further advantage over its
predecessor R it "as a-orda#le
As )heila Mello points out' #et"een 1=D< ("hen the .dsel "as phased out)
and 1=D8 ("hen the Mustang "as launched) 0ord' along "ith most of the car
industry' had shifted its focus to"ards "hat the consumer actually "anted
L3he success of the Mustang demonstrates that 0ord Motor *ompany did
learn from the .dsel eFperience'/ she "rites L3he key di-erence #et"een the
illAfated development of the .dsel and the roaring success of the Mustang
"as the shift from a productAcentric focus to a customerAcentric one/ 3his
vie" is supported #y (ee Iacocca' "ho oversa" the creation of the Mustang
as 0ord president' #efore taking over the reins at *hrysler In his
auto#iography' Iacocca eFplains the approach #ehind the Mustang: L"hereas
the .dsel had #een a car in search of a market it never found' here "as a
market in search of a car 3he normal procedure in $etroit "as to #uild a car
and then try to identify its #uyers But "e "ere in a position to move in the
opposite direction R and tailor a ne" product for a hungry ne" market/ As a
result' the Mustang "ent from strength to strength and is still in production
today )o "hile the "hole .dsel episode may have #een a costly
em#arrassment for 0ord in the short term' it helped the company learn some
valua#le lessons "hich it has carried "ith it to this day
Lessons !ro/ Edse.
1!ping an untested product is a mistae LI learned that a company should
never allo" its spokespersons to #uild up enthusiasm for an unseen'
unproven product'/ confessed * 5ayle !arnock' the &1 director responsi#le
for the pu#licity surrounding the .dsel launch
2our name matters At the most #asic level' your #rand is your name It
doesn/t matter ho" important the #rand name is to the company' it/s "hat it
means to the pu#lic that counts If the name conjures up images of "easels
and pret+els it might #e a good time to scrap it
Loos count 4isual appearance is a key factor in creating a #rand identity for
most products It "as the distinctive shape of *ocaA*ola #ottles "hich helped
that #rand #ecome so #ig In the car industry' looks are particularly
important and as .dsel proved' ugly ducklings don/t al"ays #ecome s"ans
/rice is important &roducts can #e too eFpensive or too cheap !hen some
#rands price themselves too lo"' they lose their prestige ,o"ever' "ith a
car such as the .dsel' the high price couldn/t #e justiIed in the minds of the
The right research is important 0ord spent time and money carrying out the
"rong kind of market research Instead of hunting for names' the company
should have #een concentrating on "hether there "as a market for its ne"
car in the Irst place As it turned out' the market it spent millions trying to
reach didn/t even eFist
3ualit! is important 9f course' product Euality is al"ays important #ut "hen
it comes to cars it is a matter of life and death Bad Euality control proved an
eFtra nail in .dsel/s coJn
C. E>>on
DonB sa9 a Aord
Many companies and organi+ations have had to deal "ith a crisis during their
history 9nly a very fe"' ho"ever' come to represent corporate
incompetence and irresponsi#ility through one critical event 9il *ompany
.FFon is among them
In 1=K=' the .FFon 4alde+ oil tanker ran aground and #egan spilling oil o-
the coast of Alaska !ithin a very short period of time' signiIcant Euantities
of the tanker/s 1'2D<'<<< #arrels had entered the "ater' making it the
largest tanker oil spill in 2) history At the moment of impact the ship/s third
mate' 5regory *ousins' "ho "as not certiIed to pilot the tanker into those
"aters' "as at the helm 3he "herea#outs of the captain' Noseph ,a+el"ood'
at the time of the accident "as not immediately eFplained A *oast 5uard
investigator had the #lood of the captain and the third mate tested for
alcohol 3he results "ere that the captain had unaccepta#ly high levels of
alcohol in his #lood even nine hours after the accident 3he captain "as later
Ined and sentenced to =< days in prison' a sentence many considered Ltoo
light/ .-orts to contain the oil spill lagged from the start L3he initial
response "as inadeEuate and didn/t match the planned' outlined response
measures to #e taken in a spill'/ said $ennis 6elso' commissioner of the
Alaska $epartment of .nvironmental *onservation LAs of 28 hours into the
spill' "e still haven/t seen adeEuate containment/ According to most
o#servers' the company did too little and too late %ot only "as the action to
contain the spill slo" to get going #ut the company refused to communicate
openly "ith the press 3he .FFon *hairman' (a"rence 1a"l' "as immensely
suspicious of the media' and reacted accordingly
!ithin hours an army of journalists had arrived to #egin eFtensive coverage
A company spokesman pointed to the eFistence of procedures to cover the
eventuality R procedures "hich the 34 shots #elied !hen asked if he "ould
#e intervie"ed on 34' 1a"l/s response "as that he didn/t have time for Lthat
kind of thing/ !hile the company "as getting o- to a #ad start "ith the
media' the operation on the ground "as failing to control the spill Around
28<'<<< #arrels had #een spilled' "ith another million still on the ship
$uring the Irst t"o days' "hen calm "eather "ould have allo"ed it' little
"as done to contain the spillage 3his spillage spread out into a 12 sEuare
mile slick 3hen the rain and "ind started to make things "orse' meaning
further containment "as near impossi#le
A "eek later the company "as still tightAlipped 0ollo"ing &resident Bush/s
declaration that the spill represented a Lmajor tragedy/' 0rank Iarossi' the
$irector of .FFon )hipping' Ge" to 4alde+ to hold a press conference It "ent
#adly )mall pieces of good ne"s claimed #y the company "ere immediately
contradicted #y the eye"itness accounts of the present journalists and
Nohn $evens' the Mayor of the Alaskan to"n 4alde+' commented that the
community felt #etrayed #y .FFon/s inadeEuate response to the crisis L9ver
the years' they have promised they "ould do everything to clean up a spill
and to maintain our Euality of life I think it/s Euite clear right no" that our
area is faced "ith destruction of our entire "ay of life/ Alaskan (ieutenant
5overnor )tephen McAlpine also said that he "as Lseverely disappointed/ in
the company/s response L$espite all statements to the contrary' I don/t
think they ever had a handle on it/ .ventually' the .FFon #oss deigned to go
onto television In a live intervie" he "as asked a#out the latest plans for the
cleanAup 1a"l started to look nervous It turned out he had neglected to
read these' and cited the fact that it "as not the jo# of the chairman to read
such reports ,e placed the #lame for the crisis at the feet of the "orld/s
media .FFon/s catastrophe "as complete 3he conseEuences for .FFon of
#oth the disaster' and the poor "ay in "hich it "as handled' "ere
catastrophic 3he spill cost around 2) [H #illion' including the cleanAup costs
Most of this "as made up of the largest punitive Ines ever handed out to a
company for corporate irresponsi#ility
3he damage to the company/s reputation "as even more important'
although more diJcult to Euantify ,o"ever' .FFon fell from #eing the
largest oil company in the "orld to the third largest 3he L.FFon 4alde+/
#ecame synonymous "ith corporate arrogance' and the story remained
prominent in the media for over a year According to a 1==< 2) ne"s poll' D>
per cent of respondents said that Lthe 4alde+ oil spill "as the key element in
raising pu#lic consciousness a#out environmental issues/
Lessons !ro/ E>>on
Live up to !our promises 3he company failed to sho" that it had e-ective
systems in place to deal "ith the crisis R and in particular its stated a#ility to
move Euickly once the pro#lem had occurred "as not in evidence
Act lie a good corporate citi4en .FFon acted indi-erently to the
destruction' and therefore did little to help the company/s case
+. Son9 1Bea/a>5
According to received #randing "isdom' the #est "ay to #ecome a strong
#rand is to #e Irst in a ne" category 3his theory has #een repeatedly
emphasi+ed #y the "orldAreno"ned #rand guru Al 1ies
L*ustomers don/t really care a#out ne" #rands' they care a#out ne"
categories'/ he "rites in The 22 Immutable Laws of Branding LBy Irst
preempting the category and then aggressively promoting the category' you
create #oth a po"erful #rand and a rapidly escalating market/
3here are indeed a num#er of cases to support this point $omino/s "as the
Irst company to o-er homeAdelivered pi++a and remains the leader in that
particular market *ocaA*ola' the "orld/s most popular and Inancially
successful #rand' "as the Irst in the cola category In technology markets
9"ing to the fact that consumer #ehaviour tends to #e approFimately Ive
years #ehind technological #reakthroughs' the Irst mover advantage is often
lost 0urthermore' companies have often proved to #e very #ad at predicting
ho" ne" technologies "ill #e used 0or eFample' most of the .uropean
mo#ile phone companies "ere caught completely una"are #y the rapid rise
of teFt messaging' a facility "hich some didn/t even #other to eFplain in their
instructions #ooklets
3he allAtime classic among technology #rand failures "as )ony/s BetamaF
video recorders $uring the 1=H<s' )ony developed a machine designed to
deliver home videoAtaping eEuipment 3he machine used BetamaF
technology' and hit the stores in 1=H> In its Irst year' 3<'<<< BetamaF video
recorders (or 4*1s) "ere sold in the 2nited )tates alone But a year later
)ony/s rival N4* came out "ith the 4,) R short for Lvideo home system/ R
format 4*1 By Nanuary 1=HH' there "ere four more Napanese electronics
companies manufacturing and marketing 4,)A#ased machines
!hereas )ony had either #een un"illing or una#le to license BetamaF
technology (depending on "hich account you #elieve)' N4* had #een more
than happy sharing their 4,) format 3his "ould later prove a critical factor
in the demise of BetamaF Although )ony pioneered most of the
advancements' N4* and the other 4,) manufacturers "ere not slo" to catch
up 0or instance' N4* and &anasonic introduced 4,) hiAI formats only "eeks
after )ony/s introduction of BetamaF hiAI ,o"ever' most eFperts agree that
the tape Euality on BetamaF "as superior to that of its rival
As the t"o formats "ere incompati#le' consumers "ere forced to decide
#et"een them &retty soon )ony "as feeling under pressure as its
competitors started to drop prices to as much as 2) [3<< #elo" )ony/s
machines By 1=K2 the price "ar "as in full s"ing and )ony reluctantly
joined in' o-ering a 2) [>< re#ate as a L,ome Improvement 5rant/ 3here
"ere other marketing pro#lems too 2p until the early 1=K<s the "ord
LBetamaF/ "as used as a synonym for Lvideo recorder/ 3his association had
negative as "ell as positive conseEuences #ecause in 1=H=' 2niversal
)tudios and $isney took legal action against )ony' claiming 4*1s "ere
infringing the copyrights of movie producers Although )ony emerged
apparently unscathed from the la"suit' several commentators have
suggested that the case had a detrimental impact on the "ay )ony marketed
its BetamaF products
9ne thing is for sure' from 1=K1 on"ards BetamaFA#ased machines "ere
rapidly losing popular favour In 1=K2' the year of the price "ar' BetamaF
4*1s accounted for a paltry 2> per cent of the entire market and the pu#lic
"ere #eing "arned that the selection of video rentals availa#le for BetamaF
o"ners "ould #e slightly smaller than that for 4,) o"ners
0urthermore' "hile )ony continued to claim that BetamaF "as a technically
superior format' video o"ners "ere #ecoming increasingly a"are of one
serious failing !hereas 4,) machines could record for a considera#le length
of time' BetamaF machines could only record for one hour R meaning that
most Ilms and foot#all matches couldn/t #e recorded in one go 3his "as
the price )ony paid for enhanced sound and picture Euality 3o deliver that
#etter standard' )ony used a #igger' slo"er moving tape As a result' it
sometimes took as many as three cassettes to sho" an entire movie 3his
caused frustration #oth among video o"ners' "ho had to s"ap tapes over'
and retailers' "ho had to supply more cassettes 3he pro#lem is eFplained #y
one anonymous 4,) fan on the #lockinfocom !e# site: L!hat made 4,)
succeed "as that you could get a "hole movie on a tape 9kay' may#e the
picture and sound "eren/t as good as BetaU #ut "hat the heck' you didn/t
have to get up in the middle and s"itch cassettes 4,) delivered value on a
dimension that mattered to consumers Beta delivered eFcellent value on
dimensions that did not/ )ony refused to #ite the #ullet though Indeed' it
may have #een losing market share #ut the num#er of units sold still
continued to rise' peaking "ith glo#al sales of 23 million units in 1=K8
,o"ever' three years later 4,) had gone "ay #eyond the tipping point "ith
a => per cent share of the market In 1=KH' 5olling "tone maga+ine ran an
article on BetamaF (entitled L0ormat !ars/) and declared Lthe #attle is over/
9n 1< Nanuary 1=KK )ony Inally s"allo"ed its pride and announced plans for
a 4,) line of video recorders Although )ony "as adamant that the press
should not see this as the Ldeath/ of BetamaF' the press "eren/t listening 9n
2> Nanuary' only a fortnight after )ony/s announcement' Time maga+ine
pu#lished a eulogy to the #rand "ith the headline' L5ood#ye Beta/ 3he same
article also argued that BetamaF had failed #ecause it had refused to license
the format to other Irms L!hile at Irst )ony kept its Beta technology mostly
to itself' N4*' the Napanese inventor of 4,)' shared its secret "ith a raft of
other Irms/ 3his claim has since #een hotly disputed #y the defenders of
BetamaF 0or instance' one A02 (Alt 0olklore 2r#an) "hite paper on The
'ecline and )all of Betama6 refers to the statement as L#latantly untrue/
According to Names (ardner' author of )ast )orward' )ony invited N4* and
Matsushita to license the BetamaF technology in $ecem#er 1=H8' #ut #oth
companies declined the o-er
.ither "ay' the fact that BetamaF video recorders "ere only manufactured
#y )ony meant that it couldn/t compete against the gro"ing num#er of
companies pushing 4,) ,o"ever' even "hen )ony started to make 4,)
machines it didn/t a#andon BetamaF 9verseas production of BetamaF
ho##led on until 1==K' and in )ony/s home territory' Napan' machines "ere
still #eing made until 2<<2' although not in huge num#ers ()ony produced
just 2'K<< units in 2<<1) 9n 22 August 2<<2 )ony Inally announced it "ould
#e discontinuing BetamaF products L!ith digital machines and other ne"
recording formats taking hold in the market' demand has continued to
decline and it has #ecome diJcult to secure parts'/ the company said in a
%o"' of course' 4,) itself is under threat from the rapid rise in digital
versatile disc ($4$) players' and may not #e a#le to survive into the long
term !hile $4$ has Inally dra"n a line under the #attle #et"een BetamaF
and 4,)' it has also managed to create its o"n destructive "ar #et"een
di-erent $4$ formats' and therefore delayed the takeAo- of that market
,o"ever' at least some of the lessons of BetamaF have #een learnt )ony
and eight of its competitors eventually joined forces in 2<<2 to create a
common format for $4$' meaning this time )ony "ill not #e left on the
Lessons !ro/ Bea/a>
'on’t go it alone L*ontrary to popular #elief' "hat "ould help every category
pioneer is competition'/ says Al 1ies 3rue' providing the competition isn/t
pushing a format incompati#le "ith your o"n
Let others in !hether )ony refused to license its format or not' there is no
Euestion that the company "ould have had a #etter chance if its rivals had
adopted BetamaF
&ut !our losses )ony/s decision to ignore 4,) until 1=KH "as' "ith hindsight'
an undenia#le mistake
"uppl! e7uals demand !hen the manufacturers of preArecorded tapes
decreased their supply of Beta format tapes' demand for )ony/s BetamaF
recorders inevita#ly "aned
4ery often' there is an analogy dra"n #et"een the state of the great Indian
roads and the pace of economic development in the country %eedless to
say' it/s not a very pleasing comparison )o the average Indian customer
"ho rides the roads of India is naturally eFtremely cautious "hen it comes to
investing in a vehicle 9nly those rough and tough enough to survive the
potholes and nightmarish surfaces can pass muster In such a scenario' a
foreign company launching a car in the Indian market "as #ound to #e
looked upon "ith scepticism and suspicion' more so' if it had )outh 6orean
origins )outh 6orean companies "ere perceived not to #e Euality oriented
3he failure of 6orean companies like (ucky 5oldstar (later to #e reAlaunched
as (5' "hich is another marketing success) and the #ad "ord of mouth for
$ae"oo led to this perception
$oA o <e.. 8e ca:
In the late 1==<s' car manufacturers like 0ord' 5eneral Motors' and 0iat "ere
faring misera#ly in the Indian market Maruti had a market share of a
"hopping H= per cent in the passenger car segment $ae"oo and 3elco "ere
creating hype over the impending launches of their cars Mati+ and Indica'
respectively In such a scenario' the top management of ,yundai Motor India
(td' "hich has )outh 6orean origins' had a tough decision to make It "as a
#ig gam#le to go ahead "ith the launch of the small car R)antro3he ,yundai
management stuck to a simple strategy R launch a Euality product in the
most promising segment "ith the latest technology and price it aggressively
In the preAlaunch period in late 1==H' the company commissioned market
research project to understand the Indian consumer psyche and specify a
#enchmark for the pricing policy 3he results of this survey and the actions
taken thereafter had a #earing upon the success of the product later on 3he
Indian consumers sho"ed an immense dislike to the shape of )antro 9ne
consumer even likened it to a ?funeral hearseB A second important result
"as that ,yundai is an unkno"n #rand "ith almost +ero #rand eEuity
amongst Indian consumers 3he company immediately undertook the
initiative of reshaping and customising the car for the Indian customer 3he
tall rear end "as reduced and made more aesthetically appealing 3he
)antro "as all set for the Indian launch
MarEein= =eni3s 4,ere came the most important aspect of the launch R
the marketing strategy 3his "as a factor that could make or mar the success
of the )antro ,yundai tied up "ith the advertising agency )aatchi and
)aatchi' "ho hit upon a novel strategy Bolly"ood star )hah 1ukh 6han "as
roped in to #e the #rand am#assador A threeApronged strategy "as
designed to attract the consumer:
A .ducate Indian *onsumers a#out ,yundai
A*reate hype and eFpectations a#out the )antro
A.Fplain the virtues of the )antro
3he 34 @ &ress *ampaign #roke in Nune 1==K 3he initial 34 spots and the
press campaign sho"ed )hah 1ukh 6han #eing approached #y a ,yundai
oJcial to advertise the )antro )hah 1ukh "as not convinced a#out ,yundai
and he "as sho"n to ask all Euestions a normal Indian consumer is eFpected
to ask !hat is ,yundaiZ !hy should I advertise for the )antroZ !ill it match
customer service eFpectationsZ !hat a#out dealer net"orksZ ,o" can an
international car meet the reEuirements of Indian roadsZ As the campaign
through all of these Euestions' the ,yundai oJcial ans"ered )hah 1ukh
6han By the time the car "as actually launched' )hah 1ukh 6han proclaims'
?he is convincedB ,e declares that he is no" ready to advertise the )antro
since he is certain that the )antro is the car for India 3his high proIle
campaign #acked #y some very innovative media #uying' "hich "ent for
maFimum coverage "ith the minimum #udget' #roke all grounds in terms of
creating consumer eFpectations and hype in the market Along "ith the
Advertising *ampaign' the )ales 3eam "orked #urning midnight oil in
creating the dealer net"ork across the length and #readth of the country
3he "ide dealer net"ork "ould prove to #e invalua#le in ensuring that the
)antro "ould #e availa#le to anyone "ho "ants to #uy it An important preA
reEuisite for the dealer net"ork "as a fully functional "orkshop area "ith
imported international standard eEuipment and engineers trained in
,yundai/s parent training centre in )outh 6orea and localised training
provided in the *hennai &lant
T8e s3ccess sor9
)eptem#er 23' 1==K sa" the launch of the )antro 3here "as an
unprecedented rush for #ookings in spite of the fact that ,yundai "as
accepting #ookings only against full payment for the car and #ooking "as
opened only for a fe" days ,yundai closed the calendar year 1==K "ith
sales of K'88H 3he neFt year (9cto#er 1==KAAugust 1===) sa" ,yundai
consolidating its market share' as these Igures of monthly sales sho": 3hus'
the cumulative sales during 9cto#er 1==KAAugust 1=== "ere 82'2K3 units
3his accounted for 3< per cent of the market share in the small car segment
and 1< per cent of the overall auto industry!ithin a year of its launch' the
)antro had dislodged the Maruti 7en as the no1 car in its category and
slipped in #ehind Maruti )u+uki as the no2 car manufacturer in India 3he
launch of the $ae"oo Mati+ and the 3A3A Indica failed to dampen the
demand for the )antro.ver since the historic launch of the )antro' ,yundai
has consistently taken the no1 spot in all the segments of the passenger car
industry in "hich it had launched a product )antro stands tall undisputedly
market leader in the compact car segment 3he tool #ehind the successful
launch R the marketing campaign R "on numerous a"ards for its innovative
concept' previously unheard of in India 3his "as a case of cele#rity
endorsement "ith the cele#rity actually not advertising the product #ut
playing the role of a common Indian consumer 3hus' the launch of the
)antro stands as an eFcellent eFercise in understanding consumer needs and
lucrative portrayal of a product to capitalise on its design
Lessons !ro/ $#UNDAI5SANTRO5
-areting &ampaign: Marketing campaign R "on numerous a"ards for its
innovative concept' previously unheard of in India 3his "as a case of
cele#rity endorsement "ith the cele#rity actually not advertising the product
#ut playing the role of a common Indian consumer 3hus' the launch of the
)antro stands as an eFcellent eFercise in understanding consumer needs and
lucrative portrayal of a product to capitali+e on its design
Leaders versus )ollowers, Interestingly' research supports the logic that a
direct comparative ad from a smallAshare market follo"er is least likely to
lead to higher a"areness for the comparedAto market leader (#ecause the
market leader already has high a"areness)' "hereas a marketAleading highA
share #rand has the most to lose from a direct comparative ad (#y creating
TfreeT a"areness for the comparedAto smaller #rand) 3his leads to the
conclusion that "hile lo"Ashare #rands ought to use direct comparative adsU
market leaders perhaps ought to use non comparative or indirectly
comparative ads (those that donSt name competitors)
H. Pe2si Co.aI 8e c8oice o! a neA =eneraion
3he &epsi *ola #rand #egan life in 1K=K and has survived several
o"nerships' t"o #ankruptcies and intense competition to #ecome one of the
"orld/s largest and most recogni+a#le #rands 3he #rand "as historically
marketed as a value product' priced signiIcantly cheaper than the
competition to encourage sales' #ut as !orld !ar II dre" to a close' &epsi
#egan to reposition the #rand and to assimilate it into American culture
&epsi/s marketing in the 1=><s "as aimed sEuarely at youth' the #a#y
#oomers that they la#elled L3he &epsi 5eneration/ 3he #rand adopted the
no" familiar s"irl logo on their #ottles and employed the crude #ut e-ective
slogan LBe )ocia#le R ,ave a &epsi/ 3his "as the Irst &epsi campaign to
focus on youth' a techniEue they "ould #ecome reno"ned for over the
coming decades
3he 1=D<s and 1=H<s sa" further youth orientated marketing' continuing the
&epsi 5eneration theme and even hitting the American 3op 8< in 1=D8 "ith
their catchy jingle %irlwatchers R produced to mark the launch of the ne"
$iet &epsi product And #y the mid 1=H<s &epsi "as #eginning to close to
gap on their largest competitor' *ocaA*ola Around this time a series of
consumer tests "ere conducted and' to the marketers delight' they sho"ed
that the majority of participants preferred the taste of &epsi to their
competitors 3hese results gave rise to the near legendary L&epsi *hallenge/
campaign' again aimed predominantly at the youth market' "here
consumers across the 2) "ere invited to take a #lind taste test of #oth &epsi
and *ocaA*ola !ith results favoura#le' the challenge soon found it/s "ay
into television advertisingBy the #eginning of the 1=K<s' &epsi had
esta#lished itself as the top selling #rand in takeAhome sales in the soft
drinks market and they continued their successful tactic of placing
themselves Irmly as a youth product 3he &epsi 5eneration campaign "as
Inally laid to rest #ut the #rand #ecame kno"n for eFpensive sponsorships
of high proIle youth icons and adverts featuring superstars such as Michael
Nackson' *indy *ra"ford' Michael N 0oF and the )pice 5irls 3he youth pitch
"as continued "ith copy such as L5eneratio%eFt/' LBe young' have fun' drink
&epsi/ and L3he *hoice of a %e" 5eneration/ 3he late 1==<s "ere &epsi/s
most successful times yet as turnover gre" to [32#illion and they
consolidated their position as the "orld/s second largest #everage company
In 0e#ruary 1==D' &epsi launched one of the most am#itious entertainment
sites on the !orld !ide !e# "ith &epsi"orldcom and in 1==K they
premiered a ne" logo to give the #rand a more modern look for the coming
ne" Millennium
3he &epsi #rand continues to focus on youth as its greatest core value and
recent campaigns have seen associations "ith the ne" )tar !ars Ilms and
Britney )pears 0or the past half century' &epsi has tried to #e younger'
cooler and more relevant than their competitors and this consistent strategy
has ena#led the #rand to gro" and acEuire a fundamental identity By
putting &epsi in direct and open competition "ith *ocaA*ola in terms of
product Euality' the &epsi *hallenge campaign "as also a key tactic in the
#rand/s positioning and has recently #een reAlaunched to take the challenge
into the future
J. A22.eI i/a=inaion" inno?aion and diKereniaion
Apple is a #rand that is al"ays defying the odds 3he company commands
glo#al market share of just 3\' almost "ent out of #usiness after a Inancial
nosedive in the mid 1==<s and its main products compete "ith the
o#iEuitous IBM compati#le &* Oet despite the diJculties it has faced and
continues to face' it remains an ama+ing success 3he #rand "as voted
#rand of the year #y Inter#rand in 2<<1' came a close second to #randing
L"onderkid/ 5oogle in 2<<2 and continues to command ama+ing loyalty
amongst users 3he value of the #rand to a company such as Apple is almost
incalcula#leU so much so that it prompted 8ired 9ews to claim recently that
L"ithout the #rand' Apple "ould #e dead] 3he po"er of their #randing is all
that keeps them alive/ !hy has Apple #een so successfulZ Because it
concentrated on #uilding a po"erful #rand #ased on emotional rather than
functional values Apple may have produced a range of po"erful computers
and innovative products such as the i&od and the iMac #ut #y far their
greatest success has #een in enticing customers in R forging deep #onds and
encouraging them to fall in love "ith the #rand Apple has al"ays played on
the emotions It has #een $avid taking on the 5oliath of IBM' its ethos is
po"er to the people through technology and it seeks to #uild communities
around its products 3he #rand has #ecome synonymous "ith creativity' the
choice for designers every"here' and has communicated itself as funky'
Euirky and colourful R a vi#rant alternative to its dra# and #usinesslike
competitors 3he eEuity produced #y this po"erful #randing is "ithout a
dou#t Apple/s key asset *ompetitors such as *ommodore and Amstrad "ere
slain #y the gro"th of the &* #ut the loyalty and a-ection that the Apple
#rand commanded allo"ed it to keep its head a#ove "ater and #ecome the
success it is today In a faceless market' Apple sho"ed character and #uilt an
image!hen former *.9 Nohn )cully talks of his timein the company during
the late 1=K<s and early 1==<s he has no illusions a#out Apple/s role'
pointing out that Lpeople talk a#out technology #ut Apple "as a marketing
company It "as the marketing company of the decade/ 3his kind of thinking
#uilt the #rand eEuity Apple enjoys today R the #rand eEuity that #oth kept
Apple aGoat and promises future proIts 3his asset may #e intangi#le #ut it
is also truly invalua#le
0ollo"ing methodology "ill #e follo"ed for nowing the importance of brand
management : evaluation+
!e dra" fe" characteristics of strong #rand "ith the help of fe" case studies
@ real "orld eFamples in industries
C.;) O<jeci?es
• 3o assess the principles for creating and #uilding #rand as "ell as realA
"orld eFamples of "hy it matters
• 3o look into the importance of #randing or #rand management
• !hether the #rand can #e measured or not
• !e "ill identify the fe" characteristics that the "orldSs strongest
#rands share
• Brand .valuationA constructing a #rand report cardA a systematic "ay
for managers to think a#out ho" to grade their #randSs performance
for each of those characteristics
C.&) Raiona.e o! s3d9
Building and properly managing #rand eEuity has #ecome a priority for
companies of all si+es' in all types of industries' in all types of markets After
all' from strong #rand eEuity Go" customer loyalty and proIts 3he re"ards
of having a strong #rand are clear 3he pro#lem is' fe" managers are a#le to
step #ack and assess their #randSs particular strengths and "eaknesses
o#jectively Most have a good sense of one or t"o areas in "hich their #rand
may eFcel or may need help But if pressed' many (understanda#ly) "ould
Ind it diJcult even to identify all of the factors they should #e considering
!hen youSre immersed in the dayAtoAday management of a #rand' itSs not
easy to keep in perspective all the parts that a-ect the "hole Brand often
#oils do"n to perception R a slippery' hardAtoAget Euality' not an inAtheA#ank
Euantity Avon can come #ack from the #rink' despite years of cultural
maladjustment and corporate disinterest' #ecause of residual #rand value
and ne" vision' energy and discipline IBM nearly fell apart as a #rand yet
re#ounded "ith a ne" corporate strategy and a missionary sense of #rand
value In ten years "ill "omen still Ind Avon relevantZ .Fecutives opt for
services from IBMZ !hat makes people decideZ 3hese' "e #elieve' are #etter
Euestions than the prover#ial' ?,o" much is my #rand "orth todayZB And
"hile the #etter Euestions are more diJcult to ans"er' they provoke ans"ers
that #uild #rands and invigorate companies
• 3he main signiIcance of the study "ill #e that #y Irst gaining a deep
understanding of its #rand' company "ill #e a#le to #egin life as a
pu#lic company "ith a rockAsolid #usiness strategy 3his "ork "ill
provide comprehensive study material for the academic purpose
• *onvincing #rand features form an integrated "hole
• 3he #rands of the future "ill take greater notice of the customer
C.C) Researc8 $92o8esis
%2(( ,O&93,.)I)A ? B1A%$ $9.)%/3 MA33.1B
C.+) Sco2e o! S3d9
3he area of the study "ill cover the #randing strategy follo"ed #y many of
the companies ; industry @ their practice in #rand management 3he scope
of the study "ill include identifying the market factors' determining the #asic
pricing issues to #e considered' and determining the necessity of #rand
C.() Li/iaions
Brand Management 'Brand .Euity @Brand .valuation are very essential @
very vast for the study in themselves ' therefore' research report cannot
cover all the characteristics that a #rand should possess "hich should #e
maintained updated #y the Irm periodically #ut it "ill cover the important
aspect of #randing )tudying the history of #rand;product failures may
generate some insight into the reason for those failures and create a list of
factors that may increase the opportunity for success' #ut there are no
A single num#er that tells you "hat your #rand is "orth today "on/t help you
make it "orth more tomorro" T8ere is a =rea ineres among many to
understand "hat their #rand is "orth in sheer Inancial terms ,o"ever' "e
#elieve this Inancial valuation approach has little value Moreover' relying on
the relative Inancial value of #rands for certain decisions can #e overly
simplistic 0or eFample' a company must choose #et"een t"o #rands 3he
num#ers sho" that Brand A
has a higher value than Brand B 3he assumption often made is that Brand A
is the right one to use %ot necessarily' if: Brand B is used in other
geographic markets and has not #een promoted in Brand A/s territory' or ^
Brand B has greater longAterm potential' eg' can #e stretched or eFpanded
and used in other categories' or ^ Brand B is the corporate name and the
strategy is to #uild one #rand longAterm' not support multiple #rands
3he prevailing methods produce a rough num#er that is half rightA#rain' half
leftA#rain R and' at #est' a halfAans"er It might help decide "hether to pull
the trigger on a merger or divestiture' #ut it does little to tell management
ho" to protect and gro" the value of its #rand 3here is a #etter path It' too'
involves measurement' particularly of the feelings and perceptions in the
marketplace a#out a #rand and competing #rands' as "ell as other factors
Its aim is not merely a num#er' #ut a clear direction to improved #usiness
performance' and the a#ility to reIne this path over time !e call it
Srae=ic Brand Assess/en
3he desire to determine a #rand/s value is understanda#le R in fact'
commenda#le In the aftermath of dotAcoms "ith skyAhigh market
capitali+ation passed o- as ?#rand value'B #rands are under the microscope
as never #efore But a single num#er approach is' "e Irmly #elieve'
tangential to e-ective #randA#uilding and #rand management In fact' for
most purposes' #rand simply cannot #e reduced to a num#er Any large'
mature #rand is an enormously compleF set of values' not a single value
Making corporate decisions #ased on a numeric value for the #rand is like
managing an economy kno"ing only its gross domestic product *onsider
that for many companies' #usiness and #rand are insepara#le !hat is %ike
"ithout the s"oosh or IBM "ithout its richly cultivated identityZ *ommodity
#usinesses aren/t compelling !ould teenagers clamor for generic AsianA
made sneakersZ !ould *I9s #uy anonymous eA#usiness servicesZ %ot likely
3he proof of this is often at the eFtreme' "hen a #rand #ecomes so tarnished
(think of Arthur Andersen) the license to operate is removed and the
#usiness destroyed At that point' the Euestion of dollar value #ecomes
moot 3he value of the #rand "as the value of the #usiness
Brand is as understanda#le and managea#le as any other activity R if
measured "ith a #usiness tool other than a calculator
)a.id Brand Meas3re/en
Brand is no more or less than the eFpression of a company/s essential
#usiness As a result' it should #e as understanda#le and managea#le as any
other #usiness activity It can #e molded' steered #ack on course' refreshed'
adapted to changing circumstances and reinvented 9r it can #e distorted'
diluted' sEuandered and neglected into o#livion 3his is precisely "hy #rand
can and should #e measured' #ut "ith Euite di-erent tools than #alance
sheets and calculators 3hink of a company/s #rand as a living' #reathing
#eing that resides in the collective imagination of every#ody touched #y the
company as it conducts #usiness 3his very real human phenomenon R kids
jostling to #uy the ne"est Air Nordan' *I9s hiring IBM #ecause they count on
its a#ility to deliver R is #est understood as social and psychological' not
arithmetic Oet one result of any #rand measurement "ill #e the allocation of
Inancial resources to address "hat the measurement process discovers
3herefore' #rand measurement must produce analysis that/s persuasive to
Inancial managers' and provide the means to assess return on investment
3o manage a corporate #rand' "e #elieve' reEuires translating the social
#ehavior around it into rational terms' so that its important Eualities are
EuantiIed as intensities and values and precisely deIned components that
can #e acted upon 3his too is measurement R not solely as a function of
shareholder value' #ut rather as t"o more inclusive measures of value:
saEe8o.der ?a.3e and cone>3a. ?a.3e 3he stakeholders include
everyone "ho has a personal interest in the #rand' and in proportion to their
stake R customers' potential customers' disenfranchised customers'
employees' potential employees' investors and #rand inGuencers from
Inancial analysts to community leaders *onteFtual value measures the
#rand and its drivers relative to those of competitors' similar industries and
parallel situations )trategic #rand measurement is a process It com#ines
standard marketing practices and closely
related methods from the social' #ehavioral and statistical sciences As in all
good science' there is an art to its application &roperly managed' this
process produces information and tools that help senior management make
critical decisions' point the #usiness in the right direction and achieve
o#jectives that can: focus and intensify the #rand ' clarify and reIne
strategy' create compelling ne" o-ers ' protect against #rand risk' produce
competitive advantage' reduce #randAsupport costs' improve shortAterm
proIta#ility In addition' this process "ill help enhance the traditional #eneIts
of a strong' clearly deIned #rand ' employee retention and recruitment'
ready sources of funding and customer loyalty
Pin2oinin= Brand Dri?ers
At the core of any #rand are a handful of elements that can inGuence and
change #ehavior !e call them ?#rand driversB3hey come from a small'
speciIc universe of ?#rand attri#utesB 6no"ing the #rand drivers provides
managers "ith a po"erful array of options for #ringing #rand to #ear to solve
#usiness pro#lems' sei+e market opportunities and plot the most proIta#le
course for the #usiness 3here are t"o elements to #rand drivers: 3he
attri#utes people consider "hen deciding to purchase a #rand in a category'
and the actual di-erentiators R the elements that spur #ehavior A company
typically has a half do+en or so key #rand drivers' "hich vary in relative
importance depending on audience and circumstance Any #randAdriver
research needs to #e suJciently deep to understand the changes in relative
importance among not only the company/s drivers' #ut also those of
competitors 9ver time' additional studies "ill sho" shifts in this picture'
particularly the e-ects of any actions taken to achieve some desired result
$epending on industry' #rand drivers generally don/t alter dramatically year
to year But if the #usiness is technologyAdependent or other"ise full of GuF'
drivers can change Euickly 0or eFample' as people #ecome familiar "ith
technology through use' secondAorder drivers #ecome more important It
makes sense to promote a company/s a#ility to innovate in advance of an
important product launch' #ut after the launch emphasis may need to shift to
tangi#le features' #eneIts and price $espite the decided #eneIts of
)trategic Brand Assessment)M' fe" companies fully kno" and understand
their key #rand driversOet companies commit si+a#le resources to other less
strategic #rand measurements 3he marketing department pro#a#ly gauges
a"areness and perceptions of the #rand Advertising recall is typically
measured 3his research may provide a picture of the #rand at a point in
time' #ut no roadmap for the future 3o complicate matters' #rand
measurement in large companies often consists of decentrali+ed'
uncoordinated research e-orts 3he #rand ?pictureB #ecomes a series of
fragments #y line of #usiness' geographies and target markets Oet even the
most ro#ust of conventional #rand studies tends to fall short in helping
determine future #rand direction
3he #iggest #eneIt of valid #rand measurement is direction for the #usiness

Meas3re a BrandBs )a.3e
+.&) Srae=ic Brand Assess/en
9ur approach isolates the impact of #rand It digs do"n and eFposes
customer decisionAmakingIt involves a comprehensive assessment of the
#rand in the hearts and minds of all critical audiences'eFternal and internal
3he process has four major parts: information gathering and
preparation'eFperimental design' #ackAend analysis and decision modeling
9f the four' the "ork up front is the most important 0rom the initial
preparation and analysis R "hy and "hat you/re trying to achieve R
everything Go"s3he results come in terms of strategic options: !hat/s
important' a #rand/s strengths and "eaknesses' competitive #rand strengths
and "eaknesses' are there "hite spaces R important areas not served that a
#rand is positioned to o"n!hat starts to emerge is a roadmap for the #rand
linked to "hat the company has #een doing recently'"hat it should do in the
future' and direction on ho" to get thereIn light of this ne" information' the
company/s vision and mission may need modiIcation It "ill help the
company reIne its positioning $eIning the key image attri#utes follo"s in a
process that starts "ith the study results' Ilters them through top
management/s kno"ledge and eFperience' and makes sure they di-erentiate
in their competitive arena %eFt in the process: a communications plan "ith
audiences identiIed and messages #y key audiences 0inally comes
implications for the #usiness itself 3hese can #e the #iggest #eneIts of
strategic #rand assessment R areas of vulnera#ility that must #e #uttressed
to improve credi#ility' or uniEue strengths that suggest paths for future
service o-erings 3he more eFtensive and "ell planned the research' the
more likely that these #usiness implications "ill have real su#stanceAnother
key measure is organi+ational alignment R ho" "ell the vision is #eing
supported Are the company/s values "ell understood internally or are there
pockets of confusion or resistanceZ Is employee #ehavior to"ard customers
consistent "ith the image the company "ishes to project' or are there
disconnectsZ *learly' strategic #rand measurement can #e a po"erful and
versatile tool' not only to move a company for"ard in the directions
indicated #y its strengths' #ut also to identify and address "eaknesses It
doesn/t merely try to place a value on the corporate #rand: It provides the
means to maFimi+e #rand value and project value into the future
3herefore' reali+ing that #rand has value is a fundamental Irst step If
attaching a num#er to the corporate #rand is the only "ay to gain highAlevel
attention and make the point' then #y all means do so R #ut Euickly move on
to more fundamental goals: 2nderstand the #rand' make sure it is strong and
relevant and learn ho" to maFimi+e the #rand/s positive impact on tangi#le
#usiness results 3o do these things e-ectively and eJciently reEuires a
#rand measurement process that monitors #rand drivers Rthe attri#utes of
the #rand relevant to key audiences *ompanies that are Irst to invest in
such a process "ill understand #etter than their competitors ho" to
di-erentiate their #usiness' gain share of mind and keep their #rand and
company vital 3hese companies are more likely to #ecome industry leaders
!e have identiIed the ten characteristics that the "orldSs strongest #rands
share and construct a #rand report cardA a systematic "ay for managers to
think a#out ho" to grade their #rands/
performance for each of those characteristics 3he report card can help you
identify areas that need improvement' recogni+e areas in "hich your #rand is
strong' and learn more a#out ho" your particular #rand is conIgured
*onstructing similar report cards for your competitors can give you a clearer
picture of their strengths and "eaknesses 9ne caveat: Identifying "eak
spots for your #rand doesnSt necessarily mean identifying areas that need
more attention $ecisions that might seem straightfor"ardAT!e havenSt paid
much attention to innovation: letSs direct more resources to"ard 1@$T A can
sometimes prove to #e serious mistakes if they undermine another
characteristic that customers value more
B1A%$ 1.&913 *A1$ )AM&(.
SUR)E# SA#S To9oa and Ford .ead in o?era.. <rand 2erce2ion.
To9oa" Ford o2 car <rands in cons3/er 2erce2ion
Consumer Reports Lrs Brand Re2or Card s3r?e9
Lnds !eA car <rands sand as .eaders
Automakers collectively spend [1< #illion a year to promote
their vehicles But fe" #rands appear to #e distinguished in
the cro"ded marketplace and often reality doesnSt reGect
consumer perceptions' according to ne" Indings #y the
*onsumer 1eports %ational 1esearch *enter
3he recent Brand 1eport *ard study reveals that only Ive
#rands stand out from the competition #ased on the num#er
of survey respondents "ho named them #est in
design;style' performance' Euality' safety'
technology;innovation' or value 3oyota' 0ord' ,onda' and
*hevrolet are among the salesAvolume leaders' "ith #road
vehicle o-erings' large dealer net"orks' and deepApocket
advertising #udgets 4olvo made the top Ive #ased largely
on the strength of its safety image' dra"ing the highest
single score in any one area 9ther key Indings from the
survey include: )even of 1< consumers considered safety
and Euality "hen evaluating a ne" car
• 3he mostAimportant individual features in a ne" car
are safety related
• 3echnology and innovation "ere rated least important' even though
marketing messages often focus on those factors
• BrandA"ide focus on performance alone does not ensure the vehicles
are considered among the sportiest
• %early one Euarter of Americans are considering #uying a ne" 3oyota
3he strategy of $anone "ill #e studied to have a practical eFample of
company using it Indeed' $anone launched 3ailleIne in the dairy product
"ith <\ fat in 1=D8 3hen $anone used the image of #oth leanness and "ellA
#alanced food associated to the dairy products "ith <\ fat of 3ailleIne in
O?era.. <rand

To9oa 3H\
Ford 2=
$onda 2H
)o.?o 28
order to eFtend this #rand to the light cookies As a conseEuence $anone
saved time and surprised its competitors in the cookies market 3hree years
after the launch of 3ailleIne in the #iscuits Ields in 1==K' the success has
#een eFtraordinary And' in 2<<<' the sales of 3ailleIne increased from 8<\
!ith this success met #y this eFtension' $anone decided to target the "ater
market still "ith its #rand 3ailleIne and the same promise than "ith the dairy
product: the leanness "hich is a segment that has #een controlled #y
*ontreF (the "ater #rand of a competitor' %estlQ)
Brand eFtension is one of the strategies a company can use and it is not
actually a ne"
concept 3his marketing strategy dates #ack from the 1=D<_s ("ith retailers_
#rands in
di-erent products categories in this period) #ut it really #ecomes popular
since the 1=K<_sIndeed' it is very eFpensive to create and launch a ne"
#rand in the market In addition' the market is already full of di-erent
3hus #rand eFtension is a "ay of ?restrictingB eFpenses and risks compared
to the creation of a ne" #rand 3his strategy consists in using a current
#rand name to launch a product in a category considered as ne" for the
companyAaccording to Aaker@6eller (1==<) 3his ne" product has di-erent
functions and a di-erent nature in comparison "ith the product the #rand
used to do 0or instance' Mars is "ellAkno"n in the s"eets department #ut
can #e found in the iceAcream department as "ell 2sually' this current #rand
has a good image "ithin consumers "hat drives this process ?easierB
#ecause the #rand already #eneIts #oth from a good fame and from a
recogni+ed level of Euality "ithin consumers 3hus these latter are less
reluctant to test the ne" product #ecause they like #uying "hat they already
kno" 2sually they don/t like to ?take riskB #y trying a ne" product from an
unkno"n #rand 3his strategy of #rand eFtension can #e very eJcient for
companies to reach ne" consumers and penetrate ne" markets ,o"ever' a
company has to #e careful "hen using this strategy #ecause it can' for
eFample' "eakened the image of the main #rand
A #rand needs to evolve or change products if it "ants to continue eFisting
0ace to the tough competition' companies have to reduce the amount of
#rands o"ned Aeg 2nilever decided to keep only the 8<< most sold #rands
out of 1D<< 3o reduce the #rand/s portfolio companies have several
strategies and #rand eFtension is one of them 3his is a method "hich seems
appealing at Irst #ut actually there are some constraints "ith it )o' is the
#rand eFtension a good strategy for companies instead of #rand creationZ
,o"ever' this strategy cannot only have advantages so "hat are the
"eaknesses of this strategy and "hich precautions have to #e taken "hen
using itZ
3his paper "ill focus on the strategy of the group $anone "hich decided to
use the #rand eFtension strategy "ith its #rand 3ailleIne Indeed' it is only
for 3ailleIne that $anone decided to use #rand eFtension #ecause other"ise'
it prefers creating ne" #rands )o' it "ill #e interesting to study the reason
"hy $anone is not giving the priority to #rand eFtension even if in our
theoretical part' $avid 3aylor (2<<8' p1) said that a 2<<3 Brand gym survey
sho"ed that K3\ of managers considered that #rand eFtensions "ere the
most important "ay to launch ne" products and services in neFt 2A3 years to
2\ for ne" #rand creation
II. Fra/e o! re!erence
II.;. Presenaion o! Danone
$anone has #een founded in 1=1= in )pain and is no" the leading #rand
"orld"ide in the fresh dairy products $anone yoghurt "as Irst selling in
pharmacies #ecause of research led #y Isaac *arasso after thousands of
children contracted intestinal disorders ,e "anted to relieve them ,e
looked into %o#elApri+eA"inning research led a#out 1< years ago a#out
yoghurt lactic acid #acteria After"ards' he #ought ?lactic cultures from the
&asteur Institute in &aris and launches the Irst $anone yoghurt through
pharmacistsB Matt ,aig (2<<8' p11=) $anone decided to operate in the
mass market #ut it still considered as a healthy #rand0urthermore' the
?$anone 4itapole research ensures that the health claims made #y the #rand
are scientiIcally #acked upB Matt ,aig (2<<8' p11=) 0or the promotion of
products made #y $anone' a special importance is given #oth to their health
#eneIts and their taste In the 2nited )tates' the motto is ?,o" can
something that is so good for you taste so goodZB )o' they are simple
messages #ut they ?tackle the main consumer deterrents of health food
(taste "orries) and tasty food (health "orries) #oth togetherB Matt ,aig
(2<<8' p11=)
T8e secres o! s3ccess o! Danone can <e .ised as !o..oAin=:
Diferentiation' $anone products are creating a ne" market instead of
taking share on an old one 3his di-erence is can #e seen "ith the packaging
"ith for eFample the uniEue #ottle shape and ?doseB si+e of the product
Actimel A#elonging to $anone
Education' $anone can easily eFplain a complicated science concept into a
simple message for customers
Health associations are putting for"ard #oth #y the di-erent $anone
institutes and #y its International &ri+e for %utritionIt is #ecause $anone is
associated "ith health that it could launch successful eFtensions "ith its
#rand 3ailleIne
II.&. Ad?ana=es and disad?ana=es o! <rand e>ension srae=9
II21 Advantages of #rand eFtension strategy
According to $avid 3aylor (2<<8' p1)' this strategy of #rand eFtension is
popular #ecause it is less risky and cheaper compared to the creation of a
ne" #rand (eslie de *haternatony and Malcolm Mc$onald (1==K' p31>)
point the same economical advantage #y indicating that ?the economics of
esta#lishing ne" #rands are pushing companies more to"ards stretching
their eFisting name into ne" markets $aunted #y the heavy 1@$ costs' and
more a"are of the statistics a#out failure rates for ne" #rands' marketers
are increasingly taking their esta#lished names into ne" product IeldsB
(eslie de *haternatony and Malcolm Mc$onald' (1==K' p31>)3aylor (2<<8'
p1) emphasi+es the advantages connected to this strategy instead of #rand
creation as follo"ing:
Consumer knowledge: the remaining strong #rand used to ?promote a ne"
makes it less critical to create ?a"areness and imageryB 3he association
"ith the main #rand is already done and the ?main task is communicating
the speciIc #eneIts of the ne" innovationB 3aylor (2<<8' p1)+
Consumer trust: the eFisting "ellAkno"nAstrong #rands represent a promise
Rof Euality' useful features etc A for the consumer 3hus' the eFtension "ill
#eneIt from this fame and this good opinion a#out the #rand to create ?a
compelling value proposition in a ne" segment or marketsB 3aylor (2<<8'
p1) In addition' according to a Brandgym survey in 2<<3' ?>K\ of 26
consumers "ill #e more likely to try a ne" product from a #rand they kne"'
versus only 3\ for a ne" #randB' 3aylor (2<<8' p1)
,o"ever' this has still to #e done "ith a#ility to #e successful
*atherine 4iot (2<<H' p82) agrees to this concept "hen she considers that
?the customer is eFpecting to transfer his information from the #rand to the
eFtension If the general opinion a#out the #rand is favoura#le' the
#ehaviour regarding the eFtension should #e the positive as "ellB )he adds
that a successful #rand eFtension can ena#le to get the customer loyalty A
satisIed customer #y an eFtension "ill #e more "illing to repurchase the
same #rand 0or eFample in the sport Ield' a customer "ill more likely prefer
a #rand o-ering a complete eEuipmentAshoes' outIt and accessories
Lower cost: compared to launching a ne" #rand' #rand eFtension strategy
is cheaper
especially #ecause the ne" product use the name of an already "ellAkno"n
3aylor (2<<8' p2) said that ?)tudies sho" that cost per unit of trial is 3D \
lo"er and that repurchase is also higherB "ith an eFtension Indeed' )mith @
&ark (1==2' p2=D) conIrm this idea "hen suggesting that regarding the
advertising e-ectiveness' it seems for same market share' the
advertisement #udget for #rand eFtension are smaller than for ne" #rands
Aaker (2<<8' p1=8) gives some advantages more or less close to 3aylor or *
4iot (2<<H) #eliefs:
Enhancement of brand isibility: "hen a #rand appears in another Ield it
can ?#e a more e-ective and eJcient #randA#uilding approach than
spending money on advertisingB In addition' he suggests that the
relationship "ith loyal customers "ill #e strengthen #ecause they "ill use the
#rand ?in another conteFtB and it is eFpected as "ell that they "ill rather this
#rand to the competitors/ one
!roide a source of energy for a brand: the #rand imageAespecially
"hen the #rand is a #it tiredA is eFpected to #e reinforced #y the eFtension
Indeed' this latter gives energy to the #rand #ecause it increases the
freEuency "ith "hich the #rand is associated "ith good Euality' innovations
and large range of products In addition' the customer sees the #rand name
more often and it can strengthen his idea that it is a good one
3hus' * 4iot states that the presence of the #rand on a "ider num#er of
products should improve the popularity of the #rand 3he pro#a#ility of #eing
in contact "ith the #rand R#oth in the communication and in the
supermarkets R is more important and then should improve the #rand
Defensie strategy: an eFtension can prevent competitors from gaining or
eFploiting a foothold in the market and can #e ?"orth"hile even though it
might struggleB according to Aaker (2<<8) Microsoft for instance has
decided to operate in di-erent areas "ith the aim of limiting the ?a#ility of
competitors to encroach on core #usiness areasB
II22 $isadvantages of #rand eFtension strategy
Dilution of the e"isting brand image# * 4iot (2<<H) underlines that the
eFtensions are using the most important asset of the company that ie its
#rand name It can #e a major advantage for the eFtension #ut it represents
as "ell a huge risk for the eFisting #rand #ecause the #rand image can #e
diluted &ark' Mc*arthy @ Mil#erg' (1==3' pD<) said that those positive and
negative conseEuences are ?reciprocity e-ectsB and deIned as ?a change in
the initial customer/s #ehaviour regarding the #rand' after an eFtensionB
)he eFplains that a #rand eFtension can damage the #rand A dilution of the
#rand capital can happen #y the occurrence of undesira#le associations or #y
the "eakening of the eFisting associations 3his latter can #e a conseEuence
of ne" associations transferred from the eFtension
Indeed' an accident occurring "ith a product can lead to tarnish the image of
the all #rand In addition' it is sometimes diJcult to associate one #rand to
t"o products "ithout "eakening the #rand position in the customer/s mind
Aaker (2<<8' p211) points this pro#lem "hen he argues that ?the
associations created #y an eFtension can fu++ a sharp image that had #een a
key asset' and at the same time reduce the #rand/s credi#ility "ithin its
original settingB )o he claims like the former authors that companies have
to #e careful of the confusion in the customer/s mind "hen making
Aaker (2<<8' p211) adds that "hen a #rand #eneIts are ensure #y the fact
that it is not ?for or availa#le to everyoneB' doing too much eFtensions could
reduce this image of #rand selectivity ,e takes the eFample of the overuse
of the name 5ucci R at one moment there"ere 18'<<< products 5ucciA "as a
part of the factors leading to the ?fall of that #randB
Cannibali$ation: Aaker (2<<8' p218) states that the eFtensions can
canni#ali+e the eFisting products of the #rand "hen there are positioned in a
close market It means the eFtensions sales are increasing "hile those of the
eFisting #rand/s products are follo"ing the opposite curved Aaker (2<<8)
underlines that these good sales Igures for the eFtensions cannot
compensate the damage produced to the original #rand/s eEuity ,e argues
that this situation is ho"ever #etter than seeing this happening "ith a
competitor/s #rand
3aylor (2<<8) listed as "ell this risk and he says like Aaker that this situation
can happen "hen range eFtensions are ?#rand clonesB ie they can not #e
enough di-erentiate from the eFisting products ,e gives the eFample of the
#rand *rest "hich "as launching for years ne" toothpaste t"ists Reg gum
protection and "hitening' tartar control Its share fell from >< "ith one
product to 2>\ "ith >< products 3hus' ?each introduction competed for the
same usage occasion and introduced novelty value #ut not enough added
values to create incremental gro"thB 3aylor (2<<8' p2>) And $avid 3aylor
continues his reasoning #y saying that people "anted an ?allAinAone versionB
successfully provided #y *olgate ie *olgate 3otal
% disaster can occur: Aaker (2<<8' p212) eFplains that a disaster "hich
cannot #e controlled #y the Irm Reg that 0irestone tires used for the 0ord
.Fplorers "ere potentially unsafeA can happen to any #rand 3he more
eFtensions the #rand made' more important the damages "ill #e 3his
occurred to Audi "hen the Audi ><<< cars "ere suspected to have suddenA
acceleration pro#lem Adverse pu#licity started to appear from 1=HK and
continue to the eFtent that it "as mentioned on *B)/s ?D< minutesB in
%ovem#er 1=KD Audi did not make e-orts to change this situation and as a
conseEuence its sales fell from H8<<< in 1=K> to 23<<< in 1=K= Audi needed
Ifteen years to recover "hile it "as manufacturing good cars
III. Me8odo.o=9
III.;. M3a.iai?e or N3aniai?e daa
III11 Mualitative research
According to 6umar (2<<1' p21K) ?the purpose of Eualitative research is to
Ind out "hat is in a consumer/s mind It is done to access and also get a
rough idea a#out the person/s perspective It helps the researcher to #ecome
oriented to the range and compleFity of consumer activity and concerns
Mualitative data are collected so researchers can kno" more a#out things
that cannot #e directly o#served and measured 0eelings' thoughts'
intentions'and #ehaviour that took place in the past are a fe" eFamples of
those things that can #e o#tained only through Eualitative data collection
methodsB 0ocus group' inAdepth intervie"s and repertory grid techniEue are
typical methods used in this type of approach0or this dissertation "e "ant
to kno" feelings' thoughts' intentions and #ehaviors comparing to #rand
eFtension 0or that "e apply inAdepth intervie"s
III111 $ata collection
Indi?id3a. in4de28 iner?ieA
0or this dissertation' this approach "ill #e follo"ed and t"o individual inA
depth intervie"s "ill #e made to understand ?the feelings' thoughts'
intentions and #ehaviour compare to #rand eFtensionB like advice it 6umar
(2<<H) 3o make these individual inAdepth intervie"s a list of Euestions need
to #e prepared to #e asked and ans"ered #y the respondent 0or this
dissertation' $anone has #een chosen as an eFample so it is crucial to
Euestion one person "orking in $anone marketing teamB In Eualitative
research the concern are more the Euality and depth than the proportions of
people that gave one response or anotherB ,ague' &aul (2<<8' pD3) 3o have
an intervie" "ith this person the graduate year#ook of the Business )chool
of 3oulouse "ill #e used !hen this person "ill #e found' it "ill #e possi#le to
ask for an intervie" through the phone #ecause it "ill #e easier #ecause of
his or her "orkplace
III12Muantitative 1esearch
!hile according to *raig' )amuel (1===' p31K) the ?Eualitative data
collection techniEues aid in identifying relevant constructs and concepts to
#e eFamined' survey research provides a means of Euantifying these
concepts and eFamining relevant relationships inAdepthB It is possi#le to say
that Euantitative research let Euantify or precisely measure a pro#lem It is
often used for sophisticated statistical procedures and scientiIcally dra"n
samples It is possi#le to collect Euantitative data from respondents #y t"o
means: ?the communication and the o#servationB 6inner and 3aylor (1==D)
In our case' "e "ill not use Eualitative data #ecause "e "ill only do t"o
intervie"s and not Euestionnaires
III.&. Researc8 /e8ods
III21 )econdary data
0irst of all' to collect some information a#out #rand eFtension' look for some
secondary data "as the Irst step #ecause ?the researcher should al"ays
start "ith secondary dataB *hurchill' 5il#ert A' Iaco#ucci and N1 $a"n
(2<<>' p1DH)
Indeed' as they argue' secondary data represent ?cost and time economiesB
#ecause you only need to ?get online or to go to the li#rary' locate the
appropriate sources and eFtract and record the information desiredB !ith
this data' the researcher can have a Irst idea a#out "hat have already #een
done a#out his topic Most of the time huge amount of information can #e
gotten through secondary data
,o"ever' secondary data are not enough to ans"er a pro#lem and has
furthermore t"o main disadvantages )o they argue as "ell that ?they
typically do not completely It the pro#lem' and there may #e pro#lems "ith
their accuracyB Indeed' according to them Irst of all' the data had #een
?collected for someone else/s purposesB' so it is unusual that they can
ans"er your pro#lem perfectly It can occur that the class deInition is not
"hat the researcher is eFpecting ie he "ants may#e to study the #ehaviour
of people #et"een 1KA28 years old #ut can only get data a#out those of 2>A
38 years old for eFample3he second disadvantage is the pro#lem of
accuracy Indeed at least "hen collecting and analysing the data some errors
are al"ays possi#le misleading the researcher using them to make decisions
As a conseEuence' the researcher has to #e critical "hen using secondary
Among the secondary data' it can #e found the internal and eFternal data
3he internal data are ?originate "ithin the IrmB *hurchill' 5il#ert A'
Iaco#ucci and N1 $a"n (2<<>' p1H3) In this paper' the opportunity of having
this kind of data "as a#le "ith thanks to the information got #oth from M
)udre A"orking for $anoneA and from a letter Rdating #ack from March 2<<>A
to inform the shareholders of $anone a#out its Inancial situation 3he
eFternal one originates from outside sources 3hus' information originates
from Internet and $anone "e#site has #een used' articles and literature
dealing "ith #rand eFtensions as "ell
III22 &rimary data
As it "as previously stressed' secondary data cannot #e suJcient to help
ans"ering a topic 3hus' "e need as "ell to use primary data It is important
to Ind out "hat companies are thinking a#out #rand eFtension strategy
3hus' in this paper' communication techniEues "ill #e used #y making an
intervie" of someone "orking in the Marketing Ield at $anone *ompany
through telephone 3his techniEue is used as "ell to intervie" M Marcel
Bottom "orking at %omen 0rance' "hich is a a company creating #rand
name or companies/ names 3his method is Euick and implies lo"er cost
Indeed' according to *hurchill' 5il#ert A' Iaco#ucci and N1 $a"n (2<<>'
p21>)' the ?communication is often a faster means of data collection'
#ecause researchers are not forced to "ait for events to occur as they are
"ith the o#servation methodB
,o"ever' using communication has some "eaknesses Indeed' it is not sure
that o#jective ans"ers "ill #e o#tained and data collected are less accurate
"hen using communication #ecause this method is dependent of the
respondent "illingness or capa#ility to give the information desired ?0or
eFample' respondents are often reluctant to cooperate "henever their
replies "ould #e em#arrassing or "ould in some "ay place them in an
unfavora#le lightB *hurchill' 5il#ert A' Iaco#ucci and N1 $a"n (2<<>'
p21>)2se $anoneLs "e#site seems to #e a good idea to have more details
a#out $anoneLs strategy
III221 &opulation and sampling
In this paper' the population considered is companies "hich are using or
"hich used #rand eFtensions Indeed' this "ork is a#out the advantages and
disadvantages of the #rand eFtension strategy for companies so they are the
proper target3his "ay' it "ill #e possi#le to ask them if they "ould agree to
make an intervie" to get more information a#out #rand eFtensions such as
the reason eFplaining that the company decided to use it' the advantages
and disadvantages of this strategy !hile looking for these companies'
$anone appeared to #e a good target for this paper Indeed' the strategy of
#rand eFtension has #een used #y one of $anone_s #rand: 3ailleIneU and it is
the case study)o' an intervie" "ith a #rand manager of $anone in )pain
"as made 3he purpose "as to kno" if #rand eFtension "as still considered
as a good alternative to #rand creation and "hich are the pro#lems the
company may had to face
3he Euestions "ere asked to the respondent personally so' he did not have
too much time to prepare a ?politically correctB ans"er and it is a means to
get frank ans"ers Moreover even if it has #een done through the phone' it
can #e considered as a personal relationship so it "as may#e easier for the
respondent to feel at ease to ans"er 3his method is as "ell cheaper' Euick
and more convenient 3his respondent had #een chosen #ecause he "as a
former graduate student from the Business )chool of 3oulouse and one of our
group mem#ers is actually studying there As a *onseEuence' it "as easier
to ask for an intervie" 3his intervie" had #een done through )kype R
ena#ling cheaper call from computers to landlines or to mo#ilesA and had
#een recorded in order to have the opportunity to listen this record several
times and try to lo"er the amount of information missed in relation "ith an
intervie" reali+ed "ithout recording 3his intervie" lasted approFimately 2<
minutes ,o"ever' it has to #e stressed that this intervie" "as sometimes
diJcult to make #ecause the Euality of the connection "as not very good
3hus' it "as necessary to call a second time to Inish this intervie" #ecause
the Irst time' the interlocutor could not hear correctly the Euestions and in
the opposite side his ans"ers and in addition he found the Euestions too
theoretical )o' the Euestions had to #e rephrased It has to #e emphasi+ed
that if it "as possi#le to make this intervie" again it "ould #e #etter to call
him from a landline or a mo#ile phone to have #etter connection 0or
additional information' another intervie" had #een made R a#out 1> minutes
through mo#ile phoneA "ith M Marcel Bottom "ho is "orking at %omen'
"hich deals "ith the creation of #rands names and companies/ names ,e
has #een intervie"ed as "ell #ecause he has lot of kno"ledge a#out #rand in
general and a#out #rand/s strategies
III.C. )a.idi9 and re.ia<i.i9
3he information o#tained' have to #e valid and relia#le Indeed' in this paper'
there are t"o intervie"s "hich have #een then analysed 3he interpretation
"ill depend upon our #ackgrounds and one/s kno"s that each one has a
di-erent one 0or a measure' ?a.idi9 means that "hat "e "ant to measure
is really measured' neither more nor less &recisely the Euestion "e have to
ask ourselves is ?are "e measuring "hat "e think "e are measuringZB
according to 6innear and 3aylor (1==D' p331) It is crucial not to move further
a"ay from the topic of this dissertation "hich is #rand eFtension 3hietart'
1aymondAAlain (2<<H) consider that re.ia<i.i9 means that the ?measuring
instrument must allo" di-erent o#servers to measure the same su#ject "ith
the same instrument and arrive at the same results' or permit an o#server to
use the same instrument to arrive at similar measures of the same su#ject at
di-erent timeB 3hus' it "ill #e important to #e careful "hen getting the
ans"ers and especially "hen analy+ing them and the fact that one of the
intervie"s has #een recorded "ill ena#le to lose less information a#out the
respondent/s ans"ers 0inally' in order to deal "ith the topic of this paper
more deductive than inductive approach has #een used #ecause it "as
possi#le to Ind Euite a lot of literature a#out #rand eFtension 3hus' these
previous researches "ere a guide for a great part of this paper "ork
I). E/2irica. daa
I).;. Iner?ieA o! Marce. BOTTON" CEO o! No/en France" %J4%+4;%
%omen is one of the "orld leaders companies in naming It is situated in
many countries
5ermany' 0rance' *hina etcA and the companyLs mission is to look #oth for
names for a ne" company and #rand for a ne" product %omen has created
"ellAkno"n names such as ;ivendi' -iracle (a (anc`me "oman perfume)'
&lio (1enault/s #rand cars) etc
Marcel Botton "ho is the *.9 of %omen 0rance agreed to give us an
intervie" And' the ans"ers o#tained "ill #e analysed in this paper ,e had to
ans"er to the follo"ing Euestions:
;. Brand e>ension is considered as /ore ad?ana=eo3s 8an neA
<rand creaion.
08a do 9o3 8inE a<o3 8is sae/en:
According to M Bottom' it is true and the main point is that #rand eFtension
is o#viously cheaper than #rand creation Indeed' he said that #rand creation
?is very eFpensive "hereas "ith an eFtension the company can use the
image of one eFisting #randB and as a conseEuence make some economics
on advertising' marketing etc In our theoretical part' $avid 3aylor su#scri#ed
to this point of vie" "hen he said that companies considered #rand
eFtension as ?a cheaper and less risky "ay of launching innovation than
creating ne" #randsB 0urther' 3aylor adds that #ecause of the ?associations
"hich have already #een esta#lishB "ith the strong #rand' ?the main task is
communicating the speciIc #eneIts of the ne" innovationB 9n the contrary'
?a ne" #rand starts from scratch: it has to spend heavily just to get itself
kno"nB 3aylor $avid (2<<8' p1) M Bottom underlined that the second
advantage of #rand eFtension "as the fact that it "as ?easier to negotiate
"ith retailers to put in their shops departments a #rand "hich already eFists
compared to a ne" #randB Indeed' the retailers already kno" if a #rand
sales Igure are good and in this case they don/t "orry a#out adding a ne"
product of this #rand if they think it "ill make people "illing to #uy this
product #ecause it is not a ne" unkno"n #rand 3his statement seems to #e
Euite logical Indeed' no"adays' the competition is very tough and in shops
departments' there are so many #rands that the retailers have to use the
more eJciently as possi#le the space availa#le It means that even if a
retailer "ould like to give a chance to some ne" #rands to sho" to "hat
eFtend they can attract customers' he "ill nevertheless give the priority to
an eFtension from a "ellAkno"n #rand "hich already proved its a#ility to get
good sales Igures
&. 08a are 8e ad?ana=es and disad?ana=es o! <rand e>ension
M Bottom said that "hen a company decides to do a #rand eFtension
strategy' it enhances the eFisting #rand fame #ut at the same time it can
lead to the "eakening of the #rand 3hus he took the eFample of $anone ,e
said that ?$anone is kno"n for its good Euality and healthy products
,o"ever' if it decides to eFtend to some desserts like jam' it "ill enhance the
po"er of the eFtended product Rincrease of a"areness for $anone and' the
ne" product "ill #eneIt from the image of the eFisting $anone/s productsA
#ut they "ill #e a dilution of the #rand imageB 3his means that the
customers "ill #e confused a#out the characteristics they "ere associating
to $anone #ecause jam is not the same as yogurt and is not ?so healthyB
compared to yogurt And he added that ?an eFtension is more proIta#le in
the shortArun and more disadvantageous in the longArunB 3hus' he said that
in the shortAterm' a #rand eFtension ena#les to save money compared to the
launch of a ne" #rand #ut in the longArun companies have to #e very careful
not to make too many eFtensions and not to eFtend its #rand to some areas
too far from its main and Irst line of #usiness
3his pro#lem of #rand image dilution "as already underlined #y (4iot' 2<<H)
Indeed' she eFplained that an eFtension uses the #rand name as an asset
and represents the major advantage for the eFtension ,o"ever' she said
that this main advantage can as "ell #e a main disadvantage #ecause it can
dilute the image of the #rand Besides' Aaker Euotes the dilution of eFisting
#rand associations as one risk of #rand eFtension strategy Actually' he
considers that the associations follo"ing from the eFtension can decrease
the credi#ility of the #rand perceived #y the customer It can occur "hen a
#rand makes too many eFtensions
C. 08a are 9o3r ad?ices o o<ain a s3ccess!3. <rand e>ensions
According to Marcel Bottom' to #e successful' there is a need of ?image
synergyB "hich he eFplained #y the fact that the ?o"n Euality of the eFisting
#rand products has to It "ith the eFtension/s oneB Indeed' he took the
eFample of $anone to make us understand his argument ,e said that if
?$anone starts making chocolate desserts' the image of the ne" product "ill
#e #uild at the eFpense of $anone/s former products #ecause they have the
same position on the marketB ,e took the eFample of Oamaha as "ell ,e
said that this #rand is positioned in the piano/s market and in the
motorcycles one as "ell 3hese areas have no common link' each product
has a territory 3his "ay they cannot compete "ith each other #ecause the
customer can easily avoid miFing up the products characteristics 3hus' it
can #e considered that M Botton is talking a#out the phenomenon of
canni#ali+ation 3aylor (2<<8'p2>) states that it occurs "hen the range
eFtensions are ?lacking of di-erentiation versus the eFisting productsB As a
conseEuence' the customer has diJculties to make a clear split in his mind
#et"een the eFisting product/s Ield of the #rand and the eFtension/s one
3hus' the sales of the eFtension can increase at the eFpense of the #rand
eFisting products Aaker is talking a#out this danger as "ell in his #ook "hich
named Brand portfolio "trateg!+ Indeed he states that an eFtension #eing
launched in a close market to the eFisting #rand/s products can canni#ali+e
the #rand/s sales It means that the eFtension/s sales are gro"ing #ut those
of the eFisting #rand/s products can slo" do"n and even decrease
According to this intervie"' it can #e stressed that the theory and the
empirical data have similarities 3hus' #rand eFtension seems to #e a good
alternative to #rand creation ,o"ever' like every strategy' some precautions
have to #e taken #y a company "illing to use #rand eFtension !e can Euote
the fact that marketers need to inEuire to measure if "ith the eFtension the
company "ill #ring added values in the market compared to competitors to
avoid long term #rand spoiling 3he company has also to take care not
making too many eFtensions to avoid "eakening the #rand capital But the
Irst step is to have a strong #rand #ecause the customer "ill easily #e
attracted #y an eFtension if he already kno"s the #rand and make good
associations "ith it Indeed' the #rand is a guarantee for the customer and if
he trusts its a#ility to deliver its promise' he "ill apply this judgement to the
eFtension and then #uy it
I).&. Iner?ieA o! M. S3dre" Brand Mana=er o! Aci/e. 2rod3cs" %J4
Actimel product is a su#division of $anone An intervie" of M )udre "ho is
"orking for $anone in Barcelona R)painA has #een made 3o #e more precise'
he is the #rand manager of Actimel According to the presentation of Actimel
in $anone/s "e#site' it is a yogurt you drink and "hich helps to strengthen
the #ody natural immunity system #ecause of some leavens contained in
yogurt and a special one selected #y Actimel and patentedAs a #rand
manager' he seemed to #e the right person "ho "ould #e a#le to give some
information a#out the topic of this dissertation "hich is #rand eFtension ,e
had to ans"er to the follo"ing Euestions:
;. Peo2.e consider <rand e>ension is /ore <eneLcia. 8an 8e
creaion o! a neA <rand. 08a do 9o3 8inE a<o3 i:
Brand eFtension is easier to do' #ecause "hen creating a ne" #rand you
need to develop everything from the #eginning again Oou need to invest
more in advertising to get yourproduct;service kno"n #y the consumer "hile
in #rand stretching return on investment is Euicker 3hese statements are
underlying #y &eter $oyle and &hil )tern (2<<1' p1H>) "hen they said that
#rand eFtensions are more and more used #ecause of t"o main reasons
?Irst' the high failure rate of ne" products has encouraged companies to
look to eFtensions to reduce the odds failure Attaching a successful #rand
name to a ne" product reduces the #uyer/s perceived risk the #rand name
may o-er an implicit Euality guarantee )econd' #uilding a complete ne"
#rand is eFpensiveB It is possi#le to say that the same #elief is shared #y
3aylor (2<<8' p1) "hen he says that ?a ne" #rand starts from a scratch: it
has to spend heavily just to get itself kno"nB' contrary to #rand eFtension
,o"ever' M )udre added that this statement is not al"ays true and that
each company #eing di-erent may consider that it is #etter or them to
create ne" #rand each time instead of #rand eFtension 3his is actually the
case of $anone #ecause 3ailleIne is the only #rand they use to make #rand
eFtensions and actually these eFtensions "ere very successful Indeed'
generally' $anone prefers create ne" #rands It "ill #e possi#le to have
some clue Rin the rest of the intervie"A a#out the reason of this decision from
the group $anone "hereas as it has #een said #efore that 3ailleIne
eFtensions "ere very successful so it "ould #e normal to think it "ould not
#e the only one
&. $oA Aas 8e creaion o! Tai..eLne e>ensions in Aaer a!er
<isc3is 2ercei?ed <9 8e cons3/er EnoAin= 8a Tai..eLne Aas Lrs
.a3nc8ed in 8e ;OH%Bs in 8e dair9 2rod3cs:
3hey accepted it very "ell Indeed' the group $anone sa" the opportunity to
use the fact that consumers accepted the introduction of 3ailleIne in the
#iscuits Ield high sales rate to eFtend 3ailleIne in the "ater Ield 3hus' in a
letter to its shareholders dated from March 2<<>' $anone states that:?their
asset #rands are performing each one several hundred millions euros of sales
in the "orld and eFperiencing gro"th "ith t"o Igures Mainly' "e can Ind
them in the dairy products] !ith each time an important investment in
1@$ 9nly "ith Actimel' Activia and 3ailleIne' increasing on an average of
more than 2>\' they are the source of half of the group/s gro"thB3o #e
more precise' in 2<<< Rthree years after the launch of 3ailleIne in the #iscuit
IeldA?the sales of 3ailleIne leapt from 8<\' reaching 122 million euros in
0rance and K3< million euros in the "orld under a di-erent #rand name
4italinea]and #etter' #y reinforcing itself' the #rand 3ailleIne gained greater
recognition and it increases its sales in its original marketsa !ith the success
of the #iscuits' the sales Igures of yogurts soared "ith an increase of #oth
volumes and prices 3ailleIne #iscuits are sold on average' 2<\ more
eFpensive than non light competitorsB
C. $oA /an9 <rand e>ension Aere creaed <9 Danone:
3he only one "e have in the group is 3ailleIne !e don/t have any other
+. 089 Tai..eLne Aas 8e on.9 <rand e>ension in 8e =ro32 Danone
A8ereas i Aas a s3ccess:
Indeed' it "as a success especially #ecause the notion of health "as put
for"ard and consumers sa" that there "as a connection #et"een the "ellA
#alanced and <\ fat dairy products o-ered Irst #y 3ailleIne and then the
#iscuits and the "ater "hich play on these promise Indeed' even if 3ailleIne
is present in three di-erent Ields' it still in the food IeldM )udre added that
it "as not as if ?$anone "as doing healthy products and at the same time
"as selling #eer for eFampleB )o it means that a company cannot keep
eFtending its #rand #ecause the consumer may not understand "hy the
same #rand can #e found in "ide and di-erent Ields 3his is again the
pro#lem of #rand dilution "hich appears and "hich is descri#ed #y Aaker as
the fact that the associations to one #rand eFtension can "eakened the
credi#ility of the eFisting #rand amongst customers ,e said that $anone
policy "as to create #rands and not to eFtend them ,e told us that each
company has a di-erent strategy 3hus' the group $anone chose the
eFtension strategy "ith 3ailleIne #ecause it considered it "ould give added
values to the consumer to conduce them to #uy more !ith 3ailleIne' people
#elieve that they can eat tasty products R"ith chocolate for eFample in the
3ailleIne #iscuitsA "ithout #eing scared a#out the conseEuences on their
!hen M )udre said that $anone prefers to create #rands instead of doing
#rand eFtension' it may seem that there is a di-erence #et"een the theory
and the reality Indeed' it can #e read in $oyle and )tern (2<<1' p1H>) that
?"ith too many #rands' promotional resources can #e fragmented and the
#rands can #e outgunned #y competitors a#le to concentrate support around
one nameB ,o"ever' it has to #e underlined that $anone decided to focus
on three main sectors Rdairy products' #iscuits and cereal productsA and that
the group decided to put in the frontArank only three #rand leaders "hich are
$anone' .vian and (u 3his means that the group did not create so many
#rands as it may seem "hen listening to M )udre ans"ers 3his is "hat
actually $oyle @ )tern (2<<1' p1>=) state:?the trend today is clearly a"ay
from companies launching ne" freeAstanding #rands in the "ay 2nilever and
&rocter 5am#le did in the past: the marketing costs are simply too great and
the risks too high Instead they are ] concentrating on a handful of strong
Lpillar/ #rand names and using these as range #rands or the core for line and
#rand eFtensionsB In addition' "hen the managerial organi+ation of $anone
is considered' it appears that there is a GeFi#le hierarchy Most of decisions
are made locally #y each su#sidiaries company' so each su#sidiaries is close
as possi#le to its market to make the decision "hich seem #etter to attract
(. $oA did 8e co/2eiion reac o 9o3r <rand e>ension:
$anone is the leader in his Ield )o' %estle "hich is our main competitor
needs to #e more and more competitive if it "ants to follo" us on the
market !hen the group develops a product' %estlQ develops it Euite soon
after But since $anone "as created it has al"ays #een the leader )o' this
means that the fact that $anone is the leader in its Ields gives it a
competitive advantage compared to its competitors 3he fact that $anone
succeeded to #e associated #y customers to health A ie caring a#out
making products of good Euality "hich aim to reinforced our immunity
defences' facilitating the digestion etcA ena#les the company to get
customer loyalty and as a conseEuence to keep #eing the leader
H. Can 9o3 =i?e 3s and e>a/2.e o! a <rand A8ic8 !ai.ed:
Activia stra"#erry didn/t "ork at all !e had to erase the #rand from our
portfolio a fe" time after it "as launched ,o"ever he said that he could not
give us much more details a#out this failure #ecause he is product manager
of Actimel A#ased in )painA and that the fallout of launching a #rand is not
measured #y the product manager #ut #y the #rand manager In $anone
case' they are seating in &aris According to this intervie" "ith M )udre' it
appears that #rand eFtension represents a "ay to make economics R mainly
on advertising and marketingA and is #eneIcial for the company #ecause the
consumer already kno" the #rand !hen creating a ne" #rand' the process
is longer than #rand eFtension #ecause the company needs to do research
on la"' marketing to get the product kno"n #y the consumer' copyright' and
of course customer satisfaction 3he advantage of #rand eFtension is that
the company can use the promises associated "ith its eFisting and "ellA
kno"n #rand #y the customer 3hus some customers "ill not chose the same
drinks' depending on the fat it contains or on the conseEuences it "ill have
on his #ody for eFample But #rand eFtension cannot #e applied to every
companyU it depends on its strategy As each company is di-erentU 4irgin
prefers to adopt a product eFtension "hereas $anone doesn/t
). Ana.9sis
After these previous intervie"s' it can #e stressed that if $anone did not Ind
it relevant to make much more #rand eFtensions' it is #ecause Irst Aas
underlined #y M )udreA each company has a di-erent strategy and second'
the risk of #rand image dilution can not #e underestimate 3his pro#lem of
#rand image dilution is moreover underlined #y M Marcel Bottom 3his latter
eFplained us that it "as not good for the image of a #rand "hen too many
eFtensions "ere done In addition' a company has really to #e careful to the
Ields to "hich it "ants to eFtend its #rand As M Bottom said' it "ould not
appear credi#le if $anone started to do desserts like jam In the instance of
3ailleIne' the #rand regarded the fact that it "as kno"n for its promise of
provided #oth healthy and tasty products "hen it made its eFtensions
0inally' it can #e emphasi+ed that 3ailleIne is positioned in the health area
"ith the most important aspect "hich is that its products contain <\ fat
4olvic' "hich is a #rand of $anone commits to provide #oth tasty and good
Euality drinks "hile having fe" Euantity of sugar inside Rfrom <\ to
D\,o"ever' 3ailleIne and 4olvic are not competing "ith each other #ecause
each product has its o"n delimited positioning in the market As a
conseEuence' 3ailleIne did not face the pro#lem of canni#ali+ation "hich can
occur and "hich has #een underlined #y Marcel Bottom As a conclusion' it
seems that one of the clues of 3ailleIne eFtensions success is their a#ility to
avoid some mistakes "hich are source of failure Rtoo many eFtensions
leading to #rand image dilution' eFtensions having the same market position
)I. Conc.3sion
Brand eFtensions are a means for companies to make economics on
advertising' marketing "hich account a lot "hen a company "ants to create
a ne" #rand #ecause it has to make this #rand kno"n #y customers Indeed'
the customers perceive his purchase as risky and like #uying "ellAkno"n
#rands 3hat is the reason "hy * 4iot (2<<H' pD8) says that ?a successful
#rand eFtension can create favora#le conditions to make the customer loyal
A customer satisIed #y an eFtension "ill have a greater tendency to
repurchase the same #randB And as emphasi+e $oyle and )tern (2<<D'
p1H>)' customer loyalty is the means for a company to keep eFisting despite
the tough competition in the market #y insuring future revenues ,o"ever'
even if 3aylor (2<<8' p1) states that #rand eFtensions are favoured #y
companies instead of #rand creation' the setting up of this strategy needs to
#e carefully done Indeed' a company "hich decides to use it has to evaluate
carefully this decision It has to measure if its eFisting #rand already #eneIt
from a good fame amongst customers and "hich Ield it "ants to target its
eFtension 3his is actually the case of 3ailleIne "hich "as already "ellAkno"n
across customers "hen it "as in the dairy product "ith <\ fat And its fame
increase "ith the eFtension of 3ailleIne in the #iscuits Ield
At the same time the company has to #e a"are that it has to position its
eFtension in a "ay that it "ill not compete "ith its other #rands #y a lack of
di-erentiation #et"een the eFisting products la#elled and the eFtension one
And a company does not have to forget that it has to avoid overusing #rand
eFtension 3he company must #e a"are that the eFisting #rand image is an
asset for it R#enchmark for the customer A and an eFtension can lo"er this
image or destroy it 3he eFtension must respect the features linked to the
#rand #y customers 3ailleIne respected all these precautions 0irst of all
#ecause it is associated "ith leanness and "ell#alanced food and it put
for"ard these features "ith its eFtensions in #oth #iscuits and "ater Ields
)o' the eFtensions did not lo"er the image of 3ailleIne #ut on the contrary it
reinforced its image )econdly' 3ailleIne has a clear and di-erent positioning
compared to the other #rands of $anone' so the risk that they compete to
each other is divert And Inally' 3ailleIne is the only eFample of #rand
eFtension "ithin $anone 3he company did not overuse the strategy of #rand
eFtension!ith the eFample of $anone strategy #rand eFtension does not
appear as #etter than #rand creation for all companies It is a strategy and
then it is after a deep evaluation that a company "ill choose if it applies only
one of these strategies or miF them' keeping in mind #oth advantages and
disadvantages of each of them .ach company is di-erent and a strategy
T8e To2 Ten Trais
3he "orldSs strongest #rands share these ten attri#utes:
;. T8e <rand e>ce.s a de.i?erin= 8e <eneLs c3so/ers r3.9
!hy do customers really #uy a productZ %ot #ecause the product is a
collection of attri#utes #ut #ecause those attri#utes' together "ith the
#randSs image' the service' and many other tangi#le and intangi#le factors'
create an attractive "hole In some cases' the "hole isnSt even something
that customers kno" or can say they "ant
*onsider )tar#ucks ItSs not just a cup of co-ee In 1=K3' )tar#ucks "as a
small )eattleAarea co-ee retailer 3hen "hile on vacation in Italy' ,o"ard
)chult+' no" )tar#ucks chairman' "as inspired #y the romance and the
sense of community he felt in Italian co-ee #ars and co-ee houses 3he
culture gra##ed him' and he sa" an opportunity
TIt seemed so o#vious'T )chult+ says in the 1==H #ook he "rote "ith $ori
Nones Oang' &our Oour ,eart Into It T)tar#ucks sold great co-ee #eans' #ut
"e didnSt serve co-ee #y the cup !e treated co-ee as produce' something
to #e #agged and sent home "ith the groceries !e stayed one #ig step
a"ay from the heart and soul of "hat co-ee has meant throughout
And so )tar#ucks #egan to focus its e-orts on #uilding a co-ee #ar culture'
opening co-ee houses like those in Italy Nust as important' the company
maintained control over the co-ee from start to Inish from the selection and
procurement of the #eans to their roasting and lending to their ultimate
consumption 3he eFtreme vertical integration has paid o- )tar#ucks
locations thus far have successfully delivered superior #eneIts to customers
#y appealing to all Ive sensesA through the enticing aroma of the #eans' the
rich taste of the co-ee' the product displays and attractive art"ork adorning
the "alls' the contemporary music playing in the #ackground' and even the
co+y' clean feel of the ta#les and chairs 3he companySs startling success is
evident: 3he average )tar#ucks customer visits a store 1K times a month
and spends [3[< a visit 3he companySs sales and proIts have each gro"n
more than ><\ annually through much of the 1==<s
&. T8e <rand sa9s re.e?an.
In strong #rands' #rand eEuity is tied #oth to the actual Euality of the product
or service and to various intangi#le factors 3hose intangi#les include Tuser
imageryT (the type of person "ho uses the #rand)U Tusage imageryT (the
type of situations in "hich the #rand is used)U the type of personality the
#rand portrays (sincere' eFciting' competent' rugged)U the feeling that the
#rand tries to elicit in customers (purposeful' "arm)U and the type of
relationship it seeks to #uild "ith its customers (committed' casual'
seasonal) !ithout losing sight of their core strengths' the strongest #rands
stay on the leading edge in the product arena and t"eak their intangi#les to
It the times 5illette' for eFample' pours millions of dollars into 1@$ to
ensure that its ra+or #lades are as technologically advanced as possi#le'
calling attention to major advances through su##rands (3rac II' Atra' )ensor'
Mach3) and signaling minor improvements "ith modiIers (Atra &lus' )ensor
.Fcel) At the same time' 5illette has created a consistent' intangi#le sense
of product superiority "ith its long running ads' T3he #est a man can #e'T
"hich are t"eaked through images of men at "ork and at play that have
evolved over time to reGect contemporary trends 3hese days' images can
#e t"eaked in many "ays other than through traditional advertising' logos'
or slogans T1elevanceT has a deeper' #roader meaning in todaySs market
Increasingly' consumersS perceptions of a company as a "hole and its role in
society a-ect a #randSs strength as "ell !itness corporate #rands that very
visi#ly support #reast cancer research or current educational programs of
one sort or another
C. T8e 2ricin= srae=9 is <ased on cons3/ersP 2erce2ions o! ?a.3e.
3he right #lend of product Euality' design' features' costs' and prices is very
diJcult to achieve #ut "ell "orth the e-ort Many managers are "oefully
una"are of ho" price can and should relate to "hat customers think of a
product' and they therefore charge too little or too much
0or eFample' in implementing its valueApricing strategy for the *ascade
detergent #rand' &rocter @ 5am#le made a costAcutting change in its
formulation that had an adverse e-ect on the productSs performance under
certainAal#eit some"hat atypicalA"ater conditions (ever Brothers Euickly
countered' attacking *ascadeSs core eEuity of producing Tvirtually spotlessT
dishes out of the dish"asher In response' &@5 immediately returned to the
#randSs old formulation 3he lesson to &@5 and others is that value pricing
should not #e adopted at the eFpense of essential #rand #uilding activities
By contrast' "ith its "ellAkno"n shift to an Teveryday lo" pricingT (.$(&)
strategy' &rocter @
5am#le did successfully align its prices "ith consumer perceptions of its
productsS value "hile
maintaining accepta#le proIt levels In fact' in the Iscal year after &rocter @
5am#le s"itched to .$(& (during "hich it also "orked very hard to
streamline operations and lo"er costs)' the company reported its highest
proIt margins in 21 years
+.T8e <rand is 2ro2er.9 2osiioned.
Brands that are "ell positioned occupy particular niches in
consumersS minds 3hey are similar to and di-erent from competing #rands
in certain relia#ly identiIa#le "ays 3he most successful #rands in this
regard keep up "ith competitors #y creating points of parity in those areas
"here competitors are trying to Ind an advantage "hile at the same time
creating points of di-erence to achieve advantages over competitors in some
other areas 3he MercedesABen+ and )ony #rands' for eFample' hold clear
advantages in product superiority and match competitorsS level of service
)aturn and %ordstrom lead their respective packs in service and hold their
o"n in Euality *alvin 6lein and ,arleyA$avidson eFcel at providing
compelling user and usage imagery "hile o-ering adeEuate or even strong
4isa is a particularly good eFample of a #rand "hose managers understand
the positioning game In the 1=H<s and 1=K<s' American .Fpress maintained
the highAproIle #rand in the credit card market through a series of highly
e-ective marketing programs 3rumpeting that Tmem#ership has its
privileges'T American .Fpress came to signify status' prestige' and Euality
In response' 4isa introduced the 5old and the &latinum cards and launched
an aggressive marketing campaign to #uild up the status of its cards to
match the American .Fpress cards It also developed an eFtensive merchant
delivery system to di-erentiate itself on the #asis of superior convenience
and accessi#ility Its ad campaigns sho"cased desira#le locations such as
famous restaurants' resorts' and events that did not accept American
.Fpress "hile proclaiming' T4isa ItSs every"here you "ant to #eT 3he
aspirational message cleverly reinforced #oth accessi#ility and prestige and
helped 4isa stake out a formida#le position for its #rand 4isa #ecame the
consumer card of choice for family and personal shopping' for personal travel
and entertainment' and even for international travel' a former American
.Fpress stronghold 9f course' #randing isnSt static' and the game is even
more diJcult "hen a #rand spans many product categories 3he miF of
points of parity and point of di-erence that "orks for a #rand in one category
may not #e Euite right for the same #rand in another
(. T8e <rand is consisen.
Maintaining a strong #rand means striking the right #alance #et"een
continuity in marketing activities and the kind of change needed to stay
relevant By continuity' I mean that the #randSs image doesnSt get muddled
or lost in a cacophony of marketing e-orts that confuse customers #y
sending conGicting messages Nust such a fate #efell the Michelo# #rand In
the 1=H<s' Michelo# ran ads featuring successful young professionals that
conIdently proclaimed' T!here youSre going' itSs Michelo#T 3he companySs
neFt ad campaign trumpeted' T!eekends "ere made for Michelo#T (ater' in
an attempt to #olster sagging sales' the theme "as s"itched to T&ut a little
"eekend in your "eekT In the midA 1=K<s' managers launched a campaign
telling consumers that T3he night #elongs to Michelo#T 3hen in 1==8 "e
"ere told' T)ome days are #etter than others'T "hich "ent on to eFplain that
TA special day reEuires a special #eerT 3hat slogan "as su#seEuently
changed to T)ome days "ere made for Michelo#T &ity the poor consumers
&revious advertising campaigns simply reEuired that they look at their
calendars or out a "indo" to decide "hether it "as the right time to drink
Michelo#U #y the midA1==<s' they had to Igure out eFactly "hat kind of day
they "ere having as "ell After receiving so many di-erent messages'
consumers could hardly #e #lamed if they had no idea "hen they "ere
supposed to drink the #eer &redicta#ly' sales su-ered 0rom a high in 1=K<
of K1 million #arrels' sales dropped to just 1K million #arrels #y 1==K
H. T8e <rand 2or!o.io and 8ierarc89 /aEe sense.
Most companies do not have only one #randU they create and maintain
di-erent #rands for di-erent market segments )ingle product lines are often
sold under di-erent #rand names' and di-erent #rands "ithin a company
hold di-erent po"ers 3he corporate' or company"ide' #rand acts as an
um#rella A second #rand name under that um#rella might #e targeted at
the family market A third #rand name might nest one level #elo" the family
#rand and appeal to #oys' for eFample' or #e used for one type of product
Brands at each level of the hierarchy contri#ute to the overall eEuity of the
portfolio through their individual a#ility to make consumers a"are of the
various products and foster favora#le associations "ith them At the same
time' though' each #rand should have its o"n #oundariesU it can #e
dangerous to try to cover too much ground "ith one #rand or to overlap t"o
#rands in the same portfolio 3he 5apSs #rand portfolio provides maFimum
market coverage "ith minimal overlap Banana 1epu#lic anchors the high
end' the 5ap covers the #asic styleAandAEuality terrain' and 9ld %avy taps
into the #roader mass market .ach #rand has a distinct image and its o"n
sources of eEuity
BM! has a particularly "ell designed and implemented hierarchy At the
corporate #rand level' BM! pioneered the luFury sports sedan category #y
com#ining seemingly incongruent style and performance considerations
BM!Ss clever advertising slogan' T3he ultimate driving machine'T reinforces
the dual aspects of this image and is applica#le to all cars sold under the
BM! name At the same time' BM! created "ellAdi-erentiated su##rands
through its 3' >' and H series' "hich suggest a logical order and hierarchy of
Euality and price 5eneral Motors' #y contrast' still struggles "ith its #rand
portfolio and hierarchy In the early 1=2<s' Alfred & )loan decreed that his
company "ould o-er Ta car for every purse and purposeT 3his philosophy
led to the creation of the *adillac' 9ldsmo#ile' Buick' &ontiac' and *hevrolet
divisions 3he idea "as that each division "ould appeal to a uniEue market
segment on the #asis of price' product design' user imagery' and so forth
3hrough the years' ho"ever' the marketing overlap among the Ive main 5M
divisions increased' and the divisionsS distinctiveness diminished In the midA
1=K<s' for eFample' the company sold a single #ody type (the Nody) modiIed
only slightly for the Ive di-erent #rand names In fact' advertisements for
*adillac in the 1=K<s actually stated that Tmotors for a *adillac may come
from other divisions' including Buick and 9ldsmo#ileSS In the last ten years'
the company has attempted to sharpen the divisionsS #lurry images #y
repositioning each #rand *hevrolet has #een positioned as the valueApriced'
entry level #rand )aturn represents no haggle customerAoriented service
&ontiac is meant to #e the sporty' performance oriented #rand for young
people 9ldsmo#ile is the #rand for larger' mediumApriced cars Buick is the
premium' Tnear luFuryT #rand And *adillac' of course' is still the top of the
line Oet the goal remains challenging 3he Inancial performance of &ontiac
and )aturn has improved But the top and #ottom lines have never regained
the momentum they had years ago *onsumers remain confused a#out "hat
the #rands stand for' in sharp contrast to the clearly focused images of
competitors like ,onda and 3oyota
J. T8e <rand /aEes 3se o! and coordinaes a !3.. re2eroire o!
/arEein= aci?iies o <3i.d eN3i9.
At its most #asic level' a #rand is made up of all the marketing elements that
can #e trademarkedA logos' sym#ols' slogans' packaging' signage' and so on
)trong #rands miF and match these elements to perform a num#er of #randA
related functions' such as enhancing or reinforcing consumer a"areness of
the #rand or its image and helping to protect the #rand #oth competitively
and legally
Managers of the strongest #rands also appreciate the speciIc roles that
di-erent marketing activities can play in #uilding #rand eEuity 3hey can' for
eFample provide detailed product information 3hey can sho" consumers
ho" and "hy a product is used' #y "hom' "here' and "hen 3hey can
associate a #rand "ith a person' place' or thing to enhance or reIne its
)ome activities' such as traditional advertising' lend themselves #est to
TpullT functionsAthose meant to create consumer demand for a given
product 9thers' like trade promotions' "ork #est as TpushT programsAthose
designed to help push the product through distri#utors !hen a #rand makes
good use of all its resources and also takes particular care to ensure that the
essence of the #rand is the same in all activities' it is hard to #eat
*ocaA*ola is one of the #est eFamples 3he #rand makes eFcellent use of
many kinds of marketing activities 3hese include media advertising (such as
the glo#al TAl"ays *ocaA*olaT campaign)U promotions (the recent e-ort
focused on the return of the popular contour #ottle' for eFample)U and
sponsorship (its eFtensive involvement "ith the 9lympics) 3hey also include
direct response (the *ocaA*ola catalog' "hich sells licensed *oke
merchandise) and interactive media (the companySs !e# site' "hich o-ers'
among other things' games' a trading post for collectors of *oke
memora#ilia' and a virtual look at the !orld of *ocaA*ola museum in
Atlanta) 3hrough it all' the company al"ays reinforces its key values of
Toriginality' classic refreshment'T and so on 3he #rand is al"ays the hero in
*ocaA*ola advertising
'. T8e <randPs /ana=ers 3ndersand A8a 8e <rand /eans o
Managers of strong #rands appreciate the totality of their #randSs imageA
that is' all the di-erent perceptions' #eliefs' attitudes' and #ehaviors
customers associate "ith their #rand' "hether created intentionally #y the
company or not As a result' managers are a#le to make decisions regarding
the #rand "ith conIdence If itSs clear "hat customers like and donSt like
a#out a #rand ' and "hat core associations are linked to the #rand' then it
should also #e clear "hether any given action "ill dovetail nicely "ith the
#rand or create friction
3he Bic #rand illustrates the kinds of pro#lems that can arise "hen managers
donSt fully understand their #randSs meaning By emphasi+ing the
convenience of ineFpensive' disposa#le products' the 0rench company
)ociete Bic "as a#le to create a market for non reIlla#le #allpoint pens in the
late 1=><s'disposa#le cigarette lighters in the early 1=H<s' and disposa#le
ra+ors in the early 1=K<s But in 1=K='"hen Bic tried the same strategy "ith
perfumes in the 2nited )tates and .urope' the e-ort #om#ed3he perfumesA
t"o for "omen (T%uitT and TNourT) and t"o for men (TBic for MenT and TBic
)port for MenT)A "ere packaged in Euarter ounce glass spray #ottles that
looked like fat cigarette lighters and sold for a#out [[ each 3hey "ere
displayed in plastic packages on racks at checkout counters throughout BicSs
eFtensive distri#ution channels' "hich included 1<<'<<< or so drugstores'
supermarkets' and other mass merchandisers At the time of the launch' a
Bic spokesperson descri#ed the products as logical eFtensions of the Bic
heritage: T,igh Euality at a-orda#le prices' convenient to purchase and
convenient to useT 3he company spent [2< million on an advertising and
promotion #lit+ that featured images of stylish people enjoying the perfumes
and used the tag line T&aris in your pocketT
!hat "ent "rongZ Although their other products did stand for convenience
and for good Euality at lo" prices' BicSs managers didnSt understand that the
overall #rand image lacked a certain cachet "ith customersA a critical
element "hen marketing something as tied to emotions as perfume 3he
marketers kne" that customers understood the message they "ere sending
"ith their earlier products But they didnSt have a handle on the associations
that the customers had added to the #rand imageA a utilitarian' impersonal
essenceA "hich didnSt at all lend itself to perfume By contrast' 5illette has
#een careful not to fall into the Bic trap !hile all of its products #eneIt from
a similarly eFtensive distri#ution system' it is very protective of the name
carried #y its ra+ors' #lades' and associated toiletries 3he companySs
electric ra+ors' for eFample' use the entirely separate Braun name' and its
oral care products are marketed under the 9ral B name
O. T8e <rand is =i?en 2ro2er s322or" and 8a s322or is s3sained
o?er 8e .on= r3n.
Brand eEuity must #e carefully constructed A Irm foundation for #rand
eEuity reEuires that consumers have the proper depth and #readth of
a"areness and strong' favora#le' and uniEue associations "ith the #rand in
their memory 3oo often' managers "ant to take shortcuts and #ypass more
#asic #randing considerationsA such as achieving the necessary level of
#rand a"areness Ain favor of concentrating on Gashier aspects of #rand
#uilding related to image
A good eFample of lack of support comes from the oil and gas industry in the
1=K<s In the late 1=H<s' consumers had an eFtremely positive image of
)hell 9il and' according to market research' sa" clear di-erences #et"een
that #rand and its major competitors In the early 1=K<s' ho"ever' for a
variety of reasons' )hell cut #ack considera#ly on its advertising and
marketing )hell has yet to regain the ground it lost 3he #rand no longer
enjoys the same special status in the eyes of consumers' "ho no" vie" it as
similar to other oil companies
Another eFample is *oors Bre"ing As *oors devoted increasing attention to
gro"ing the eEuity of its lessAesta#lished #rands like *oors (ight' and
introduced ne" products like 7ima' ad support for the Gagship #eer
plummeted from a peak of a#out [83 million in 1=K> to just [8 million in
1==3 !hatSs more' the focus of the ads for *oors #eer shifted from
promoting an iconoclastic' independent' "estern image to reGecting more
contemporary themes &erhaps not surprisingly' sales of *oors #eer dropped
#y half #et"een 1=K= and 1==3 0inally in 1==8' *oors #egan to address the
pro#lem' launching a campaign to prop up sales that returned to its original
focus Marketers at *oors admit that they did not consistently give the #rand
the attention it needed As one commented: T!eSve not marketed *oors as
aggressively as "e should have in the past ten to 1> yearsT
;%.T8e co/2an9 /oniors so3rces o! <rand eN3i9.
)trong #rands generally make good and freEuent use of inAdepth #rand
audits and ongoing #randAtracking studies A #rand audit is an eFercise
designed to assess the health of a given #rand 3ypically' it consists of a
detailed internal description of eFactly ho" the #rand has #een marketed
(called a T#rand inventorySS) and a thorough eFternal investigation' through
focus groups and other consumer research' of eFactly "hat the #rand does
and could mean to consumers (called a T#rand eFploratoryT) Brand audits
are particularly useful "hen they are scheduled on a periodic #asis ItSs
critical for managers holding the reins of a #rand portfolio to get a clear
picture of the products and services #eing o-ered and ho" they are #eing
marketed and #randed ItSs also important to see ho" that same picture
looks to customers 3apping customersS perceptions and #eliefs often
uncovers the true meaning of a #rand' or group of #rands' revealing "here
corporate and consumer vie"s conGict and thus sho"ing managers eFactly
"here they have to reIne or redirect their #randing e-orts or their marketing
goals 3racking studies can #uild on #rand audits #y employing Euantitative
measures to provide current information a#out ho" a #rand is performing for
any given dimension 5enerally' a tracking study "ill collect information on
consumersS perceptions' attitudes' and #ehaviors on a routine #asis over
timeU a thorough study can yield valua#le tactical insights into the shortAterm
e-ectiveness of marketing programs and activities !hereas #rand audits
measure "here the #rand has #een' tracking studies measure "here the
#rand is no" and "hether marketing programs are having their intended
e-ects 3he strongest #rands' ho"ever' are also supported #y formal #randA
eEuityAmanagement systems
Managers of these #rands have a "ritten documentAa T#rand eEuity charterTA
that spells out the companySs general philosophy "ith respect to #rands and
#rand eEuity as concepts ("hat a #rand is' "hy #rands matter' "hy #rand
management is relevant to the company' and so on) It also summari+es the
activities that make up #rand audits' #rand tracking' and other #rand
researchU speciIes the outcomes eFpected of themU and includes the latest
Indings gathered from such research 3he charter then lays out guidelines
for implementing #rand strategies and tactics and documents proper
treatment of the #randSs trademarkA the rules for ho" the logo can appear
and #e used on packaging' in ads' and so forth 3hese managers also
assem#le the results of their various tracking surveys and other relevant
measures into a #rand eEuity report' "hich is distri#uted to management on
a monthly' Euarterly' or annual #asis 3he #rand eEuity report not only
descri#es "hat is happening "ithin a #rand #ut also "hy .ven a market
leader can #eneIt #y carefully monitoring its #rand' as $isney aptly
demonstrates In the late 1=K<s' $isney #ecame concerned that some of its
characters (among them Mickey Mouse and $onald $uck) "ere #eing used
inappropriately and #ecoming overeFposed 3o determine the severity of the
pro#lem' $isney undertook an eFtensive #rand audit 0irst' as part of the
#rand inventory' managers compiled a list of all availa#le $isney products
(manufactured #y the company and licensed) and all third party promotions
(complete "ith pointAofApurchase displays and relevant merchandising) in
stores "orld"ide At the same time' as part of a #rand eFploratory' $isney
launched its Irst major consumer research study to investigate ho"
consumers felt a#out the $isney #rand 3he results of the #rand inventory
"ere a revelation to senior managers 3he $isney characters "ere on so
many products and marketed in so many "ays that it "as diJcult to
understand ho" or "hy many of the decisions had #een made in the Irst
place 3he consumer study only reinforced their concerns 3he study
indicated that people lumped all the product endorsements together $isney
"as $isney to consumers' "hether they sa" the characters in Ilms' or heard
them in recordings' or associated them "ith theme parks or products
*onseEuently' all products and services that used the $isney name or
characters had an impact on $isneySs #rand eEuity And #ecause of the
charactersS #road eFposure in the marketplace' many consumers had #egun
to feel that $isney "as eFploiting its name $isney characters "ere used in a
promotion of Nohnson !aF' for instance' a product that "ould seemingly
leverage almost nothing of value from the $isney name *onsumers "ere
even upset "hen $isney characters "ere linked to "ell regard premium
#rands like 3ide laundry detergent In that case' consumers felt the
characters added little value to the product !orse yet' they "ere annoyed
that the characters involved children in a purchasing decision that they
other"ise "ould pro#a#ly have ignored If consumers reacted so negatively
to associating $isney "ith a strong #rand like 3ide' imagine ho" they reacted
"hen they sa" the hundreds of other $isneyAlicensed products and joint
promotions $isneySs characters "ere ha"king everything from diapers to
cars to Mc$onaldSs ham#urgers *onsumers reported that they resented all
the endorsements #ecause they felt they had a special' personal relationship
"ith the characters and "ith $isney that should not #e handled so carelessly
As a result of the #rand inventory and eFploratory' $isney moved Euickly to
esta#lish a #rand eEuity team to #etter manage the #rand franchise and
more selectively evaluate licensing and other thirdAparty promotional
opportunities 9ne of the mandates of this team "as to ensure that a
consistent image for $isney reinforcing its key association "ith fun family
entertainmentA"as conveyed #y all thirdAparty products and services
)u#seEuently' $isney declined an o-er to coA#rand a mutual fund designed
to help parents save for their childrenSs college eFpenses Although there
"as a family association' managers felt that a connection "ith the Inancial
community suggested associations that "ere inconsistent "ith other aspects
of the #randSs image
It may #e "orth"hile for marketing managers and practitioners to give as
much importance to #rand failures as they give to successful #rands As it
not only help the companies introspect and think "here it "ent "rong' #ut
"hat are the things that need to #e avoided in the future so that the
company does not encounter such things in the future &roduct and Brand
failures occur on an ongoing #asis to varying degrees "ithin most productA
#ased organi+ations 3his is the negative aspect of the development and
marketing process In most cases' this failure rate syndrome ends up #eing a
num#ers game 3here must #e some ratio of successful products to each one
that ends up #eing a failure !hen this does not happen' the organi+ation is
likely to fail' or at least eFperience Inancial diJculties that prohi#it it from
meeting proIta#ility o#jectives 3he primary goal is to learn from product
and #rand failures so that future product development' design' strategy and
implementation "ill #e more successful
3here should #e planning and implementation process to learn from the
mistakes of other product and #rand failures .ach product failure can #e
investigated from the perspective of "hat' if anything might have #een done
di-erently to produce and market a successful product rather than one that
failed 3he a#ility to identify key signs in the product development process
can #e critical If the product;#rand should make it this far' assessing risk
#efore the product is marketed can save an organi+ation #udget' and avoid
the intangi#le costs of eFposing their failure to the market 3he factors "hich
contri#ute maFimum to the #rand failures are: A*ategory ' 3iming ' *ultural
factors 'To2 Mana=e/en Co/2.acenc9( Brands are doomed "hen top
eFecutives drink the deadly glass of complacency miFed "ith arrogance) @
BooEis8 F3nda/ena.s ra8er 8an Cons3/ers Insi=8I Brands also fail
"hen they #ase decisions on marketing theories instead of customer
reEuirements Brands fail #ecause they fail to maintain the N3a.i9' r3s
and .o9a.9 that must #e at the heart of every #rand
Brand evaluation is vital to the success of the #rand It ena#les #rand o"ners
to see "here the #rand/s strengths and "eaknesses lie and "hat forces are
driving these' "hich in turn points to the nature and level of investment
needed to fulIll the #rand/s potential Measuring #rand performance is an
integral part of #rand management A thorough evaluation looks not only at
the Inancial value of the #rand #ut also at the #rand eEuity R the intangi#le
elements of a #rand that distinguish it in the mind of the consumer Brand
evaluation is used
A0or #alance sheet purposes
A0or mergers and acEuisitions
ANointAventure negotiations (eg' to prevent overpayment)
AInvestor relations
A(icensing and 0ranchising
3o evaluate the #rand' the soft"are for designing a #rand score card can also
#e used

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