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Lesson 3: Brand Management

In Lesson 3, students will learn about building brand equity and positioning a brand in the marketplace.
They will learn how to choose the appropriate brand elements to identify and differentiate their brand.
Further, students will be presented with ways to establish effective brand positioning, how brands are
successfully differentiated, and the major approaches to measuring brand equity.

Learning Objectives
Upon completion of Lesson 3, you should be able to:

Describe how branding works, what brand equity is, and how it is built, measured, and managed.

Identify the important decisions made in developing a branding strategy.

Explain how a firm develops and establishes an effective positioning and how brands are
successfully differentiated.

Describe how marketers identify and analyze competition.

Explain how market leaders, challengers, followers, and nichers compete effectively.

What To Do Next
Lecture and Research Update
Click on the Lecture and Research Update link above to access your lesson lecture notes.
Required Readings
After reading the Lecture and Research Update, you should read all of the Required Reading
selections by clicking on the Required Readings link above.
Vocabulary List
Click on the Vocabulary List link above to view vocabulary terms that are found in the Required
Readings and/or the Lecture and Research Update for this lesson. Study and learn the meaning
of each term and how to apply the term to the content area and the real world.
Discussion Questions
After you have completed the readings in this lesson and feel comfortable with the material
presented, go to the Assignments tool on the left navigation panel underneath the QUICK LINKS
section and complete Discussion Question 3_06 and Discussion Question 3_07.
After you have completed the readings in this lesson and feel comfortable with the material
presented, go to the Assignments tool on the left navigation panel underneath the QUICK LINKS
section and complete Activity 3_08.
Stand-Alone Project Benchmark
Grading Criteria
Once you have completed these items, you are ready to move on to your next lesson!
Lecture and Research Update from Your Professor, James
A. Lumpp, Ph.D.
You will receive the greatest benefit from the following Lecture and Research Update if you first
read this narrative, review the lesson, study the Required Readings, then come back to this
section and carefully re-read this Lecture and Research Update. The lecture portion of this
narrative focuses on issues from the textbook that need further explanation, while the research
update portion integrates supportive information from recent professional academic and trade
articles with the textbook information.
Reading the Kotler book so far, you have undoubtedly concluded that there is much more to
consider when marketing a product than just its physical characteristics. You have seen how a
buyers perceptions of a product, whether or not they resemble reality, can be pivotal in decision-
making. Marketers, therefore, are usually eager to create a brand image for what theyre
selling. Sometimes that will be a complex exercise (e.g., for automobiles or pharmaceuticals); in
other cases, the task will seem simpler (as in the case of bottled water). Compared with other
consumables, however, marketing bottled water or taking market share away from similar
offerings in this category may not be all that simple. The task may be especially challenging if
differentiation must be achieved on something other than identifiable physical characteristics of
the product or definable service attributes.
A brand adds dimensions differentiating the offering in some way from other offerings designed
to satisfy the same need. Marketers must be able to create, maintain, enhance, and protect
brands. Strategic brand management covers the design and implementation of marketing
activities and programs to build, measure, and manage brands to maximize their value. This
process involves:

1. Identifying and establishing brand positioning

2. Planning and implementing brand marketing

3. Measuring and interpreting brand performance

4. Growing and sustaining brand value

All investment dollars used to provide market offerings are actually an investment in building an
equity bridge with the consumer as the consumer acquires knowledge from the respective
Marketers must choose the appropriate brand elements to identify and differentiate their brand.
These elements must be tested and developed, usually with the help of market research firms.
Brand elements should also capture the brands intangible characteristics as The rock of
Gibraltar symbol is used by Prudential Insurance. Organizations may use personalizing
marketing to ensure relevancy in the brand marketing efforts. This can be accomplished via the
Internet, experiential marketing, one-to-one marketing, and permission marketing methods.
Marketing activities throughout the organization as well as the value chain should be integrated
to ensure consistency with the brand strategy. Internal branding can be used to inform and
inspire employees of the organizations branding strategy. Another way for organizations to build
brand equity is to create secondary brand associations by linking associations to other entities
and their respective brand, often referred to as co-branding.
There are two major approaches to measuring brand equity. First is an indirect approach, which
is a quantitative method of identifying and tracking consumer brand knowledge. The direct
approach assesses the actual impact of brand knowledge on consumer response to different
aspects of marketing. Both methods are important for an organization to understand how
sources of brand equity and respective outcomes of strategy change over time. Brand audits are
customer-focused exercises that involve a series of procedures to assess the health of the
brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity.
As Arnold (2013) explains,

A marketing audit:

* gives you suggestions for improvement;

* provides money-saving ideas;
* gives an outsider's feedback for your marketing;
* helps analyze your competitors and how your marketing is positioned; and
* offers industry best practice ideas.

Brand audits enable the organization to better understand the sources of brand equity and how
they affect outcomes of interest. There must be a long-term brand management strategy as well.
Brand reinforcement and brand revitalization techniques help support longer term strategies.
The former consists of reinforcement and changes to marketing activities for current and new
products. The latter may include a major change to how a product is positioned in the market
place, i.e., re-inventing itself. When devising a brand strategy, the organization must first decide
whether to brand or not to brand. If the organization decides to brand, it must choose which
brand names to use, i.e., individual names, blanket family names, separate family names for all
products, corporate name combined with individual product names.
Co-branding is a joint effort whereby two or more established brands are linked together in a
marketing branding effort. Ingredient branding is a special case of co-branding in which a
component of the product also has a brand association. An example of this would be a PC with
the Intel chip inside.

Ingredient branding, or the use of two or more brand names on a single product, is widely seen
as providing significant benefits in terms of increased product differentiation and greater market
share. The association between two brand names can both enhance and dilute the brand equity
of the host brand name and the ingredient brand name The results (of a recent study) suggest
that there is a significant behavioral spillover impact of trial of the co-branded product on the
purchase probability of both the host and ingredient brands. This effect is greater among prior
non-loyal users and prior non-users of the host and ingredient brands and when there is a higher
degree of perceived fit between the host and ingredient brands. (Swaminathan, Reddy, Dommer,
and Loughran, 2012)

Brand extending is the process of associating a new product with an existing brand, thereby
extending the brand to cover the product. This can increase the odds of success for the new
product. There is the risk with extensions of diluting the brand. This occurs when consumers can
no longer associate a brand with a specific product or similar set of products and start thinking
less of the brand.
Because different market segments look upon brands differently, it is important to provide
multiple brands in the same category. Other reasons for having multiple brands in the same
category include 1) increase shelf presence and retailer dependence in the store, 2) attract new
customers seeking variety, 3) increase internal competition within the firm, 4) increase
economies of scale in marketing mix activity. Multiple brands in the same category can be
referred to as being in a set called the brand portfolio.
Companies should develop brand policies for the individual product items in their lines. They
must decide on product attributes (quality, features, design), whether to brand at all, whether to
employ producer or distributor branding, whether to use family brand names or individual brand
names, whether to extend the brand name to new products, whether to create multiple brands,
and whether to reposition any of them.
The concept of brand is the most discussed aspect of marketing management in most
competitive industries. Brand usually means a word, sign, symbol, name, slogan, or design that
individuals use to identify and value products and services. The brand is a perception of what
the product or service stands for in the publics mind. It is a shorthand explanation of what
people can expect from the product or service. When this shorthand recognition of the traits of
the product is widely accepted, the brand itself has value. We call that value brand equity.

Branding strategy of a company largely depends on how branding strategy can counter market
complexity, competitive pressure, channel dynamics, and; favor in globalization, acquisition and
mergers. It helps in aggressive brand extension in related or unrelated category to meet the
diverse nature of consumers, to get advantage of social media and internet as well as to
minimize the ill effect of negative linkages if any, or threats being imposed by society, market
and environment. The brand portfolio of a company is designed as House of Brand, Branded
House or Mixed which change in response to environment. Companies to serve the various
market segments, either top, middle or bottom of the pyramid has to decide the optimum
portfolio constituting of global and local brands, if not then to acquire the same, also required to
structure the brand portfolio so that it can create value for the company in terms of bottom line,
by serving maximum needs and wants of consumers and market. The emerging trends of brand
partnership and acquisition are exercised by the company to fill the gap in their brand portfolio,
and Ingredient branding is to enhance product recognition based on the benefit and attributes,
rather than extending the brand vertically or horizontally. (Singh, 2012)

You may not think brand equity is important financially, but each year, Interbrand publishes a list
of the value of some high-profile brands. The 2013 report claims that the most valuable brand in
the world is Apple, with a value for the brand only of over $98 billion. In second place is Google,
with a brand value of over $93 billion (See Table 1). Just ten years ago, the most valuable brand
was Coca-Cola, with a value for the brand only of over $66 billion. In second place was IBM,
with a brand value of over $59 billion.
Table 1: Top 10 Global Brands
Nearly every firm has a different method to calculate the value of its brand. Even different
consulting companies have different valuation methods. The variety of methods used to value
such an intangible asset causes some skeptics to argue that the entire exercise of brand
evaluation is nothing more than creative accounting. The accounting debate aside, there is little
doubt among marketers and CEOs that a firms brand has value.
Lecture and Research Update Bibliography
Arnold, M. (May 2013). Brand in Focus. Credit Union Management, 36.5: 22-23. Retrieved from:
Interbrand (2013). Best Global Brands 2013. Retrieved August 8, 2014, from
Kotler, P. and Keller, K. (2012) A Framework for Marketing Management (5th ed.). Upper Saddle
River, NJ: Prentice-Hall.
Singh, B. (2012). Emerging Trends in Branding Strategy. International Journal of Marketing &
Business Communication, 1.3: 34-42. Retrieved from:
Swaminathan, V., Reddy, S. and Dommer, S. (Mar 2012). Spillover Effects of Ingredient
Branding Strategies on Brand Choice: A Field Study. SSRN Working Paper Series.
Retrieved from:
PowerPoint Lecture Notes
Use the lecture notes available in PowerPoint as you study this chapter by CLICKING THE
LINK BELOW. These notes will help you identify main concepts and ideas presented in this
If you do not have PowerPoint on your computer, you can download a free viewer from Microsoft
by clicking here.
A Framework for Marketing Management

Chapter 8

Chapter 9

Advertising & IMC: Principles and Practice

Chapter 2

Chapter 3

Required Readings
After reviewing this lesson in its entirety and reading the Lecture and Research Update, you should read
all of the Required Reading selections below. You can access library resources from our Web site for
readings that are not from your textbook(s). You may find it helpful to make notes while you read or to
highlight information of importance. Take special note when the identified vocabulary terms show up in the
Required Readings.
DIRECTIONS: To access ProQuest articles, you MUST first open a Web browser window to the ProQuest
Library; otherwise, you will be denied access to the articles when you click the links. Once your browser is
open to ProQuest, simply click on the link for the article you need to read. For detailed instructions on how
to access ProQuest, click here. For non-ProQuest articles, use the provided Internet link to access the
Required Readings material.
REPORT A DEAD LINK: If you have problems with a link, please report the problem to Ashworth College
by e-mail at
Textbook Readings

Kotler, P. & Keller, K. (2012) A Framework for Marketing Management (5th ed.). Upper Saddle River, NJ:
Prentice-Hall. Chs. 8-9, pp.113-142.

Moriarty, S., Mitchell, N. & Wells, W. (2012) Advertising & IMC: Principles and Practice. (9th ed.). Upper
Saddle River, New Jersey: Prentice Hall. Chs. 2-3, pp. 32-91.

ProQuest Links
Marketing Audits: The Forgotten Side of Management?
Da Gama, A. (Sep/Dec 2012). Journal of Targeting, Measurement and Analysis for Marketing, 20.3-4:

The Differential Impact of Brand Equity on B2B Co-Branding

Kalafatis, S., Remizova, N., Riley, D. and Singh, J. (2012). The Journal of Business & Industrial
Marketing, 27.8: 623-634.

How to Think Strategically About Retail Brand Extensions

Mitchell, V., Edelman, D. and Giles, A. The Retail Digest, 20.1: 38-43.

Vocabulary List
You will find the following vocabulary terms in the Required Readings and/or the Lecture and Research
Update for this lesson. Study and learn the meaning of each term and how to apply the term to the
content area and the real world.
Brand Differentiation
Brand Audit Integrated Marketing
Brand Equity Points-of-difference
Brand Portfolio Points-of-parity
Competitive Advantage
Stand-Alone Project Benchmark: Competitive Market Analysis
Think about how to position your product in relation to market forces from initial strategic planning stages
to later stages that develop after your product has been launched. You should learn to think about and
analyze the big picture, looking not only at products that directly compete with the one youve selected,
but also, in light of companies that satisfy the same customer need.

Grading Criteria
1. Discussion Questions Cover Sheet
2. Discussion Question #1 26 points
3. Discussion Question #2 24 points
4. Activity Cover Sheet
5. Mattel and the Barbie Brand 100 points
Contribution to Course Grade
150 points 15%