Brand Management

Unit No: 41

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Table of Contents
Introduction...................................................................................................................1

LO1: Demonstrating an understanding of how a brand is built and managed over

time...............................................................................................................................2

LO2: Analysing how brands are organised in portfolios: how brand hierarchies are
built and managed........................................................................................................7

LO3: Evaluating how brands are leveraged/extended over time domestically and
internationally..............................................................................................................11

LO4: Evaluating techniques for measuring and managing brand value over time....15

Conclusion..................................................................................................................18

References.................................................................................................................19
Table of Figures
Figure 1: 9 elements of brand strategy.........................................................................3
Figure 2: Components of brand equity.........................................................................5
Figure 3: Branded house Vs. House of Brands............................................................7
Figure 4: Keller's brand equity model applied for AstraZeneca...................................9
Figure 5: Applying Ansoff matrix for AstraZeneca......................................................12

List of Tables
Table 1: AstraZeneca brand portfolio analysis.............................................................8
Introduction
AstraZeneca is one of the largest pharmaceutical and biotechnology companies in
the world. The company is headquartered in Cambridge, UK, but is based in both the
UK and Sweden. It was formed in 1999 by the merger of the Swedish company Astra
AB and the UK company Zeneca Plc. The company had total sales worth £18.77
billion and had a net income worth £2.28 billion (AstraZeneca, 2020). In this report,
firstly the brand building and managing process of AstraZeneca is discussed and
demonstrated. Then the organisation of brands in the portfolios and the brand
hierarchies are analysed. Then the process of leveraging or extending the brands of
AstraZeneca in a collaborative manner over time evaluated. And lastly, the various
techniques used for measuring and managing brands over time is evaluated.

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LO1: Demonstrating an understanding of how a brand is
built and managed over time
Explaining the importance of branding as a marketing tool and why
and how it has emerged in business practice

Branding is one of the most prominent marketing tools. It helps a company to create
a unique identity of itself in the market based on its purpose of existence. It helps the
customer base to create an emotional attachment to the business (Todor, 2014). It
also sets a standard regarding what to expect from the company regarding product
quality and customer service. Branding is usually built through effective design of
logo and symbols, creative and engaging advertising, helpful customer service, etc.

Branding did not exist in the business world even 70 years ago. At that time,
companies only depended on the product quality to market them. But as the quality
of the products provided by different manufacturers became similar, there arose a
need to distinguish the products. That is why companies began using branding
tactics to add emotional value to their product besides the functional value.

Branding is important for several reasons-

- Successful branding helps to create recognition in the market. It makes the

business and the products or services it provides more identifiable among the
customer base.
- Branding can also increase the intrinsic value of the business. A well-
recognised brand helps the company to gain trust from the market
stakeholders, like- the customers, the business clients, the suppliers, etc. A
well-branded company can claim to be the professionals and act as the
market leader and experts in their market category. The increase in the
intrinsic market value of the business makes it more attractive for investors.
- A good brand is trusted by its customers. And the customers work as a very
efficient marketing tool. When customers have a good experience with a
brand, they like to share the experience with their friends and family, and this
leads to new customer generation for the business through referrals. Branding

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 not only helps to gain new customers but also helps to retain them through
better quality and customer support.
- Just like branding impacts the external environment of the business, it can
also impact the internal environment. The employees of a business are the
most important and most valuable component of the internal environment.
While working with a trusted and established brand, employees feel proud
and satisfied, and this adds value to the contribution and performance they
put in for the company.

Analysing the key components of a successful brand strategy for

branding and managing brand equity of AstraZeneca

Key components of AstraZeneca’s brand strategy

The brand strategy is an outline regarding how the brand will be communicated to
the target market along with all the brand components. It involves both short-term
and long-term planning on branding while considering the marketing activities of the
competitors.

Figure 1: 9 elements of brand strategy.

Source: (Neuvonen, 2016)

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The brand strategy involves nine key components under three categories- brand
core, brand positioning, and brand persona. The components are-

Brand purpose: A brand strategy is propelled by the brand’s purpose.

AstraZeneca’s products and their brand meet the healthcare needs of the people
and they exist to leverage the innovative capabilities of the company for public health
benefits.

Brand vision: The vision in a brand strategy helps to set long-term goals and
expectations regarding the brand (Neuvonen, 2016). In the case of AstraZeneca,
they intend to utilise their innovative abilities to come up with cost-efficient healthcare
solutions to add value to both society and the patients.

Brand values: The brand value is all about the cultural direction of the brand
strategy. It reflects the core values and the corporate cultures of the company.
AstraZeneca’s brand values also reflect their brand values.

Target audience: Each brand can be targeted towards different target market
segments. AstraZeneca as a brand has a very wide target market segment across
the globe. But each of AstraZeneca’s different product brands has different target
markets.

Market analysis: Proper market analysis needs to be conducted before

communicating the brand to the market. AstraZeneca also needs to conduct
thorough market research before launching their brands.

Awareness goals: The awareness goals dictate how the brand will create
awareness among the target audience. It also determines how much awareness will
be created in a specific period. For a wide target market segment, AstraZeneca will
have a set of broad awareness goals.

Brand personality: Having a brand personality helps the brand to better connect
with the customers on an emotional level. AstraZeneca also develops brand
personalities in its brand strategies through effective design and symbols.

Brand voice: Just like having a personality, a brand can also have a voice or a tone
of its messages. A brand can have either a formal or informal tone depending on the
taste and culture of its target market.

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Brand tagline: A powerful brand tagline helps the brand to communicate its purpose
and unique features clearly and concisely. AstraZeneca’s core tagline is “Life
inspiring ideas”.

Key components of AstraZeneca’s brand equity management

Figure 2: Components of brand equity.

Source: (Foroudi, et al., 2018)
Brand equity can be defined as the financial representation of the brand’s value.
Higher brand equity can help a business to price higher premiums for their products,
generate more sales, or create a better image in the market. There are primarily four
components in effective brand equity management, which are-

Brand awareness: Higher brand awareness of the product means that more people
know about the brand. AstraZeneca has a high level of brand awareness.

Brand association: Powerful brands can generate effective and frequent

associations with their brand in the customer’s mind. AstraZeneca has a high level of
brand equity because of this. (Foroudi, et al., 2018)

Perceived quality: The higher the perceived quality of the product in the customer’s
mind is, the higher is the brand equity.

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Brand loyalty: Brand loyalty can be defined as the pinnacle of effective brand equity
management. Loyal customers make up most of the sales of a company like
AstraZeneca.

Evaluating how brands are managed successfully over time using

application of appropriate theories, models, and concepts

Brand management is not a short-term process. Before launching a brand, the entire
process needs to be strategized thoroughly and the brand needs to be developed
and reinforced in the long-term. There are many theories and models that can
explain the long-term brand management process of AstraZeneca.

Brand loyalty theory: As AstraZeneca executes its brand management strategy

over a specific period, its brand creates an emotional attachment with the customers,
which over time translates into brand loyalty (de Villiers, 2015). There are three
different aspects to the brand management theory- emotional attachment, brand
evaluation, and the behavioural aspect.

Value-based brand theory: According to this theory, AstraZeneca develops and

manages its brand over time by delivering the value it promises to its customers. By
delivering the expected value and quality, a brand can establish itself in the market.

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LO2: Analysing how brands are organised in portfolios:
how brand hierarchies are built and managed
Critically analysing portfolio management, brand hierarchies, and
brand equity using appropriate theories, models, and frameworks

Portfolio management strategies

AstraZeneca operates globally and manages quite a large portfolio of brands which
consists of medicines in the fields of cardiovascular, renal and metabolic diseases,
oncology, infection and vaccines, neuroscience, respiratory, and gastrointestinal
diseases. There are two main portfolio management strategies-

The branded house strategy: The house of brands strategy is a very common
brand portfolio management strategy. In this system, there is a parent brand, and all
the products are rolled out as sub-brands of that parent brand. All the sub-brands
have a very similar design and communicative approach compared to the parent
brand and the sub-brands are not independent of each other (Yu, 2020).

Figure 3: Branded house Vs. House of Brands.

Source: (Yu, 2020)
The house of brands strategy: Compared to the branded house strategy, the
house of brands strategy is completely different. Similar to the first strategy, there is
a parent brand, but that brand has very limited control over or connection to the sub-
brands. Companies like- Unilever, Pepsico, P&G, are prominent followers of this
house of brands strategy (Strebinger, 2014).

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Analysis of AstraZeneca brand portfolio

Table 1: AstraZeneca brand portfolio analysis.

Source: Self-made.

AstraZeneca as a pharmaceutical company follows the branded house brand

management strategy. They launch all their products under different brands, but all
of the brands can be easily traced back to the original AstraZeneca brand.
AstraZeneca does not follow the house of brands strategy as this is not suitable for
the pharmaceutical industry. AstraZeneca has built up its reputation regarding safety
and reliability over its 21 years of operation. If the sub-brands of medicines were
independent of the parent brand, they would not perform well in the market.

Brand hierarchies

Most of the companies in the world have a product range that consists of more than
one product. To achieve consistent growth, companies have to keep launching new
products and new brands. But when AstraZeneca has launched a lot of products, it
needs to create an ecosystem that clearly explains the relationship between the
different brands offered by the company. That is where brand hierarchies come in
handy. There are mainly three types of brand hierarchies-

Corporate, Umbrella or Family brands: The corporate brand hierarchy, which is

also called the umbrella of brands or the family of brands, is quite similar to the
branded house portfolio strategy. In this system, there is a central corporate brand
that has a high level of market penetration and brand awareness. All the sub-brands
launched by the company have similar brand elements compared to the parent
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corporate brand. AstraZeneca mostly follows the corporate brand hierarchy model
(Wijaya, 2015). Most of the medical products and brands launched by the company
have a close association with the corporate AstraZeneca brand.

Endorsed brands: In an endorsed brand hierarchy model, new brands that are
launched have less similarity with the parent brand in terms of the brand elements.
They are rather endorsed by the parent brand and this helps them to attract more
brand awareness within a less amount of time. AstraZeneca only follows this brand
hierarchy model for a few of its product brands.

Individual brands: And lastly, the individual brand hierarchy model, where all the
sub-brands are launched and communicated to the market as individual brands with
no apparent or visible connection to the parent corporate brand. AstraZeneca does
not deploy this brand hierarchy model.

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Brand equity

To understand the scope of brand equity in building in managing the AstraZeneca

brand, Keller’s brand equity model has been applied.

Figure 4: Keller's brand equity model applied for AstraZeneca.

Source: (Farjam & Hongyi, 2015)
Brand identity: This is the first stage in the brand equity development process is
defining the brand identity. The main goal of this step is to develop brand salience
which is also known as brand awareness. In this step, AstraZeneca needs to ensure
that its target audience is aware of their brand and the products they are selling.

Brand meaning: In the second step of the brand equity development process, a
brand needs to properly communicate to the consumers about the true meaning and
purpose of the brand. The brand meaning stage has two performance measures-
performance and imagery (Farjam & Hongyi, 2015). If the brand serves its functional
purposes and delivers its material value, it is said to have brand performance. And if
the brand can connect to the consumers on an emotional level, it is said to have
brand imagery.

Brand response: After being communicated about the meaning of AstraZeneca’s

brands from the previous step, the consumers will now react to communication and
respond about what they think of their brand. The two performance measures, in this

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case, are- judgements and feelings. The target audience of AstraZeneca judges the
brand based on its quality, credibility, consideration, and superiority.

Brand resonance: The last step is about brand resonance. At this stage, the level of
relationship that will be established between the company, AstraZeneca, and its
target audience will be determined.

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LO3: Evaluating how brands are leveraged/extended over
time domestically and internationally
Evaluating how brands are managed collaboratively and in
partnership both at a domestic and global level

At present, the global business environment has become much more complex from
all the frequent innovations and technological disruptions. With the arrival of the
internet and social media, brands have become more and more transparent towards
their target audience. Though this is a positive sign, it has made it harder for brands
to create their unique offerings. As information technology has become much
cheaper and available than before, every brand is deploying IT-based solutions and
insights to gain a competitive edge over its competitors. In this case, brand-related
collaboration has become a majorly successful trend (Baumgarth, 2018). Brands that
have many similarities between them regarding their brand values, vision, purpose,
target market, etc. are collaborating to unlock the benefit that comes from the
synergy of collaborative practices. One might think that only small and new brands
need to collaborate to access the traction and brand awareness offered by larger
and established brands. But in the 21 st century, in a fast-paced world, even big
brands need to collaborate to stay competitive in the business.

In the case of AstraZeneca, the company has been involved in many different
collaborations or partnerships which also have the branding aspect. One of the most
notable collaborations is the one with the University of Oxford. This partnership led to
the development of one of the first vaccines against the COVID-19 virus, the
AZD1222, which is being commercially sold as the Covishield vaccine. AstraZeneca
also has a long-running partnership with the University of Cambridge. The company
has its global headquarters based in the city of Cambridge and is currently running
more than 100 research projects across 23 different departments (University of
Cambridge, 2021). The company has also partnered up with more than 20 other
major pharmaceutical brands globally so that it can manufacture nearly 2 billion
vaccines by the end of 2021 (Taylor, 2020). In the US, AstraZeneca has partnered
up with Emergent Biosolutions to manufacture and distribute around 300 million
doses of the AZD1222 vaccine (Joseph, 2020). Apart from the coronavirus vaccine,

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the company has also signed a collaboration deal with Accent Therapeutics, which is
a pharmaceutical firm specialising in RNA-based therapies (Sheridan, 2020). All the
partnerships discussed above are mostly operational. But they also have a brand-
related benefit. Most of the companies and organisations discussed above are well
known and hold a positive image. While the partnerships with the academic
institutions provide valuable academic validation to the brand, the other partnerships
help AstraZeneca to expand their brand to a wider market.

Critically evaluating the use of different techniques used to

leverage and extend brands

The value of a company’s brand can be interpreted as the brand equity. AstraZeneca
as a company has significant brand equity on a global scale and the company can
leverage this equity in many different ways to add value to its business. Using the
Ansoff Matrix, a total of four different techniques can be identified in this case.

Figure 5: Applying Ansoff matrix for AstraZeneca.

Source: (Schawel & Billing, 2018)
Market penetration

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The Ansoff matrix is a matrix that helps to determine strategic options. Based on two
variables- the type of the market and the type of the product, a total of four different
strategic options can be developed. When AstraZeneca chooses to focus on
marketing its existing products in its existing markets, it will be the market
penetration strategy. For example, if AstraZeneca only sold respiratory medicines in
the UK market, and then to grow it chose to sell more of the respiratory medicines by
focusing on and expanding the UK market, it will be following the market penetration
model. In terms of risk, this strategy provides the lowest risk, but it might also offer
the lowest returns.

Product development

When a company choose to sell a new product in an existing market, it is called the
product development strategy. In this case, a company like AstraZeneca will develop
a new product by investing more in R&D, acquiring a competitor and their product, or
forming a strategic alliance with capable partners (Schawel & Billing, 2018). For
example, if AstraZeneca invests in R&D to develop a new product for cardiovascular
diseases targeted at the UK market, it will be the product development strategy. It
involves more risk than the market penetration strategy.

Market development

The market development strategy is followed when a company decides to sell its
existing products to a new market. The market can be developed by the company by
targeting a new segment among the existing market or targeting a completely new
market either domestically or internationally. For example, if AstraZeneca decides to
sell its existing respiratory medicines to a newly developed market in Brazil instead
of the existing market in the UK, it will be following the market development strategy
(Dawes, 2018). The market development strategy involves more risk than the
product development strategy.

Diversification

The last strategic option from the Ansoff matrix involves a radical approach. In this
case, the company chooses to sell a completely new product to a completely new
set of customers. This is the riskiest strategic technique of them all. The
diversification can be either related or unrelated. If AstraZeneca decides to develop

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new cardiovascular medicine and market it in the Brazilian market, it will be a
diversification approach.

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LO4: Evaluating techniques for measuring and managing
brand value over time

Evaluating techniques for measuring and managing brand value

using specific organisational examples

Cost-based approach

Accumulated cost or Historical cost method: This method involves the

calculation of brand value by taking in all the costs incurred historically by the
business to develop the brand. This is a simple calculation, and it considers the
marketing and communication costs only. But there are some confusions with this
method regarding the differentiation between different marketing costs and their
attributiveness towards building the brand (Yanenko, 2016). AstraZeneca’s brand
value can be calculated this way by adding up all the money they have spent in their
20 years of operations to build their main brand.

Replacement cost method: The replacement cost method calculates the cost of
replacing the current brand with another brand that will provide similar utility. Here
the utility from the new brand is divided by the probability of the brand’s success in
the market. This method also has some problems (Paugam, et al., 2016). If
AstraZeneca wants to replace its old brand with a new brand with the same utility, it
will have to deal with market factors that were not present during the development of
the old brand.

Use of conversion model: This method starts by calculating the amount of

awareness that would be needed to achieve the existing level of sales under the
current brand. The calculation process, in this case, is lengthy and it puts the cost of
acquiring new customers as the replacement cost for the brand equity.

Customer preference model: This model focuses on how the market share
increases with an increase in the level of awareness. But this model has serious
drawbacks as the increase in market share cannot be attributed to brand awareness
alone. AstraZeneca’s market share can increase if the competitors are doing worse
than them.

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Market-based approach

Comparable approach or the Brand sale comparison method: The comparable

approach focuses on the brand value generated by competitors offering similar
product brands. In this approach, the company analyses the brand-driven price
premiums the other similar brands are charging and uses them to determine the
brand value of the company-owned brands (Huang, 2015). If AstraZeneca calculated
its brand value based on GlaxoSmithKline’s brands, it would be a comparable
approach.

Brand equity based on equity evaluation method: According to the proponents of

this method, two components are driving the brand value or brand equity- the
demand enhancing component and the cost advantage component. This approach is
based on empirical statistics from the financial market and provides accurate
information about brand value (Abratt, Bick & Reyneke, 2014). If AstraZeneca
considered the two components while calculating their brand value from financial
market data, the company would be following the equity evaluation method.

Residual method: This method is a simple approach for calculating brand value. It
involves subtracting the market capitalisation value of the firm from the net asset
value. This would only leave the intangible value of the firm which can be identified
as the brand equity value of the firm.

Income-based approach

Royalty relief method: The royalty relief method is the most common and popular
in use for calculating brand value. It calculates the royalty fee that would be needed
to pay for the use of the brand and its trademark. The fee is usually determined by a
valuer who assesses the net income, turnover ratios, future growth rates, etc. of the
company in the discussion. The assessment is done on publicly available data.
AstraZeneca’s brand value calculated in this way amounts to €8.123 billion
(Interbrand Health, 2020).

The differential of price to sale ratios method: The differential of price to sale
ratios method is another easy way to determine the brand value of a company. In
this method, firstly the price to sales ratio of a branded company is divided by the
price to sales ratio of an unbranded company to generate another ratio (Chung, Jan

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& Han, 2013). This ratio is multiplied by the sales figures of the branded company to
calculate the brand value. Calculating AstraZeneca’s brand value this way would be
easier as the required information is easily available.

Price premium method: To use the price premium method for calculating brand
value, one must accept the assumption that branded products should sell for a
premium against the generic unbranded products. This method calculates brand
equity by multiplying the sales volume of the branded product with the price
differential between the branded and unbranded products.

Brand equity based on discounted cash flow: This method would use the free
cash flow data of AstraZeneca to determine its brand equity from the discounted
cash flows. This method is quite problematic and is not used so commonly.

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Conclusion
AstraZeneca is one of the popular and established brands in not only the UK
pharmaceutical sector but also the UK pharmaceutical sector. The company has
much experience in building, managing, and maintaining brands for healthcare.
Companies like AstraZeneca set pioneering examples for the industry regarding
managing brand portfolios. By adapting quickly to the changes in the external
environment and being dynamic in their marketing and branding approaches,
AstraZeneca has stayed competitive and remained a market leader in the UK
pharmaceutical industry.

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