Repositioning a company

In volatile markets, it can be necessary - even urgent - to reposition an entire

company, rather than just a product line or brand. When Goldman Sachs and
Morgan Stanley suddenly shifted from investment to commercial banks, for
example, the expectations of investors, employees, clients and regulators all
needed to shift, and each company needed to influence how these perceptions
changed. Doing so involves repositioning the entire firm.

This is especially true of small and medium-sized firms, many of which often
lack strong brands for individual product lines. In a prolonged recession,
business approaches that were effective during healthy economies often
become ineffective and it becomes necessary to change a firm's positioning.
Upscale restaurants, for example, which previously flourished on expense
account dinners and corporate events, may for the first time need to stress value
as a sale tool.

Repositioning a company involves more than a marketing challenge. It involves

making hard decisions about how a market is shifting and how a firm's
competitors will react. Often these decisions must be made without the benefit
of sufficient information, simply because the definition of "volatility" is that
change becomes difficult or impossible to predict.

Rebranding is the creation of a new name, term, symbol, design, or a

combination of them for an established brand with the intention of developing a
differentiated (new) position in the mind of stakeholders and competitors.[1][2]

Far from just a change of visual identity, rebranding should be part of an

overall brand strategy for a product or service.[3]

This may involve radical changes to the brand's logo, brand name,
image, marketing strategy, and advertising themes. These changes are typically
aimed at the repositioning of the brand/company, sometimes in an attempt to
distance itself from certain negative connotations of the previous branding, or
to move the brand upmarket. However, the main reason for a re-brand is to
communicate a new message for a company, something that has evolved, or the
new board of directors wish to communicate.

Rebranding can be applied to new products, mature products, or even products

still in development. The process can occur intentionally through a deliberate
change in strategy or occur unintentionally from unplanned, emergent
situations, such as a "Chapter 11 corporate restructuring," "union busting," or
"bankruptcy."

Brand equity refers to the marketing effects and outcomes that accrue to a
product with its brand name compared with those that would accrue if the same
product did not have the brand name. Fact of the well-known brand name is
that, the company can sometimes charge premium prices from the consumer .[1]
[2][3][4]
And, at the root of these marketing effects is consumers' knowledge. In
other words, consumers' knowledge about a brand makes manufacturers and
advertisers respond differently or adopt appropriately adept measures for the
marketing of the brand.[5][6] The study of brand equity is increasingly popular as
some marketing researchers have concluded that brands are one of the most
valuable assets a company has.[7] Brand equity is one of the factors which can
increase the financial value of a brand to the brand owner, although not the
only one.[8]Elements that can be included in the valuation of brand equity
include (but not limited to): changing market share, profit margins, consumer
recognition of logos and other visual elements, brand language associations
made by consumers, consumers' perceptions of quality and other relevant brand
values.

Co-branding refers to several different marketing arrangements:

Co-branding, also called brand partnership[1], is when two companies form an

alliance to work together, creating marketing synergy. As described in Co-
Branding: The Science of Alliance:[2]

"the term 'co-branding' is relatively new to the business vocabulary and is

“ used to encompass a wide range of marketing activity involving the use of
two (and sometimes more) brands. Thus co-branding could be considered to
include sponsorships, where Marlboro lends it name to Ferrari or accountants
Ernst and Young support the Monet exhibition." ”
Co-branding is an arrangement that associates a single product or service with
more than one brand name, or otherwise associates a product with someone
other than the principal producer. The typical co-branding agreement involves
two or more companies acting in cooperation to associate any of various logos,
color schemes, or brand identifiers to a specific product that is contractually
designated for this purpose. The object for this is to combine the strength of
two brands, in order to increase the premium consumers are willing to pay,
make the product or service more resistant to copying by private
label manufacturers, or to combine the different perceived properties associated
with these brands with a single product.

According to Chang, from the Journal of American Academy of Business,

Cambridge, states there are three levels of co-branding: market share, brand
extension, and global branding.

Level 1 includes joining with another company to penetrate the market

Level 2 is working to extend the brand based on the company's current market
share

Level 3 tries to achieve a global strategy by combining the two brands

Individual branding, also called individual product

branding or multibranding, is the marketing strategy of giving
each product in a portfolio its own unique brand name. This contrasts
with family branding, corporate branding, and umbrella branding in which the
products in a product line are given a single overarching brand name. The
advantage of individual branding is that each product has an image and identity
that is unique. This facilitates the positioning of each product, by allowing a
firm to position its brands differently.

Examples of individual product branding include Procter & Gamble, which

markets multiple brands such as Pampers, and Unilever, which markets
individual brands such as Dove.

Family branding is a marketing strategy that involves selling several related

products under one brand name. Family branding is also known as umbrella
branding. It contrasts with individual product branding, in which each product
in a portfolio is given a unique brand name and identity.

There are often economies of scope associated with family branding since
several products can be efficiently promoted with a single advertisement or
campaign. Family branding facilitates new product introductions by evoking a
familiar brand name, which can lead to trial purchase, product acceptance, or
other advantages.

Family branding imposes on the brand owner a greater burden to maintain

consistent quality. If the quality of one product in the brand family is
compromised, it could impact on the reputation of all the others. For this reason
family branding is generally limited to product lines that consist of products of
similar quality.

Product lining is the marketing strategy of offering for sale several

related products. Unlike product bundling, where several products are
combined into one, lining involves offering several related products
individually. A line can comprise related products of various sizes, types,
colors, qualities, or prices. Line depth refers to the number of product variants
in a line. Line consistency refers to how closely related the products that make
up the line are. Line vulnerability refers to the percentage of sales or profits
that are derived from only a few products in the line.

The number of different product lines sold by a company is referred to as width

of product mix. The total number of products sold in all lines is referred to
as length of product mix. If a line of products is sold with the same brand
name, this is referred to as family branding. When you add a new product to a
line, it is referred to as a line extension. When you add a line extension that is
of better quality than the other products in the line, this is referred to as trading
up or brand leveraging. When you add a line extension that is of lower quality
than the other products of the line, this is referred to as trading down. When
you trade down, you will likely reduce your brand equity. You are gaining
short-term sales at the expense of long term sales.

Image anchors are highly promoted products within a line that define the
image of the whole line. Image anchors are usually from the higher end of the
line's range. When you add a new product within the current range of an
incomplete line, this is referred to as line filling.

Price lining is the use of a limited number of prices for all your product
offerings. This is a tradition started in the old five and dime stores in which
everything cost either 5 or 10 cents. Its underlying rationale is that these
amounts are seen as suitable price points for a whole range of products by
prospective customers. It has the advantage of ease of administering, but the
disadvantage of inflexibility, particularly in times of inflation or unstable
prices.

There are many important decisions about product and service development
and marketing. In the process of product development and marketing we should
focus on strategic decisions about product attributes, product branding, product
packaging, product labeling and product support services. But product strategy
also calls for building a product line.

In patent law, a cross-licensing agreement is an agreement according to which

two or more parties grant a license to each other for the exploitation of the
subject-matter claimed in one or more of the patents each owns.[1] Very often,
the patents that each party owns covers different essential aspects of a given
commercial product. Thus by cross licensing, each party maintains their
freedom to bring the commercial product to market. The term "cross licensing"
implies that neither party pays monetary royalties to the other party, however,
this may be the case.

For example, Microsoft and JVC entered into a cross license agreement in
January 2008.[2] Each party, therefore, is able to practice the inventions covered
by the patents included in the agreement.[3] This benefits competition by
allowing each more freedom to design products covered by the others patents
without provoking a patent infringement lawsuit.

Parties that enter into cross-licensing agreements must be careful not to

violate antitrust laws and regulations. This can easily become a complex issue,
involving (as far as the European Union is concerned) Art. 101 and 102 of
the Treaty on the Functioning of the European Union (TFEU), previously Art.
81 and 82 of the EC Treaty, (abuse of dominant position, etc) as well as
licensing directives, cartels, etc.

Some companies file patent applications primarily to be able to cross license

the resulting patents, as opposed to trying to stop a competitor from bringing a
product to market.[4] In the early 1990s, for example, Taiwaneseoriginal design
manufacturers, such as Hon Hai, rapidly increased their patent filings after their
US competitors brought patent infringement lawsuits against them.[5] They used
the patents to cross license.
One of the limitations of cross licensing is that it is ineffective against patent
holding companies. The primary business of a patent holding company is to
license patents in exchange for a monetary royalty. Thus, they have no need for
rights to practice other companies' patents. These companies are often referred
to pejoratively as patent trolls.

Brand extension or brand stretching is a marketing strategy in which a firm

marketing a product with a well-developed image uses the same brand name in
a different product category. The new product is called a spin-off.
Organizations use this strategy to increase and leverage brand
equity (definition: the net worth and long-term sustainability just from the
renowned name). An example of a brand extension is Jello-gelatin creating
Jello pudding pops. It increases awareness of the brand name and increases
profitability from offerings in more than one product category.

A brand's "extendibility" depends on how strong consumer's associations are to

the brand's values and goals. Ralph Lauren's Polo brand successfully extended
from clothing to home furnishings such as bedding and towels. Both clothing
and bedding are made of linen and fulfill a similar consumer function of
comfort and hominess. Arm & Hammer leveraged its brand equity from
basic baking soda into the oral care and laundry care categories. By
emphasizing its key attributes, the cleaning and deodorizing properties of its
core product, Arm & Hammer was able to leverage those attributes into new
categories with success. Another example is Virgin Group, which was initially
a record label that has extended its brand successfully many times; from
transportation (aeroplanes, trains) to games stores and video stores such
a Virgin Megastores.

In the 1990s, 81% of new products used brand extension to introduce new
brands and to create sales.[1] Launching a new product, is not only time
consuming but also needs a big budget to create awareness and to promote a
product's benefits.[2] Brand extension is one of the new product development
strategies which can reduce financial risk by using the parent brand name to
enhance consumers' perception due to the core brand equity.[3][4]

While there can be significant benefits in brand extension strategies, there can
also be significant risks, resulting in a diluted or severely damaged brand
image. Poor choices for brand extension may dilute and deteriorate the core
brand and damage the brand equity.[5][6] Most of the literature focuses on the
consumer evaluation and positive impact on parent brand. In practical cases,
the failures of brand extension are at higher rate than the successes. Some
studies show that negative impact may dilute brand image and equity.[7][8] In
spite of the positive impact of brand extension, negative association and wrong
communication strategy do harm to the parent brand even brand family.[9]

Product extensions are versions of the same parent product that serve a
segment of the target market and increase the variety of an offering. An
example of a product extension is Coke vs. Diet Coke in same product category
of soft drinks. This tactic is undertaken due to the brand loyalty and brand
awareness they enjoy consumers are more likely to buy a new product that has
a tried and trusted brand name on it. This means the market is catered for as
they are receiving a product from a brand they trust and Coca Cola is catered
for as they can increase their product portfolio and they have a larger hold over
the market in which they are performing in.

Franchising is the practice of using another firm's successful business model.

The word 'franchise' is of anglo-French derivation - from franc- meaning free,
and is used both as a noun and as a (transitive) verb.[1] For the franchisor, the
franchise is an alternative to building 'chain stores' to distribute goods and
avoid investment and liability over a chain. The franchisor's success is the
success of the franchisees. The franchisee is said to have a greater incentive
than a direct employee because he or she has a direct stake in the business.

Except in the US, and now in China (2007) where there are explicit Federal
(and in the US, State) laws covering franchise, most of the world recognizes
'franchise' but rarely makes legal provisions for it. Only Australia, various
provinces within Canada, France and Brazil have significant Disclosure laws
but Brazil regulates franchises more closely.

Where there is no specific law, franchise is considered a distribution system,

whose laws apply, with the trademark (of the franchise system) covered by
specific covenants.
1. Subway (Sandwiches and Salads | Startup costs $84,300 – $258,300
(22000 partners worldwide in 2004).
2. McDonald's | Startup costs in 2010, $995,900 – $1,842,700 (37,300
partners in 2010)
3. 7-Eleven Inc. (Convenience Stores) |Startup Costs $40,500- 775,300
in 2010,(28,200 partners in 2004)
4. Hampton Inns & Suites (Midprice Hotels) |Startup costs $3,716,000 –
$15,148,800 in 2010
5. Great Clips (Hair Salons) | Startup Costs $109,000 - $203,000 in 2010
6. H&R Block (Tax Preparation and e-Filing)| Startup Costs $26,427 -
$84,094 (11,200 partners in 2004)
7. Dunkin Donuts | Startup Costs $537,750 - $1,765,300 in 2010
8. Jani-King (Commercial Cleaning | Startup Costs $11,400 - $35,050,
(11,000 partners worldwide in 2004)
9. Servpro (Insurance and Disaster Restoration and Cleaning) | Startup
Costs $102,250 - $161,150 in 2010
10. MiniMarkets (Convenience Store and Gas Station) | Startup
Costs $1,835,823 - $7,615,065 in 2010