Strategic Brand Management Notes

Chapter 1 - Brand & Brand Management 2

Chapter 2 - Customer-Based Equity 8

Chapter 3 - Brand Positioning, Brand Resonance & The Brand Value Chain 13

Chapter 4 - Choosing Brand Elements to Build Brand Equity 26

Chapter 5 - Designing Marketing Programs To Build Brand Equity 33

Chapter 6 - Integrating Marketing Communications to Build Brand Equity 38

Chapter 7 - Leveraging Secondary Brand Associations To Build Brand Equity 44

Chapter 11 - Designing & Implementing Brand Architecture Strategies 49

Chapter 12 - Introducing & Naming New Products & Brand Extensions 56

Chapter 13 - Managing Brands Over Time 62

Chapter 14 - Managing Brands Over Geographic Boundaries & Market Segments 67

Chapter 15 - Luxury Branding 73

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Chapter 1 - Brand & Brand Management
Product
A product is anything that is offered to a potential market to satisfy a want or a need.
Can be:
● A Physical good - A cereal, tennis racquet, or automobile.
● A service - An airline, bank, or insurance company.
● A retail outlet - Department store, specialty store, supermarket.
● A person - Political figure, professional entertainer, athlete.
● A Place - City or country
● A Property
● An idea, information, or a social cause
● An organization or company
● An Event
● An Experience

Five Levels of Product

Core benefit level: Fundamental need or want

Generic product level: Basic version, necessary
for its functioning but no distinguishing features. It
is the physical dimensions of the product.
Features, benefits, design & style, packaging,
brand name.
Expected product level: Set of attributes or
characteristics that buyers normally expect.
Creates no preference for a particular brand.
Augmented product level: Additions that
distinguish the product from competitors.
Potential product level: All the augmentations and
transformations in the future.

Each Level Adds More Customer Value To The Hierarchy

How Brands Augment & Add Value

Augmentation means giving extra and thus adding value to the brand. To augment, companies
have two strategies.
Invading the consumption cycle -means all steps in buying decision process (need awareness,
gather info on search criteria to evaluate brands, search brand alternatives, evaluate
alternatives, consider and choose/select, trial, purchase, acquire, use, after purchase behavior
like disposal, WOM)
Invading consumption system - means all products and services consumed together in a
situation.

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What is a Brand?
Far more than a brand name and logo. It is an organization’s/seller’s promise to a customer to
consistently deliver what the brand stands for.
Not only on functional/rational/tangible benefits but also symbolic/intangible benefits (emotional,
self-expressive, social benefits). But a brand is more than delivering on a promise.
It is also a journey, an evolving relationship that the brand builds with its customers - based on
the perceptions and experiences that a customer has every time he or she connects to the
brand.

A brand is essentially a seller’s promise to consistently deliver a specific set of features,

benefits, services, values, and associations, both tangible and intangible to buyers and build
relationships.

Brand Vs Product

Brand Product

It has dimensions that differentiate it in some Anything available in the market for use or
way from other brands. Brands are consumption that may satisfy a need or want.
differentiated both on tangibles and far more Products can be differentiated on tangibles -
on intangibles. attributes, benefits, services

Can be differentiated based on tangibles like
● Design, style
● Packaging
● Services eg installation,after-sales,
● Customer advice, Financing, Delivery
● arrangements, Warehousing
● , And also intangible symbolic
associations valued by the customers,
holding special meaning for
customers
It can be categorized into five levels namely:
● Core benefit level
● Generic product level
● Expected product level
● Augmented product level
● Potential product level

Brand Elements
It is not the same as brand. Brand elements are different components that identify and
differentiate a brand's physicality. Brand name, URL, logo, symbol, package design, characters,
spokespersons, jingles, or any other characteristic. It can be based on people, places, animals
or birds, things, and abstract words or images. Eg - Tata, British Airways, Tiger, Dove,
Kingfisher, Jaguar, Apple, Pentium, Visteon

How is Brand Important to Consumer?

● Identifier
● Differentiator- Unique set of attributes, benefits & associations
● Signal of quality
● Promise of consistent delivery of attributes, benefits, values so guarantee, trust

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 ● Simplify product decisions by lowering the search costs for products internally and
externally
● Risk reducer in product decision.
● Continuity - Satisfaction brought about through familiarity and intimacy and assurance of
● sameness of experience (no unpleasantness, shock, disappointment) eg - Maggie
● Symbolic device - Brand as a Badge- of self-expression and self-extension, of
self-image, values, lifestyle eg - UCB
● Hedonistic - Satisfaction linked to the attractiveness of the brand, logo, communication.
Eg - CK, Michael Kors
● Ethical- Satisfaction is linked to the responsible behavior of the brand in its relationship
with society (ecology, employment, citizenship, advertising which doesn’t shock)

Product Classification Based on Attributes

Search goods
Can be evaluated based on visible attributes /features such as sturdiness, size, color, style,
design, weight, and ingredient composition by visual inspection before purchase.Example -
Cars, mobiles, laptops

Experience goods
Can be evaluated only after trial consumption or final consumption and experience based on
features such as durability, service quality, safety, and ease of usage. Example -
Automobile tires, restaurants, travel package

Credence Goods
Consumers may rarely learn attributes and may not be able to evaluate. Credibility is the key
driver of purchase Example – Insurance, lawyers, doctors, medical diagnostics

Brands serve an important function in each, but in different ways

Product Classification Based on Risks in Decision Making

● Functional or Performance risk
● Physical risk
● Financial risk
● Social risk
● Psychological risk
● Time and energy risk

Brands are a very important risk handling device. More the risk, more important is to buy
branded

Brands provide valuable functions to firms

● Simplify product handling and tracing,
● Organizing inventory and accounting records.
● Legal protection for unique features or aspects of the product ( patents, trademarks)

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 ● Means of signaling quality
● Means of endowing product with unique associations
● Thus, provide a powerful means to secure competitive advantage.
● Thereby creating entry barriers for competitors
● And providing predictability and security of demand for the firm
● Source of Financial returns

Branding various entities

Can Anything Be Branded? - Yes
Brand is something that resides in the minds of consumers as a perceptual difference and risk
reducer. So marketers can benefit from branding whenever the marketer can create
differentiation and add value, whenever consumers need choice, value, or when consumers are
in a perceived risk situation

Deep v/s Shallow Brand-

A Deep brand is understood clearly and consistently by all stakeholders (including customers)
on all the six dimensions of brand meaning -

1. Attributes
2. Benefits
3. Values (values of the brand)
4. Culture (of company, of the country)
5. Personality
6. User demographics

Strategic Brand Management

The 1980s was a turning point in how brands began to be viewed. The real value is outside the
business itself. Not production capacity, buildings, land, plant, and machinery but brand
importance. The real value of brands is in customers' minds. Since 1991, the buzzword is brand
equity. 26 different ways to measure brand equity by 1994.

SBM Is the process of building, measuring, and managing brand equity, brand recognition, and
presence to boost revenues and accomplish long-term business objectives. Is about choosing a
long-term responsible and sustainable strategy for a brand’s growth and the frequent updating
of that strategy.

What is Brand Equity

It is a set of assets & liabilities linked to a brand, its name & symbol, that add to or subtract from
the value provided by a product or service to a firm and/or to that firm’s customers. It is an
important intangible asset that has psychological & financial value to the firm. The added value
can be created for a brand in many different ways. Brand equity provides a common
denominator for interpreting marketing strategies and helps assess the value of a brand. There
are many different ways in which the value of a brand can be exploited to benefit the firm.

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Implications of Strategic brand management
1. Brands need to be treated as strategic assets.
2. It means investing in Brand building and believing brand building leads to Business
Building.
3. From Tactical paradigm to Strategic and visionary encompassing issues like strategic
market insights, the stimulation of “big” innovations, growth strategies, brand portfolio
strategies, and global brand strategies.
4. Top management pays close attention to brands and managing innovation allocation.
5. Marketing Role Is Elevated eg CEO in B2B and service firm, brand manager at strategy
table with customer insights and marketing opportunities.
6. Shifting focus from short-term sales ( through sales promotions etc) to Brand Equity
indicators of long-term financial performance.
7. Knowing it takes more than a brand name to build a Brand.
8. From transaction to relationships through functional, emotional, experiential,
self-expressive, and aspirational values
9. Brand Manager as Communication Team Leader- Earlier, delegated in part to an
advertising manager or agency because it is mostly about managing the image, creating
an advertising campaign to now managing an integrated communication program (IMC)
to move beyond sales generation to build brand assets through clear brand vision, brand
associations, and customer relationships. Also creating buy-in inside the organization.
10. End of dispersion &proliferation–From Brands to Brand Families. Reducing brand
portfolio means fewer brands encompass more products. e.g. in 1991 Nestle launched
101 new products worldwide but created only 5 new brands. Umbrella/ source /master
brands.
11. Brand Identity and vision (aspirational) prevail over the brand image (current
perceptions).
12. Exploiting brand equity through responsible strategic leveraging. Only one product
means shrinking brand equity and at the same time, indiscriminate irresponsible
leveraging reduce brand equity. Eg Ponds toothpaste, Colgate entrees
13. Identity consistency vs change overtime when needed
14. Addressing diversity of consumers and geographical markets while managing
consistency
15. Organizational Silo Issues Need to be Addressed- Isolated products, countries and
functions are no longer a practical option. Need for Centralized coordination across
countries and products, at the same time allows those organizational units closest to the
customer to adapt the brand to their needs.

Measuring and Interpreting Brand Performance

Through Brand equity measurement system
A set of research procedures to help make tactical and strategic decisions Brand equity
measurement system involves:
● Brand audits: Comprehensive examination of a brand’s health, and suggest ways to
improve and leverage brand equity.

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 ● Brand tracking studies: Collect information from consumers on a routine basis over time,
typically through quantitative measures of brand performance on several key dimensions
marketers can identify in the brand audit or other means.
● Brand equity management system: Set of organizational processes designed to improve
the understanding and use of the brand equity concept within a firm.

Three steps that help implement a brand equity management system are: creating brand equity
charters, assembling brand equity reports, and defining brand equity responsibilities.

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Chapter 2 - Customer-Based Equity
The strength of a brand leads to customer loyalty, business success, resilience despite product
problems, and the basis for moving into new products or markets.

They serve as the core of a customer relationship, a platform for strategic options, and a force
that affects financials, including stock return.

Defining Customer-Based Equity

Approaches brand equity from the perspective of the consumer. Stresses that the power of a
brand lies in what resides in the minds and hearts of customers as a result of what they have
experienced/learned about the brand over time.
The differential effect that brand knowledge has on consumer response to the marketing of that
brand.

Brand equity – (David Aaker)

Strong positive brand equity is about five assets /dimensions -
● Deep and broad awareness;
● Higher perceived quality;
● Positive, varied, unique associations;
● Intense loyalty; and
● Other assets like distribution equity, patents, trademarks, etc

Brand Knowledge
Creates the differential effect that drives brand equity. Brand knowledge consists of all the
thoughts, beliefs, images, experiences, and so on that become associated with the brand.
Thus Brand Knowledge is about what consumers have seen, learned, heard, and also what they
think and feel about the brand as a result of their experiences over time.
Brand knowledge has two components -
1) Brand awareness and
2) Brand image

Marketers use The associative network memory model” to understand how brand knowledge
exists in consumer memory.

Associative Network Memory Model

Views memory as a network of nodes and connecting links.
● Nodes: Represent stored information or concepts.
● Links: Represent the strength of association between the nodes.

Any type of information – verbal, abstract, contextual (user and usage situations ) can be stored
in the memory network. Brand associations are informational nodes linked to the brand node
in memory.

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Brand awareness
Related to the strength of the brand node or trace in memory.
● Brand recognition (Aided recall): Consumers’ ability to confirm prior exposure to the
brand when given the brand element as a cue. More important during the point of
purchase decisions.
● Brand recall (Unaided recall including Top Of Mind): Consumers’ ability to retrieve the
brand from memory when given the product category, the needs fulfilled by the category,
or a purchase or usage situation as a cue. More important when decisions are made
away from point of purchase.

How to establish strong brand awareness

Through repetition of brand elements and marketing mix elements. Sometimes, Shock
advertising is used to create brand awareness- but sometimes may fail to create strong links
and also create ill-will. Example - McDonald's, Zomato.

Advantages of brand awareness

● Research shows correlation with market share
● Learning advantages-of new additional information of associations
● Consideration advantages
● Choice advantages- In low involvement product, maybe sufficient condition
Explained by The elaboration- likelihood model
● Consumer purchase motivation ( high involvement product with high perceived
risk)
● Consumer ability - Simple heuristic of familiar, aware as highly visible, must be
popular

How to create strong brand image

Positive brand image - Requires strong, favorable, and unique brand associations. A marketer's
task is to forge strong brand associations with the appropriate
product category through
● Brand attributes: Descriptive features that characterize a product or service.
● Brand benefits: The personal value and meaning that consumers attach to the product or
service attributes.
Note, Consumers can form brand associations in many ways other than marketing activities –
from direct experience, online surfing, consumer reports, influencers, WOM, and inferences
consumers make. Marketers need to manage them and account for them in designing
communication strategies.

Brand vision(From David Aaker's book)

Brand vision is based on six to twelve vision elements prioritized into -
● 2 to 5 core identity/vision elements – Soul of a brand, fundamental beliefs & values of
the brand & organization behind the brand, the most compelling and differentiating vision

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 elements – that which reflect value propositions going forward and drive the
brand-building programs and initiatives.
● And remaining are extended identity/vision elements – they add texture to the brand
vision, allowing strategists to make judgments on whether a program is on-brand or not.
They are crucial for success but not the basis for differentiation eg high quality.

The brand vision model is not a one-size-fits-all, fill-in-the-box model. Example - Innovation may
be important for high tech, organizational values, and programs for B2B. Brand personality may
or may not be part of the core vision. It could be in extended vision. Brand vision dimensions will
be a function of many factors eg marketplace, competition, customers, organization values,
strategy, and the brand. The brand vision is aspirational and hence can differ from the current
positioning or image. The brand vision is captured in the Brand book. The brand vision model
allows for adaptation eg different countries may dial-up to different aspects of the vision or
augment, even though the vision is the same.

Brand Vision vs Brand Mantra vs Brand Positioning

Brand essence or brand mantra represents the central theme of the brand vision, meant for
internal communication for employees and hence inspirational and is conveyed thru brand
cards.
Brand positioning is based on brand vision elements that appeal to customers and are currently
deliverable and credible.

Internal Branding
Brand vision needs to be communicated internally. It means internal branding which in turn
means employees have to learn, believe, and live the brand vision. Learning the brand vision
can happen through participation in the B2E program through the corporate intranet, brand
ambassadors within the organization, workshops, newsletters, senior managers, influencers,
CEO, brand book, and brand card.
Believing the Brand vision involves creating strategic imperatives in terms of proof points eg
claims of outstanding service have to be backed by a return policy, empowered staff, and also
internal systems that support it eg employees training, compensation, hiring, and IT
investments, etc. Example - Zappos hiring based on wow /out of box /weird.
Living the brand vision involves inspired action Eg through stories eg Nordstorm employees in
Alaska who took back used tires, P&G puts executives in front of customers, employee
engagement, Taj hotels 26/11.

Brand Mantra
Short three-to five-word phrase that captures the irrefutable essence or spirit of the brand vision
Its purpose is to ensure that all employees and other external marketing partners (eg distribution
partners) understand what the brand most fundamentally represents.

A brand mantra effectively communicates what the brand is and what it is not. Thus Brand
mantra creates a mental filter to screen out inappropriate marketing activities and actions. A
good brand mantra helps the brand present a consistent image

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Guides:
● What products to introduce under the brand.
● What ad campaigns to run.
● Where and how the brand should be sold.
● May even guide mundane decisions like the look of the reception area, employee dress,
and demeanor.

Designing a brand mantra

A good brand mantra should provide:
● Brand functions: Describes the nature of the product or service or the type of
experiences or benefits the brand provides.
● Descriptive modifier: Combined with brand functions, helps delineate and clarify the
brand boundaries.
● Emotional modifier: Determines how a brand provides benefits and in what ways.

Additional points to remember

● Brand mantras derive their power and usefulness from their collective meaning.
● Brand mantras typically capture the POD ie what is unique about the brand.
● For brands facing rapid growth, a brand functions term can provide critical guidance on
appropriate and inappropriate categories to extend.
● For brands in stable categories brand mantra may focus more on POD as expressed by
functional and emotional modifiers perhaps not even including the brand function term.

A good brand mantra should:

● Communicate the category of the business to set the brand boundaries and clarify what
is unique about the brand.
● Be simple, short, crisp, and vivid.
● Stakeout ground that is personally meaningful and relevant to employees and marketing
partners and inspires.

Brand Personality
Brand Personality is a set of human characteristics associated with a given brand.

It includes characteristics (gender, age, socio-economic class), lifestyle (activities, interests &
opinions), and human personality traits (such as warmth, concern & sentimentality).

Jennifer Aaker’s Brand Personality Scale (BPS): The Big Five

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Sincerity (Bajaj, Tata, Hallmark, Kodak, Colgate, VIP)
● Down-To-Earth: family-oriented, small-town, conventional, blue-collar, all-Indian
● Honest: sincere, real, ethical, thoughtful, caring
● Wholesome: original, genuine, ageless, classic, old-fashioned
● Cheerful: sentimental, friendly, warm, happy

Excitement (Axe, Elle18, Centrefresh, Benetton)

● Daring: trendy, exciting, off-beat, flashy, provocative
● Spirited: cool, young, lively, outgoing, adventurous,
● Imaginative: unique, humorous, surprising, artistic, fun
● Up-To-Date: independent, contemporary, innovative, aggressive

Competence (L&T, Intel, CNN, IBM)

● Reliable: hardworking, secure, efficient, trustworthy, careful
● Intelligent: technical, corporate, serious
● Successful: leader, confident, influential

Sophistication (Lexus, Mercedes, Revlon)

● Upper Class: glamorous, good-looking, pretentious, sophisticated
● Charming: feminine, smooth, sexy, gentle

Ruggedness (Levi’s, Marlboro, Nike)

● Outdoorsy: masculine, Western, active, athletic
● Tough: rugged, strong, no-nonsense.

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Chapter 3 - Brand Positioning, Brand Resonance &
The Brand Value Chain
Basic Concepts of Brand Positioning
● The Segmentation exercise is followed by a selection of the target market. The target
market (i.e. actual and potential consumers/users (B2C/buyer(B2B). But note is different
from the target audience to whom you communicate) selected will determine the
possible positioning alternatives (What customers want but is unmet by competition).
● Positioning is the act of designing the company’s offer and image so that it occupies a
distinct and valued place in the target customer's mind. Thus, Positioning is more about
what you do to the consumer’s mind than what you do to the product.
● Sometimes positioning involves only what you do to the consumer's mind without any
changes in the product (psychological positioning). But Sometimes psychological
positioning needs to be backed by real changes in the product (real positioning).
● Deciding on positioning to a target market involves determining a category membership
and competitive frame of reference (nature of competition). The positioning also involves
arriving at optimal POP and POD.

Target Market
Market segmentation: Divides the market into distinct groups of homogeneous consumers who
have similar needs and consumer behavior.
Involves identifying segmentation bases and criteria
● Relevant Criteria
● Identifiable/Measurable
● Size/Substantial
● Accessible- geographically, economically and legally
● Responsive/Actionable
Segmentation has to be followed by profiling- Describing the characteristics of the segment in
great detail so that marketers can make the necessary differentiated marketing strategies. All
other bases will be used to do the profiling.

Positioning Guidelines
Defining Category Membership
Means defining which category the brand belongs to. Very Important in new products. Three
ways to convey a brand’s category membership are -
● Product descriptor - The product descriptor that follows the brand name is often a very
compact means of conveying category origin. Eg soft drinks and detergents.
● Communicating category benefits - Marketers use product benefits to announce
category membership. Eg EZEE.
● Exemplars - Well-known, noteworthy brands in a category can also be used as
exemplars to specify a brand’s category membership eg Top Ramen is a Smoodle
(smoother noodle vs Maggie).

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1) Competitive Frame of Reference
Types of competition are
1) Brand eg Coke vs Pepsi.
2) Product Form eg cola vs orange vs lime.
3) Category eg soft drink vs sherbet/Thanda and tea/coffee in the home serving segment.
4) Desire /Budget competition eg drink or eat in the limited money customer has.

● Indirect competition
Even if a brand does not face direct competition in its product category, and thus does
not share performance-related attributes with other brands, it can still share more
abstract associations and face indirect competition in a more broadly defined product
Category. Because competition occurs at benefit rather than attribute level, a company can
face direct competition in a more broadly defined product category. Hence, Important not to
define competition too narrowly

● Competitive analysis
Considers resources, capabilities, and likely intentions of other firms. Allows marketers to
choose markets where consumers can be profitably served.

2) Points of Parity before Points of Difference

Marketer first definitely needs to build a point of parity to be recognized as belonging to a
category. Only then will customers know when/in what situations to consider your brand. Unless
certain points of parity are achieved, points of difference may not even matter. However, it is
only a necessary but not a sufficient condition for consideration. There is a “zone” or “range of
tolerance or acceptance” with points of parity.

Points- of-parity associations - Attributes shared with other brands. Three types of associations
are -
● Category points-of-parity: Necessary conditions for brand consideration choice (form,
package, certain features, quality level) eg refrigerator has to have a freezer and fridge.
● Competitive points-of-parity: Associations designed to negate competitors’ points of
difference. Eg Surf vs Nirma.
● Correlational points-of-parity: Potential negative associations that arise from the
existence of other more positive associations for the brand. Eg Taste vs health, quality vs
price, Hair & care nonsticky hair oil with grooming plus nourishment Vitamin E vs Keo
Karpin grooming.

Points of Difference
Attributes or benefits that consumers strongly associate with a brand, positively evaluate, and
believe that they cannot be found to the same extent with a competitive brand.
● Functional-performance-related considerations- attributes and benefits.
● Abstract-imagery-related considerations.

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PODS will have to be backed by proof points or reason to believe ( RTB). Eg design,
ingredients, imagery, endorsements, etc. Points of parity are easier to achieve than
points-of-differences

Creating Points of Difference

● Desirability criteria- from a consumer point of view (favorable)
● Differentiating criteria- relative to competitors (unique)
● Deliverability criteria- from company point of view (strong)
○ Feasibility - Actual ability to make the product or service. Eg - Ponds blackhead
remover
○ Communicability- factual verifiable proof points. Eg - Marico’s Colorfix. Will
consumers believe coming from this company? Eg. Manikchand Ganga.

3) Establishing Points-of-Parity & Points-of-Difference

Separate the attributes. Leverage equity of another entity. Redefine the relationship and
convince why possible. Also, address the problem of negatively correlated POP and POD.

4) Straddle Positions
Type of positioning where a company can straddle two frames of reference with one set of
points of difference and points-of-parity. The points of difference in one category become points
of parity in the other and vice-versa for points-of-parity. eg “Maggie taste bhi health bhi”, McD
unhealthy vs healthy, Burger vs Mc café. Disadvantage - If the points-of-parity and
points-of-difference concerning both categories are not credible, consumers may not view the
brand as a legitimate player in either category.

5) Updating Positions Overtime

1) Laddering - Once the target market attains a basic understanding of how the brand relates to
alternatives in the same category, it may be necessary to deepen the meanings associated with
the brand positioning over time. Failure to move up the ladder may reduce the strategic
alternatives available to a brand.
A) Eg. using Maslow’s need hierarchy. Also, the means-end chain from attributes to
benefits to abstract values, and motivations. Eg Dove, Maggie.
B) Multiple frames of reference
Result of a company defining the brand in terms of broader uses, many uses, and hence in
terms of broader category competition or the intended future growth of a brand. Eg chocolates
from sometimes to every time indulgence, hunger appeaser, gifting, sweet after lunch n dinner,
etc OR Broadening of market segments – eg Cadbury from kids to adults.

2) Reacting - When a competitor challenges an existing POD or attempts to overcome a POP,

there are essentially three main options for the target brand:
● Do nothing.
● Go on the defensive.
● Go on the offensive.

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6) Developing a Good Positioning
Should:
● Establish relevant POPs before a POD.
● POD should be strong, favorable, and unique.
● Favorable means reflect a consumer point of view in terms of the benefits that
consumers derive.
● PODs should appeal both to the “head” and the “heart”.
● Unique should be USP, not just Unique proposition eg - The biggest-selling gasoline in
the world.
● Positioning should have a “foot in the present” and a “foot in the future”. Positioning
cannot be so removed from reality that it is essentially unbelievable, not feasible to be
deliverable. At the same time, USP should give a long-term sustainable advantage.

Positioning Strategy – Ways/Types

● Attribute
● Benefit
● Use/ Application/Occasion
● User (Demographics, Psychographics, Personality Lifestyle)
● Competitor
● Leadership (Quality, Technology, Service, Etc)
● Product Category Disassociation (Dove, 7up)
● Exclusive Club (Top 10, 15, 20)
● Price

Positioning Strategy To Be Avoided

1. Underpositioning - Vague Idea Because Not Advertised Enough
2. Overpositioning - Too Narrow An Image. Eg Tanishq
3. Confused Positioning Eg Hippo Baked Snacks, Onida Candy Tv
4. Doubtful Positioning - Claims Not Believable

Product Repositioning
1. Changing Target Consumer Profile Eg Femina Psychographics
2. Competitor Too Close Eg Detergents, Suitings, Deodrants, Perfumes
3. Increase Market - E.G. Cadbury
4. Communicate Technological Advancement / Upgradation In The Product - E.G. Surf.
5. Changing Customer Needs - Maggie Taste Bhi, Health Bhi

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Moving From Positioning To Framing The Subcategory
Brand positioning is all about how my brand is better than yours. Framing has a bigger agenda.
it aims to change the way people perceive, discuss, and feel about a subcategory or category
and can change the way people are buying and which brands are relevant to that purchase.
Thus framing makes competitors less relevant or even irrelevant eg dove, apple, tesla.

Creating ‘must Haves’ Rendering Competition Irrelevant

When the POD becomes a ‘must have’ it means it defines a new subcategory or a new
category, rendering competitors irrelevant. A must-have is a transformational or substantial
innovation and not an incremental innovation (like to have) Must have is a better strategy as “my
brand is better than yours, rarely changes the marketplace.”
A must-have may be a feature, benefit, appealing design, system offering, new technology,
product, dramatically low price point. A must-have may also be something not involving the
product but outside it eg shared interest, personality, passion, and organizational values.
Common errors are presuming an incremental innovation as a must-have (rosy picture bias) and
gloomy picture bias (a flawed assumption that innovation will not succeed or too small a market
eg Coke Aquafina).
The firm not only creates the must-have but also markets it well n builds barriers to competitors -
proprietary technology protected by patents, trademarks, copyrights. Also become a moving
target ( eg Apple, Gillette) Also create branded differentiators.
Timing matters, not important to be a pioneer eg Sony Walkman before Apple iPod and
the Microsoft tablet ten years before the iPad.

Ideas For Must-Haves

Ideas for must-haves may be unmet customer needs, under-served markets, unintended
applications (Arm & Hammer baking soda being a deodorizer in refrigerators), competitor

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weakness, market trends, channel dynamics, role models in other countries or industries, or
new technologies, brand touchpoints, brand journey (touchpoint consolidation). Also by mistake
eg 3M post it, P&G Ivory soap floats. Eg Air BnB , Oyo, Flipkart, Uber, Zomato, Patanjali, Nykaa.

Branded Differentiator
By branding an innovation we create a branded differentiator, that creates a meaningful,
impactful point of differentiation for a branded offering over an extended period. A branded
differentiation does not mean just slipping a name on an innovation. Types of branded
differentiators are – branded features eg Westin hotel heavenly bed mattress (1999); Oral B
indicator, branded ingredient eg Intel, branded technology eg DTS, and branded service. Eg
Google ad words, branded programs eg healthy lifestyle programs, Harley Davidson ride
planner.

The Organization And Its Higher Purpose Differentiate

While a competitor brand can copy you, what it cannot copy is an organization- its people,
culture, heritage programs, assets, capabilities, values – because that is unique. Organizational
values eg perceived quality, innovation, concern for customers, success/size, going local,
environment programs, social programs. Eg Tata, P&G girl child, Body shop, 3M.
Organizational values can be a great value proposition eg quality or concern for customers.
Act as a great basis of relationship with customers (liking).

The Brand Resonance Model

Looks at building a brand as a sequence of steps, each of which is contingent on successfully
achieving the objectives of the previous one.
The four steps of brand building(through the branding ladder) -
1. Ensure identification of the brand with customers and an association of the brand in
customers’ minds with a specific product class, product benefit, or customer need.
2. Firmly establish the totality of brand meaning in the minds of customers by strategically
linking a host of tangible and intangible brand associations.
3. Elicit the proper customer responses to the brand.
4. Convert brand responses to create brand resonance and an intense, active loyalty
relationship between customers and the brand.

Four Steps Of Brand Building Involves Questions

Four steps represent fundamental questions that customers ask about brands (at least
implicitly)
1. Who are you? (brand identity)
2. What are you? (brand meaning)
3. What about you? What do I think or feel about you? (brand responses)
4. What about you and me? What kind of association and how much of a connection would
I like to have with you? (Brand relationship)
These four steps are established through six brand building blocks of the brand resonance
pyramid model.
Keller Customer-Based Brand Equity Pyramid

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Subdimensions of Brand Building Blocks

Building A Strong Brand: Brand Resonance Pyramid Model by Keller

19
The left side of the pyramid is the rational route to brand building satisfying utilitarian needs, and
the right side is the emotional route satisfying psychological or emotional needs. Most strong
brands are built by going up both sides of the pyramid.

Ladder/Step 1 - Brand Identification Through Brand Salience

Brand salience measures various aspects of the awareness of the brand:
● How easily and how often the brand is evoked under various situations and
circumstances?
● To what extent is the brand top-of-mind and easily recalled or recognized?
● What types of cues or reminders are necessary?
● How pervasive is this brand awareness?
Thus, Brand salience is about category identification, needs to be satisfied, depth and breadth
of brand awareness.

Ladder/Step 2 - Brand Meaning

Established through brand associations which are PODs in areas of
● Brand performance
● Brand Imagery

Brand Performance
Describes how well the brand:
● Meets customers’ more functional needs.
● Rate on objective assessments of quality.
● Satisfies utilitarian, aesthetic, and economic customer needs and wants in the product or
service category.
Attributes and benefits that underlie brand performance:
● Primary ingredients and supplementary features.
● Product reliability, durability, and serviceability.
○ Reliability: Measures the consistency of performance over time and from
purchase to purchase.
○ Durability: This is the expected economic life of the product.
○ Serviceability: The ease of repairing the product if needed.
● Service effectiveness, efficiency, and empathy
○ Effectiveness: Measures how well the brand satisfies customers’ service
requirements.
○ Efficiency: Describes the speed and responsiveness of service.
○ Empathy: Is the extent to which service providers are seen as trusting, caring,
and having the customer’s interests in mind.
● Style and design
● Price
Consumers may organize their product category knowledge in terms of the price tiers of
different brands.

Get Beyond Functional Benefits - The Product Attribute Fixation Trap

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“They laughed when I sat at the piano – but when I started to play” - Written by a copywriter,
John Caples in 1926, one year into the job, his assignment – to entice people to buy piano
lessons by correspondence from US school of music. There was nothing about the offer or
process of learning to play. Rather the ad told a story in graphic detail about what happened to
someone who took the correspondence course. The ad showed that functional benefits are not
the sweet spot of persuasion. Rather what grabs people’s attention is the emotional,
self-expressive, and social benefits.

Why Do Companies Have Product Attribute Fixation Trap

B2B, High tech companies say customers are rational decision-makers – understandable.
But, B2C companies also say customers have rational decisions in marketing (Eg. happens in
high involvement products eg cars). Research shows otherwise. In reality, Strategies based on
functional benefits are often strategically ineffective as not compelling enough, easily copied,
and consumers assume all brands have it. Makes sense to move beyond functional benefits
and into emotional, social benefits, self-expressive benefits, or organizational associations.

Non Rational Benefits

● Emotional benefits - The ability of the brand to make the buyer or user feel something
during the purchase process or user experience. When I buy/use this brand I feel……. (
loved, romantic, proud, safe, nostalgic, etc).
● Social benefits-The brand enables a person to be a part of a social group. When I buy or
use the brand, the type of people I relate to are ………. Eg Starbucks, Apple community,
FCC of shoppers stop.
● Self-expressive benefits – people express/signal their self or idealized self and values
through job choice, friends, attitudes, opinions, activities, lifestyles, and also brands.
When I buy /use this brand I am……. Eg Zara, Harley Davidson.

These three are often related and a brand can combine the three, however it can be useful
to prioritize them.

Brand Imagery
● User profile/imagery - Type of person or organization who uses the brand. Result of
customers’ mental image of actual users or more aspirational, idealized users.
Consumers may base associations of a typical or idealized brand user on descriptive
demographic factors or more abstract psychographic factors.
○ Demographic factors: Gender, age, race, income.
○ Psychographic factors: Attitudes toward life, careers, possessions, social issues,
or political institutions.
● Purchase and usage situations/imagery - Associations that tell consumers under what
conditions or situations they can or should buy and use the brand. Associations to a
typical usage situation can relate to the time to use the brand, location, and type of
activity during which to use the brand.

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 ● Brand history, heritage, and experiences - Brands association with its past and with
certain noteworthy events in the brand’s history. It May is highly personal and individual
or shared by many people.
● Brand personality and values - Brand personality is defined as the set of human traits
associated with the brand. Through consumer experience or marketing activities, brands
may take on personality traits. Marketers imbue brands with personality traits through
anthropomorphization, product animation techniques, and brand ambassadors.
Brand personality construct can help -
1. Represent and communicate functional benefits eg Michelin man, Ambuja Khali,
Pillsbury doughboy, Energizer bunny also emotional benefits eg Cadbury vs Silk
and self-expressive benefits.
2. Provide energy by adding excitement, interest, and involvement eg Vodafone
zoo, pug.
3. Define a brand relationship – caring mother, family member, boss, stimulating
companion, outdoor companion, weekend fun companion.
4. Guide brand-building programs eg Miss India contest- Dove Real beauty vs LUX
filmy.
5. Help customers understand.
Not all brands should aspire to have a personality, especially as a core vision element. Some
brands may even have conflicting dimensions eg Microsoft is perceived to be both arrogant as
well as competent. Eg Jet airways vs Indian airlines.

Brand Personality
Five dimensions of brand personality:
1. Sincerity (down-to-earth, honest, wholesome, and cheerful)
2. Excitement (daring, spirited, imaginative, and up-to-date)
3. Competence (reliable, intelligent, successful)
4. Sophistication (upper class and charming)
5. Ruggedness (outdoorsy and tough)
Note that user imagery and brand personality may not always be in agreement eg on
performance-related attributes, and mundane household food products. Eg Amul. However
when the user and usage imagery are important to consumer decisions, then brand personality
and user imagery are very likely to be related eg publicly consumed brands or brands in line
with social or ideal self-concept.

Ladder/Step 3 -Elicit Favorable Brand Responses

In the form of
● Brand judgments - Brand judgments are customers’ personal opinions about and
evaluations of the brand, which consumers form by putting together all different brand
performance and imagery associations. Eg Kelloggs.
○ Brand Quality - Specific attributes and benefits of the brand that help develop
consumer attitudes toward the brand. Important consumer attitudes relate to its
perceived quality and customer value and satisfaction. Perceived quality
measures are inherent in many approaches to brand equity.

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 ○ Brand Credibility - Extent to which customers see the brand as credible in terms
of perceived:
■ Expertise - Competence, innovation, and ability to lead.
■ Trustworthiness - Dependability and keeping customer interests in mind.
■ Likability - Fun, interesting, and worth spending time with.
○ Brand Consideration - How personally relevant customers find the brand. Crucial
filter in terms of building brand equity.
○ Brand Superiority - The extent to which customers view the brand as unique and
better than other brands. Critical to building intense and active relationships with
customers. Depends to a great degree on the number and nature of unique
brand associations that make up the brand image.

● Brand Feelings -
Customers’ emotional responses and reactions to the brand. Relate to the social
currency evoked by the brand. How the brand makes customers feel about themselves
and their relationship with others. Feelings can be mild or intense, positive or negative
Feelings can be:
● Experiential and immediate, increasing in level of intensity.
● Private and enduring, increasing in level of gravity.

Important Brand Building Feelings

Kevin Roberts of Saatchi and Saatchi argues that brands should create trust marks and then
ultimately love marks because mere respect is not enough. Done through Transformational
advertising (emotional eg Ariel share the load or moral Eg Tata Tea jaago re, Red label).
● Warmth - Soothing feelings that make consumers feel a sense of calm or peacefulness.
● Fun - Upbeat feelings that make consumers feel amused, light-hearted, joyous, playful,
and cheerful.
● Excitement - The ability of the brand to make consumers feel energized and experience
something special.
● Security - Ability of a brand to produce a feeling of safety, comfort, and self-assurance.
● Social approval - Gives consumers a belief that others look favorably on their
appearance and behavior.
● Self-respect - Brand makes consumers feel better about themselves.
Note, the first three types of feelings are experiential and immediate, increasing in level of
intensity. The latter three are Private and enduring, increasing in level of gravity.

Ladder/Step 4 - Brand Resonance

It describes the nature of identification and relationship that customers have with a brand which
makes customers feel that they are in sync. Resonance is characterized in terms of intensity
(depth of psychological bond) as well as the level of activity (the extent to which customers seek
out brand info, events, other loyal customers).

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 ● Behavioral Loyalty - Gauged in terms of repeat purchases and the share of category
volume attributed to the brand. Behavioral loyalty is necessary but not a sufficient
condition for resonance to occur. As customers may buy out of necessity, only brand
available or accessible or affordable, low involvement, etc. What is important is
behavioral loyalty supported by attitudinal attachment ( differentiating and important
condition).

● Attitudinal Attachment - -Strong personal attachment with the product. Eg Car buyers,
Xerox's rating of 4 vs 5= is six times the defection rate.

● Sense Of Community - Sense of kinship/affiliation with other people associated with the
brand.

● Active Engagement - The strongest affirmation of brand loyalty occurs when customers
are engaged, or willing to invest time, energy, money, or other resources in the brand
beyond those expended during the purchase or consumption of the brand. Eg clubs, visit
a brand website, participate in contests, and discussions, receive updates, WOM, brand
ambassadors and evangelists, buy merchandise, and suggestions.

Brand Building Implications

Customers own the brand-while marketers take responsibility for designing and implementing
marketing programs, success depends on how customers respond eg Iconic Coke blind test,
Maggie vs Top Ramen.

Do not take shortcuts with brands- brands are not built by accident or not built in a day, but by
logically linked steps.

Brands should have a duality – should appeal to both head and heart eg Mastercard's priceless
campaign.

Brands should have richness- breadth, and depth.

The brand resonance model provides important focus and priority for decision-making.

Brand Value Chain

Is a structured approach to assessing the sources and outcomes of brand equity and the
manner by which marketing activities create brand value. Value creation begins with the
marketing program investment. A necessary condition for value creation is a well-funded,
well-designed, and well-implemented marketing program. Value creation requires more than the
initial marketing investment. Provides a detailed road map for tracking value creation that can
make marketing research and intelligence efforts easier. Allows estimating shareholder value
and the investor sentiment multiplier through investor analysis and interviews.

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25
Chapter 4 - Choosing Brand Elements to Build
Brand Equity
Brand Elements
sometimes physical brand identities are those trademarkable devices that serve to identify and
differentiate the brand. The main ones are brand names, URLs, logos and symbols, characters
and spokespeople, slogans, jingles, packaging shape, and color. Marketers choose brand
elements to enhance brand awareness, facilitate the formation of strong, favorable, and unique
brand associations and elicit positive brand judgments and feelings. If consumers infer a certain
valued association or response for an isolated element, the element is said to contribute to
brand equity.

Criteria for Choosing Brand Elements

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 ● Memorability - eg Golden arches
● Meaningfulness - general information of product category or specific info about attributes
and
● benefits of the brand.
● Likeability - is it likable visually, verbally, and in other ways. Eg - Vodafone Zoo zoo.
● Transferability- across geographies and product categories. Less specific the element,
more easily transferable (however linguistic challenges ) eg Microsoft Vista in Latvia
became chicken or frumpy woman in the local language.
● Adaptability- need to be updated over time because of changes in consumer values and
opinions or to remain contemporary eg Pillsbury doughboy
● Protectability-legally protectable internationally. Also competitively eg Molson Ice early
entrant but then lost its pioneering advantage when Miller Ice, Bud Ice were introduced.
Marketers need to reduce the likelihood that competitors create a derivative based on
the product’s elements
Note the first three are marketers' offensive strategies and build brand equity. The latter three
play a defensive role to leverage and maintaining brand equity.

Options And Tactics For Brand Elements

Ideally brand element should satisfy all the criteria (of the previous slide). However, a very
difficult example is more meaningful a brand name, more difficult to transfer to other product
categories or translate to other cultures.
This is one of the reasons why it's preferable to have multiple brand elements eg Dove.
Other reasons catering to all senses, a medium may require only a particular brand element eg,
cohesiveness, all contribute to creating meaning eg Nike.

Brand Name
It is a fundamentally important choice as it captures the central theme or key associations of a
product in a very compact and economical fashion. However most difficult to choose as most of
the desirable brand names are legally registered. The most difficult element for marketers to
change is closely tied to the product in the minds of consumers.

Brand Naming Guidelines

Like all brand elements, the brand name must be chosen with the six general criteria of
memorability, meaningfulness, likeability, transferability, adaptability, and protectability.

Apart from this, for Awareness -

Simplicity, and ease of pronunciation and spelling. Eg short names are easy to recall.
Customers then Marketers shorten some names eg Chevrolet, Budweiser, Coco cola, also KFC.
Longer difficult names can lead to ambiguous pronunciation, could be an embarrassment for
customers and marketers may need to spend to teach pronunciation eg Volkswagen, Polish
vodka Wyborowa(vee-ba-ro-va), Honda Acura had problems in the USA.
● Familiarity and meaningfulness-less learning required but highly descriptive can also be
restrictive eg Juicy Juice juice

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 ● Differentiated, distinctive, and unique- inherently unique or unique in the context of other
brands in the category eg Apple.
● Likeability – Smucker's jelly. So to compensate Slogan - With a name like Smuckers, it
has to be good.

For Brand Association -

Brand names can reinforce an important attribute (Mangola)or benefit (Moov) or intangible
benefit eg Paperboat, Sarpanch. The descriptive brand name can make it easier to believe eg
Blossom has a fresh scent vs the neutral name Circle detergent. However, the description is
also restrictive eg Blossom fights tough stains? Circle fights tough stains are believable.
● Morpheme: Smallest linguistic unit having meaning(7000 morphemes in the English
language) eg Nissan Sentra.
● Individual letters - have to mean eg X means extreme, Xylys Xiaomi, Z
● Plosives: The letters b, d, g, k, p, and t. Plosives escape more quickly from the mouth
but are harsher and more direct, considered easier to recognize and recall.
● Sibilants: Sounds like S and soft S. Sibilants have a softer sound, they tend to conjure
soft, romantic, serene images eg perfumes.
● Alphanumeric names - eg BMW 3,5,7 series.

Naming Procedure
1. Define objectives.
2. Generate names - use all informed sources eg employees, ad agencies, professional
name consultants, etc.
3. Screen initial candidates eg unintentional double meaning( Bund in Punjabi), Colgate
Cue ( French ), Ford Pinto (Latin) unpronounceable, already in use, too close to an
existing name, legal complications, obvious contradiction of the positioning (Hippo).
4. Study candidate names- final 5 to 10 names, do an international legal search before
consumer research eg Adani Bravus (in Latin means crooked)
5. Consumer research for the final candidates
6. Select the final name

Uniform Resource Locators (URLs)

● Specify locations of pages on the web.
● Known as domain names.
● Must own the URL by paying and registering (ICANN)
● Companies protect the brands from unauthorized use in other domain names by
registering all conceivable variations.
● Cybersquatting - registering, trafficking in, or using a domain name with
● bad faith to profit from
○ The goodwill of a trademark belonging to someone else
○ Eg Citibank against Shui of China due to citibank.org

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Logos and Symbols
They are visual elements that indicate origin, ownership, or association. Corporate names or
trademarks(word marks with text only) written in a distinctive form ( eg Coca Cola in ribbon form,
KitKat, Cadbury). Abstract visual designs or non-wordmark logos (called symbols) that may be
completely unrelated to the wordmark, corporate name, or corporate activities( Audi rings,
Mercedes star, Nike swoosh, M).

Benefits:
● Easily recognized and a valuable way to identify products.
● Versatile- symbols are nonverbal hence transfer well across cultures, and a range of
products
● Symbols offer advantages when the full brand name is difficult to use Eg National
Westminster bank created a triangular device as a symbol eg Vodafone Idea
● Unlike brand names, symbols can be easily adapted over time to achieve a more
contemporary look.
● However, changing a logo or symbol is not cheap. Creating or remaking old symbols
usually costs $ one million

Characters and Spokespersons

One that takes on human or real-life characteristics introduced through advertising and can play
a central role in ad campaigns and package designs. Eg Ronald McDonald, Pillsbury doughboy,
Zoo zoo, or Colonel Sanders, Richard Branson.

Benefits:
● As they are colorful and rich in imagery, tend to be attention-getting and help brands
break through marketplace clutter.
● Help communicate a key product benefit eg Michelin, Ambuja Khali, Pillsbury doughboy
● The human element of brand characters can enhance likeability and help create
perceptions of the brand as fun and interesting.
● A consumer may more easily form a relationship with a brand due to humanization
● Brand characters can be transferred relatively easily across product categories and
countries.
● Animated Characters avoid many of the problems that plague human spokespersons –
don’t grow old, don’t demand pay raises, don’t get into trouble with the law, other
aspects.
● Popular characters often become valuable licensing properties eg Disney.

Cautions:
Can be so attention-getting and well-liked that they dominate other brand elements and
dampen brand awareness eg the Eveready energizer bunny is mistaken as Duracell.
Later through marketing efforts, 95% awareness. (Oxford dictionary, everyone from politicians to
sports stars uses it to indicate staying power). Must be updated over time so that their image
and personality remain relevant to the target market eg Asian paints Gattu, Boomer man
became irrelevant, Air India Maharaja, Pillsbury Doughboy.

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Slogans
● Short phrases that communicate descriptive or persuasive information about the brand.
● Function as useful “hooks” or “handles” to help consumers grasp the meaning of a brand
● Indispensable means of summarizing and translating the intent of a marketing program.

Benefits:
● Help build brand awareness (may become part of everyday parlance)
● May serve as tag lines to summarize associations (see below in designing slogans)
● Most flexible and perhaps easiest to change over time.

Designing slogans
Slogans should be designed in such a way that they contribute to brand equity in multiple
ways.
1) Brand awareness eg have a break, have a
2) Product-related associations eg More car per car, A Lot can happen over coffee
3) Image –related associations eg L’Oreal, because you are worth it.

Updating slogans
● Once a slogan achieves a high level of recognition, it may still contribute to brand equity
but only as a reminder of the brand and consumers are unlikely to consider what the
slogan means thoughtfully. And hence needs updating, through creative twists eg KitKat,
thumbs up.
● However, some slogans are so strongly linked to the brand that it becomes difficult to
introduce new ones eg 7up Uncola and Kitkat.
● However, sometimes a slogan becomes so generalistic that it loses a specific brand or
product meaning eg Hungry kya?

Jingles
● Musical messages are written around the brand.
● Have catchy hooks and choruses that become permanently registered in the minds of
listeners eg Titan, the four-note signature of Intel, Britannia.
● As consumers tend to mentally rehearse and repeat catchy jingles eg Titan, Ummeedon
wali Dhoop, har ek friend zaroori hota hai.
● However, because of their musical nature, jingles may not be easily transferable.
● Enhance brand awareness by repeating the brand name in clever and amusing ways.eg
Kya aap close up karte hain?,Saridon, Vicco, Nirma.

Packaging
Activity of designing and producing containers or wrappers (primary, secondary, tertiary).
Packaging acts as a moment of truth during purchase and after purchase and is also an
advertising medium.
Packaging at the point of purchase- called the permanent media, five seconds of marketing, the
last salesman

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 ● Many consumers may first encounter a new brand on the supermarket shelf or in the
store therefore right packaging can create strong appeal on the store shelf and help
products stand out from the clutter. Eg Walmart a 3 seconds and 15 feet test
● When few product differences exist in some categories, packaging innovations can
provide at least a temporary edge over the competition.

Benefits of packaging
● Strongest associations eg Calcium Sandoz, Heineken green bottle
● Structural packaging innovations can both lower costs and also create a point of
difference that permits a higher margin eg resealable, tamperproof, convenient to use -
easy to hold, open, squeezable
● New packages can also expand a market and capture new market segments eg sachet
revolution, travel pack, gift packs Today, packaging has created newer geographic
markets and segments, especially in India eg coke Rs. 5, Bhujia
● Packaging changes can have an immediate impact on customer shopping behavior and
sales. Eg Tropicana orange packaging change failed

From the perspective of both the firm and consumers, packaging’s role is to:
● Help Identify the brand.
● Convey descriptive and persuasive information.
● Facilitate product transportation and protection.
● Assist in at-home storage.
● Aid product consumption.

Package designing
● Integral part of product development and launch.
● Must choose the functional and aesthetic components correctly
● Specialized package designers to bring artistic techniques and scientific skills to
package design in an attempt to meet the marketing objectives of a brand.eg optimal
look and content considering various brand elements thus creating a billboard effect
through stand-out packaging.
● Also, packaging should meet legal requirements.
● Customers may demand certain info eg ingredients % in healthy food.

Psychology of packaging
● Packaging color affects consumers’ perceptions of the product itself
● Certain brands have color ownership eg red coke, orange tide, etc
● Colour perceptions – the darker orange color of a can, means sweeter drink
● Research studies show that packaging can influence
● Richer /thicker Taste eg Tab on tetra pack Frooti ( Yo Frooti) vs straw
● Value perceptions ( size, shape, material used) eg tall narrow packages perceived to
hold more than short wide packages
● Consumption ( 18-32% more consumed when packaging size doubles) and
● Influence how a person uses the product eg visuals of Monaco as entrees

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 ● Firms play around with/change their packaging:
● To signal a higher price, (eg plastic vs glass in cosmetics ) or to sell products through
new distribution channels.
● When a product line /brand extensions would benefit from a common look.
● To signal a new product innovation.
● When the old package looks outdated.
● But it will be a mistake to change packaging so significantly that consumers don’t
recognize it in-store eg Parachute blue and Dabur Chawanprash bottle shape or resent it
eg Tropicana
● Retailers' opinions also can be important eg Paint company, Britannia Tiger biscuit (
Shambit Sengupta) ( eat healthily, think better)

To Sum up & Put it All Together

Entire set of brand elements makes up the brand identity.
The cohesiveness of the brand identity depends on the extent to which the brand elements are
consistent.
Each brand element plays a different role in building brand equity, so marketers should “mix and
match” to maximize brand equity.
eg Dabur umbrella brand name for generic products honey, Chawanprash while endorser for
Hajmola, Vatika, Real, Homemade Garlic paste.
The old Banyan Tree was replaced by the younger tree with the tagline Celebrate Life.

Legal Branding Considerations

● A brand when registered is known as a trademark and the law enacted to protect and
prevent infringements to a trademark in India is the Trademark Act 1999.
● A trademark is a visual representation that when attached to a good or service defines
its trade origin eg brand name, logo, symbol, package, etc.
● Trademark protection to names – names are protectable in the following descending
order- fanciful ( no inherent meaning eg Kodak ), arbitrary( not associated with product
category eg Jeeva ayurvedic soap)Suggestive (eg Boost), Descriptive ( common word
description eg Bru coffee ) Generic ( word synonymous with category eg Anacin )
● Trademark protection to packaging – Dabur won against Tushar amla hair oil
● Cybersquatting is very serious eg SBI won against Australian company
● Despite this, counterfeit business is booming
● China is the highest source of counterfeit products in Asia with 30% originating from
there
● In India, Delhi is the center as 70% of counterfeits originate from there
● In India, in 2009, 82000 crores of counterfeit and govt lost 2000 crores in 2008-09 in
taxes
● Parachute has 128 clones, Fair and lovely 113
● Most counterfeits sold in semi-urban and rural areas
● 10% if medicines, luxury goods, and consumer electronics are counterfeits. Also
software sector

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Chapter 5 - Designing Marketing Programs To Build
Brand Equity
Integrating Marketing

Personalizing marketing - Rapid expansion of the internet has made possible use of more
efficient media of communication and distribution. Also increased consumer desire for
personalization hence marketers have embraced concepts such as experiential marketing and
relationship marketing.

Reconciling the different marketing approaches - The different approaches to personalizing

marketing emphasize different aspects of brand equity of the customer-based brand equity
(CBBE) model.

Personalizing Marketing

Experiential marketing - Promotes a product by connecting it with unique and interesting

consumer experiences which creates involvement, engagement, and hence loyalty. Experiences
encompass all 7 Ps.

Schmitt details five types of marketing experiences -

● Sense marketing – appeals to consumer senses of sight, sound, touch, taste, and smell
eg. Rolls Royce.
● Feel marketing – appeals to customers' inner feelings and emotions
● Think marketing - appeals to the intellect through the delivery of cognitive,
problem-solving experiences that engage customers creatively
● Act marketing – physical behaviors, lifestyle, and interactions
● Relate marketing - creates experiences by taking into account individual desires to be
part
● of social contact eg club, association, community

Research shows Lego, Starbucks, Victoria secret, iPod most experiential brands

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Schmitt‘s Brand Experience Scale

Relationship marketing
Attempts to create stronger consumer bonds/ties to retain customers.

Benefits:
● Acquiring new customers can cost five times as much as satisfying and retaining current
customers.
● The average company loses 10 percent of its customers each year.
● A 5 percent reduction in the customer defection rate can increase profits by 25 to 85
percent, depending on the industry.
● The customer profit rate tends to increase over the life of the retained customer.

Mass customization - It means producing products and services in mass production, modular
fashion, and then customizing individually to fit the customer’s exact specifications eg Mahindra
Scorpio, Archies greeting cards, Ikea, Asian paints. Possible due to the advent of digital-age
manufacturing technology. With the advent of social media, customers can share what they
have co-created with the company. Eg the NikeiD website customized shoes with an
eight-character personal Id. Mass customization offers supply-side benefits too –reduced
inventory cost, no need for discounting leftovers.
However certain limitations too – eg not all products can be customized or demand
customization. Also, returns are a problem.

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One-to-one marketing by Don Peppers and Martha Rogers - One-to-one marketing strategies
include singling out customers through the database for customer dialogue/communication thru
interactivity. More marketing efforts on more valuable customers eg Ritz Carlton, Shoppers stop
first citizen club. However, don't go overboard and assume customers want to repeat behavior
eg flowers to girlfriend or acknowledge eg 5-star hotel embarrassment.

Permission marketing by Seth Godin - The practice of marketing to consumers only after gaining
their express permission. As marketers can no longer employ interruption marketing. An
influential perspective on how companies can break through the clutter and prospect buy-in on
listening to the message. Eg Amazon.
Permission marketing is a way of developing the customer dialogue component of one-to-one
marketing. However, one drawback of permission marketing is that it presumes that consumers
have some sense of what they want. Hence marketers may need to give guidance to
consumers and indulge in participation in marketing.

Reconciling the Different Marketing Approaches

According to the customer-based brand equity (CBBE) model, different approaches emphasize
different aspects of brand equity. Mass customization, one-to-one, and permission marketing
are potentially effective means of creating greater relevance, engagement, and stronger
behavioral and attitudinal loyalty. On the other hand, experiential marketing is useful to establish
brand imagery, tap into feelings, and build brand communities.

The four approaches can build stronger consumer–brand bonds. Modern marketing program
requires that firms must still devise 4 Ps or 7 Ps of the marketing mix but keep the above four
approaches in mind -

Product strategy

Perceived quality - Customers’ perception of the overall quality or superiority of a product or

service compared to alternatives and concerning its intended purpose. Consistent with
dimensions in the brand resonance model. Sometimes consumer evaluations may not be based
on actual physical quality dimensions but perceptions based on extrinsic cues eg brand
reputation, popularity, color, scent, imagery, price, packaging, etc

Aftermarketing - To achieve the desired brand image: product strategies should focus on not
just purchase but also on consumption. The actual product experience is the second moment of
truth. After marketing is more than the design of products and packaging.

Aftermarket
User manuals - should not be an afterthought, put together by engineers who use overly
technical terms and convoluted language. Should be user-friendly and translated into multiple
languages.
Customer service programs - Customer service is a critical determinant of repeat buying,
attitudinal loyalty, WOM, and a great opportunity to strengthen customer ties.

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Also can be a profit center with high revenue potential eg AMC, HP printer cartridges. Locked
contract due to proprietary patents or technology, service contracts, or unique service expertise.
Loyalty or frequency programs – The purpose is to identify, maintain, and increase the yield
from a firm’s ‘best’ customers through long-term, interactive, value-added relationships.
Financial Loyalty programs increase retention rates due to the switching barrier. Also helps
engage your customers and make them feel special eg birthdays, and invitations to social
events. Often they also include extensive co-branding arrangements or brand alliances.

Pricing Strategy
Price is a revenue-generating element of the marketing mix. Price premiums are amongst the
most important benefits of building a strong brand.

Setting Prices to Build Brand Equity involves

● Choosing a method for setting current prices.
● A policy for choosing the depth and duration of price promotions and discounts
The pricing strategy can dictate:
● How consumers categorize the brand(high, medium, low)
● How firm or how flexible they think the price is, based on how deeply or how frequently it
is discounted.
Consumers rank brands according to price tiers in a category. Price bands: Range of acceptable
prices that indicate the flexibility and breadth marketers can adopt in pricing their brands within
a tier. Many companies can sell multiple brands, one or more in each tier. In many product
categories, price acts as the only indicator of quality eg perfume. Perceived value is an
assessment of perceived quality vis-a-vis price

Understanding consumer price perceptions

Consumers' purchase decisions are based on perceived value, not marketers stated prices.
Consumers actively process price info, interpreting price in terms of their knowledge from prior
purchase experience, advertising, online, friends, family, salespeople, etc.
Thus consumers use both internal frame of reference (prices they remember) as well as
external frame of reference (posted retail price vis a vis competitor prices etc).
Reference prices take many forms – Typical price, fair price, last price paid, upper bound price,
lower bound price, competitor prices, expected future price, usually discounted price.
Consumer perceptions of price are also affected by alternate pricing strategies played by
marketers eg broken down price perceived as less expensive, odd end pricing eg 999.
Psychological price barrier results in target pricing strategy by company eg Tata Nano, LG
Sampoorna tv, Onida candy, Tata Ace.

Setting Prices to Build Brand Equity

Pricing strategies: Attempting to sell the right product at the right price to better meet consumer
wishes and the profit targets of the firm. It should strike the proper balance among three key
components:
● Product design and quality - Consumers are willing to pay a premium for perceived
added value.

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 ● Product costs - Cost savings through productivity gains, outsourcing, material
substitution, product reformulations, and process changes. However, cost reductions
should not sacrifice quality.
● Product prices - Perceived value pricing ( pricing as per the value perceived by the
customer) Vs Value for money pricing (charging lesser than the value perceived by the
customer, gives customers a feeling that they are getting more value than the price they
have paid) VFM pricing is lesser than perceived value pricing. Other strategies like
premium pricing, skimming pricing, penetration pricing

Communicating value - Marketers may need to engage in marketing communications to help

consumers better recognize the value. Eg Pantene One $ more 100 shampoos a penny more

Price segmentation -
● Sets and adjusts prices for appropriate market segments.
● Because of the wide adoption of the Internet, firms are increasingly employing yield
management
● Eg hotels, airlines because of occupancy/load
● Principles, or dynamic pricing to vary their prices for different market segments
according to their different demand and value perceptions eg Uber/Ola, Bar Stock
Exchange.

Everyday low pricing (EDLP) -

Has received increased attention as a means of determining price discounts and promotions
over time. Deep discounting ie EDLP is perceived as lower than frequent shallow discounts
(HILO) even though avg prices are the same in both cases. Reasons for Price Stability:
Prevents, Forward buying, Diverting.

Summary
Although marketers use price reductions to improve perceived value, in reality, discounts are an
expensive way to add value (because it damages brand equity) than brand-building marketing
activities.

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Chapter 6 - Integrating Marketing Communications
to Build Brand Equity
Information Processing Model of Communications
1. For a person to be persuaded by any form of communication the following 6 steps must
occur:
2. Exposure: Seeing or hearing communication.
3. Attention: Noticing communication.
4. Comprehension: Understanding the intended message.
5. Yielding: Responding favorably to the message (as relevant and convincing product
claims).
6. Intentions: Planning to act in the desired manner of communication (due to immediate
perceived need).
Behavior: Acting in the desired manner. A very difficult task as a breakdown at any step possible
means failure of the communication process. At 50% success rate also 0.5 X 6 =1.5625%

An Ideal Advertisement Campaign

It would ensure:
● The right consumer is exposed to the right message at the right place and at the right
time.
● The creative strategy for the advertising causes the consumer to notice and attend to the
ad but does not distract from the intended message.
● The ad properly reflects the consumer’s level of understanding of the product and the
brand.
● The ad correctly positions the brand in terms of desirable and deliverable
points-of-difference and points-of-parity associations.
● The ad motivates consumers to consider the purchase of the brand.
● The ad creates a strong brand image so that it can have a continued effect.
● The ad should be able to sustain brand relationships and loyalty.

Role/Advantages of Multiple Communications J&J

Optimal utilization of monetary and other resources through proper mix and match. Because
each medium contributes differently to communication objectives eg awareness vs purchase.
Different communication options also may target different market segments. Eg young vs old
customers. Different factors need to be considered for budget allocation or media mix eg brand
life cycle, brand market share, competitor media strategy, product characteristics, objectives of
the firm, consumer characteristics, etc.

Where Do Brand Communication Ideas Come From

Ideas for communication may come from creative thinking, from other countries ( Pantene - hair
so healthy it shines- came from Taiwan), leveraging story, crowdsourcing, customer sweet spot.

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Customer Sweet Spot
The problem is that often brand communication programs are ineffective because it does not
engage customers as the offering is inconsequential, tangential, detached from customer
lifestyle, personality, values, higher purpose, beliefs, opinions, issues, and activities they enjoy.
This is especially true of digital strategies that hope to activate a community
The best thing is to look for a customer sweet spot - ie find a shared interest idea or program
and connect the brand to it eg Dove real beauty campaign.
However important to find a natural fit. A customer sweet spot program creates brand energy
and interest, enhances brand likeability, helps form brand relationships, and stimulates a social
network.

Advertising
Any paid form of non-personal presentation and promotion of ideas, goods, or services by an
identified sponsor.n Powerful means of creating awareness, strong, favorable, and unique
brand associations, and eliciting positive judgments and feelings. However difficult to quantify
and predict delayed effects

Television
Creative strategies or appeals can be
● Informational/Rational (elaborating product-related attributes or benefits) or
● Transformational appeals are of two types (emotional or moral) (portraying non-product
related benefit or image)
Appeals can also be both positive (love, care, happiness, etc) or negative (fear, guilt, shame)
Also, many creative approaches ( you must have done in advertising subject in detail) available
under each appeal.
Motivational or borrowed interest devices are also used to attract consumers' attention
eg babies, music, animal, celebrity, cartoons, humor, sex, and cause. However, sometimes
being too attention-getting and distracted from the brand eg Amitabh Bachchan in a paint ad.
Testing can be conducted to evaluate the effectiveness of TV ad messages and creative
strategies.

Ad Execution Techniques/Style
The way the promotional appeal is presented can be executed in any of the multiple ways as
below or in combination -

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Place Advertising
Known as “non-traditional,” “alternative,” “support” or out-of-home advertising. Marketers reach
out to people in environments, where they work, play, and, of course, shop.
Advantages -
● Can reach a very precise and captive audience cost-effectively and engagingly.
● More effective at enhancing awareness or reinforcing existing brand associations than at
creating new ones.
Guidelines -
● As the audience must process out-of-home ads quickly, the message must be simple
and direct, and also creative. It's called 15 seconds sell.
● However, the challenge is reaching and measuring the effectiveness.

Billboards and posters

Transformed over the years-digital technology allow syncing billboards with mobile advertising,
creative techniques like 3D, sound, backlights, movement
- Transit ads - buses, trains, subways
- Street furniture – bus shelters, kiosks, public area
- Billboard trucks
Movies, Airlines, Lounges, other places.
Product placements - In movies and TV, Branded entertainment
Point of purchase – ads on shopping carts, cart straps, aisles, shelves, instore promotions, point
of purchase radio FM style, live sampling.

Sales Promotion
While advertising provides a reason to buy, sales promotions are short-term incentives to buy
now. The use of sales promotions grew after the 1980s due to quarterly evaluations and quickly
observable impact on sales as against delayed effects of advertising. Economics also worked
against advertising due to media clutter, fragmented audience, instore consumer decisions, less
brand loyalty, less differentiated brands, and also more retailer power.

Consumer promotions are designed to change the behavior of consumers so that they buy a
brand for the first time, buy more quantity, or buy earlier or more often. Permit manufacturers to
charge different prices to groups of consumers eg based on quantity. Convey a sense of
urgency to consumers eg last day, limited period offer. Can build brand equity through actual
product experience eg trials.
Type of consumer promotions:
● Customer franchise-building promotions like samples, demonstrations, and educational
material. Brand managers prefer these as they contribute to brand awareness or
knowledge or teach consumers to use the product in different ways or create excitement,
engagement, etc, and hence brand equity
● Customer non-franchise building promotions detract from brand equity such as price-off
packs, premiums, sweepstakes, and refund offers.

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Trade promotions - are designed to change the behavior of the trade so that they carry the
brand and actively support it. Incentives to secure shelf space and distribution for a new brand,
or to achieve more prominence on the shelf and in the store. Eg point-of-purchase displays
Financial incentives are given to channel members to facilitate the sale of a product through
dealer quantity discounts, contests and dealer incentives, training programs, trade shows, and
cooperative advertising.

Disadvantages of consumer promotions

● Decreased brand loyalty and increased brand switching.
● Decreased quality perceptions, and increased price sensitivity.
● Inhibit the use of franchise-building activities like advertising and divert marketing funds
to sales promotion.
● Increase the importance of price and sales promotion as a factor in consumer decisions.
● May subsidize buyers who would have bought the brand anyway.
● Encourages forward buying and zero ultimate sales impact
Disadvantages of trade promotions
● Retailers may come to expect and demand trade discounts
● Retailers will engage in unproductive forward buying and zero ultimate sales impact
● Retailers may engage in unproductive diversion

Online marketing communication

Advantages of marketing on the Web
● Engages, as rich and deep content, garners trust
● Low cost, greater detail and a higher degree of customization.
● Can accomplish almost any marketing communication objective.
● Especially valuable in terms of solid relationship building.

A digital strategy helps brand building in many ways

● Communicates the offering eg Subway deal of the day
● Augments the offering eg Nike + chip
● Provides credibility to the offering eg Walt Disney world’s mom panel, JC penny where
customers give reviews
● Helps make the purchase process easier with information sharing – eg DeBeers 4 Cs
(cut, color, clarity, carat)
● Encourage applications eg Cosmetics
● Engage the customer in product development – My Starbucks idea, Heineken bottle
redesign challenge
● Create a highly impactful brand-building communication platform eg. Online viral videos
(coke happiness machine) Red bull Stratos balloon (9 mins fall, $40 million garnered 40
million views)

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Events and Experiences
Focus on engaging the consumers’ senses and imagination as a part of brand building.
Event marketing: Public sponsorship of events or activities related to sports, art, entertainment,
or social causes. Range from extravagant sponsorship events and experiences to a simple local
in-store product demonstration and sampling.

Guidelines for Choosing sponsorship events

● Must meet the communication and marketing objectives of the brand.
● Should closely match the ideal target market in terms of the audience attending the
event and positioning.
● Should be unique but not encumbered with many sponsors.

Marketing of sponsorship ultimately determines its success. The sponsor should strategically
identify themselves at an event through banners, signs, and programs. Sponsors also
supplement through samples, prizes, advertising, and publicity. The budget for related marketing
activities should be two to three times more than sponsorship expenditure.

Measuring sponsorship activities

● Supply-side method- Focuses on potential exposure to the brand by assessing the
extent of media coverage.
● Demand-side method- Focuses on reported exposure from consumers.

Mobile Marketing
Product advertising on various mobile platforms.
● Geotargeting: Marketers send messages to consumers based on their location and the
activities they are engaging in.
● Opt-in advertising: Users agree to allow advertisers to use specific, personal information
and send them targeted ads and sales promotions.

Brand Amplifiers
Efforts made to engage consumers and the public via word-of-mouth and public relations and
publicity. They amplify the effects created by other marketing activities.
Public relations and publicity
● Publicity: Nonpersonal communications such as press releases, media interviews, press
conferences, feature articles, newsletters, photos, films, and tapes.
● Public relations: Include annual reports, fund-raising and membership drives, lobbying,
special event management, and public affairs.
Eg Tata Nano, Burson Marsteller - Skillful handling of J& J Tylenol product tampering incident

Word-of-mouth
Critical aspect of brand building. Consumers share likes, dislikes, and experiences with each
other. Assures a greater degree of credibility and relevance as seen as genuine. Sometimes
marketer has no control but brand damage is huge. Eg United broke my guitar by an aggrieved
customer.

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Buzz marketing: Various techniques marketers apply to get people to notice and talk about the
brand. However, buzz marketing works for only high involvement products and high involvement
experiences. eg JJKN Mona Singh mystery, don’t say hello, say Cello.

Developing an integrated marketing communication program (IMC)

Choosing the best set of marketing communication options from the various alternatives and
managing the relationships between them.

Criteria For IMC Program

Coverage - Proportion of the audience reached by each communication option, as well as how
much overlap exists among communication options. Thus total coverage = proportion of the
target audience covered by all media put together.

Contribution - Inherent ability of marketing communication to create the desired response and
communication effects from consumers in the absence of exposure to any other communication
option. Thus the contribution of an individual medium to the coverage

Commonality - The extent to which common information conveyed by different communication

options shares meaning across communication options to create a coherent and cohesive brand
message and image. This ensures the Commonality of information.

Complementarity - Describes the extent to which different associations and linkages are
emphasized across communication options such that there are mutually compensatory eg TV
advertising for awareness, press ads for detailed comparative info, salespersons for persuasive
communication, samples for trial, the sales promotion for immediate purchase, etc.

Conformability - Extent that a marketing communication option is robust and effective for
different groups of consumers. Types of conformability -
● Communication conformability - Ability of the mode of communication to effectively
communicate with a diverse group of customers.]
● Consumer conformability - Ability of the communication option to inform or persuade
consumers who vary on dimensions including and other than past communication
history. Eg Events are simple and hence effective on this dimension

Cost
To arrive at the most effective and efficient communication program evaluations of marketing
communications on all of the preceding criteria must be weighed against their cost.

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Chapter 7 - Leveraging Secondary Brand
Associations To Build Brand Equity
Leveraging Secondary Brand Associations
It is an indirect approach to building brand equity. It involves linking the brand to some other
entity, having its knowledge structure. Thus the brand borrows knowledge, associations,
responses, and brand equity from other entities. Consumers may infer that some of the
knowledge, associations, or responses that characterize the other entity, may also be true of the
brand.

Conceptualizing The Leveraging Process

Inference and the transfer happens due to the consumer's need for Cognitive consistency: What
is true for the entity must be true for the brand through the new association.
Secondary brand associations are most likely to help the creation of new brand associations
when consumers lack either the motivation or the ability to judge product-related concerns.

The Extent of Leverage

Factors predicting the extent of leverage from linking the brand to another entity:
● Awareness and knowledge of the entity.
● Meaningfulness of the knowledge of the entity.
● Transferability of the knowledge of the entity. Eg Hyundai Santro
Some types of entities are more likely to inherently create or affect certain kinds of brand
knowledge than others. Eg Events help in creating an experience, people are effective in
eliciting feelings, and other brands are suited for establishing brand attributes and benefits.
The above serve as guidelines for a marketer to leverage secondary associations.

Secondary Sources of Brand Knowledge

1. Company (through branding strategies)
2. Countries or geographic areas (through identification of product origin)
3. Channels of distribution(through Channel strategy)
4. Other brands(through brand extensions & co-branding alliances, ingredient branding)
5. Characters (through licensing)
6. Spokespersons (through endorsement by employees and outside endorsers)
7. Events (through sponsorship of events and causes)
8. Other third-party sources (through awards or reviews)

1) Company
A corporate brand may evoke associations of attributes, benefits, attitudes; people and
relationships; programs and values; and corporate credibility. Existing brands can be related to
the company through a corporate branding strategy eg AMUL, TATA, or an endorsement
strategy eg Marico’s Hair n care . Westside, Chroma, a Tata enterprise.
Corporate strategy or endorsement strategy is very important in High involvement categories.

44
Some companies feel this strategy is not useful and choose new brand strategy eg HUL, P&G,
Fast track. Sometimes leveraging a corporate brand may or may not be useful eg companies in
oil and gas or financial services may be perceived in a negative light.

2) Country of Origin or Geographic Location

Can create strong points of difference. The world has become a cultural bazaar where
consumers pick and chose products from various countries Consumers choose brands
originating in different countries based on:
● Their beliefs about the quality of certain products from certain countries.
● The image that these brands or products communicate.
Research indicates:
● In the domestic market, the country of origin perspective can stir consumers' patriotic
notions or remind them of their past heritage as a patriotic brand.
● In individualistic societies, that are more guided by self-interest and personal goals, and
in developed markets, consumers demand stronger evidence of product superiority.
● In collectivistic countries and not so developed markets, country of origin may be an
important factor for status enhancement due to premium image of foreign brand eg
America’s double cola
● Sometimes country of origin may have negative connotations abroad eg Korean cars in
the USA originally eg Chinese, Hyundai and Shahrukh India.

3) Channels of Distribution
Retail stores can indirectly affect brand equity through an “image transfer” process. Retailers
have their brand images in consumers’ minds due to the following associations:
● Product assortment
● Pricing
● Credit policy
● Quality of service
Customer base can be expanded by tapping into new channels of distribution. However, this
expansion of distribution channels can be counterproductive. eg when Vera Wang decided to
also distribute her products through Kohl’s, Macy’s decided to drop her popular lingerie line.
Similarly, Macy’s cut ties with Liz Claiborne when the fashion brand decided to offer
the line Liz & Co. to J C Penny.

4) Other brands
1. Brand extensions eg Dove soap already existed and then Dove shampoo was launched
as a brand extension with less advertising than Dove soap as the necessary
associations had already been established with a blitzkrieg campaign for Dove soap
2. Co-branding - Also called brand bundling or brand alliance. When two or more existing
brands are combined into a joint product or are marketed together in some fashion eg
distribution, advertising, sales promotion, product and brand name tie-up. This can be
through linking with another brand from the same company or a different company. Eg
Cadbury plus Oreo = Cadbury Oreo. Eg Disney toys and McDonald's for happy meals for
sales promotions. Betty Crocker paired with Sunkist Growers to market a lemon chiffon

45
 cake mix. eg Mahindra tie-up with Ford for distribution, Washing machine tie-up with a
detergent brand for advertising cost-sharing eg Star alliance for airlines.

Co-branding Guidelines - To create a strong co-brand, both brands should have

● Adequate brand awareness.
● Sufficiently strong, favorable, and unique associations.
● Positive consumer judgments and feelings.
However the above is only a necessary but not a sufficient condition. What's important is
that there must be a logical fit between the two brands. Marketers should make detailed
plans to legalize contracts, make financial arrangements, and coordinate marketing
programs.
3. Ingredient Branding - A special case of co-branding is Ingredient branding eg Intel
inside, Teflon coated. Creates brand equity for materials, components, or parts that are
contained within other branded products.
a. Branded ingredients are often a signal of quality.
b. Consumers may not know how ingredients work but
c. Uniformity and predictability of ingredient brands can reduce risks and reassure
consumers.
d. Ingredient brands may become industry standards and thus point of parity.
e. Eg Dolby sound, Gorilla glass, Intel inside, Scotch Gard fabrics, Dupont Teflon,
Lycra, Stainmaster stain-resistant fibers.
f. Dupont made mistake with Nylon, did not protect its innovation through
trademark registration, and became generic.
g. Some companies create their own ingredient brands eg Westin Hotel Heavenly
bed mattress
Advantages
● The ingredient firm can generate greater sales at a higher margin. Also two revenue
streams – direct revenue from supplied ingredients and also extra revenue from royalty
rights paid to display ingredient brand.
● From the standpoint of the manufacturer of the host product, the benefit is in leveraging
the equity from the ingredient brand to enhance its own brand equity.
On the demand side, the host product brands may achieve access to -
➔ New product categories.
➔ Different market segments.
➔ More distribution channels than otherwise could have been expected.
Disadvantages
● Costs of a supporting marketing communication programs can be high.
● Loss of control, because marketing programs for the supplier and manufacturer may
have different objectives.
● The sustainability of the competitive advantage for pioneer host brands may be
somewhat uncertain as follower brands may gain from enhanced consumer knowledge.

46
Guidelines
● Consumers must first perceive that the ingredient matters to the performance and
success of the end product.
● Consumers must then be convinced that not all ingredient brands are the same and that
the ingredient is superior.
● A distinctive symbol or logo must be designed to signal to consumers that the host
product contains the ingredient.
● A coordinated program must be put into place so that consumers understand the
importance and advantages of the branded ingredient.
● Companies must look at ROI on the quantitative side and on the qualitative side look at
how ingredient helps product positioning

Trademark Licensing
Licensing of company names, logos, characters, or brands for use on various, often unrelated
products. It creates contractual arrangements whereby firms can use these properties for a fee.
Firms may license trademarks to
● Generate extra revenue and profits
● Protect their trademarks-It can prevent other companies from entering a product
category
● Increase their brand exposure
● Enhance their image
Champion of licensing is Walt Disney. Other examples are Ralph Lauren, Donna Karan, Pierre
Cardin, Calvin Klein, and Gucci. Risk: A trademark may become overexposed to the point of
saturation.Especially when no relation eg Coca Cola radios, toy trucks, clothes. If the product
fails to live up to expectations, then the brand name can get tarnished eg NMIMS PGDBA
Meerut.

Spokesperson
1. Employees as spokesperson eg Samsung service, Intel, Eureka Forbes friend for life,
Singapore girl for Singapore airlines.
2. Expert and Celebrity Endorsement
a. Rationale - A famous person can be
i. Draw attention to a brand.
ii. Shape brand perceptions, by consumers' perceptions of the famous
person.
b. Endorsers should have
i. A high level of visibility.
ii. A rich set of potentially useful associations, judgments, and feelings.

Celebrity Endorsement (film stars, sportspeople, social media influencers)

Disadvantages
● Celebrity endorsers can endorse so many products that they lack any specific product
meaning or match eg Jackie Chan.

47
 ● Celebrity endorsers can get in trouble or lose popularity, diminishing their marketing
value to the brand, or just failing to live up to expectations. Eg Fardeen khan and
Provogue
● Many consumers feel celebrities are doing the endorsement only for the money.
● Consumers may notice the stars but have trouble remembering the advertised brand.
● Celebrities may be difficult to work with due to their tantrums eg Andre Agassi tried
Nike’s patience as tied up with Canon Rebel camera and said image is everything while
Nike as the authentic athletic performance was an antithesis.
● Celebrities may endorse clashing image brands eg Amitabh Bachchan Reid and Taylor
vs Dabur Laal tel

Guidelines
● Choose a well-known celebrity whose associations are relevant to the brand and likely to
be transferable.
● The advertising and communication program should creatively use the celebrity that
highlights the relevant associations and encourages their transfer.
● Ideally, the celebrity should be perceived as credible in terms of expertise,
trustworthiness, and likeability/attractiveness

How to avoid Celebrity Mishaps

● Check celebrity brand personality fit
● Analyse whether the category is celebrity cluttered
● Overexposed celebrities should be avoided eg Accucheck Wasim Akram
● Have a strict legal contract in place. However, despite that, it can’t prevent certain
mishaps eg Virat Kohli footwear brand vs team endorsement in the athletic footwear
category
● Check on celebrity behavioral patterns with media

Sporting, Cultural or Other Events

Have their own set of associations that may become linked to a sponsoring brand under certain
conditions. Contribute to brand equity by -
● Becoming associated with the brand and improving brand awareness.
● Adding new associations.
● Improving the strength, favourability, and uniqueness of existing associations.
● Olympics eg but Ambush marketing can happen eg Coke Official sponsor /Pepsi nothing
about it eg Nike /Reebok but now Olympic Committee has taken a serious view.

Third-Party Sources
Involves linking the brand to various third-party sources. Eg could be endorsements from
leading mags eg PC magazines or organizations eg Indian dental association, or acknowledged
expert organizations. For example, Grey Goose's eventual success was a taste-test result from
the Beverage Testing Institute that ranked Grey Goose as the number-one imported vodka.

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Chapter 11 - Designing & Implementing Brand
Architecture Strategies
Brand Architecture Strategy
Brand architecture strategy: Helps marketers determine which products and services to
introduce, and which brand names, logos, and symbols to apply to new and existing products.
Role:
● To clarify or enhance brand awareness.
● To create or improve brand image/associations.
Brand architecture strategy development involves three steps

Step 1: Defining Brand Potential

Three important characteristics
1. The brand vision
● Management’s view of the brand’s long-term potential.
● Brand vision needs to be aspirational, yet it cannot be unobtainable.
● It transcends the brand’s physical product category descriptions and boundaries.
● It relates to the higher purpose of the brand

2. The brand positioning

Current image the brand manager wants to create in customers' minds.

3. The brand boundaries

Brand vision and positioning create boundaries of to what extent can a brand stretch.
● Based on the brand vision and positioning, identifying the products or services
the brand should offer, the benefits it should supply, and the needs it should
satisfy.
● Broad brand - One with an abstract positioning, that acts as a transferable POD,
relevant in multiple product settings
● However apply the Spandex rule – Just because you want to stretch, don’t.

Step 2: Identifying Brand Extension Opportunities

Brand extension is a new product introduced under an existing brand name. It is of two types
Line extension:
1. Maybe a Variant - adds a different variety, a different form or size, or a different
application for the brand eg Maggie noodles masala, chicken, flavor Maggie in different
pack sizes, Lux in different colors, lux shampoo sachet.
2. Vertical line extensions- catering to a different market segment, a different price point
within the same product category that it is currently in eg Lux soap to Lux international
soap, Maggie to Maggie wheat atta noodles

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Category extension:
Marketers apply the parent brand to enter a totally different product category from the one it
currently serves. Eg Maggie noodles to Maggie sauces, Pasta, Lux soap to Lux shampoo.
Equity implications of each extension need to be understood in terms of
● Points-of-parity
● Points-of-difference

Step 3: Branding new products and services

Firms may use either one of the Broad two strategies
1. Branded house strategy – i.e. Umbrella branding - Corporate eg Amul, Tata or family/
Range brand for all its products eg Nestle for dairy and drinks, Maggie for non-dairy
products. Mostly used by B2B but also by some B2C.
2. House of brands strategy - i.e. collection of individual brand names for each product eg
Consumer product companies. Eg Procter & Gamble, Unilever.
a. Advantage, if things go wrong, only that brand reputation is affected and not all.
b. Major limitation - loss of brand extension leverage and failure of brand if poor
investment support by the company
The current trend is not House of brands strategy but to follow branded house strategy. In
reality, most firms use a Combination strategy-a combination of a new brand names and
existing brand names eg Tata, Titan, Xylys, Westside, Chroma.

New Brands can be named in many ways

1. Master brand or Parent brand - the primary indicator of the offering, the point of
reference eg Maggie, Titan
2. Master brand with descriptor - describes the offering in functional terms eg Tata motors,
Titan watches
3. Master brand with Sub-brand – augments or modifies the associations of a master
brand, in a specific Product - market context eg Titan Nebula, Titan Raga. It could have a
slightly different personality or value proposition from the master brand (combination
strategy)
4. New brand name with Endorser brand – The endorser serves to provide credibility and
substance to the offering. eg Xylys, a Titan product, or Chroma from the house of Tata.
Here, Titan, and Tata, the master brand is endorsers, and Xylys and Chroma are
endorsed brands. The endorser brand has only a minor driver role to play and the
endorsed brand has considerable freedom to develop product associations and brand
personality very very different from the endorser brand. (combination strategy).
5. New brand – giving an individual brand name to the new product. In reality, most
companies have a Hybrid/combination strategy- L'Oréal has a set of master brands eg
Maybelline New York, L'Oréal Paris, and Garnier but each of these has sub-brands and
branded ingredients.

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The Brand Relationship Spectrum - Distance From Master Brand
● New brand- maximum distance. Eg Xylys
● Endorsed brand –more distance eg Xylys from the house of Titan
● Sub-brand – some distance eg Titan Xylys
● Master brand with descriptor – no distance eg Titan Watches

Branding Strategy Screen

Tools To Successfully Execute Brand Architecture Strategy

There are three important tools, that help formulate brand architecture strategies. These are -
1) Brand portfolio
2) Brand product matrix
3) Brand hierarchy

Tool 1) Brand Portfolio

Includes all brands sold by a company in a particular product category. It automatically means
that a company is offering multiple brands in a product category. Originally pioneered by
General Motors, P&G popularized it. Reasons for introducing multiple brands in a category:
● Multiple brands allow firms to pursue different price segments, different channels of
distribution, different geographies, customers' needs, etc.
● To increase shelf presence and retailer dependence in the store.
● To attract consumers seeking variety who may otherwise switch to another brand. Eg
Parle
● To increase internal competition within the firm. Eg P&G

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Thus Maximize market coverage - So that no potential customers are being ignored. But should
Minimize brand overlap - So that brands aren’t competing among themselves to gain the same
customer’s approval (over cannibalization).

Special Brand Roles Within A Brand Portfolio

Companies assign specific roles to brands. Some brands are assigned as Strategic brands- one
with strategic importance to the organization. Identification of strategic brands is a huge step in
ensuring that brand-building resources are allocated to the strategically most important brands
These strategic brands are of four types –
1. Current power or mega brands- currently generating significant sales and profits, may or
may not be a cash cow
2. Future power brands are projected to generate significant sales and profits in the future
3. Linchpin brands – will indirectly influence ( as opposed to generating) significant sales
and market position in the future Eg Hilton rewards for Hilton hotels, Shoppers stop FCC
4. Flagship product: Embodies the brand to consumers. Maybe a product that signals
a company’s capabilities, maybe the first product by which a brand gained fame, most
popular. Important in the brand portfolio in that marketing them can have short- and
long-term benefits
The classic problem is future power brands and linchpin brands get starved for resources while
current power brands get over investment. Hence important to take a total portfolio view.
In addition to strategic brands, there are other brand roles with resource allocation implications.

Flankers
Protective or Fighter Brands
● Purpose is to create stronger points of parity with competitors’ brands so that more
important and profitable flagship brand can retain their desired positioning .
● Flanker brands - may not reach profitability standards but are useful in reducing the
market power of competitors.
● Fighter brands must not be so attractive that they take sales away from their
higher-priced comparison brands.
● If they are connected to other brands in the portfolio, they must not be designed so
cheaply that they reflect poorly on other brands
● eg HUL Surf vs Nirma Vs HUL Wheel ( flanker)
● eg Asian paints vs unorganized Tractor distemper

Cash Cows
Cash cow – a worthwhile business based on the core segment but little growth potential hence
should be assigned little or no investment (BCG matrix). Despite dwindling sales, cash cows
brands are retained:
● Due to their sustainability without any kind of marketing support.
● Milked by capitalizing on their reservoir of existing brand equity. Eg Parle G, Monaco,
Parachute

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Niche brands
Operate in a very small but highly profitable segment because few competitors (one or two or
nobody) have become the dominant brands in that segment. eg O.b. tampons for J and J. Also
Revive starch for Marico, All plus size, Vegan, Burma Burma.

Low-End, Entry-Level or High-End, Prestige Brands

● Sub-brands leverage associations with other brands while distinguishing themselves on
price and quality.
● Role of a relatively low-priced brand: To attract customers to the brand franchise. (traffic
builders in retail) eg Westside 500 rs Kurtis, Mc D softy ice cream 7 rs
● Role of a relatively high-priced brand: To add prestige and credibility to the entire
portfolio. Eg Tata has Jaguar, Land rover

Special Roles Of Brands In The Brand Portfolio/Reasons For Introducing Multiple Brands

Tool 2) Brand Product Matrix

Visual representation of brand architecture strategy of the firm in form of rows and
columns in the matrix. The rows represent the brand–product relationships. = A brand line is
one single row of the matrix that consists of the original brand product plus line extensions plus
category extensions. Eg Dove soap plus Dove international soap plus Dove shampoo plus Dove
conditioner etc
The columns represent product- brand relationships = brand portfolio strategy in terms of the
number and nature of brands that a company offers to consumers in a particular category. eg In
the soap line we have Dove, Lux, Jai, Liril, Hamam, and Lifebuoy.
This firm’s architecture strategy is characterized by breadth /width ( ie in terms of
brand-product relationship and category extension strategy) and its depth (i.e. in terms of
product-brand relationships and brand portfolio mix)

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Other related terms are
1) Product line eg each individual product line of soaps, detergents, toothpaste, etc.
2) Product mix or assortment = total of all products of all forms in all product lines across all
categories.
3) Brand mix or brand assortment = total of all brands across all product categories.

Tool 3) Brand Hierarchies

It is a useful means of graphically portraying a firm’s branding strategy by displaying the number
and nature of common and distinctive brand elements across the firm’s products, revealing their
explicit ordering.

Levels of a Brand Hierarchy

● Corporate or company brand eg Maruti Suzuki or Cadbury
● Family brand eg Baleno or Dairy milk
● Individual sub-brand eg Baleno Delta or Silk
● Modifier (designating item or model) Baleno Delta VXI or Oreo red velvet
● Product descriptor eg Automatic or Manual, diesel vs petrol version or chocolate

Corporate or Company Brand Level

Highest level of hierarchy. The corporate or company brand plays a prominent role in
the branding strategy. Used When Corporate image is important to the consumer. Consumer
purchase decisions are affected by associations with the company or corporation making the
product or providing the service.

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Family Brand Level
It is used in more than one product category but is not necessarily the name of the company or
corporation. Also called a range brand or an umbrella brand. If the corporate brand is applied to
a range of products, (and not all the products of that company ) then it functions as a family
brand. Marketers may apply family brands instead of corporate brands when distinct family
brands can evoke a specific set of associations across a group of related products.

Individual Sub Brand Level

Restricted to essentially one product although multiple product types may differ on model, size,
flavor, etc. If the brand runs into difficulty or fails, the risk to other brands and the company itself
is minimal. Disadvantages of difficulty, complexity, and expense of developing separate
marketing programs.

Modifier Level
Brands should distinguish according to the different types of items or models. Modifier:
Designate a specific item or model type or a particular version or configuration of the product.
The function of modifiers is to show how one brand variation relates to others in the same brand
family. Help make products more understandable and relevant to consumers. Eg BMW 3,5,7 or
Titan Raga variant, Videocon bazooka

Product Descriptor
Although not considered as a brand element per se, product descriptor may be an important
ingredient of branding strategy. Helps consumers understand what the product is and does
by describing the offering usually in functional terms. Also helps define the relevant competition
in consumers’ minds.

Driver Role Of A Brand

The driver role reflects the degree to which a brand name drives the purchase decision and
defines the user experience. Eg it's about what customers say they bought ie Cadbury
Temptations or Temptations, which will decide whether the sub-brand Temptations
has played a minor role (in the first case) or driver role (in the second case).

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Chapter 12 - Introducing & Naming New Products &
Brand Extensions
Brand extensions
When a firm uses an established brand name to introduce a new product.
Line extension:
A) Maybe a Variant -adds a different variety, a different form or size, or a different
application for the brand eg Maggie masala, chicken, Maggie in different sizes, Lux in
different colors, lux shampoo sacheT
B) Vertical line extensions - a different price point catering to a different market segment
within the same product category that it is currently in eg Lux soap to Lux international
soap, Maggie to Maggie wheat atta noodles
Category extension:
Marketers apply the parent brand to enter a different product category from the one it currently
serves. Eg Maggie noodles to Maggie sauces, Lux soap to Lux shampoo.

Advantages of Brand Extensions

The high failure rate of new products (with a completely new brand name) is well documented.
Market analysts estimate only 2 out of 10 or 1 out of 10 will be successful. New products
introduced as a brand extension may be more likely to succeed, because of certain advantages.

Brand Extensions Facilitate New Product Acceptance

● Increase Efficiency of Promotional Expenditures - studies show avg advertising to sales
ratio for brand extension was 10% compared to 19% for new brands.
● Reduce Costs of Introductory and Follow-Up Marketing Programs - a firm can save 40 to
80% of the estimated $ 30 to 50 million it costs to launch a new supermarket product
nationally in the USA.
● Avoid Cost of Developing a New Brand - ie brand elements involves global trademark
search
● Allow for Packaging and Labeling Efficiencies - similar or identical packaging and labels
result in lower production costs and increased prominence in-store due to the billboard
effect

Provide Feedback Benefits to the Parent Brand

● Clarify brand meaning-J&J all products stand for baby care
● Enhance the Parent Brand Image- Nike expansion from running shoes to athletic shoes,
clothing, equipment, strengthened associations of peak performance and sports.
● Bring New Customers into the Brand Franchise and Increase Market Coverage- eg
Maggie noodles to Maggie wheat atta noodles. Dabur Real juice vs Active, Coke 5 rs
pack for Rural, bhujia chotu packs for travel segment /single segment
● Revitalize the Brand - eg Dabur Chawanprash for different segments
● Permit subsequent extensions - Dabur Real, Active, Wellness. Also, ISB to PGP to PGP
pro

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Disadvantages of Brand Extensions
● Can Confuse or Frustrate Consumers eg 16 varieties of coke, 35 versions of Crest,
overwhelming – study shows that consumers are more likely to purchase after sampling
when there were 6 flavors rather than 24. Consumers reject new extensions for tried and
true favorites or all-purpose versions eg Colgate Total.
● Can Encounter Retailer Resistance- as retailers don’t have space.25000 SKUs in India.
Walmart annually drops 20% of its slow-moving items. A food marketing institute study
showed retailers can reduce SKUs by 5-25 % without hurting sales or consumer
perceptions of variety. Hence when Heinz culled 40% of its items over two years, its
operating income increased by 18%.
● Can Fail and Hurt Parent Brand Image- e.g Patanjali
● Can Succeed but may Cannibalize Sales of Parent Brand- eg Kodak Funtime
cannibalized Kodak gold. Cannibalization may be deliberate and desired by the
company, especially when higher eg customer migration may be preemptive or
deliberate company strategy eg Maruti 800 to Maruti Alto.
● Can Succeed but Diminish Identification with any one Category- eg NMIMS has many
schools beyond MBA school i.e. SBM. But not necessarily eg Virgin records, airlines,
mobile and not-so-successful cola, vodka, PCs, jeans, etc. Yamaha motorcycles, guitars,
pianos, etc
● Can Succeed but Hurt the Image of the Parent Brand eg Miller Lite led to a decline in
market share of Miller high life from 21% to 12 % in 8 years as perceived to be watery
● Can Dilute Brand Meaning or Image eg Gucci overexpansion
● Can Cause the Company to Forgo the Chance to Develop a New Brand eg Success of
Disney through Touchstone pictures ( for adults ) or for Levis through Docker pants or
Amazon through Kindle.

Vertical Line Extensions

Extending the brand up into more premium market segments (upward extension) or down into
more value-conscious segments (downward extension), is a common means of attracting new
groups of consumers.

Pros
● An upward extension can improve brand image, increase profitability
● Extensions in either direction can offer consumers variety, revitalize the parent brand,
permit further extensions in a given direction, and get new customers.

Cons
● Vertical extension to a new price point, whether higher or lower, can confuse or frustrate
consumers who have learned to expect a certain price range from a brand.
● The successful downward extension has the possibility of harming the parent’s brand
image by introducing associations common to lower-priced brands.
● It will cannibalize the sales of the parent brand eg Kodak Gold, to tackle Fuji introduced
Kodak Funtime.

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Naming Strategies
● It is possible to use certain brand modifiers to signal a noticeable, although presumably
not dramatic, quality improvement or variety. Ultra Dry Pampers, Extra Strength Tylenol,
or PowerPro Dustbuster Plus.
● Firms often adopt endorser brand strategies to distinguish their lower-priced entities, to
prevent poor image associations from harming the parent brand eg Tractor from the
house of Asian paints.
● Endorser brand strategies are also used in upward extension cases, as It is difficult to
change people’s impressions of the brand enough to justify a significant upward
extension, eg Xylys from the house of Titan, Orchid by Lakme
● To avoid the potential difficulties associated with vertical line extensions, companies
sometimes elect to use new and different brand names to expand vertically. Eg Gap
came up with Banana republic at 40% premium and Old Navy at 40% discount eg
Jaguar, Landrover are tata brands

Research Shows
Line Extensions
● Of Strong brands are more successful than weak brands
● Of Symbolic brands are more successful than less symbolic brands
● Of Strongly advertised and promoted brands are more successful than less supported
brands
● Of strong brand extensions entering earlier in product category are more successful than
extensions entering later

Also
● Firm size and marketing competencies play a role in extension success
● Line extensions have helped in market expansion of parent brand eg coke rs5, wheat
noodles
● Incremental sales generated by line extensions may more than compensate for the loss
in sale due to cannibalization

Brand Extension Guidelines Based on Academic Research

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Point 1 – Categorization perspective eg Dove soap and shampoo

Point 2 - product-related /function-oriented eg Timex watches all types vs non-product related

eg usage type/situation eg Rolex watches, bracelets, etc. Or user type J and J eg all products
for babies. Consumers seek explanatory links to tie products together.

Point 3 – Fit could be related to the notion of substitutability or complementary in product use(on
the demand-side) as well as the firm’s perceived skill and expertise (from the supply-side) eg
Honda motors for car and lawnmowers are supply-side fit, while Colgate toothpaste and
toothbrush is demand-side complementarity. Also, Demand-side Substitutability eg is Coca
Cola, lime, and water. Similarly coffee or tea.

Additionally note, Also Aunt Jemima was successful in introducing a pancake syrup extension
from its well-liked pancake mix but syrup maker. The log cabin was less successful in
introducing a pancake mix extension because pancake mix is seen as the dominant /primary
ingredient and syrup as secondary. Same problem with Clorox bleach maker who took on giant
P& G by introducing the first detergent with bleach but achieved only 3 % market share after
pouring $ 225 million, while P & G achieved 17% market share on Tide with bleach. However
Clorox is successful in household cleaning products where bleach ingredient is the main

Point 4 - eg Nirma, Sunlight is perceived as low quality vs Surf excel

Point 5 – eg Burnol, Thermos, Kleenex, Band-aid, Fevicol, M-Seal, Coke are prototypical and
hence find it difficult to extend.

Point 6 –while generally true, some caveats eg abstract associations may not always transfer eg
durability in watches may not be transferable as durability in clothes

Point 7 - eg Campbell soups strong association resulted in Campbell tomato sauce test
marketing flop because perceived as watery so introduced as Prego

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Point 8- eg Durable handbags may also mean negative associations of non-stylish. McD Pizza
did not succeed because takes time to make

Point 9 – Neeta disagrees with the statement that it's difficult to extend. My statement is that you
are wasting your brand equity by extending to a mundane category eg Annapoorna salt will be
considered as a mundane category to extend to, a company has not fortified salt, the way it has
fortified Atta

Point 10 - Success casts a halo effect and helps further extensions eg iPod, iTunes

Point 11 – Neeta don’t agree as hurt even more if no fit eg Patanjali

Point 15- Analytical vs holistic. Both gave prestige brands more permission to extend widely but
holistic thinkers gave functional brands much greater permission to extend. Perception of fit
depends on whether expert or whether novice customers eg tennis rackets and shoes seen
more as a fit by novice customers than tennis racquets and golf balls

Point 16 – Eastern cultures have more holistic thinking and hence perceive higher levels of
extension fit than Western analytical consumers

Brand Extension - the good, bad and ugly

The Good – the parent brand enhances the extension offering - eg Dove soap to Dove
shampoo, etc.

More good – the extension enhances the parent brand eg Virgin records to airlines. Virgin
airlines brand flagship of 300 business

The bad – the parent brand fails to help or even inhibits the extension eg Levi Strauss tailored
classic line of suits failed, Ponds toothpaste, Colgate entrees

The ugly - the extension damages the parent brand eg Gucci, Lacoste

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Chapter 13 - Managing Brands Over Time
Consistency Wins
● Most strong brands are consistent in their message – Coke, Dove, Lux, Apple, Maggie,
Thumbs up. Consistency wins for various reasons.
● It takes time for any brand positioning or brand-building program to gain traction.
● Second, a consistent brand program over time can lead to virtual ownership of a
position.
● Third, any change has the potential to dilute what has been built up or customers may
resent in case of iconic brands eg Coke blind test, Maggie formulation like Top Ramen,
Similarly Logo problem eg Gap and packaging design problems eg Tropicana
● Finally, consistency is cost-effective
● However beware of change biases – brand professionals want to change things because
change is what they are trained to do and because it is simply more fun
● However consistency does not mean strategic stubbornness because a brand should
not lose relevance. Hence need strategies to reinforce brands

Maintaining Brand Consistency

In terms of the amount and nature of marketing support. Brands with shrinking R&D and
marketing communication budgets run the risk of becoming disadvantaged. Eg Rasna, Onida,
Mitsubishi Lancer. Inadequate marketing support is an especially dangerous strategy when
combined with price increases. Eg, Daewoo Cielo, Nokia, iPhone 10.

Consistency Vs Change in nature of marketing support

● Consistency wins. eg Amul
● However, brand consistency does not mean that markters should avoid making any
changes in the marketing program.
● On the contrary, managing brand equity with consistency requires making numerous
tactical shifts and changes to maintain the strategic thrust and direction of the brand. I.e.
marketing mix changes eg prices, product features, quality, variety, sizes, ad slogans eg
Lux for film stars to bring out the star in you, brand extensions changes
● Nevertheless, the strategic positioning of many leading brands have been kept uniform
over time by the preservation of the brand meaning and by the retention of key elements
of the marketing program

Protecting Sources of Brand Equity

Key sources of brand equity are of enduring value. The top priority is to preserve and defend
those that already exist. Unless some change in either consumer behavior, competition, or the
company, makes the strategic positioning of the brand less powerful, there is little need to
deviate from a successful positioning. Eg Surf changed from Surf washes whitest (POD had
now become POP) to daag acche hain. eE Maggie from Taste to taste bhi health bhi

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Fortifying versus Leveraging
Marketers face tradeoffs between activities that fortify /strengthen brand equity and those that
leverage / capitalize on existing brand equity to reap some financial benefit.
Fortifying/strengthening means eg increasing R&D, increasing advertising, increasing service
quality, investments in distribution, product quality, investments in CRM, etc i.e. all activities to
build brand equity through creating associations, judgments, feelings, and resonance.
Capitalizing /leveraging means eg reducing advertising expenses, seeking increasingly higher
price premiums, or introducing numerous brand extensions.
However, the more marketers pursue capitalizing/leveraging strategy, the easier it is to neglect
or overexploit your brand and perhaps diminish brand equity. Subsequently, the brand itself may
not continue to yield valuable benefits.

Fine-Tuning the Supporting Marketing Program

● Product-related performance associations
● Non-product-related imagery associations

Marketers should make changes only when it’s clear the marketing program and tactics are no
longer making the desired contributions to maintaining or strengthening brand equity.

Product-related performance associations

● For brands whose core associations are primarily product-related performance attributes
or benefits, innovation in product design, manufacturing, and merchandising is especially
critical to maintaining or enhancing brand equity.
● At the same time, It is important not to change products too much, especially if the brand
meaning for consumers is wrapped up in the product design or makeup eg New Coke
resistance

Non-product-related imagery associations

● For brands whose core associations are primarily non-product-related attributes and
symbolic or experiential benefits, relevance in user and usage imagery is especially
critical. Eg Raymond from an alpha male to a man who is in touch with his yin and yang,
Femina.
● Because of their intangible nature, non- product-related associations may be easier to
change
● However, Ill-conceived or too frequent repositioning can blur the image of a brand and
confuse or even alienate consumers.
● Especially flip flop between product-related performance and non-product-related
imagery associations is dangerous because it involves fundamentally different marketing
and advertising approaches.
● Brand images can be extremely sticky, and once strong associations have formed, they
may be difficult to change.

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Revitalizing Brands
In virtually every product category, are examples of once prominent and admired brands that
have fallen on hard times (eg Lacoste) or even completely disappeared.

Expanding Brand Awareness

With a fading brand, often the depth of awareness is not a problem – consumers can still
recognize and recall the brand under certain circumstances. Eg Threptin, Protinex, Gripe water
Rather the breadth of awareness is the stumbling block – consumers tend to think of the brand
only in very narrow ways eg burnol, bandaid, Dettol, honey, chawanprash, nutrela.

Identifying additional usage opportunities

● Means increasing quantity per usage/consumption or increasing the frequency of
usage/consumption of current target market/customers
● Communicate accordingly merits of more regular usage or more qty usage.
● To increase the frequency of usage for products of short life spans:
○ Tie the act of replacing the product to a certain holiday, event, or time of year.
○ Provide consumers with better information about when they need to replace it. Eg
Oral-B toothbrushes, razors with indicators.
● Overcome any potential hurdles to increased usage by making product designs and
packaging more convenient and easier to use.
Identifying new and completely different ways to use the brand (means even new target
markets)
New usage applications may require more than just new ad campaigns or merchandising
approaches. Eg Arm & baker baking soda, Wrigleys chewing gum as a substitute for smoking

Why a brand becomes irrelevant (and has brand image problems)

The subcategory or category is declining eg customers don’t want Ambassadors
A brand positioning has now become a negative and a reason not to buy eg unhealthy McD,
Parachute coconut hair oil is chipko. The brand is losing vitality and energy eg Chawanprash,
Honey, Dettol, Nutrela.

How to energize your brand

Every brand needs energy. It needs at least one of the following characteristics
● Interesting/ exciting – there is reason to talk about the brand eg Red Bull, Coke
● Involving / engaging – the brand is part of valued activity or lifestyle eg Ruffles lays share
your flavor.
● Innovative /dynamic – must-haves or flow of visible incremental innovations eg 3M,
Apple
● Passionate/purpose-driven - higher purpose eg HUL Shakti, ITC Echoupal

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Improving Brand Image

Identifying the target market

Key target market segments:
● Retaining vulnerable customers.
● Recapturing lost customers.
● Identifying neglected segments.
● Attracting new customers.
During a decline in sales, it is best to ensure that no more customers are lost in the short run
before targeting new ones.
However, sometimes it may involve abandoning the current consumer group that supported it in
the past to target a completely new market segment. Eg Yo Frooti

Repositioning the brand

Heritage brands that have been around for years may be seen as trustworthy but boring,
uninteresting, and not that likable. Need to make them more contemporary by creating relevant
usage situations, a more contemporary user profile, or a more modern brand personality. Yo
Frooti Digen Verma. Updating a brand may require some combination of marketing mix
newness eg Dabur honey, Chawanprash, Yo Frooti, Appy fizz, Fruit beer

Changing Brand elements

Sometimes one or more brand elements are changed. The brand name is typically the most
important brand element, yet most difficult and expensive to change. Eg Kentucky fried chicken
to KFC, Federal Express to FedEx. Other elements may also be changed eg character Asian
paints Gattu was removed, Pillsbury doughboy slimmer.

Sometimes a brand refresh requires cleaning up the brand architecture and brand portfolio

1. Acquiring new customers – All firms face trade-offs between retaining existing customers
and acquiring new ones. In mature markets, retention is most important. However, some
dropouts due to natural causes or other causes are inevitable. Hence brand may
proactively develop strategies to attract new customers, especially young customers eg
Frooti to Yo Frooti The marketing challenge is to make the brand seem relevant to vastly
different generations, cohort groups
2. Migration strategies- consumers are made to understand how various brands in a
portfolio can satisfy changing customer needs over time or as technology changes over
time, through organizing brands in hierarchy
3. Retiring brands –because of dramatic or adverse changes in the marketing environment,
some brands are just not worth saving as their sources of brand equity have dried up,
damaging or difficult to change associations. Hence decisive mgt actions are necessary
to properly retire or milk the brand.
A first step in retrenching a fading brand is to reduce the number of product types (sizes,
variants, etc) also eliminate marketing support (making it an orphan brand), help milking
or harvesting profits from the cash cows eg P& G reduced the number of its shampoos,

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 conditioners and styling aids by 1/3rd and reorganized and color-coded the entire
product line around four specific hair color types: color-treated, curly, fine, medium to
thick.
4. Obsoleting brands - a permanent solution to discontinue the product altogether eg Fiat,
Ambassador

Brand flashbacks
● Older, heritage brands can reach into their past in different ways to develop successful
new marketing campaigns.
● One way is to revisit well-known and loved past ad campaigns as they may still be a key
source of brand equity, perhaps giving them a twist and updating them in the
● process.
● Called retro-branding or retro-advertising eg Colonel Sanders, Close up the theme of the
1980s worked twenty years later
● Especially works when heritage or nostalgia rather than any product related difference is
the key point of difference for consumers and may convey expertise, longevity,
experience, and not old-fashioned, etc
● Research shows that nostalgia advertising can positively influence consumers purchase
due to intergenerational influence eg Nirma, Lifebuoy tanduroosti, Saridon, Titan Mozart
● Sometimes does not work eg Onida Devil perceived as has been overused

Brand crisis – Marketing guidelines

● Cadbury worms, Maggie lead , J& J cancer forming ingredients, Pepsi pesticides, car
companies recall , mobile phone companies
● Swiftness in action eg Recall of product
● Swiftness in communication and highly credible source
● Sincerity- consumers have to perceive your sincerity

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Chapter 14 - Managing Brands Over Geographic
Boundaries & Market Segments
Regional Market Segments
A regionalization strategy can make a brand more relevant and appealing to an individual.
Cultural, demographic, user, and usage differences often serve as the rationale for a separate
branding and marketing program

Downsides
● Marketing efficiency may suffer and costs may rise with regional marketing.
● Regional campaigns may force local producers to become more competitive and
aggressive eg Danone could never succeed against Amul and Britannia

Is regionalization always better?

● Not necessary. If younger generation may be more easily influenced by international
trends and broad cultural movements due to media exposure. Eg Axe, Apple, Sony
Walkman. Thus, such brands can tap into the global sensibilities of the youth market.
● Also, some consumers may not like being targeted based on their being different eg
Mercedes made a mistake. Since that reinforces their image as outsiders or a minority.
They may feel alienated or distanced from the company and brand.

The rationale for Going International

Forces that have encouraged many firms to market their brands internationally:
Perception of slow growth and increased competition in domestic markets. Eg Tata motors
Belief in enhanced overseas growth and profit opportunities. Eg Indian handicrafts and weaves
Desire to reduce costs from economies of scale.
Need to diversify risk Eg McD 80 % outside of USA like from China, India
Recognition of global mobility of customers eg Audi, Apple, David off, Starbucks, McD
In some product categories, the ability to establish a global profile and presence is becoming a
prerequisite for success eg luxury goods where the addressable local market is relatively small
% of the global market.

A marketing program for a global brand

Ideally, the marketing program for a global brand should consist of one standardized:
● Positioning
● Product formulation
● Package design
● Advertising program
● Pricing schedule
● Distribution plan

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Advantages of Global Marketing Programs
● Economies of scale in production and distribution - Lower costs due to economies of
scale in production and distribution and learning curve.

● Lower marketing costs - Arises from uniformity in packaging, advertising, promotion, and
other marketing communication activities.

● Power and scope - A global brand profile can communicate credibility. An admired global
brand can also signal social status and prestige.

● Consistency in brand image Consistency of brand and company image prevents

confusion when globally mobile customers.

● Ability to leverage good ideas quickly and efficiently - Not having to develop strictly local
versions speeds up a brand’s market entry. Marketers can leverage good ideas across
markets as long as the right knowledge transfer systems are put into place.

● Uniformity of marketing practices - Simplify coordination and provide greater control of

communications in different countries.

Disadvantages of Global Marketing Programs

● Differences in consumer needs wants, and usage patterns for products - Differences in
cultural values, lifestyle, economic development, and other factors across nationalities
lead customers to behave very differently. Eg yogurt, juices, cornflakes in Europe vs tea,
coffee in India, Lingerie vs Clothes, McD eggless mayonnaise, and also veg/nonveg
separate kitchen, separate vessels
Product strategies that work in one country may not work in another. Eg Nike in USA vs
India, Tanishq 18K gold, Light beer, Bicycles, Pagers vs mobile

● Differences in consumer response to branding elements - Linguistic differences across

countries can change the meaning of a brand element
○ Sound systems that differ across dialects can make a word problematic in one
country but not another. Eg Pinto in Brazil
○ Nonverbal elements normally transfer well and yet some may create problems eg
color perceptions eg green symbolizes death in Malaysia, china yellow is infidelity

● Differences in consumer responses to marketing mix elements - Price sensitivity,

promotion responsiveness, sponsorship support, and other activities all can motivate
differences in consumer behavior and decision making. McD Aloo Tikki 25 rs, Ikea,
Debeers in Japan, P&G Ivory soap in the bathroom

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 ● Differences in the brand and product development and the competitive environment -
Products may be at different stages of their life cycle in different countries Eg Coke's
many variants, Ocean, O.B. tampons the 1980s. The nature of competition also differs.
Eg unorganized sector competition in India.

● Differences in the legal environment -

○ Venezuela, Canada, and Australia stipulated that commercials had to be
physically produced in the native country.
○ Canada banned prescription drug advertising on television.
○ Poland required commercial lyrics to be sung in Polish.
○ No children in Austrian ads and no comparative ads in Singapore
○ No Advertisement for alcohol, cigarettes in India, no direct comparison of brands

● Differences in marketing institutions - Channels of distribution, retail practices, media

availability, and media costs all may vary significantly from country to country. Eg
Amsterdam sex shops and organized retail in India are 9%. The penetration of cable
television, cell phones, supermarkets, and so on may also vary considerably, especially
in developing countries. Marketing Research possibilities sometimes due to
technology/resources and sometimes due to culture eg Arab countries, door to door in
India

● Differences in administrative procedures - It may be difficult to achieve the control

necessary to implement a standardized global marketing program. Local offices may
resist having their autonomy threatened.

Global brand strategy

In building brand equity across different countries, different marketing programs need to be
created to satisfy different market segments. Therefore:
● Differences in consumer purchase and usage behavior need to be identified. Also,
differences in marketing environment eg distribution outlets
● Decide what can be common and can be retained and what needs to be adjusted/
modified for various markets eg McD QSCV
● Branding program need to be adjusted accordingly through the choice of brand
elements, marketing mix elements, and the leveraging of secondary associations (eg In
US heritage and abroad premium eg Double Cola in India)

Global Customer-based Brand Equity

● Creating brand salience-depth and breadth of brand awareness
○ Product introductions in the domestic market are sequential, stretched out over a
longer period than the nearly simultaneous introductions that occur overseas.
○ Different orders of introduction can profoundly affect consumer perceptions about
what products the brand offers, the benefits supplied, and the needs satisfied.

● Crafting brand image-POP and POD

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 ○ One challenge in global marketing is to meaningfully define the brand image
across diverse markets.
○ A desirable brand personality in one market may be less desirable in another. Eg
Nike's competitive aggressive user imagery needed to be toned down in Europe

● Eliciting brand responses-positive judgments and feelings

○ Brand judgments must be positive in new markets.
○ Blending inner (enduring and private) and outer (immediate experiential)
emotions can be difficult, given cultural differences across markets. Eg Bournville
ad, De beers in Japan, P& G Ivory soap concept of privacy in Japan

● Cultivating resonance- intense and active brand relationships

Achieving brand resonance in new markets means that consumers must have
sufficient opportunities and incentives to buy and use the product, interact with
other consumers and the company itself, and actively learn and experience the
brand and its marketing. Eg coke's happiness machine in the USA and India

Global Brand Positioning

Because the brand is at an earlier stage of development when going abroad:
● Awareness and key points of parity need to be established first.
● Global branding also involves understanding
○ Standardization vs customization
○ Developing vs developed market strategies

Standardization and Customization

● Transferring products across borders may mean consistent brand positioning but not
necessarily the same marketing program in each market
● Tailoring products and programs to local conditions is possible bcos flexible
manufacturing technology has decreased the concentration of activities, and advances
in information systems and telecommunications have allowed increased coordination.
● Eg Sony Walkman in the USA, Japan, and India.

Standardization and Customization of marketing strategy

Product strategy
● Due to the relative expense, many smaller companies tried to sell their products without
sufficient market research.
● As a result, they sometimes become aware of consumer differences only after the
introduction of the product. Eg, Barbie dolls in Japan after 12 years, Tropicana
● Sometimes product customization is not needed for certain countries
● From a corporate perspective, a solution to the trade-off between global and local brands
is to sell both types of brands as part of the brand portfolio in a category.

Communication strategy

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 ● Although the brand positioning may be the same (exceptions eg Airlines, Apple) in
different countries, creative strategies in advertising may differ. Eg Close up sensual
humor Brazil vs India
● Each country has its own unique media challenges and opportunities.
● Marketers can execute entertainment and sports sponsorship on a global basis.

Distribution strategy
● Distribution challenges in different markets can be very different eg Nestle white
chocolate eg organized retail vs unorganized, long channels in Japan, vending
machines.
● As in domestic markets, firms will often want to blend push and pull strategies
internationally to build brand equity.
● Sometimes companies mistakenly do not adopt strategies that were critical factors to
success, only to discover that they erode the brand’s competitive advantage eg Nike
exclusive stores alone did not work, had to start multibrand outlets

Pricing strategy
● Marketers need to understand in each country what consumer perceptions of the value
of the brand are, their willingness to pay, and their elasticities concerning price changes.
● Pressures for international price alignment have arisen, in part because of the increasing
numbers of legitimate imports and exports and the ability of retailers and suppliers to
exploit price differences through “gray imports” across borders.

Developing Versus Developed Markets

BRICS (Brazil, Russia, India, China, and South Africa)
● Most important developing markets.
● They do not yet have the infrastructure, institutions, and other features that characterize
more fully developed economies in North America and Western Europe.

The product category itself may not be well developed:

The marketing program must operate at a very fundamental level.

“Three As” model for emerging markets strategy:

● Applicability - The product must suit the local culture.
● Availability - The product must be sold in channels that are relevant to the local
population.
● Affordability - The product can’t be priced out of the target market’s range.

Cultivating brand partnerships for global brands

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 ● Most global brands have marketing partners in international markets eg joint venture
partners, franchisees, licensees, distributors eg. Fossil tied up with titan to sell their
watches in Titan stores before Fossil set up its distribution system i.e. owned outlets,
own distributors.
● Otherwise, export or acquire brands.
● Three criteria are speed, control, and investment.
● Companies may have to legally partner with a local company in the Middle East and
India eg Tata Starbucks.
● Different entry strategies are adopted by different firms and by the same firm in different
markets eg P & G enters the market by building infrastructure while Heineken will export,
then license, then joint venture, etc.

When to standardize vs customize

Companies standardize core aspects of the brand ( that which provide the main competitive
edge eg branding, positioning, product formulation) while advertising, pricing is less so, and
distribution is most often localized. Food is difficult to standardize, unlike cleaning products.
Likely candidates for standardization are
● High tech products with strong functional images eg computers, laptops
● High image/high touch products with strong associations of fashion, sensuality, wealth,
and status eg watches, perfumes
● B2B products and services
● Brands positioned in the country of origin eg French champagne or perfume, German
beer, Indian weaves

When global vs local control

Centralisation vs decentralization vs combination. In general, firms tend to adopt combinations.
Firms adopt T shaped structure where customer-facing operations are localized for fast
marketing actions while the back end eg production, product development, and R&D are
standardized.

Establish operable guidelines

Brand definitions and guidelines must be established, communicated, and properly enforced so
that marketers in different regions have a good understanding of what they are and what they
are expected to do. Eg Coke has a brand charter, strategy document, McD operating manual,
Colgate Palmolive bundle books contain down to the smallest details that every country or
regional manager needs to know about every Colgate product attributes, formula, market
research, graphics advertising, pricing options, ingredient sourcing info and this is sent to 200
countries.
Disney‘s centralized marketing group has assigned products to three categories –
a) acceptable to license without permission (eg T-shirts),
b) no permission ever (eg toilet paper)
c) requires validation from headquarters (eg air fresheners and 20 other categories)

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Chapter 15 - Luxury Branding
Introduction to luxury
Luxury is different and much above and beyond premium or fashion brands. Luxury is a high
price but not all high price is luxury. Luxury has its peculiarities and business models different
from everyday products and even premium products. It is a society that defines what constitutes
luxury. Earlier luxury was unbranded. Today there is no luxury without brands. Because, the
earlier value was created only by raw materials, their preciousness, and craftsmanship but now
the value is also created by a brand, its dream, its image eg Cartier in
the red box. Earlier luxury was the prerogative of the kings and nobles, deliberately conspicuous
and ostentatious. Democratization of luxury towards the end of the 18th century gradually made
luxury accessible to all.

Luxury, Fashion & Premium Positioning Triangle

Drivers of change
● Democratization – means everyone has access to a world of luxury. Democratization
implies that historical stratification is gradually disappearing and everybody can recreate
their strata according to their dreams
● Following the Industrial Revolution, which brought about a considerable rise in living
standards, more and more individuals found themselves with the financial means to
afford the luxury, hence client base has increased exponentially. However increased
accessibility carries the risk of vulgarization, a trap that needs to be avoided.

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 ● Globalization – offers accessibility to completely new sources of luxury from across the
globe eg French wines, Swiss watches, Italian suits, etc
● Communications – through global media
● Phrase Cult of luxury is being used to indicate the spread of luxury like a religion to BRIC
and CIVETS, which were deprived for decades, even of barest necessities. So here
luxury market growth is driven by young demographics who wish to own bits and parts of
well off. Eg accessories, ready to wear, which makes one look rich without owning a
Ferrari. Mix and match Zara or Mango inexpensive stuff with Chanel eyewear, Hermes
silk scarves, or a compulsory Louis Vuitton bag.

Facets of Luxury
● Luxury is a very qualitative hedonistic experience or product made to last (unlike
fashion).
● Offered at a price that far exceeds what their mere functional value would command
(unlike premium products which talk of objective superiority). While premium brands are
comparative, luxury is superlative.
● Tied to history, heritage, unique know-how, country of origin, the fame of clients, and
culture attached to the brand (luxury has a very high intangible component).
● History alone is not enough, It is necessary to create a myth, a legendary discourse that
gives birth to dreams. Hence Toyota Lexus is not considered luxury unlike Maybach
because Lexus has not built an idealization of the brand beyond functional, nor has it
tried to create any myth, though it is very good quality while Rolls Royce is luxury as, so
says the legend, a coin balanced on its side would not fall over, the hyperbole indicates
comfort. Lamborghini Diablo is a monster of technology where monster implies excess.
● The creations demand respect and admiration as they are superlative high tech and/or
high touch.
● The brand myth is also built by the yardstick of not just the wealth of its owners, but
beyond their wealth, by their glory, their symbolic power. Eg. Rolls Royce and Bentley
are official cars of crowned heads of the planet. Rolls Royce aims at only 85400 people
in the world. The myth feeds on history and authenticity. 80% of Rolls
● Royce buyers go to the Gooderham workshop to customize their Rolls Royce.
● Luxury is a dream that can be defined by a dream equation by Dubois and Paternault
1995: Dream= -8.6+0.58 awareness-0.59purchase
● Available in purposefully restricted and controlled distribution.
● Offered with personalized accompanying services
● Representing a social marketer, making the owner or beneficiary feel special with a
sense of privilege
● Objective Rarity ( scarcity ) is not part of the core definition of luxury though some
brands may capitalize on it eg Romanee Conti wines produce only 5600 bottles per year
● Relativity of luxury - what may be luxury in one market may be premium in other eg
Mercedes is luxury in China, India, Russia but the USA it has lost the power of dreams
● Luxury brands create a cult eg At Harley Davidson, sale of accessories (eg helmets,
Clothing, etc) represent a third of their profits. Ferrari stores have belts of the same

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 leather and color as the customized leather on the seats of the Ferrari one might
purchase
● Luxury has a strong human component ie has a great deal of labor, handmade, service
eg Rolls Royce grille, Wally boat
● Luxury is about rarity – the rarity of ingredients, artisans, know-how, and the ultimate
rarity, the brand and the values it respects. However, a rarity as a concept has got
abandoned to some extent eg Global sales, Asian markets, Japanese office ladies all
carry the same Louis Vuitton. In Japan, luxury is a luxury of integration.
● Keywords of Luxury are thus – price, rarity (abandoned to some extent), exclusivity,
perfection, history, art, time, dreams
● Rarity is of two types – Physical rarity eg ingredients, process, and on another hand
virtual rarity created by communication. The first is true luxury eg La Prairie is known for
Caviar Luxe cream, Amex black Centurion payment card, Grey goose, luxury vodka
distilled four times.
● The luxury brand has no life cycle
● Luxury has an iconic product eg Chanel is only Chanel No.5
● Luxury has to be multisensory eg Porsche's appearance plus sound. Perfume bottle
shape plus scent
● A luxury that is not ethical, ceases to be luxury eg Elephant ivory, musk deer, rhino
horns, tiger skin were luxuries when animals were there, today symbols of stupidity
● Positive luxury – helps to elevate somebody socially by raising one’s self-esteem in eyes
of others and not by crushing them (else its show off) Also respects self (not addiction)
● Luxury has a stamp of timelessness (else its fashion or fad). Should be modern and at
the same time laden with history
● Value may increase with time eg Louis Vuitton luggage, wine, Painting unlike an
industrially manufactured object which wears out or goes out of fashion

Luxury has two aspects

Luxury as a social marketer – Luxury for others (public luxury). Hence need for brands. Luxury
recreates some degree of social stratification. Hence it’s a social signifier, a symbol of belonging
to a superior class that can afford the dream Hence anything which ceases to be a social
signifier, ceases to be a luxury eg buying jewelry is no longer luxury but a Pvt elevator, a Pvt
swimming pool, a farmhouse, a yacht, jet, etc.

Luxury for oneself – luxury is access to pleasure, it should have a strong personal and
hedonistic component, otherwise, it's just snobbery. In luxury, hedonism takes precedence over
functionality eg a haute couture may be elegant, not pleasant to wear, designer furniture
uncomfortable, and Ferrari noise. Luxury is qualitative, not quantitative eg the number of
diamonds only indicates opulence.

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The Ratchet or non-return effect
Once people have tasted luxury in whatever area, it is very difficult to turn away from it. So
people may cut their expenditure on conventional products but they will keep their Ferrari, even
if it means leaving it in the garage and going by bicycle on the pretext of ecological reasons

This ratchet effect is because luxury has both personal aspects (I really can't do without the
comfort of my cashmere sweater) and also public one (I drive a Ferrari)

Anti laws of marketing

● Forget about positioning, luxury is not comparative. Luxury is superlative, an expression
of taste, creative identity, and passion of creator

● Luxury are not about flawlessness eg Seiko quartz watch is superior to any luxury watch
while in Hermes time is indicated by just 12, 3, 6, 9. But luxury is not utilitarian or
functional, they are hedonic, symbolic, madness touch. Their flaw is their emotion.

● Do not pander to your customer's wishes - does not mean that the luxury brand should
not care or not listen to clients but do nothing which threatens its identity, which is
defined by the long term vision and mind of the creator

● Keep non-enthusiasts out in traditional marketing, there is an obsession with poaching

competitor clients

● Do not respond to rising demand –The prime objective of traditional marketing is volume
growth through wide distribution, broad visibility, advertising to sell hard, lowering prices,
sale promotions, etc. at Ferrari, production is deliberately kept to fewer than 6000
vehicles a year. Hermes CEO says when a product starts selling too much, we stop
producing it. A luxury brand thus must have far more people who know it and dream of it
than people who buy it

● To Dominate the client. Luxury is a consequence of meritocracy – don’t be best buddies.

A certain distance is preserved that is not supercilious or aloof but maintains an aura of
mystery

● Making it difficult for clients to buy unlike traditional marketing products, luxury brands
create both actual and virtual inaccessibility, to create greater desire. People have to
pass a series of obstacles, not just financial obstacles but more particularly cultural (
they have to know how to appreciate the product, wear it, consume it) Logistical (very
few outlets), and time obstacles (wait for two years for a Ferrari or a Mikimoto pearl
necklace)

● Protect clients from non-clients, the big from the small – social segregation in stores,
CRM (personal invitations to meet the designer, head wine buyer, brand perfume nose),
etc. The role of advertising is not to sell - eg Tag Heuer watch ad shows a photo of a

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 man/woman, a shot of a watch model, and just a cryptic line what are you made of.
Explanations by salesmen are just rationalization eg when you go to Tag Heur shop, you
will be handed a thick brochure that says everything about the Tag Heur brand origins,
processes, and unique design. Similarly, go to a Porsche dealer and staff will talk about
racer tracks

● Communicate to those who you are not targeting – In luxury, if somebody is looking at
somebody else and fails to recognize the brand, part of the value is lost because luxury
is also about luxury for others. Hence Aston Martin in James bond movies

● The presumed price should always seem higher than the actual price, due to the aura of
luxury

● Raise the price as time goes on to increase demand

● Keep stars out of your advertising - using stars to promote a luxury brand is extremely
dangerous means that the brand needs star appeal to survive, gross error of strategy.
Only brand domination, standing above everything like a god is acceptable. If celebrities
are used, the status of the brand is reduced to that of a mere accessory. The exception
is LV using Michel Gorbachev

● Cultivate closeness to the arts – indicates taste

● Do not relocate factories- A luxury product has to stay true to its roots eg when you buy
Chinese silk, you are buying not just a piece of material but a bit of China as well eg
Chanel, Hermes continues to be manufactured in France while Dior ( originally France)
and Burberry ( originally UK) have shifted manufacturing base in countries with low labor
costs and hence are no longer entitled to be called luxury products. So also Rolls Royce
is Luxury

● Do not hire consultants – because they apply all laws of marketing, not anti-marketing
that is necessary for luxury

● Do not test or look for consensus - LV, Hermes never test or seek averages while Coach,
Chivas do (Coach is not considered a luxury even though it's very high priced)

● Do not look for cost reduction as it compromises on quality

● Internet is for fashion and premium, not for luxury – the internet can be used as a
complementary service for existing customers or as an initiation for the brand story but
not as a selling tool

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What is the size of the luxury market
● In 2011, the USA is the clear leader with an estimated market of Euro 48 billion followed
by Japan with Euro 18 billion and European countries.
● China was only 9.2 billion euros but growth is double-digit. In addition, an equivalent
amount is spent by Chinese tourists abroad.
● China is to become the number one luxury market within eight years.
● Growth in the luxury market around the world because more and more rich people in
BRIC countries, new targets of luxury cars, yachts, resorts, luxury services, private jets,
watches, jewelry.
● Though individuals in the west are ten times richer than the Chinese, their incomes are
stagnating, their discretionary purchases are reduced and hence they feel they are poor
while the Chinese see their income perceptibly increasing and hence they are more
optimistic and feel rich. In China, there is no brake on the economic rise of new
population layers, unlike in India where the caste system blocks the mechanism of
climbing the social hierarchy through economic success.
● Luxury excursionists or luxury day tippers – are less wealthy but are advanced in
sociocultural terms and therefore allow themselves to purchase an object from a luxury
band occasionally motivated by self-indulgence or hedonism or to celebrate a person or
moment. They mostly purchase entry lines or accessible items of luxury brands
● Masstige is prestige products at affordable prices eg L'Oréal Paris

Do You Like Luxury - Research Findings

● On a scale of 1 to 10, China gave the highest rating 8.2 followed by Mexico 8.0, India
and UK I7.3, USA 6.8, South Korea 6.4, Germany and Italy 6.1, France 5.7 and Japan
5.6.
● It is not that Europeans do not buy luxury but maybe they are home to luxury brands and
hence the relationship to luxury is more about aesthetics (France, Italy), and quality
(Germany) rather than signaling a badge of success.
● Research also indicated that while the high price and quality are important in luxury,
Japanese purchasers placed prestige much higher than price and quality (unlike the
USA and France)
● In 2006, 60% of women in Tokyo aged between 20-30 years own an LV product showing
the power of pressure to conform. However now, Japan has entered a phase of
collective psychological depression after March 11, 2011, Tsunami and Fukushima
nuclear catastrophe. Hence luxury, unlike before when LV and Burberry succeeded in
the 1980s, and 1990s, now Japanese clients and youth want meaningful luxury that is
spiritual.
● China will be the number one luxury market in ten years (it used to be Japan earlier in
the 1980s and 1990s ) due to high disposable incomes, the large size of the population,
high need for conformism, and the need to signal (In China through luxury you become
someone important or simply someone ), traveling and buying a status symbol, gifting
compulsory. Also Chinese will never buy fakes because they could lose face. The
Chinese market is Veblen-oriented.

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Why are luxury brands only western and not Indian or Chinese
● Western brands have nurtured their long heritage, history through myths, image,
consistency, and also great luxury brand mgt
● Another question is will there be an emergence of luxury brands made in China – well
there is a strong heritage in some business eg silk, lacquer, however, will take time as
China lacks experienced luxury managers and creative designers needed to implement
luxury strategy, also the current reputation of cheap
● Indian have great artisans eg handicrafts and weaves however lack finishing,
consistency and luxury managers. Also in India when you buy a diamond Brooch,
admittedly the seller will deliver it to you but in a plastic bag. The idea of investing in a
sumptuous jewel case, packaging that contributes to showing off the object’s beauty, by
slowing the discovery and increasing the waiting time remains unknown. The concept of
the brand is not fully understood nor is the importance of its very visible logo which
attests to the creator and the house.
● No Indian or Chinese brand would ever dare to ask for incredibly high prices of western
brands

Why India resists western Luxury

● India presents a paradox
● Though demographically it is as big a country as China yet luxury market lagging behind
● Hypotheses is that, unlike China which has killed any reference to culture, history, and
heritage as a result of the cultural revolution decided by Mao Tse Toung, India is a
country of luxury but its luxury.
● India has a long tradition of service and excellent artisans. So western value for
handmade luxury does not apply here. Indians do not see why they should buy a French
chiffon gown from Dior for 4.5 lakhs ($9100) when they can get an Indian luxury designer
for 600 $
● Hence Indians when asked what's a luxury, mention industrial manufactured goods eg
Mercedes, BMW, unlike China which mentions LV, Chanel

Two modes of luxury brand building

1. European model – the creation of value through the cult of heritage, history, the legacy of
the founder, the personality of the founder
2. American model – US origins of new world brands lacking in history but ready to create
an image through storytelling and also recognizing the importance of store atmosphere
to create image and brand values and associations eg Ralph Lauren
Today, these two models are converging eg Ralph Lauren created Purple label and Black label
clothing line for European clientele, made in Italy from sought after fabrics. Similarly, Hennessy
created microbars to sit down, converse and consume.

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Defending the luxury brand against counterfeits
● Luxury has two aspects – a functional side and a dream side. Counterfeit compromises
both these aspects. Non targeted customers alienate the regular clients
● Why has counterfeit grown ?- many reasons as follows
● Globalization (Chinese cannot make out difference as they cant understand English , or
counterfeit and copying is integral part of eastern culture)
● Non - luxury product, easy to copy , sold under a prestigious name by the licensee
● Pierre Cardin himself decided to license his name to 800 licences , any product , to
make money by selling nothing but his name , lead to negative spiral
● Also luxury brands have started delocalizing their production to countries with low labour
costs have themselves created condition for a copying industry to emerge
● For mafias , manufacturing and selling fakes is far safer and js as profitable as dealing in
drugs Also unfortunately while laws are very strict for drug trafficking, counterfeit
medicine because of physical danger ,there is lack of genuine support from authorities in
struggle against counterfeits
● Counterfeits grow because of cultural dimensions too eg in China , the clients of fakes
are foreigners and people coming from countryside

Who buys counterfeits consciously

The counterfeit buyer knows he is buying a fake but considers it to be a better deal than buying
an original as counterfeits may represent less value but for a lower cost or may be seen as
amazing-looking products at a lower price than the genuine article. Typically they may feel that
the price of the original is excessive – either they do not idolize the brand enough or cannot
afford to buy the real one. The presence of friends also buying counterfeits facilitates the
decision. Thus counterfeit customers are four types-
1. the first type may buy to be part of the club but can't afford it originally.
2. the Second type may feel the original price is not justified by quality eg LV.
3. The third type holds a negative opinion of the brand and hence justifies their behavior in
buying counterfeits eg (isn’t licensed accessory business unethical or is Real Madrid
T-shirt $ 85 a ripoff /scandalous)
4. The fourth group is clients of brands, not customers who buy counterfeits as a present,
aiming to deceive the recipient.
In terms of personal characteristics, buyers of counterfeits, lack confidence, have low status, do
not come from affluent families, and are influenced by celebrities and their materialistic values.
They do not have respect for the law. They look more for the logo than for the quality or
durability of the product.

Impact of counterfeits
Counterfeits damage brand prestige and should be fought fiercely for the following reasons
● They ruin social stratification
● They extend the number of products circulating beyond the producer’s plan resulting in
loss of value

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 ● The quality of counterfeits is not high and hence the risk of poor image eg LV or Hermes
bag clients get to know that their bag is not original when they bring for repair. There are
more bottles of Petrus for sale in China than were ever made in product history
● Counterfeits are shown in poor retail environment

Counterfeiting is a way to check the health of a brand

Paradoxically counterfeits are a measure of a brand‘s status and strength of a dream. It is also a
way to check the quality of the strategy of the brand, in production and distribution. The
existence of counterfeits is indicative of the following -
● The distribution is too selective - The existence of counterfeits is often a sign of too
selective a distribution and that it is necessary to open more outlets. Clients who do not
have access to the real genuine product cannot differentiate between real and fake
and/or the value of the product both symbolic or monetary is not enough to justify the
journey to existing stockists. In contrast, the complete absence of counterfeits in a
country may indicate a complete lack of desire for the brand and futility of opening a
sales outlet, then first it is necessary to invest in communication

● The distribution is too large or uncontrolled – in this case, fakes are sold with real
products. LV discovered a subtle strategy in Japan some years ago. Through tourists,
local Japanese retailers were buying genuine products from Paris and displaying them in
their shops but were selling fakes without clients realizing. The retailers would explain
that they could not sell products in windows as damaged by light and then bring out a
fake from stock

● The production is poorly controlled –If the luxury brand subcontracts a part of its
production, the temptation for the subcontractor to produce more and to discreetly sell off
merchandise is very strong. The product may be real genuine but it will be sold outside
the brand‘s circuit and thus the brand loses, or a product of inferior quality but presenting
all external appearances of the genuine article will be produced, in which case both
brand and client lose

● Drawback of licensing – since licenses are expensive, it is tempting for the licensee to
use the brand for products other than those specified in the contract or sell products of
lower quality

● Counterfeit and internet – Internet opens the door for counterfeit

● Always defend your rights and communicate frequently – In countries that do not
recognize or partially recognize intellectual property, it is difficult to lay claims to your
rights. It is necessary to continually pursue counterfeiters through courts and make it
known in the press to educate prospects and assure clients eg Cartier's campaign of
crushing fakes with bulldozers. In June 2008, eBay lost against LVMH and was ordered
to pay euro 38.6 million. Too many luxury products sold through eBay are counterfeits

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Luxury brand stretching
● Category extension eg Cartier the jeweller , now in watches, LV from luggage maker to
leather goods, Hermes the leather goods maker to silk ware ( Galaxy model where all
entries in the brand are equivalent and represent a facet of the brand ) eg Ralph Lauren
sells everything from eye-wear, accessories , perfume , cosmetics , also furniture ,
paintings , cafes , restaurants under its name but each Ralph Lauren product is a
legitimate entry into the brand universe

● In brand stretching , the brand does not apply the luxury strategy in a new territory but
applies fashion or premium strategy eg Cartier in perfumes or LV in ready to wear (
pyramid model involves lowering of creation and risk of brand image damage ) eg
Giorgio Armani, then Armani Collezione , them Emporio Armani , them beneath that very
casual Armani Exchange or Armani jeans

● Regarding the question of how far a brand can extend , then more the intangible ,
hedonic potential of brand rather than functional / utilitarian , the more the extendibility.
There are no prior extensions that need to be discarded eg Ferrari and seat belts are
neither a tangible supply-side fit nor a demand-side complementary or image fit. But
succeeded because the belt extension respects the brand identity. The leather belt is a
gift.

● Licenses should be limited and if possible avoided

The 7 Ps for luxury - Product

1. No luxury product without exceptional service.
2. Luxury products always comprise a functional side and a symbolic side (dreams for the
user and prestige for others)
3. The principal characteristic of the Luxury brand is its narrowness of range, very small
number of products, or even single product eg Hermes square and its designs, LV trunk,
and internal arrangements
4. Each product has a raison d’étre eg complete range of urban handbags will have one
shoulder bag, one one-handled bag, one two-handled bag, one rucksack, one women’s
handbag; one large capacity, one medium, one small capacity; one holdall bag, one
organizer bag
5. Each product will have its personality and price differences will be significant at least
15% but better 30 % and also backed by simple criteria visible to all eg Cartier 5 strand
watch bracelets are all steel or all gold or else either two gold strands with three steel or
vice versa
6. The range comprises at least one entry-level product which will entice the day-trippers
and make them graduate to be future faithful
7. The human hand must have a significant role in production and production should not be
outsourced/licensed or relocated

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7 Ps for luxury – Price
When the price is a major factor in the strategy of a luxury brand, it is loudly proclaimed eg
Bugatti Veyron, the world’s most expensive car, or Joy, the world’s most expensive Perfume.
However, the price is never publicly advertised or mentioned in the shop window. If legal
constraints demand it, then it has to be done as discreetly as possible. Charles Rolls,
co-founder of Rolls Royce once said, if you have to ask the price, you can't afford one. The
brand tries to back such statements up with impressive figures eg 10600 jasmine flowers and
300 roses for 30 ml perfume. Unlike in normal consumption products, the elasticity coefficient is
null or even positive (Veblen goods where demand increases along with price). Hence never
reduce prices – increase prices to increase demand and recreate the Distance. Never hold
sales for a luxury brand eg LV destroys unsold stocks.

7 Ps for luxury – Distribution

Distribution is the service side of luxury products. The watchword of luxury brand mgt is a
multisensory experience. Clients often enter a boutique without any idea of what they will buy
particularly when looking for a gift. They often trust entirely in the salesperson's opinion and will
prefer someone they already know, the personal advice aspect of the sale is very important.
Hence the importance of staff stability in boutiques, continual training of sales personnel, and
greater importance of their feeling of belonging to the house. Also, the distribution must be done
in a way that the client buys in a calm environment with no forced sales, no pressure from the
salespeople, and with an element of security that they are buying genuine products at a true
price. The salesperson should never earn direct sales commission as it induces aggression.
Atmospherics play an important role eg 1980s LV got many complaints where the staff was
perceived as arrogant when they were not responsible. The architecture was rigid, the colors
dark as their monogram. With the new warmer more open concept, where one could touch the
products, the complaints disappeared, although it was the same staff in attendance A store
window plays a big role in communicating the dream equation, so important in luxury. The store
location has to be in a highly symbolic place and every care is taken over the window, display,
and lighting.

The personalized human relationship is crucial. The salesperson has to be bicultural – if the
client has to perceive the brand universe, the salesperson must be from the same culture as the
client eg Japanese in Japan, Chinese in China but also from the same universe as the brand eg
Italian for the Italian brand. Hence managers travel regularly. At the retail sales level, there is no
competition rather two brands complement each other. One characteristic of luxury is that since
each brand has its universe, a client does not desire a product from house X or house Y but a
product from each of them. So proximity of two stores for two brands of equivalent level is not a
problem. Each strengthens the other from point of view of image and social codes. Its perfectly
natural to walk into a Cartier store with a Hermes bag wrapped and you will not be asked to
leave it at the door but rather salesperson will try to find out what you bought at Hermes to sell
you a complementary Cartier product Luxury brand should use - own store, exclusive
distribution, selective distribution, at home sales particularly for very prestigious products such
as Haute Joaillierie (discretion, security, due to risk of attack by criminals) Lacoste is seen as a
luxury in China but just the opposite in Japan where the brand was entrusted to the local

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licensee and distributed everywhere. Internet should be avoided for selling – because Digital is
noisy, crowded, flashy. Luxury is quiet and sleek. Digital is about accessibility, availability, and
immediacy while luxury is about timelessness, rarity, and effort. Digital is about price, luxury is
beyond price – no sales, no discounts. Digital is about automation, luxury is about human
relations. Thus a luxury product must communicate via the internet but should not be sold there
as it reduces the dream value of the brand by giving too easy access to too many unqualified
people. Exception - sell on the internet if a small luxury brand wants to grow internationally or
when you want to reach new customers who will never enter your shop for a first purchase eg
LV key chain but not bags or luggage. Hence only entry products and in limited quantities should
be sold on the internet.

7 Ps for luxury – communication

● You don't communicate to sell a luxury product. You communicate because you sell a
dream
● You don’t talk about money
● You communicate, you don’t advertise. While mass prestige brands use scream
communication, Luxury brands invest a lot in whisper communication (one on one
intimacy communication in VIP clubs and at VIP events). They permanently encourage
word of mouth Luxury brands also invest in song communication (public relations, larger
events, targeted brand content on the internet, and shop window displays)
● Luxury brands invest little in advertising, but when they do it, it must be visible, they
appear on the first pages of a magazine, they always take a double-page spread,
sometimes six consecutive pages.
● Luxury brands never use celebrities to endorse (paying a star to appear in an ad), nor do
they use a brand ambassador (a single person paid to serve as an emblem for the
brand). They may use a personality as a brand testimonial user eg Gorbachev in the
Louis Vuitton campaign or Marilyn Monroe who said she wore a few drops of channel 5
to bed, fell within the scope of testimonial and therefore within codes of luxury. Also, they
mostly use various personalities testifying at the same time using the product normally.
The difference is that in using testimonial strategy ( as opposed to brand ambassador or
endorsement strategy ), you are placing yourself as a common product for extraordinary
people, using the product in everyday life
● One of the sources of the brand dream is its international character. Hence anything that
localizes the brand too much in the country of sale causes the brand to fall from its
pedestal and has to be avoided
● Luxury brands have to have a website, create communities and also create brand
content (unlike the advertising which is typically 30 seconds, brand content invests in the
message and may be very long-lasting for more than 10 minutes) Brand content delivers
information about the brand, its depth, personality, history needed to build sovereignty of
the brand, its authority and legitimacy form inside. Brand content is different from
branded content, the latter is just sponsoring info or event attaching one’s name to
content created by another party. Brand content on the other hand is designed and
created by the brand itself. Brand content is not a sales pitch eg the latest new product
and why you should buy it. Brand content is about content that is self-propelling, quality,

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 creative, engaging, interesting, and an experience in itself. So important is brand content
to luxury brands that Louis Vuitton in 2011, created its digital agency to work on-brand
content with 400 people employed full time throughout the world eg core of Louis Vuitton
is travel. This core notion of travel does not mean tourism but the notion that one
discovers oneself by moving and experiencing new countries and people – the spiritual
dimension of travel. Hence their brand content is based on this. LV has also published
and sold in its store a collection of special guides– carnets de voyage. These do not
travel guides per se with practical up-to-date info and tips but they are diaries with
impressions of a traveler in a town or country in question.
● There is no luxury brand without storytelling – traditional marketing developed tools that
reduce brands to a promise (the famous positioning). The luxury brand is not about
comparative logic and its communication is first and foremost about word of mouth. Its
distinction is based not on its advertising budget but on what clients say about it among
themselves. Anything can be the object of Word of mouth from the search for rarest raw
materials, to the number of silkworm cocoons necessary to create a single Hermes scarf
to manufacturing methods at Ferrari’s Maranello home, to a creator's life.
● Sometimes you may have to tweak your communication for local sensibilities eg Louis
Vuitton in Asia is the ultimate symbol of social ascension, conformism, and success. In
Europe, it is a symbol of creativity

The unique code of luxury communication – it is important to make the luxury brands' visual
language denser by using nine signatures of brand
1. The figure of the brand’s creator, the individual who made the brand work and not
production. The effigy of the person will be found in its shops and communications
2. The typographical logos eg Dolce and Gabbana‘s DG, Chanel's double Ç. Originally
typographical logo was a way of protecting a brand against counterfeiting, but now it has
become an aesthetic form of signature, capable of being repeated ad infinitum eg Louis
Vuitton was the first to do with LV on its famous monogram canvas.
3. A visual symbol that accompanies the typographical signature eg Aston martin wings,
Mercedes circle
4. A repetitive visual motif
5. A brand color eg Tiffany's blue or Veuve Clicquot’s orange
6. A favorite material eg silk for Hermes or python skin and ostrich feather for Prada
7. The cult of detail to the point of obsession, which is expressed visually eg through
close-ups on the seam and the lock details at Louis Vuitton
8. From the constant hymns to the manual work, to the excellence of artisans who have
contributed to each object, to the know-how
9. A way of doing things that is typical of the brand whether it is the Chanel style so visible
in a woman’s suit or quilting of the Chanel bag or the typical driving experience at the
wheel of BMW.

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CRM in luxury,
Without a doubt, CRM is key to luxury. However not the way it is used in Fmcgs where
everything comes down to facts and figures eg if you bought brand X, you will have a high
probability of buying brand Y. This doe not work in luxury. Implementing modern CRM does not
work in luxury for lots of reasons. The main one is that half the luxury products are bought as
gifts so the customer is not the user hence entering in the database - age, the color of the eye,
number of children will not predict the Hermes bag you will buy, also finding a letter in your mail
where your name is wrongly spelled telling you that brand X has thought of you on your birthday
doesn’t seduce you – it irritates you.

The personalized human relationship is crucial but the idea of a client file is too discouraging in
particular in the form of automatic IT mgt which is often used in client relationship mgt ( CRM )
strategies Client relationships in luxury are personal ones to one. CRM is automated and kills
dreams

Luxury purchase is a lengthy act- the pre-purchase where clients dream of the product and
hence right communication strategy important; Moment of purchase where the staff makes it a
multi-sensory pleasurable experience and after purchase where its necessary to reassure the
clients that they are indeed right to spend so much.

There is no concept of luxury without monitoring of product right up to the end clients; personal
knowledge of the clients, not just their preferences, but also lifestyle; accompanying the clients
so that the purchase gains value over time.

Financial and HR management of luxury company

Luxury strategy leads to a better financial valuation of brands than a fashion strategy eg LV in
2011 made it to 18th brand in the world on Interbrand with a valuation of $ 23.1 billion
(Mercedes $27.4 billion, BMW $ 24.5 billion, but far ahead of H& M 16.4, Nike 14.5, L’Oreal 8.7)

The financial strategy of a luxury brand is not to maximize net profits (unlike traditional
strategies). Luxury companies have a very high return on equity, a phenomenon accentuated by
often very high profitability. Luxury businesses are small in size. The overheads are high as the
degree of rigor in all facets of brand experience is high (distribution, services, products,
communication). Also, the traditional strategy of covering overheads through marginal volume
does not apply to luxury. There are also no marginal countries. A luxury brand has to be handled
perfectly everywhere it is sold. It takes lots of time and money to build a luxury brand. A high net
profit one year is the reward for several years of loss in the past.

A local clientele is rarely large enough as maintaining price level does not help increase volume
and economies of scale cannot be taken too far since this requires a sale volume so high that
the brand would lose all the status linked to exclusivity. Hence internationalization and
globalization are the law of luxury eg for all French houses, 90 % are foreign clients. However
note that globalizing is only the image and distribution, not the production under any
circumstances.

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Luxury is very resilient to crises and sales of brands sticking to luxury strategy bounce back very
strongly although the crisis is not over – because once anxiety is over, the client needs relief
from it and wants to show others that they are alright, a behavior of self-reward appears.

Managing the human capital in luxury

It is very important – stability of teams is the key. Traditionally employees spent an entire lifetime
in a single luxury company (hence called a house or family). Even today in luxury , the most
important people for the brand other than the creator are the workers who make the product and
the salespeople who are in direct contact with the clients. In LV house, a store director has
priority over all debts and always has direct access to the CEO. It is compulsory that any new
employee in a managerial position of any kind begins by working in the store, in order to fully
understand what goes on there and how the manager's job can serve the sales network and
hence the client. Thus the whole organization serves the store, to serve the client.

Luxury branding
● Maintaining and controlling premium and prestige image is very crucial
● All elements of the marketing program have to be in line eg selective distribution,
premium pricing, few discounts, experiential marketing eg luxury bags
● Luxury brands rely on trickle-down to a broader audience through PR and WOM
● Brand architecture for the luxury brand have to be carefully managed with selective
strategic licensing and extensions
● Secondary associations and brand elements must be carefully chosen
● Luxury brands must legally protect all trademarks and aggressively combat counterfeit

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