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Branding Strategies and Brand Extension

Dr.Sanjay Patro

April 26, 2012

Sanjay Patro

Kapferers Brand Identity Prism


Physique Personality

Relationship

Culture

Reflection
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Self Image
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De Chernatony-McWilliam Matrix
High Functionality L o w Low
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High
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Customer-Based Brand Equity Model

ConsumerBrand Resonance

INTENSE, ACTIVE INTENSE, ACTIVE LOYALTY LOYALTY

Consumer Judgments

Consumer Feelings

RATIONAL & RATIONAL & EMOTIONAL EMOTIONAL REACTIONS REACTIONS

Brand Performance

Brand Imagery

POINTS-OFPOINTS-OFPARITY & PARITY & POINTS-OFPOINTS-OFDIFFERENCE DIFFERENCE

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Brand Salience

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DEEP, BROAD DEEP, BROAD BRAND BRAND AWARENESS 5 AWARENESS

The Brand Iceberg

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MANAGING THE BRAND PORTFOLIO


Objectives:

Leverage commonalities to generate synergy Reduce damage to brand identity Obtain clarity of product offering Enable change and adaptation Guide resource allocations among brands
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April Aaker, Building Strong Brands, 1996. Source: 26, 2012

Branding Strategies

Monolithic Approach Endorsement Approach Simple/Individual Approach

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Sony 2008 Rank: 25 2008 Brand Value (Millions): $13,583

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In 2008 the Fusion razor hit $1 billion in sales faster than any other P&G brand. Gillette is expanding its mens care dominance with new hair and body-wash products

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Major Branding Strategies

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Leveraging of Brands and Brand Extension Management


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Classic conception of Branding


It does not differentiate the history of the brand from the reality of the brand

Al Ries and Jack Trout on Branding

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Brand Name Strategy


AMAZON Toys R Us

Kodak Free Standing


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Speed-post

Associative
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Developing a Brand Extension Strategy


1. Line Extension Strategy
Maximise coverage across offerings Evaluate vertical price tier opportunities

2. Category Extension Strategy


Uncover new products that fulfill brand promise Ensure positive feedback effects Allows to break from the mono-product
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Outcomes of Brand Extensions


Brand Name aids the extension Extension enhances the brand name

Effects of brand extensions Brand Name fails to help extension New brand name is foregone
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Brand Name is damaged

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Factors Affecting Brand Extensions


Strength of Parent Brand Brand Loyalty Age of the Brand Brand Knowledge and Awareness Perceived Quality Brand Breadth Intervening Extensions Market Characteristics
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Life cycle of Brands


Brands originate as a new product or service

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Extendability of a Brand
Type of brand
Values Interests

Know-how Formula Product


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Brand DNA

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Brand Product Matrix Brand Hierarchy


Corporate Brand Range Brand/Family Brand Product-line Brand Product Brand Sub-Brands Modifier Brand
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A strategic brand perspective requires managers to be clear about what role brands play for the company in creating customer value and share-holder value.

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Brand Relationship Spectrum


Four options to brand an acquired or developed offering: 1. A house of brands 2. Endorsed brands 3. Sub brands 4. A Branded house
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Brand Hierarchy Decisions


In creating the hierarchy, it is important to decide:
The number of levels of the hierarchy to use in general How brand elements from different levels of the hierarchy are combined, if at all, for any one particular product How any one brand element is linked, if at all, to multiple products Desired brand awareness and image at each level
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Brand Roles
Driver Endorser Flanker Brands Branded Energizers Low end entry or high end prestige Silver Bullets Cash cows

Kissan Annapurna
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Kissan Annapurna
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Annapurna
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Basic principle of brand portfolios


Maximize coverage Minimize overlap

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Brand Value Chain


BVC is a structured approach to assess the sources and outcomes of brand equity and the manner by which marketing activities create brand value.

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Brand Value Chain


Value stages Marketing Program Investment Customer Mindset Market Performance Price Premium Price Elasticity Cost savings Market share Stock Price P/E Ratio Market Capitalization
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Shareholder Value

Product Communicn Trade Employee.


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Awareness Associations Attitudes Attachment

Expansion Sanjay Patro Success

Brand Value Chain


Marketing Program Investment
Product Communicn Trade Employee.

Customer Mindset

Market Performance
Price Premium Price Elasticity Cost savings Market share Expansion Success

Shareholder Value

Awareness Associations Attitudes Attachment Activity

Stock Price P/E Ratio Market Capitalization

Multiplier Program Quality


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Market Conditions
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Investor Sentiment
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Key Role of Line Extensions


To meet the needs of each consumption segmentformat extensions To trade consumers up-vertical consumer extns To increase volume per capita-big foramt vs.small sizes To suppress barriers to consumption among specific targets To extend the share of choices through new varieties
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How are brands intersected with the daily life of customers

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What innovations bring to brands


They become the content for communication They become drivers of perceived quality Create new segments to dominate Demonstrate the brands permanent relevance They stimulate behavioural loyalty
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Innovation is the life blood of the brand

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What brands bring to innovations


They induce trials because they are reassuring They reduce perceived newness They bring their resources, trust ,power and goodwill among distributors They indicate in what directions the innovations to be looked for
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What innovations for the brand?


Values Territory Personality Knowhow Attributes
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Thank You

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Strategic Brand Management


Brand Identity Identity Implementation Brand Strategy Over Time Strategic Brand Analysis Managing the Brand Portfolio
Leveraging the Brand
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Brand Equity

Value Chain of a Brand Brands energy must be focused downstream at contact points with customers

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Brands and the Time Challenge Changing to survive

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Innovations should not be in terms of only product features but for better customer experiences Apple stores have become hangout places for young customers Kingfisher benchmarking against Singapore airlines
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Measurement of Brand Equity


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Measures of Brand Equity

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Nestles acquisition of Rowntree Reckitt & Colemans acquisition of Airwick Rank Hovis Mc Dougal Rupert Murdoch Arvind Garments Will Cadbury acquire Hershey ???
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Brands on the balance sheet ??????? A new conception of Brand

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Far better an approximate answer to the right question,which is often vague,than an exact answer to the wrong question, which can always be made precise.
John Tukey,Statistician

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Coca-Cola 2008 Rank: 1 2008 Brand Value (Millions): $66,667

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Olympic sponsorship boosted Coca-Colas profile in Asia, where sales are surging. But Coke continued to record sluggish sales in its home market.

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Rank- Name 2008 1 Coca Cola 2 IBM 3 Microsoft 4 GE 5 Nokia 6 Toyota 7 Intel 8 McDonalds 9 Disney 10 April 26, 2012 Google

Country US US US US Finland Japan US US US Sanjay Patro US

2008 Brand value in $bn

66.66 59.03 59.00 53.08 35.94 34.05 31.26 31.04 29.25 25.59

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Samsung 2008 Rank: 21 2008 Brand Value (Millions): $17,689

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All Definitions Available on Brand Equity can be Divided into Three Categories Cost Based Methods Price Based Consumer Based
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Cost Based Approaches


Valuation by Historical cost Valuation by Replacement Cost Valuation by Market Price Method Discounted Cash Flow Method
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Brand Asset Valuator


Differentiation Relevance Esteem Knowledge Brand Strength and Brand Stature
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A Two Dimensional Framework for Diagnosing Brands: The Power Grid


BrandAsset Valuator

Brand Strength

Brand Stature

Differentiation

Relevance

Esteem

Knowledge

Leading

Lagging

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Brand Equity Ten : David Aaker


Loyalty Measures
Price Premium Satisfaction/loyalty

Perceived Quality/Leadership Measures Associations/Differentiation Measures


Perceived Value Brand Personality 2012 Organizational Associations April 26, Sanjay Patro

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Awareness Measures
Brand Awareness

Market Behavior Measures


Market Share Price and Distribution Indices

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Brand Equity=Weighted Av. Of Brand Profits*P/E of Industry*Brand Strength

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Method of Valuing Brand Strength


FACTORS

Interbrands Approach
MAXM. SCORE

Leadership Stability Market International Trend Support April 26, 2012 Protection

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25 15 10 25 10 10 5

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Multiple measures and methods should be used to assess the multiple outcomes of brand equity.
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Brand power in India


CDM
Bonding Advantage Performance Relevance Presence
Source: IMRB U&A Study

Munch
2% 45% 65% 75% 89%

Kit Kat
8% 64% 77% 84% 99%

68% 84% 85% 89% 100%

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Strategic Brand Management Process

STEPS
Identify and Establish Brand Positioning and Values

KEY CONCEPTS
Mental maps Competitive frame of reference Points-of-parity and points-of-difference Core brand values Brand mantra Mixing and matching of brand elements Integrating brand marketing activities Leveraging of secondary associations Brand Value Chain Brand audits Brand tracking Brand equity management system Brand-product matrix Brand portfolios and hierarchies Brand expansion strategies Brand reinforcement and revitalization Sanjay Patro

Plan and Implement Brand Marketing Programs

Measure and Interpret Brand Performance

Grow and Sustain Brand Equity


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Brand Management Challenges*


Internal and external forces create hurdles for product brand managers in their brand building initiatives:
Fragmentation of Markets and Media Complex Brand Strategies and Relationships Bias Against Innovation Pressure to Invest Elsewhere
*David A. Aaker, 2012 Strong Brands, 1996, 26-35. April 26, Building

Intense Price and Other Competitive Pressures

Short-Term Pressures Patro Sanjay

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Responsibility for Managing Products


Product/Brand Management
Planning, managing, and coordinating the strategy for a specific product or brand

Product Group/Marketing Management


Product director, group manager, or marketing manager

Product Portfolio Management


Chief executive at SBU Team of top executives
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1. Market sensing

Marketings Role in Product Strategy

2. Identifying the characteristics and performance features of products 3. Guiding target market and programpositioning strategies
Strategic brand management decisions are relevant to all businesses, including suppliers, producers, wholesalers, distributors, and retailers. April 26, 2012 Sanjay Patro 69

Strategic Brand Analysis


Analyses Product Product Line Portfolio of Product Lines

Market and Customer Competition

Brand(s)
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Tracking Product Performance


Set Performance Objectives Select Method(s) for Product Evaluation Identify Problem Products

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Decide How to Eliminate the Problems

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Brand Equity
Effective strategic brand management requires that we understand brand equity and evaluate its impact when making brand management decisions: Brand equity is a set of brand assets and liability linked to a brand, its name, and symbol, that add to or subtract from the value provided by a product or service to a firm and/or to that firms customers.*
April Aaker, Managing Brand Equity, The Free Press, 1991, 15. Sanjay * David A.26, 2012 **Ibid, 102-120. Patro 72

Measuring Brand Equity


. Several measures are needed to capture all relevant aspects of brand equity. loyalty (price premium, satisfaction/loyalty), perceived quality/leadership measures (perceived quality, leadership/popularity), associations/differentiation (perceived value, brand personality, organizational associations), awareness (brand awareness), and market behavior (market share, price and distribution indices). These components provide the basis for developing operational measures of brand equity.

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Strategies for Improving Product Performance


Cost reduction Add new product(s) Product improvement Product line Strategy Alter marketing strategy Eliminate specific product(s)

Product mix strategy

Delete product April 26, 2012 line(s)

Change Sanjay line productPatro priorities

Add new product line(s)

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Strategies for Brand Strength


Brand-Building Strategies
Developing the brand identification strategy Coordinate identity across the organization

Brand Revitalization
Find new uses for mature brands Add products related to heritage

Strategic Brand Vulnerabilities


Brand equity can be negative Retailer private brands compete with manufacturer brands Major shifts in consumer tastes Competitive actions Sanjay Patro April 26, 2012 75

Product Mix Modifications

Motivation for changing the product mix: Increase the growth rate of the business Offer a more complete range of products to wholesalers and retailers Gain marketing strength and economies in distribution, advertising, and personal selling Leverage an existing brand position Avoid dependence on one product line or April 26, 2012 Sanjay Patro 76 category

Brand Leveraging Strategy


LINE EXTENSION BRAND EXTENSION
Minor variants of a single product are marketed under the same brand name

Extensions of the brand name to other product categories --Similar --Dissimilar

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BRAND LEVERAGING EVALUATION CRITERIA


Brand Relevance/Differentiation Capabilities/Perceived Value Match Market/Segment Opportunity Cannibalization Risks Potential for Core Brand Damage Clarity of Product Offerings Estimated Financial Performance Brand Equity Impact April 26, 2012
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Failure to fully understand the meaning of the brand. Failure to live up to the brand promise. Failure to adequately support the brand. Failure to be patient with the brand. Failure to adequately control the brand. Failure to properly balance consistency and change with the brand. Failure to understand the complexity of brand equity measurement and management.
*Kevin Lane Keller, Strategic Brand Management, Prentice Hall, 2003, 736.

SEVEN DEADLY SINS OF BRAND MANAGEMENT*

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Current Products

New Products

Current Markets

Market Penetration Strategy

Product Development Strategy

New Markets

Market Development Strategy

Diversification Strategy

Ansoffs Product Market Grid


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Double Jeopardy Effect


Strong brands grow by penetration and loyalty Major brands have high penetration higher per capita usagehigher loyalty Double Jeopardy effect

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Brand image is not equal to brand usage Adoring your brand wont lead to increased brand usage

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Segmenting markets by situations to grow the brand


Products are always consumed in specific situations and contexts Here we segment the battlefield not the consumers who move through different situations during the same day

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When A Firm Introduces A New Product


1. It can develop a new brand 2. It can use one of its existing brands 3. It can use a combination of a new brand with an existing brand 4. It can join hands with an outsider to take the product forward to the market
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We were successful because our goal was to get more people to buy more stuff , more often so that the company can make more money
Sergio Zyman,VP of Cocacola during New Coke launch in 1984

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