Introduction to brands
Take a look at the list below that shows the world's top 10 brands in 2002 (as measured by value):
{Rank Brand Value ($ billions)}
1 Coca-Cola ($69.6)
2 Microsoft ($64.1)
3 IBM ($51.2)
4 GE ($41.3)
5 Intel ($30.9)
6 Nokia ($30.0)
7 Disney ($29.3)
8 McDonalds ($26.4)
9 Marlboro ($24.2)
10 Mercedes ($21.0)
Source: Interbrand; JP Morgan Chase, 2002
Why do companies such as Coca-Cola, Microsoft, IBM and Disney seem to achieve global marketing success so easily? Why does it seem such an effort for others?
Why do we, as consumers, feel loyal to such brands that the mere sight of their logo has us reaching into our pockets to buy their products?
The meaning of brands
Brands are a means of differentiating a company's products and services from those of its competitors.
There is plenty of evidence to prove that customers will pay a substantial price premium for a good brand and remain loyal to that brand. It is important, therefore, to understand what brands are and why they are important.
Macdonald sums this up nicely in the following quote emphasising the importance of brands:
"…it is not factories that make profits, but relationships with customers, and it is company and brand names which secure those relationships"
Businesses that invest in and sustain leading brands prosper whereas those that fail are left to fight for the lower profits available in commodity markets.
What is a brand?
One definition of a brand is as follows:
"A name, term, sign, symbol or design, or a combination of these, that is intended to identify the goods and services of one business or group of businesses and to differentiate them from those of competitors".
Interbrand - a leading branding consultancy - define a brand in this way:
"A mixture of tangible and intangible attributes symbolised in a trademark, which, if properly managed, creates influence and generates value".
Three other important terms relating to brands should be defined at this stage:
Brand equity
"Brand equity" refers to the value of a brand. Brand equity is based on the extent to which the brand has high brand loyalty, name awareness, perceived quality and strong product associations. Brand equity also includes other "intangible" assets such as patents, trademarks and channel relationships.
Brand image
"Brand image" refers to the set of beliefs that customers hold about a particular brand. These are important to develop well since a negative brand image can be very difficult to shake off.
Brand extension
"Brand extension" refers to the use of a successful brand name to launch a new or modified product in a new market. Virgin is perhaps the best example of how brand extension can be applied into quite diverse and distinct markets.
Brands and products
Brands are rarely developed in isolation. They normally fall within a business' product line or product group.
A product line is a group of brands that are closely related in terms of their functions and the benefits they provide. A good example would be the range of desktop and laptop computers manufactured by Dell.
A product mix relates to the total set of brands marketed by a business. A product mix could, therefore, contain several or many product lines. The width of the product mix can be measured by the number of product lines that a business offers.
For a good example, visit the web site of Hewlett-Packard ("HP"). HP has a broad product mix that covers many segments of the personal and business computing market. How many separate product lines can you spot from their web site?
Managing brands is a key part of the product strategy of any business, particularly those operating in highly competitive consumer markets.
brands - building a brand
What factors are important in building brand value?
Professor David Jobber identifies seven main factors in building successful brands, as illustrated in the diagram below:
Quality
Quality is a vital ingredient of a good brand. Remember the "core benefits" – the things consumers expect. These must be delivered well, consistently. The branded washing machine that leaks, or the training shoe that often falls apart when wet will never develop brand equity.
Research confirms that, statistically, higher quality brands achieve a higher market share and higher profitability that their inferior competitors.
Positioning
Positioning is about the position a brand occupies in a market in the minds of consumers. Strong brands have a clear, often unique position in the target market.
Positioning can be achieved through several means, including brand name, image, service standards, product guarantees, packaging and the way in which it is delivered. In fact, successful positioning usually requires a combination of these things.
Repositioning
Repositioning occurs when a brand tries to change its market position to reflect a change in consumer's tastes. This is often required when a brand has become tired, perhaps because its original market has matured or has gone into decline.
The repositioning of the Lucozade brand from a sweet drink for children to a leading sports drink is one example. Another would be the changing styles of entertainers with above-average longevity such as Kylie Minogue and Cliff Richard.
Communications
Communications also play a key role in building a successful brand. We suggested that brand positioning is essentially about customer perceptions – with the objective to build a clearly defined position in the minds of the target audience.
All elements of the promotional mix need to be used to develop and sustain customer perceptions. Initially, the challenge is to build awareness, then to develop the brand personality and reinforce the perception.
First-mover advantage
Business strategists often talk about first-mover advantage. In terms of brand development, by "first-mover" they mean that it is possible for the first successful brand in a market to create a clear positioning in the minds of target customers before the competition enters the market. There is plenty of evidence to support this.
Think of some leading consumer product brands like Gillette, Coca Cola and Sellotape that, in many ways, defined the markets they operate in and continue to lead. However, being first into a market does not necessarily guarantee long-term success. Competitors – drawn to the high growth and profit potential demonstrated by the "market-mover" – will enter the market and copy the best elements of the leader's brand (a good example is the way that Body Shop developed the "ethical" personal care market but were soon facing stiff competition from the major high street cosmetics retailers.
Long-term perspective
This leads onto another important factor in brand-building: the need to invest in the brand over the long-term. Building customer awareness, communicating the brand's message and creating customer loyalty takes time. This means that management must "invest" in a brand, perhaps at the expense of short-term profitability.
Internal marketing
Finally, management should ensure that the brand is marketed "internally" as well as externally. By this we mean that the whole business should understand the brand values and positioning. This is particularly important in service businesses where a critical part of the brand value is the type and quality of service that a customer receives.
Think of the brands that you value in the restaurant, hotel and retail sectors. It is likely that your favourite brands invest heavily in staff training so that the face-to-face contact that you have with the brand helps secure your loyalty.
Branding Basics Create a Great Logo and Tag Line
Logo Design & Tagline Tips for Effective Branding
Have you ever asked yourself why a competitor's business gets more attention than yours? The answer just may have to do with the elements that go into how memorable the business is. And that has to do with branding.
But exactly what is branding, anyway? Think of branding as predefining what a company is all about in the minds of its clients. Good branding differentiates your products and services in a positive way that really sticks in the minds of potential customers.
Let's say you are getting ready to run errands on a busy Saturday morning, thinking about the groceries that need to be bought, the dry cleaning that needs to be picked up, and the packages that must get to the post office before noon. The trip to the post office reminds you that your favorite aunt's birthday is next Wednesday.
You need to add buying and mailing a birthday card to your list of things to do. Without a moment's hesitation, you know exactly where you will buy the card: the local Hallmark store. Why did you think Hallmark?
The answer to that question has everything to do with Hallmark's branding and two key elements of that branding are:
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Assuming your own product is fabulous, it all comes down to image. Graphic design can play a huge part in that image. But what are some key things to consider?
The First Key Element of Branding; Create a Great Logo.
You have given a great deal of attention to your company name and believe it speaks to who you are and what you do. Great! Now you need to wrap a graphic image around that name to carve out a prime piece of real estate in your target customer's mind. That is exactly what a great logo design can do.
7 Logo Design Tips
Keep in mind that a powerful logo design:
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Hallmark's memorable crown logo is one of the reasons that Hallmark comes to mind so quickly when you need to buy a greeting card. It is simple, bold, looks good in either color or black and white, and bespeaks the quality required for something to be stamped with a hallmark, so it works well with the company name. While the image might not have communicated the nature of the business when it was first created, it certainly does now!
The Second Key Element of Branding; Create a Distinctive Tag Line.
A tag line is a three to seven word phrase that accompanies your logo. It expresses your company's most important benefits and/or what you want your customers to remember about working with you. Think of it as the words you want to linger in your target customer's mind about you and what you have to offer.
Great tag lines appear to be effortlessly created because they just seem to flow. In fact, creating and refining one takes time, just like designing a great logo. The benefits of taking the time to craft a great tag line lie with the tag line's stickiness. Great tag lines stick in your memory.
The Hallmark tag line, "When you care enough to send the very best," appeals to the human desire to be viewed as having good taste and an appreciation for luxury. If greeting cards are a commodity, then Hallmark has found a way to differentiate itself as the choice for quality.
The Hallmark company was founded by J. C. Hall, so the name Hallmark was a natural. It was also brilliant from a marketing standpoint. Hallmarks have been used for centuries as a stamp to denote quality, purity, and genuineness. Could there be a better way to attach the image of quality to a product? The tag line capitalizes on that image well with words that stick in the mind and exemplify good taste.
Creating a great logo and distinctive tag line are critical in creating a brand that provides the perfect image for your company and great ones just might be memorable enough to give your company the beach front property in the minds of your customers that leaves them thinking only of you.
brands - brand extension and stretching
Brand extension and brand stretching
Marketers have long recognised that strong brand names that deliver higher sales and profits (i.e. those that have brand equity) have the potential to work their magic on other products.
The two options for doing this are usually called "brand extension" and "brand stretching".
Brand extension
Brand extension refers to the use of a successful brand name to launch a new or modified product in a same broad market.
A successful brand helps a company enter new product categories more easily.
For example, Fairy (owned by Unilever) was extended from a washing up liquid brand to become a washing powder brand too.
The Lucozade brand has undergone a very successful brand extension from children's health drink to an energy drink and sports drink.
Brand stretching
Brand stretching refers to the use of an established brand name for products in unrelated markets.
For example the move by Yamaha (originally a Japanese manufacturer of motorbikes) into branded hi-fi equipment, pianos and sports equipment.
When done successfully, brand extension can have several advantages:
• Distributors may perceive there is less risk with a new product if it carries a familiar brand name. If a new food product carries the Heinz brand, it is likely that customers will buy it
• Customers will associate the quality of the established brand name with the new product. They will be more likely to trust the new product.
• The new product will attract quicker customer awareness and willingness to trial or sample the product
• Promotional launch costs (particularly advertising) are likely to be substantially lower.
brands - brand positioning
Brand positioning
As we have argued in our other revision notes on branding, it is the "added value" or augmented elements that determine a brand's positioning in the market place.
Positioning can be defined as follows:
Positioning is how a product appears in relation to other products in the market
Brands can be positioned against competing brands on a perceptual map.
A perceptual map defines the market in terms of the way buyers perceive key characteristics of competing products.
The basic perceptual map that buyers use maps products in terms of their price and quality, as illustrated below:
brands - types
Types of brand
There are two main types of brand – manufacturer brands and own-label brands.
Manufacturer brands
Manufacturer brands are created by producers and bear their chosen brand name. The producer is responsible for marketing the brand. The brand is owned by the producer.
By building their brand names, manufacturers can gain widespread distribution (for example by retailers who want to sell the brand) and build customer loyalty (think about the manufacturer brands that you feel "loyal" to).
Own label brands
Own-label brands are created and owned by businesses that operate in the distribution channel – often referred to as "distributors".
Often these distributors are retailers, but not exclusively. Sometimes the retailer's entire product range will be own-label. However, more often, the distributor will mix own-label and manufacturers brands. The major supermarkets (e.g. Tesco, Asda, Sainsbury's) are excellent examples of this.
Own-label branding – if well carried out – can often offer the consumer excellent value for money and provide the distributor with additional bargaining power when it comes to negotiating prices and terms with manufacturer brands.
Why should businesses try to build their brands?
There are many advantages to businesses that build successful brands. These include:
•Higher prices
•Higher profit margins
•Better distribution
• Customer loyalty
Businesses that operate successful brands are also much more likely to enjoy higher profits.
A brand is created by augmenting a core product with distinctive values that distinguish it from the competition. This is the process of creating brand value.
All products have a series of "core benefits" – benefits that are delivered to all consumers. For example:
•Watches tell the time
•CD-players play CD's
•Toothpaste helps prevent tooth decay
• Garages dispense petrol.
Consumers are rarely prepared to pay a premium for products or services that simply deliver core benefits – they are the expected elements of that justify a core price.
Successful brands are those that deliver added value in addition to the core benefits.
These added values enable the brand to differentiate itself from the competition. When done well, the customer recognises the added value in an augmented product and chooses that brand in preference.
For example, a consumer may be looking for reassurance or a guarantee of quality in a situation where he or she is unsure about what to buy. A brand like Mercedes, Sony or Microsoft can offer this reassurance or guarantee.
Alternatively, the consumer may be looking for the brand to add meaning to his or her life in terms of lifestyle or personal image. Brands such as Nike, Porsche or Timberland do this.
A brand can usefully be represented in the classic "fried-egg" format shown below, where the brand is shown to have core features that are surrounded (or "augmented") by less tangible features.
Touchpoints Are Key to Building a Strong Brand
Customers experience your brand in numerous ways: products, packaging, price, marketing, sales personnel, etc. Each of these contacts or touchpoints molds the customer's impression of the brand. Some of these touchpoints are obvious, like product performance, and one-on-one customer interactions. Other touchpoints, such as the product manual, monthly statements or post-sales support, may be subtler in their brand effects.
Your brand image creates expectations. It defines who you are, how you operate, and how you're different from your competitors. In essence, your brand image is a promise - a promise that must be kept.
If the brand is a promise you make, then the customer experience is the fulfillment of that promise. The customer experience can't be left to chance. It should be actively designed and controlled in a manner that enhances your brand image.
It must consistently reinforce the brand promise across every customer touchpoint or the value of the brand itself is at risk.
Here are five easy steps to building a strong brand and an optimized customer experience:
1. Identify your reasons-to-believe.
Your brand promise is irrelevant if your customers do not believe it. Therefore, your promise must be supported by reasons-to-believe. This will automatically add substance to the promise and define specific expectations for the customer.
For example, an automobile manufacturer promises potential customers that Car XYZ is an "intelligent choice for serious drivers." What makes it an intelligent choice? Why should the customer believe this promise?
To address this question effectively, the manufacturer could frame its promise with two reasons-to-believe... sporty performance and safety. These two reasons in essence define "intelligent choice" and clearly set customer expectations. They also give the company specific direction for designing the customer experience through tangible customer touchpoints like vehicle design features, advertising campaigns, dealer sales approaches, and customer service activities.
2. Identify customer touchpoints.
Each individual step in your business process contains a number of touchpoints when the customer comes in contact with your brand. Your ultimate goal is to have each touchpoint reinforce and fulfill your marketplace promise.
Walk through your commercial processes. How do you generate customer demand? How are products sold? How do your customers use your products? How do you provide after-sales support?
This comprehensive trace of your marketing, selling, and servicing processes allows you to create a simple touchpoint map that defines your customers' experiences with your brand.
3. Determine the most influential touchpoints.
All touchpoints are not created equal. Some will naturally play a larger role in determining your company's overall customer experience. For example, if your product is ice cream, taste is typically more important than package design. Both are touchpoints, but each has a different effect on our customers' experiences as a whole.
To determine the touchpoints driving your customers' overall experience, your organization can use a wide array of techniques ranging from quantitative research to institutional knowledge. The methods you use will depend on the complexity of your products, commercial processes, and your existing knowledge base.
4. Design the optimal experience.
Once you have completed the above three steps to building a brand, you should be able to design your optimal customer experience.
Determine how to express each reason-to-believe at each key touchpoint. For example, how can you reinforce sporty performance (a reason-to-believe) in product design, at the dealership, and in marketing campaigns (the influential touchpoints)?
5. Align the organization to consistently deliver the optimal experience.
A holistic approach to aligning your organization to consistently deliver the optimal experience is essential. Identify the people, processes, and tools that drive each key touchpoint.
Look beyond employees that have direct contact with your customers. The impacts of behind-the-scenes employees are less obvious but no less important. Similarly, the impact of workflow processes and tools (i.e. technology systems) on the customer experience may be less intuitive but crucial to consistent delivery.
Identify which activities don't align with your envisioned customer experience. Determine how to address them so that these components can be brought into alignment.
The Final Word
Every product or service you bring to market yields a customer experience. Is it the experience you intend? Does that experience fulfill the promise you've made to the marketplace?
By identifying the people, processes, and tools that drive your customer experience, you can actively design and control your own, unique, optimized experience. The brand promise you make to the marketplace will be kept day in and day out across every key customer touchpoint, building a strong brand.
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