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StrategicBrandManagement:Building,Measuring,andManagingBrandEquityFifthEditionChapter1BrandsandBrandManagementCopyright©2020,2013,2008PearsonEducation,Inc.AllRightsReservedLearningObjectives1.1Define“brand,”statehowbranddiffersfromaproduct,andexplainwhatbrandequityis1.2Summarizewhybrandsareimportant1.3Explainhowbrandingappliestovirtuallyeverything1.4Describethemainbrandingchallengesandopportunities1.5IdentifythestepsinthestrategicbrandmanagementprocessWhatisaBrand?BrandElementsBrandsversusProductsBrandElementsThekeytocreatingabrand:Abletochooseaname,logo,symbol,packagedesign,orothercharacteristicthatidentifiesaproductDistinguishesitfromotherproductsComponentsthatidentifyanddifferentiateabrandarebrandelementsBrandsVersusProducts(1of3)Fivelevelsofmeaningforaproduct:CorebenefitlevelGenericproductlevelExpectedproductlevelAugmentedproductlevelPotentialproductlevelBrandsVersusProducts(2of3)Aproductisanythingwecanoffertoamarketforattention,acquisition,use,orconsumption:ThatmightsatisfyaneedorwantPhysicalgoodlikeacereal,tennisracquet,orcarAbrandismorethanaproductsinceitcanhavedimensionsthatdifferentiateitfromotherproductsBrandsVersusProducts(3of3)Differencesbetweenaproductandabrandmaybe:Rationalandtangible:RelatedtoproductperformanceofthebrandOrmaybemoresymbolic,emotional,andintangible:RelatedtowhatthebrandrepresentsFigure1.2TenFirmsRatedHighlyinInnovationAppleNetflixSquareTencentAmazonPatagoniaCVSHealthTheWashingtonPostSpotifyNBASource:
BasedonFastCompany’s2018ListofMostInnovativeCompanies.WhyDoBrandsMatter?ConsumersFirmsConsumers(1of3)Functionsprovidedbybrandstoconsumers:IdentifythesourceormakeroftheproductSimplifyproductdecisionsLowerthesearchcostsforproductsinternallyandexternallyHelpssetreasonableexpectationsaboutwhatconsumersmaynotknowaboutthebrandConsumers(2of3)Brandcansignalproductcharacteristicsandattributes:Onthebasisofattributesproductscanbeclassifiedas:SearchgoodsExperiencegoodsCredencegoodsConsumers(3of3)Brandscanreducerisksinproductdecision:Theseriskcanbecategorisedas:Functional,physical,financial,socialpsychological,andtimeFirmsBrandsprovidevaluablefunctionstoafirm:SimplifyproducthandlingandtracingHelporganizinginventoryandaccountingrecordsOfferthefirmlegalprotectionforuniquefeaturesoraspectsoftheproductProvidepredictabilityandsecurityofdemandforthefirmandcreatesbarriersofentryforcompetitorsProvideapowerfulmeanstosecurecompetitiveadvantageFigure1.3RolesThatBrandsPlayConsumersIdentificationofsourceofproductAssignmentofresponsibilitytoproductmakerRiskreducerSearchcostreducerPromise,bond,orpactwithmakerofproductSymbolicdeviceSignalofqualityManufacturersMeansofidentificationtosimplifyhandlingortracingMeansoflegallyprotectinguniquefeaturesSignalofqualityleveltosatisfiedcustomersMeansofendowingproductswithuniqueassociationsSourceofcompetitiveadvantageSourceoffinancialreturnsFigure1.4BrandValueasaPercentageofMarketCapitalizationCompanyBrandValue(in$billions)TotalValue(in$billions)BrandValueasaPercentageofOverallValueApple184.1868.8821%Google141.7729.119%Microsoft79.9659.912%Coca-Cola69.7195.536%Amazon64.7563.511%Samsung56.230019%Toyota50.3188.227%Facebook48.2420.811%Mercedes47.879.360%I
B
M46.814233%Sources:
BasedonInter-brand,“BestGlobalBrands2010.”Yahoo!Finance,February11.CanAnythingBeBranded?(1of2)PhysicalGoodsServicesCanAnythingBeBranded?(2of2)Tobrandaproduct,itisnecessarytoteachconsumers“who”theproductis:GivingitanameandusingotherbrandelementstohelpidentifyitWhattheproductdoesandwhyconsumersshouldcareMarketersmustgiveconsumersalabelfortheproductandprovidemeaningforthebrandMarketerscanbenefitfrombrandingwheneverconsumersareinachoicesituationPhysicalGoodsPhysicalgoodsarewhataretraditionallyassociatedwithbrands:Mercedes-BenzNescaféSonyBrandinghasbeenadoptedinavarietyofindustries:Industrialbusiness-to-business(B2B)productsTechnologicallyintensive“high-tech”productsServicesBrandingaservicecanbeaneffectivewaytosignaltoconsumersthatafirmhasdesignedaparticularserviceofferingthatisspecialanddeservingofitsname:AmericanExpressBritishAirwaysRitz-CarltonMerrillLynchFederalExpressRetailersandDistributors(1of2)Forretailersandotherchannelmembers,brandsprovideimportantfunctions:Cangenerateconsumerinterest,patronage,andloyaltyCreateanimageandestablishpositioningwithinanindustryYieldhigherpricemargins,increasedsalesvolumes,andgreaterprofitsRetailersandDistributors(2of2)Retailerscanintroducetheirownbrandsby:UsingtheirstorenameCreatingnewnamesSomecombinationofthetwoManydistributors,especiallyinEurope,haveintroducedtheirownbrandsProductsbearingthesestorebrandsorprivatelabelbrandsofferanotherwayforretailerstoincreasecustomerloyaltyandgeneratehighermarginsandprofitsDigitalBrandsSomeofthestrongestbrandsinrecentyearshavebeenbornonline:AmazonGoogleFacebookTwitterBrandbuildinghasbecomemoreimportantinrecentyearstoonlinemarketers:ItiscriticaltocreateuniqueaspectsofthebrandBrandneedstoperformsatisfactorilyaswellPeopleandOrganizationsAproductcategorycanbeapersonoranorganization:NamingofthisbrandingisusuallystraightforwardUsuallyisaccompaniedbywell-definedimagesthatareeasilyunderstoodbyconsumersThekeytoapersonororganizationasabrandisthatpeopleoutsideyourindustryknowwhoyouareandrecognizeyourskills,talents,andattitude:LadyGagaTheAmericanRedCrossAmnestyInternationalSierraClubSports,Arts,andEntertainmentAspecialcaseofmarketingpeopleandorganizationsasbrandsexistsinthesports,arts,andentertainmentindustries:SportsmarketinghasbecomehighlysophisticatedBrandingplays,forexample,hasbecomeanespeciallyvaluablefunctionintheartsMovieshavebecomefamousfortheirmarketingandbranding:Foryears,someofthemostvaluablemoviefranchiseshavefeaturedrecurringcharactersandongoingstories—aclassicapplicationofbrandingGeographicLocationsWhathascontributedtotheriseinplacemarketing?IncreasedmobilityofpeopleIncreasedmobilityofbusinessesGrowthintourismCities,states,regions,andcountriesactivelypromotethroughadvertising,directmail,andothertoolsIdeasandCausesNumerousideasandcauseshavebeenbranded:EspeciallybynonprofitorganizationsMaybecapturedinaphraseorsloganorrepresentedbyasymbol:SuchasAIDSribbonsWhataretheStrongestBrands?Brandsthatarethe“strongest”arethebrandsthatare:BestknownMosthighlyregardedMaintainingbrandrelevanceanddifferentiationareimportanttothesuccessofabrandFigure1.5(1of2)Twenty-FiveMostValuableGlobalBrands2017RankBrandSectorBrandValueChangeinBrandValue1AppleTechnology184,154$m+3%2GoogleTechnology141,703$m+6%3MicrosoftTechnology79,999$m+10%4Coca-ColaBeverages69,733$mMinus5percentage.5AmazonRetail64,796$m+29%6SamsungTechnology56,249$m+9%7ToyotaAutomotive50,291$mMinus6percentage.8FacebookTechnology48,188$m+48%9MercedesAutomotive47,829$m+10%10IBMBusinessServices46,829$mMinus11percentage.11GEDiversified44,208$m+3%12McDonald’sRestaurants41,533$m+5%13BMWAutomotive41,521$m0%14DisneyMedia40,772$m+5%Figure1.5(2of2)Twenty-FiveMostValuableGlobalBrands2017RankBrandSectorBrandValueChangeinBrandValue15IntelTechnology39,459$m+7%16CiscoTechnology31,930$m+3%17OracleTechnology27,466$m+3%18NikeSportingGoods27,021$m+8%19LouisVuittonLuxury22,919$mMinus4percentage.20HondaAutomotive22,696$m+3%21SAPTechnology22,635$m+6%22PepsiBeverages20,491$m+1%23H&MApparel20,488$mMinus10percentage.24ZaraApparel18,573$m+11%25IkeaRetail18,472$m+4%Sources:
BasedonInter-brand,“The100MostValuableGlobalBrands,”2017.BrandingChallengesandOpportunitiesUnparalleledaccesstoinformationandnewtechnologiesDownwardpressureonpricesUbiquitousconnectivityandtheconsumerbacklashSharinginformationandgoodsUnexpectedsourcesofcompetitionDisintermediationandreintermediationAlternativesourcesofinformationaboutproductqualityWinner-takes-allmarketsMediatransformationTheimportanceofcustomer-centricityUnparalleledAccesstoInformationandNewTechnologiesTechnologyhascreatedvastamountsofinformationOvertime,astechnologybecomesmorestandard,brandmarketersmayfindopportunities:UtilizinginnovativefeaturesindesigningbetterbrandexperiencesfortheircustomersDownwardPressureonPricesAssearchcostsforinformationbecomelower,consumerscancomparepricesmoreeasily:Thus,theycanswitchtoadifferentbrandmoreeasilyThismaycausemorecommodificationofproductsandservicesThiscreateschallengesforbrandmarketersUbiquitousConnectivityandtheConsumerBacklashAsdigitalandelectronicconnectivitybecomesubiquitous,consumers’attentionislessenedandaremorevulnerabletointrusions:BacklashmaycomeasconsumersbecomeincreasinglyresistanttomarketersattemptstogainaccesstothemSoftwaremaycomeavailablethatthwartsmarketerseffortstoreachconsumersSharingInformationandGoodsTechnologyhasofferedtwophenomenarelatedtobranding:Socialmediaplatforms:Whiletheyofferawayforconsumertoconnectandcommunicatetheirpreferencesforgoodsorservices,theplatformsfaceincreasedscrutinybyregulatoryagenciesManyoftheplatformshavetraditionallynothadtoobtainpermissionsforuseofcustomerdataPeer-to-peersharing:Napster,Airbnb,ZipcarUnexpectedSourcesofCompetitionThedigitalworldallowseasierentryintonewmarkets:IncreasedcompetitionWhenAmazonMoaviesbeganofferingstreamingservices,itfacedcompetitionfromNetflixandAppleiTunesDisintermediationandReintermediationDisintermediation:ReductionoreliminationofintermediariesThetravelindustry,forexample,hasexperiencedsignificantdeclineintheneedfortravelagencies:OnceofferedadvisoryservicesandhelpedmakebookingsinreturnforasmallfeeorcommissionReintermediation:IntroductionofnewintermediariesthatperformsomeofthesamefunctionsorhaveadditionalrolesinthechannelofdistributionYelp,onlineconsumerguides(ConsumerR),andinfluentialbloggersAlternativeSourcesofInformationaboutProductQualityTheInternetoffersconsumersnewwaystolearnaboutnewproductsandproductquality:ThishasreducedtherelianceonbrandsassignalsonqualityBrandsnowhavetodomore:Havetobetranslatorsoftrends,actingoninformationaboutchangingcustomertastesanddesiresalmostinstantaneouslyWinner-Takes-AllMarketsAwinner-take-allmarketislikelytopermeateotherindustriesandcategoriesoutsideofsportsandentertainment:BrandswhicharemarketleaderswithincategoriesarelikelytobechosenatanevengreaterrateMediaTransformationTheerosionandfragmentationoftraditionaladvertisingmediahascoincidedwith:Theemergenceofinteractiveandnontraditionalmedia,promotion,andothercommunicationalternativesMarketersarespendingmoreonnontraditionalformsofcommunication:OnnewandemergingformsofcommunicationSocialmediaPaidinfluencersSponsoredbloggersLaCroixisanexampleofthisTheImportanceofCustomer-CentricityBrandequitycanbevulnerabletodestructionifproductandserviceclaimsarenotverifiedbyactualexperience:ReviewforumsReviewsfrompeersOnlineword-of-mouthTheBrandEquityConceptPrinciplesofbrandingandbrandequity:Differencesinoutcomesarisefromthe“addedvalue”endowedtoaproductTheaddedvaluecanbecreatedforabrandinmanydifferentwaysBrandequityprovidesacommondenominatorforinterpretingmarketingstrategiesandassessingthevalueofabrandTherearemanydifferentwaysinwhichthevalueofabrandcanbeexploitedtobenefitthefirmStrategicBrandManagementProcessIdentifyingandDevelopingBrandPlansDesignin
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