Strategic brand management
Summary includes Chapter 1 to
Chapter 5
By Laith Fadi Bushnaq
,In our increasingly complex world everyone faces more choices to make but
has less time to make them. Therefore a brand’s ability to simplify decision
making, reduce risk, and set expectations is invaluable.
What is a brand?
Brand (American Marketing Association definition) = a name, term,
sign, symbol, or design, or a combination of them, intended to identify the
goods and services of one seller or group of sellers and to differentiate them
from those of competition. Whenever a marketer creates a new name, logo,
or symbol for a new product, a new brand has been created.
A brand can also be considered something that has created a certain amount
of awareness, reputation, prominence, and so on in the marketplace. This is
the industry concept of a brand, called ‘Brand with a big B’, while the AMA
definition is the definition with a small b. The key to creating a brand is being
able to choose the right brand elements (name, logo, etc.).
Product = anything we can offer to a market for attention, acquisition, use,
or consumption that might satisfy a need or want. It may be a physical good,
a service, a type of store, a person, an organization, a place, or even an idea.
Five levels of meaning for a product are defined:
1. Core benefit level = the fundamental need or want that consumers satisfy by
consuming the product or service;
2. Generic product level = a basic version of the product containing only those
attributes or characteristics absolutely necessary for its functioning but with no
distinguishing features (stripped-down, no frills version);
3. Expected product level = a set of attributes/characteristics that buyers normally
expect and agree to when they purchase a product;
4. Augmented product level = includes additional attributes/benefits/services that
distinguish the product from those of competitors;
5. Potential product level = includes all the augmentations and transformations that
a product might ultimately undergo in the future.
In many markets most competition takes place at the augmented product
level. At that level, firms can successfully build satisfactory products at the
expected product level. Levitt argued that the new competition is not
between what companies produce, but between what they add to their
factory output in the form of packaging, services, advertising, customer
advice, and other things that people value. Therefore a brand is more than a
product, because it can have dimensions that differentiate it from other
products that satisfy the same need.
Some brands create competitive advantages with product performance by
steadily investing in R&D and mass marketing. Other brands create
competitive advantages through non-product related means, e.g. by creating
,appealing images surrounding their products. Especially strong brands carry
various different types of associations, which marketers have to account for
when making marketing decisions. There are many different ways to create
such associations. By creating perceived differences among products
through branding and by developing a loyal consumer franchise, marketers
create value that can translate to financial products for the firm. Most
valuable are intangible assets such as management skills, marketing,
financial and operations expertise and of course the brand itself.
Why do brands matter?
Consumer = all types of customers, including individual citizens as well as
organizations. To consumers, brands identify the source/maker of a product,
thereby allowing them to assign responsibility to a particular
manufacturer/distributor. Based on past experiences and marketing
programs, consumers find out which brand satisfies them. They use this
information to simplify their product decisions because when they already
know a brand and like it, they do not necessarily have to consider all other
brands available for purchase. This way, the consumer’s search costs for
products both internally (how much he has to think) and externally (how
much he has to look around) are lowered. Consumers trust a brand and
become loyal to it with the implicit understanding that the brand will behave
in certain ways and provide them utility through consistent product
performance and appropriate pricing, promotion, and distribution programs
and actions. As long as consumers are satisfied with a product, they are
likely to continue to buy it.
Brands can allow consumers to project their self-image (serve as symbolic
devices) and allow consumers to communicate to others the type of person
they are by reflecting different values or traits. Brands and their attributes
can be classified into three categories:
Search goods = consumers can evaluate product attributes like color, size, style,
design, and weight by visual inspection (e.g. groceries);
Experience goods = consumers cannot assess product attributes like durability,
ease of handling, and safety easily by inspection, so have to try/experience the
product (e.g. car tires);
Credence goods = consumers may rarely learn product attributes (e.g. insurance
coverage).
Brands can be indicators of quality and other characteristics, and can reduce
risks in product decisions. Types of risk are:
Functional risk = the product does not perform up to expectations;
Physical risk = the product poses a threat to the physical well-being of the
user/others;
Financial risk = the product is not worth its price;
Social risk = the product results in embarrassment from others;
, Psychological risk = the product affects the mental well-being of the user;
Time risk = the failure of the product results in an opportunity cost of finding
another satisfactory product.
One way for consumers to handle these risks is to buy well-known brands
with which they have had favorable experiences. The special meaning that
brands take on can change consumers’ perceptions and experiences with a
product. They may evaluate identical products differently because of the
brands they carry. Brands take on personal meanings to consumers and as
their lives become more complicated, they use brands in order to simplify
their decision making and to reduce risk.
To firms, brands fundamentally serve an identification purpose (to simplify
product handling/tracing). Operationally, they help organize inventory and
accounting records. A brand also offers the firm legal protection for unique
features of the product and can retain intellectual property rights, ensuring
that the firm can safely invest in a brand and reap the benefits of a valuable
asset. The brand name can be protected through trademarks, manufacturing
processes through patents, and packaging through copyrights. Consumers’
brand loyalty provides predictability and security of demand and creates
barriers of entry, because lasting impressions in the minds of individuals
cannot be easily duplicated by competitors.
Can anything be branded?
Ultimately a brand is something that resides in the minds of consumers: it
reflects their perceptions. Marketers must give consumers a label for the
product (how you can identify it) and provide meaning for the brand (what it
can do for you, and why it is special and different). The key to branding is
that consumers perceive differences (related to attributes, the
product/service itself, or intangible assets) among brands in a product
category. Marketers can benefit from branding whenever consumers have to
make a choice.
Business-to-business branding creates a positive image for the company as a
whole. Goodwill with business customers is thought to lead to greater selling
opportunities and more profitable relationships. A strong brand can provide
valuable reassurance and clarity to business customers who may be putting
their company’s fate/their own careers on the line. A strong B2B brand can
thus provide a strong competitive advantage.
High-tech firms often lack any kind of brand strategy and sometimes see
branding as simply naming their products. However, marketing skills,
besides product innovation, play an increasingly important role in the
adoption and success of high-tech products.
Summary includes Chapter 1 to
Chapter 5
By Laith Fadi Bushnaq
,In our increasingly complex world everyone faces more choices to make but
has less time to make them. Therefore a brand’s ability to simplify decision
making, reduce risk, and set expectations is invaluable.
What is a brand?
Brand (American Marketing Association definition) = a name, term,
sign, symbol, or design, or a combination of them, intended to identify the
goods and services of one seller or group of sellers and to differentiate them
from those of competition. Whenever a marketer creates a new name, logo,
or symbol for a new product, a new brand has been created.
A brand can also be considered something that has created a certain amount
of awareness, reputation, prominence, and so on in the marketplace. This is
the industry concept of a brand, called ‘Brand with a big B’, while the AMA
definition is the definition with a small b. The key to creating a brand is being
able to choose the right brand elements (name, logo, etc.).
Product = anything we can offer to a market for attention, acquisition, use,
or consumption that might satisfy a need or want. It may be a physical good,
a service, a type of store, a person, an organization, a place, or even an idea.
Five levels of meaning for a product are defined:
1. Core benefit level = the fundamental need or want that consumers satisfy by
consuming the product or service;
2. Generic product level = a basic version of the product containing only those
attributes or characteristics absolutely necessary for its functioning but with no
distinguishing features (stripped-down, no frills version);
3. Expected product level = a set of attributes/characteristics that buyers normally
expect and agree to when they purchase a product;
4. Augmented product level = includes additional attributes/benefits/services that
distinguish the product from those of competitors;
5. Potential product level = includes all the augmentations and transformations that
a product might ultimately undergo in the future.
In many markets most competition takes place at the augmented product
level. At that level, firms can successfully build satisfactory products at the
expected product level. Levitt argued that the new competition is not
between what companies produce, but between what they add to their
factory output in the form of packaging, services, advertising, customer
advice, and other things that people value. Therefore a brand is more than a
product, because it can have dimensions that differentiate it from other
products that satisfy the same need.
Some brands create competitive advantages with product performance by
steadily investing in R&D and mass marketing. Other brands create
competitive advantages through non-product related means, e.g. by creating
,appealing images surrounding their products. Especially strong brands carry
various different types of associations, which marketers have to account for
when making marketing decisions. There are many different ways to create
such associations. By creating perceived differences among products
through branding and by developing a loyal consumer franchise, marketers
create value that can translate to financial products for the firm. Most
valuable are intangible assets such as management skills, marketing,
financial and operations expertise and of course the brand itself.
Why do brands matter?
Consumer = all types of customers, including individual citizens as well as
organizations. To consumers, brands identify the source/maker of a product,
thereby allowing them to assign responsibility to a particular
manufacturer/distributor. Based on past experiences and marketing
programs, consumers find out which brand satisfies them. They use this
information to simplify their product decisions because when they already
know a brand and like it, they do not necessarily have to consider all other
brands available for purchase. This way, the consumer’s search costs for
products both internally (how much he has to think) and externally (how
much he has to look around) are lowered. Consumers trust a brand and
become loyal to it with the implicit understanding that the brand will behave
in certain ways and provide them utility through consistent product
performance and appropriate pricing, promotion, and distribution programs
and actions. As long as consumers are satisfied with a product, they are
likely to continue to buy it.
Brands can allow consumers to project their self-image (serve as symbolic
devices) and allow consumers to communicate to others the type of person
they are by reflecting different values or traits. Brands and their attributes
can be classified into three categories:
Search goods = consumers can evaluate product attributes like color, size, style,
design, and weight by visual inspection (e.g. groceries);
Experience goods = consumers cannot assess product attributes like durability,
ease of handling, and safety easily by inspection, so have to try/experience the
product (e.g. car tires);
Credence goods = consumers may rarely learn product attributes (e.g. insurance
coverage).
Brands can be indicators of quality and other characteristics, and can reduce
risks in product decisions. Types of risk are:
Functional risk = the product does not perform up to expectations;
Physical risk = the product poses a threat to the physical well-being of the
user/others;
Financial risk = the product is not worth its price;
Social risk = the product results in embarrassment from others;
, Psychological risk = the product affects the mental well-being of the user;
Time risk = the failure of the product results in an opportunity cost of finding
another satisfactory product.
One way for consumers to handle these risks is to buy well-known brands
with which they have had favorable experiences. The special meaning that
brands take on can change consumers’ perceptions and experiences with a
product. They may evaluate identical products differently because of the
brands they carry. Brands take on personal meanings to consumers and as
their lives become more complicated, they use brands in order to simplify
their decision making and to reduce risk.
To firms, brands fundamentally serve an identification purpose (to simplify
product handling/tracing). Operationally, they help organize inventory and
accounting records. A brand also offers the firm legal protection for unique
features of the product and can retain intellectual property rights, ensuring
that the firm can safely invest in a brand and reap the benefits of a valuable
asset. The brand name can be protected through trademarks, manufacturing
processes through patents, and packaging through copyrights. Consumers’
brand loyalty provides predictability and security of demand and creates
barriers of entry, because lasting impressions in the minds of individuals
cannot be easily duplicated by competitors.
Can anything be branded?
Ultimately a brand is something that resides in the minds of consumers: it
reflects their perceptions. Marketers must give consumers a label for the
product (how you can identify it) and provide meaning for the brand (what it
can do for you, and why it is special and different). The key to branding is
that consumers perceive differences (related to attributes, the
product/service itself, or intangible assets) among brands in a product
category. Marketers can benefit from branding whenever consumers have to
make a choice.
Business-to-business branding creates a positive image for the company as a
whole. Goodwill with business customers is thought to lead to greater selling
opportunities and more profitable relationships. A strong brand can provide
valuable reassurance and clarity to business customers who may be putting
their company’s fate/their own careers on the line. A strong B2B brand can
thus provide a strong competitive advantage.
High-tech firms often lack any kind of brand strategy and sometimes see
branding as simply naming their products. However, marketing skills,
besides product innovation, play an increasingly important role in the
adoption and success of high-tech products.
