ALL ABOUT BRAND Brand loyalty

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Jump to: navigation, search Brand loyalty has been proclaimed by some to be the ultimate goal of marketing.[1] In marketing, brand loyalty consists of a consumer's commitment to repurchase the brand and can be demonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy.[2] True brand loyalty implies that the consumer is willing, at least on occasion, to put aside their own desires in the interest of the brand.[3] Brand loyalty is more than simple repurchasing, however. Customers may repurchase a brand due to situational constraints, a lack of viable alternatives, or out of convenience.[4] Such loyalty is referred to as "spurious loyalty". True brand loyalty exists when customers have a high relative attitude toward the brand which is then exhibited through repurchase behavior.[2] This type of loyalty can be a great asset to the firm: customers are willing to pay higher prices, they may cost less to serve, and can bring new customers to the firm.[1][5] For example, if Joe has brand loyalty to Company A he will purchase Company A's products even if Company B's are cheaper and/or of a higher quality. An example of a major brand loyalty program that extended for several years and spread worldwide is Pepsi Stuff. Perhaps the most significant contemporary example of brand loyalty is the fervent devotion of many Mac users to the Apple company and its products. From the point of view of many marketers, loyalty to the brand - in terms of consumer usage - is a key factor:

Contents
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1 Usage rate 2 Loyalty 3 Industrial Markets 4 Portfolios of Brands 5 Market Inertia 6 Examples of Brand Loyalty Promotions 7 See also 8 References 9 External links

[edit] Usage rate

Most important of all, in this context, is usually the 'rate ' of usage, to which the Pareto 80:20 Rule applies. Kotler's `heavy users' are likely to be disproportionately important to the brand (typically, 20 per cent of users accounting for 80 per cent of usage -- and of suppliers' profit). As a result, suppliers often segment their customers into `heavy', `medium' and `light' users; as far as they can, they target `heavy users'.

[edit] Loyalty
A second dimension, however, is whether the customer is committed to the brand. Philip Kotler, again, defines four patterns of behaviour: Hard Core Loyals - who buy the brand all the time. Soft Core Loyals - loyal to two or three brands. Shifting Loyals - moving from one brand to another. Switchers - with no loyalty (possibly `deal-prone', constantly looking for bargains or `vanity prone', looking for something different).

[edit] Industrial Markets

In industrial markets, organizations will regard the `heavy users' as `major accounts', to be handled by senior sales personnel and even managers; whereas the `light users' may be handled by the general salesforce or by a dealer.

[edit] Portfolios of Brands

Andrew Ehrenberg, then of the London Business School said that consumers buy 'portfolios of brands'.[citation needed] They switch regularly between brands, often because they simply want a change. Thus, 'brand penetration' or 'brand share' reflects only a statistical chance that the majority of customers will buy that brand next time as part of a portfolio of brands they favour. It does not guarantee that they will stay loyal. Influencing the statistical probabilities facing a consumer choosing from a portfolio of preferred brands, which is required in this context, is a very different role for a brand manager; compared with the - much simpler - one traditionally described, of recruiting and holding dedicated customers. The concept also emphasises the need for managing continuity.

[edit] Market Inertia

On the other hand, one of the most prominent features of many markets is their overall stability - or inertia. Thus, in their essential characteristics they change very slowly, often

over decades - sometimes centuries - rather than over months. This stability has two very important implications. The first is that if you are a clear brand leader you are especially well placed in relation to your competitors, and should want to further the inertia which lies behind that stable position. This will, however, still demand a continuing pattern of minor changes, to keep up with the marginal changes in consumer taste (which may be minor to the theorist, but will still be crucial in terms of those consumers' purchasing patterns - markets do not favour the over-complacent.). But these minor investments are a small price to pay for the long term profits which brand leaders usually enjoy. Only farmhands make a career out of milking cows, and only fools jeopardise the investment contained in an established brand leader. The second, and more important is that if you want to overturn this stability, and change the market (or significantly change your position in it), then you must expect to make massive investments to succeed. Even though stability is the natural state of markets, however, sudden changes can still occur and the environment must be constantly scanned for signs of these.

Brand equity
From Wikipedia, the free encyclopedia

Jump to: navigation, search It has been suggested that Brand extension be merged into this article or section. (Discuss) This article is about the marketing concept. For the weekly supplement and Quiz, see The Economic Times Brand equity is the value built-up in a brand. It is measured based on how much a customer is aware of the brand. The value of a company's brand equity can be calculated by comparing the expected future revenue from the branded product with the expected future revenue from an equivalent non-branded product. This calculation is at best an approximation. This value can comprise both tangible, functional attributes (e.g. TWICE the cleaning power or HALF the fat) and intangible, emotional attributes (e.g. The brand for people with style and good taste).

[edit] Positivity
It can be positive or negative. Positive brand equity is created by effective promotion and consistently meeting or exceeding customer thoughts. Negative brand equity is usually the result of bad management. The greater a company's brand equity, the greater the probability that the company will use a family branding strategy rather than an individual branding strategy. This is because

family branding allows them to leverage off the equity accumulated in the core brand. This makes new product introductions less risky and less expensive.

[edit] Examples
In the early 2000s, the Ford Motor Company made a strategic decision to brand all new or redesigned cars with names starting with "F". This aligned with the previous tradition of naming all sport utility vehicles since the Ford Explorer with the letter "E". The Toronto Star quoted an analyst who warned that changing the name of the well known Windstar to the Freestar would cause confusion and discard brand equity built up, while a marketing manager believed that a name change would highlight the new redesign. The aging Taurus, which became one of the most significant cars in American auto history would be abandoned in favor of three entirely new names, all starting with "F", the Five Hundred, Freestar and Fusion. By 2007, the Freestar was discontinued without a replacement, and Ford announced record losses. In a surprise announcement, the discarded Taurus nameplate would be re-used on an improved Five Hundred which had dissapointing sales and whose nameplate was recognized by less than half of most people, but an overwhelming majority was familiar with the Taurus.

Brand management
From Wikipedia, the free encyclopedia

Jump to: navigation, search The discipline of brand management was started at Procter & Gamble PLC as a result of a famous memo by Neil H. McElroy[citation needed]. Brand management is the application of marketing techniques to a specific product, product line, or brand. It seeks to increase the product's perceived value to the customer and thereby increase brand franchise and brand equity. Marketers see a brand as an implied promise that the level of quality people have come to expect from a brand will continue with present and future purchases of the same product. This may increase sales by making a comparison with competing products more favorable. It may also enable the manufacturer to charge more for the product. The value of the brand is determined by the amount of profit it generates for the manufacturer. This results from a combination of increased sales and increased price. The annual list of the worlds most valuable brands, published by Interbrand and Business Week, indicates that the market value of companies often consists largely of brand equity. Research by McKinsey & Company, a global consulting firm, in 2000 suggested that strong, well-leveraged brands produce higher returns to shareholders than weaker, narrower brands. Taken together, this means that brands seriously impact shareholder value, which ultimately makes branding a CEO responsibility.

Contents
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1 Principles o 1.1 Types of brands 2 Techniques 3 Problems 4 See also 5 References

[edit] Principles
A good brand name should:

be legally protectable be easy to pronounce be easy to remember be easy to recognize attract attention suggest product benefits (e.g.: Easy-Off) or suggest usage suggest the company or product image distinguish the product's positioning relative to the competition.

[edit] Types of brands

A premium brand typically costs more than other products in the category. An economy brand is a brand targeted to a high price elasticity market segment. A fighting brand is a brand created specifically to counter a competitive threat. When a company's name is used as a product brand name, this is referred to as corporate branding. When one brand name is used for several related products, this is referred to as family branding. When all a company's products are given different brand names, this is referred to as individual branding. When a company uses the brand equity associated with an existing brand name to introduce a new product or product line, this is referred to as brand leveraging. When large retailers buy products in bulk from manufacturers and put their own brand name on them, this is called private branding, store brand, or private label. Private brands can be differentiated from manufacturers' brands (also referred to as national brands). When two or more brands work together to market their products, this is referred to as cobranding. When a company sells the rights to use a brand name to another company for use on a non-competing product or in another geographical area, this is referred to as brand licensing. An employment brand is created when a company wants to build awareness with potential candidates. In many cases, such as Google, this brand is an integrated extension of their consumer.

[edit] Techniques
Brand rationalization refers to reducing the number of brands marketed by a company. Some companies tend to create more brands and product variations within a brand than economies of scale would indicate. Sometimes, they will create a specific service or product brand for each market that they target. In the case of product branding, they may do this to gain retail shelf space (and reduce the amount of shelf space allocated to competing brands). A company may decide to rationalize their portfolio of brands from time to time to gain production and marketing efficiencies. They may also decide to rationalize a brand portfolio as part of corporate restructuring. A recurring challenge for brand managers is to build a consistent brand while keeping its message fresh and relevant. An older brand identity may be misaligned to a redefined target market, a restated corporate vision statement, revisited mission statement or values of a company. Brand identities may also lose resonance with their target market through demographic evolution. Repositioning a brand (sometimes called rebranding), may cost some past brand equity, and can confuse the target market, but ideally, a brand can be repositioned while retaining existing brand equity for leverage. Brand Orientation is a deliberate approach to working with brands, both internally and externally. The most important driving force behind this increased interest in strong brands is the accelerating pace of globalisation. This has resulted in an ever-tougher competitive situation on many markets. A products superiority is in itself no longer sufficient to guarantee its success. The fast pace of technological development and the increased speed with which imitations turn up on the market have dramatically shortened product lifecycles. The consequence is that product-related competitive advantages soon risk being transformed into competitive prerequisites. For this reason, increasing numbers of companies are looking for other, more enduring, competitive tools such as brands. Brand Orientation refers to "the degree to which the organisation values brands and its practices are oriented towards building brand capabilities (Bridson & Evans, 2004)

[edit] Problems
There are several problems associated with setting objectives for a brand or product category.

Many brand managers limit themselves to setting financial objectives. They ignore strategic objectives because they feel this is the responsibility of senior management. Most product level or brand managers limit themselves to setting short term objectives because their compensation packages are designed to reward short term behaviour. Short term objectives should be seen as milestones towards long term objectives.

Often product level managers are not given enough information to construct strategic objectives. It is sometimes difficult to translate corporate level objectives into brand or product level objectives. Changes in shareholders' equity are easy for a company to calculate. It is not so easy to calculate the change in shareholders' equity that can be attributed to a product or category. More complex metrics like changes in the net present value of shareholders' equity are even more difficult for the product manager to assess. In a diversified company, the objectives of some brands may conflict with those of other brands. Or worse, corporate objectives may conflict with the specific needs of your brand. This is particularly true in regard to the trade-off between stability and riskiness. Corporate objectives must be broad enough that brands with high risk products are not constrained by objectives set with cash cows in mind (see B.C.G. Analysis). The brand manager also needs to know senior management's harvesting strategy. If corporate management intends to invest in brand equity and take a long term position in the market (i.e. penetration and growth strategy), it would be a mistake for the product manager to use short term cash flow objectives (ie. price skimming strategy). Only when these conflicts and tradeoffs are made explicit, is it possible for all levels of objectives to fit together in a coherent and mutually supportive manner. Many brand managers set objectives that optimize the performance of their unit rather than optimize overall corporate performance. This is particularly true where compensation is based primarily on unit performance. Managers tend to ignore potential synergies and inter-unit joint processes.

Product management is an organizational function within a company dealing with the product planning or product marketing of a product or products at all stages of the product lifecycle. Product Management is also a collective term used to describe the broad sum of diverse activities performed in the interest of delivering a particular product to market. From a practical perspective, product management is an occupational domain which hold two professional disciplines: product planning and product marketing. This is because the product's functionality is created for the user via product planning efforts, and product value is presented to the buyer via product marketing activities. Product planning and product marketing are very different but due to the collaborative nature of these two disciplines, some companies erroneously perceive them as being one discipline, which they call product management. Done carefully, it is very possible to functionally divide the product management domain into product planning and product marketing, yet retain the required synergy between the two disciplines.

Brand extension or brand stretching is a marketing strategy in which a firm that markets a product with a well-developed image uses the same brand name but in a different product category. Brands use this as a strategy to increase and leverage equity (definition: the net worth and long-term sustainability just from the renowned name). An example of a brand extension is Jello-gelatin creating Jello pudding pops. It increases awareness of the brand name and increases profitability from offerings in more than one product category. However, a brand's "extendibility" depends on how strong consumer's associations are to the brand's values and goals. Ralph Lauren's Polo brand successfully extended from just clothing to home furnishings like bedding and towels. Both clothing and bedding are made of linen and fulfill a similar consumer function of comfort and homeliness. Arm & Hammer leveraged it's well-known brand equitiesfrom basic baking soda into the oral care and laundry care categories. By emphasizing its key attributes, the cleaning and deodorizing properties of its core product, Arm & Hammer was able to leverage those attributes into new categories with success. While there can be significant benefits in brand extension strategies, there can also be significant risks, resulting in a diluted or severely damaging a brand image. Poor choices for brand extension may dilute and deteriorate the core brand and damage the brand equity (Aaker, 1990; Martinez and Pina, 2003). Most of literatures were focus on the consumer evaluation and positive impact on parent brand. In practical cases, the failures of brand extension are at higher rate than success. On the other hand, few studies show that negative impact may dilute brand image and equity (Loken and John, 1993; RoedderJohn et al., 1998). In spite of the positive impact of brand extension, negative association and wrong communication strategy do harm the parent brand even brand family (Aaker, 1990; Tauber, 1981, 1988). Product extensions, on the other hand, are versions of the same parent product that serve a segment of the target market and increase the variety of an offering. An example of a product extension is Coke vs. Diet Coke in same product category of soft drinks. This tactic is undertaken due to the brand loyalty and brand awareness they enjoy consumers are more likely to buy a new product that has a tried and trusted brand name on it. This means the market is catered for as they are receiving a product from a brand they trust and Coca Cola is catered for as they can increase their product portfolio and they have a larger hold over the market in which they are performing in.

Contents
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1 Types of extension 2 Categorisation theory 3 Effect on extension failure 4 Brand equity 5 References