Brand Risk Management

Ankit Gautam (Roll No.01)

Shivali Sontakke (Roll No.10)
Group No.05
?
 Brand Risk Management
Brands are becoming more valuable and more vulnerable
Brand risk is important for internet based startups to Giants

Brand Risk is multifaced- Financial,

Brand Risk?
By Product of all variety if risks (product
liability lawsuit, adverse regulatory decisions)
threats to brand equity (customer choosing
other product over your)
hazard, strategic and operational risk,
Brand risk Management-
Can be most effectively be conducted when Company's risk
are identified, measured, and managed in an integrated
manner (within enterprise risk management framework)

Brand Risk- changes in stakeholder perception that threaten

1) Sustainability of current demand for a company's product and services
2) Company's commercial freedom or license to operate
 Brands risk could be generated by:

A company's own conduct- manufacturing

defects in product /poor customer service
The behavior of customers or competitors-
regardless of the company's own product-
that might suddenly or gradually depress
demand for the company's wares

Political or community opposition to a company that might limit

its ability to develop, or even transact, business in a particular
region or product/ service category
 Dimensions of Brand Risk

Market- Related changes. External to the management of the company. Eg- Social
values may change, making products that once commanded premium prices
seems less attractive. Eg- Internet service

Essentials- These are the foundations of corporate, or product, reputation. Cars that
have a reputation for being unsafe will not sell. Banks that have a reputation for
stealing, losing or gambling their clients' money will not prosper.

Differentiators- These are the constituents of what is termed brand equity: the set
of image elements that have the ability to shift economic demand in favor of (or
against- brand equity can be negative), the company or its products.
 Why Are Brands Becoming More Valuable
1. The value proposition glut- How your product differs from other in market

2. Brand consolidation- Cut the brand numbers

3. Growing price competition- Strong brand values—particularly emotional values—can

protect a brand from intensifying price competition

4. Brand stretching into new products or services

5. Channel switching- Brand equity built through one sales channel can sometimes be
transferred to another.

6. Outsourcing- focus on core competence—and outsourcing everything else

7. Relationship-building- New technologies

8. Brand alliances- By teaming up with other well-respected companies. Eg- Tata Croma
 Why Are Brands Becoming More Vulnerable?

Where brands are stretched across a number of products or services, brand failure in
one area can taint perceptions of the brand in other areas.

As per Svensson, “`Vulnerability is a condition that is caused by time and relationship

dependencies in a company’s business activities in supply chain channels”

Example:- The strength of McDonald’s relies on supply-chain network e.g. Vegetable and chicken
patties comes from Vista Processed foods Pvt Ltd. , French fries and potato wedges by McCain
Foods India Pvt. Ltd. And so on.

1) Value Concentration- As value is concentrated in fewer brands, the threat posed by risks to these
brands will correspondingly grow in severity. To take one obvious example, the recall of a product
accounting for 30% of a company's profits will be more damaging than the recall of a product
accounting for 10% of profits.
e.g. Maggi attains over 60% market share so Maggi lead case controversy has greatly affected it’s % profit.
Brand Extension:- When brands are extended across numbers of other products e.g.;
Horlicks’ brand extension into noodles.

2) Product Substitution- Greater ease of product and service substitution

Burger king is substitution to McDonald’s or Nirma detergent is substitute to
Surf, local salon is substitute to Javed Habib

3) Outsourcing- Outsourcing relates to customer service and other functions that

may contribute significantly to a company's brand equity
e.g. if Tata sky outsources customer service business
 Brand risk in relation to customer and audiences

• As per Global Web Index, 54% of Social media users browse social media to research
products e.g. before buying any product on Amazon and Flipkart, customer look for
feedback regarding product

• Brand risk management needs to take into account the dynamic relationship among
the perceptions of different audience

• Example:- Tata Nano positioned itself as cheap car, failed to read Indian consumer
perception

• Examples:- Bisleri Pop failed to read customer strong inclination for Coca cola and
Thump-ups
 Risk Management Strategy
• Evaluate your brand- Access strength and weakness
in the context of its risk environment

• Employee Perspective- To gauge their willingness and ability to sustain your brand
promise and to provide further insights into customers

• Risk mapping- Quantify threats, covering all the major strategic, operational, hazard
and financial risks affecting the company. risk map ranks risks by frequency and severity

• External and internal research- Evaluate the positive value of your corporate and product/
service brands as a form of "insurance" protecting you against other risks. How trusted is
management in the eyes of stakeholders such as consumers, investors and regulators

• Implement an integrated risk management strategy- Protects your brand from

the major risks identified, strengthens your brand in those areas where a strong brand
can help mitigate other risks
 Brand Catastrophies and Brand Erosion
Catastrophe - An oil spill, a plane crash, food or drink Brand erosion - is when there is a loss of value in that
contamination, a defective car component that threatens brand name and a decrease in perceived value among
driver safety. The brand risks posed by such events are consumers
immediate, public and, usually, severe

e.g. Tata Nano caught fire due to ruptured fuel line; e.g. Nokia has not accepted face of change in terms of
foreign object in the exhaust system technology and slowly-slowly eroded from mind of customer

These non-catastrophic events include:

Brand Vulnerability Analysis :-
Catastrophic event and brand erosion
risks in relation to value creation and
value destruction
• A proposed merger or acquisition e.g. Vodafone-Idea merger
• A spin-off or recapitalization e.g. Hero Honda
• A major enterprise restructuring e.g. Facebook restructured itself related to
security and data privacy issues
• Outsourcing of a brand relevant activity, such as technology or customer
support e.g. P&G outsourced some of the research and development tasks
to accelerate innovation.
Thank You