UNIT-4

BRAND MANAGEMENT

Brand Management - Meaning and Important Concepts

BRAND:A brand is the set of product or service attributes imbibed in the consumer’s mind in the form of a
name, symbol, logo, design and trademark. The importance of brand management is:

- Product differentiation from competitors

- Building corporate image
- Creating bundle of benefits for different product categories
- Attract and retain the most loyal customers
Brand management begins with having a thorough knowledge of the term “brand”. It includes developing a
promise, making that promise and maintaining it. It means defining the brand, positioning the brand, and
delivering the brand. Brand management is nothing but an art of creating and sustaining the brand. Branding
makes customers committed to your business. A strong brand differentiates your products from the competitors. It
gives a quality image to your business.

IMPORTANCE OF BRAND MANAGEMENT

A brand represents who your company is and what it stands for. This includes your name, logo, messaging,
merchandise, design, and any other feature that identifies your company and its products and service and makes it
distinct from others. With your brand you are developing a promise, conveying the message of this promise and
then maintaining it.

Brand management is the science of crafting and sustaining a brand. This means defining the brand, positioning
the brand, and delivering the brand value constantly. Branding creates customer commitment to your business. A
robust brand differentiates its products from the competitors and gives your business a leg up on the others,
allowing you to increase sales and grow your business.

Brand management includes handling both the noticeable and intangible characteristics of a brand. When it comes
to product brands, this includes the product itself, packaging, pricing, availability, etc. With service brands,
tangibles include customers’ experience. The intangibles include emotional connections and expectations with
products and services. Branding also involves assembling a blend of the right marketing campaigns to create and
reinforce your identity. If done right, you can even create a brand that is able to break through the noise and create
brand loyalty.

Your brand should:

• Make your product or service distinctive from the competition

• Identify what customers can only get from your brand (Don’t camouflage your strengths!)

• Trigger instant recognition with customers and prospects

• Position yourself as an expert

• Be present when and where it matters (Queue your integrated marketing campaigns)

• Remind people of the reputation for which you are known. Show up locally to reinforce this

• Place your company top-of-mind with your audience

• See better return on investment, more brand awareness

• Capitalize on mind share to help drive sales

Why Brand Management Matters

Customers will recognize your company, your product, your service and your status through your brand. You can
build an incredible brand through messages, images and ads but whether you realize it or not, your company is
creating this reputation with everything that you and your local affiliates do. So you need to make sure you are
consistently living up to your brand promise each and every day.

The most important part of brand management is ongoing maintenance and control. Proper brand management
involves making sure that each promotional piece, touch point and every usage of your name, logo and message
supports your organization and goals by reinforcing your brand in the way you intended. This allows you continue
to strengthen the association your brand imprints on your customers. Even the best brands can fall apart if not
managed properly.
Many large corporations hire a full-time brand manager to ensure the brand is held in high regard, and not
diminished or misused. Even with a brand manager, developing high quality promotional pieces that consistently
strengthen your brand and controlling its use can be a challenge for anyone.

Managing your Brand Throughout Your Channel

Brand management becomes even more challenging once you additional parties. If you’re a brand that sells your
products or services through resellers, VARs, agents, distributors or other local affiliates, you know this better
than anyone. Local affiliates are notorious for using out of date information, old logos and off-brand messaging if
they aren’t provided the content they need. And brands generally don’t have the visibility or control at the local
level to police their brand. So what is a brand to do?

Revenue helps brands manage the chaos of local marketing by enabling them to distribute the content, tools, data
and funds needed to activate and empower channel partners to market effectively – all with complete control and
visibility to activities and results.

Branding is more about following rules because if you don’t follow those rules, things don’t look the same and
people won’t remember you. When you put out your marketing pieces, you want to create a similar look and feel
so that people remember you. And you want that similar look and feel on every piece you put out.

The good thing is that you get to make the rules…colors are the same, style of lettering is the same, logo, etc.
However, there is some flexibility as long as you follow the rules. You can’t go too far out of bounds, but you can
change some things within the framework of what others can still recognize.

Branding in your marketing has to make you feel something. A technology company can’t have an old-style font
— you might not think that they are very advanced.

A brand consists of eight basic building blocks:

• The name

• The logo (brand icon)

• The brand’s colors

• The slogan and brand messaging

• The sound of the brand

• The overall look and feel = the brand’s position

• Packaging the brand

• The brand experience

A brand is a greater sum of its parts. It is always more than just the nuts and bolts, the pieces; great brands are
always the result of the whole equaling more than the sum of its parts.

Branding is about making the consumer or buyer more hip, more in the “know,” more cool than anybody else. We
are a generation and a nation wanting to be special. We want to be richer, more beautiful, better dressed, and more
effortlessly gorgeous than any other generation that we know.

Benefits of Branding

Your business needs to create a positive image in the minds of consumers. Contrary to what most people believe,
branding isn’t just a logo. Your business’s purpose, focus, and image all combine to create your brand. Why
should you make this effort? Below are a few benefits:

• You are remembered: It’s hard to remember a company with a generic name. You may not be able to
distinguish their purpose and business focus. And why would you call a company if you couldn’t tell
what they did? Branding your business ensures that consumers will know what you’re about.

• You gain customer loyalty: The fact is, people build close bonds with brand identities. Consumers want
quality products that they can trust. So, your business should have an identity that your customers can
cling to. If your company delivers great products and services and has a great brand identity, people will
remember you. Additionally, they will often refer you to friends and family.

• You become well-known: You want the people who have not done business with you to still know who
you are and what you do. If they see your ads on billboards, hear them on the radio, see them on
television, or any other media, they will know your brand identity. And when the time comes that they
need your product or service, your company will be the first to come to mind.

• Consumers pay for image: We are a very brand-aware society. People commonly associate brand names
with quality and may only buy certain brands for that reason. If people only want one brand of a
particular product, they are willing to pay a higher price. Having a great brand will make your company
have a superior image and cause consumers to forget about the competition.

When you have distinguished your business through branding, the marketing has the capability of becoming so
profound that little else is necessary. Developing your brand takes time and effort, but after it has been solidified,
and after customers have had the chance to identify with it, your sales can increase naturally. You won’t have to
spend as much time planning marketing strategies to attract the public.
Online Branding

Branding, as a whole, is essential for any serious business because a company’s brand is what distinguishes it
from its competitors. In today’s computer age, it is necessary for most businesses to have an online presence to
stay competitive. Effective Internet branding, just like its offline counterpart, helps bring awareness to your
unique business offering and drive customer demand.

While Internet branding offers huge opportunities for business, in order for it to be effective, one needs to attract
and engage its customers. This isn’t easy on the Internet. Branding is not as easy as putting up a website and
adding your company logo and slogan. Your Internet branding strategy should make your online brand noticeable
and apparent.

Branding utilizes hi-tech tools to create an online presence for your business. Graphics and animation, compelling
web copy, and overall website design that reflect your company are some of the important elements that will
bring your online brand alive. An attractive website that helps customers easily and quickly find the information
they need is the key to getting customer interaction and eventually, business. Your branding plan should include
good design elements and ease of use to create an effective overall
impression. A strong online image will make the difference between a customer who buys from you online or
switches to your competitors. Remember that online customers can just leave your website and go to your
competitors with the click of a mouse. A lot depends on the impression they get from your website. Branding
seeks to convey an immediate unique message about your business to your target clients.

Promoting Your Brand

If you haven’t already initiated a brand for your company, now might be just the time. Use these simple
techniques in the promotion of your special brand.

• Make your brand as unique as possible: Catch the eye of the public by creating something different —
something that people have not yet seen. Instead of doing what has already been done, go the opposite
direction and be creative. Don’t forget the legal dangers of copyright infringement related to borrowing or
stealing from another firm’s design.

• Display stability: Take time in the development process to establish your brand and accomplish the look
you really want. It’s better to spend sufficient time in the beginning fine-tuning your design for the
desired outcome rather than to play with it after it’s been revealed to the public. Changing your brand, and
all that’s involved with it, including colors, slogans, logos, and tag lines, doesn’t support an image of
reliability and longevity.
 • Stability should be maintained with branding: If you have integrated a brand into your company’s
marketing, use it all over the place. It should appear on all of your marketing materials, business cards,
website, and printed items. The same is true for your packaging. Your brand should appear on all of your
products.

• Give your brand away to the public with diverse promotional products: You can help your brand to
saturate the consumer population by handing out precious, yet low-cost, items. Promotional products
encourage possible customers to keep in mind your brand and your gift every time they are used.

Brand Attributes

Brand Attributes portray a company’s brand characteristics. They signify the basic nature of brand. Brand
attributes are a bundle of features that highlight the physical and personality aspects of the brand. Attributes are
developed through images, actions, or presumptions. Brand attributes help in creating brand identity.

A strong brand must have following attributes:

• Relevancy- A strong brand must be relevant. It must meet people’s expectations and should perform the
way they want it to. A good job must be done to persuade consumers to buy the product; else inspite of
your product being unique, people will not buy it.

• Consistency- A consistent brand signifies what the brand stands for and builds customers trust in brand.
A consistent brand is where the company communicates message in a way that does not deviate from the
core brand proposition.

• Proper positioning- A strong brand should be positioned so that it makes a place in target audience mind
and they prefer it over other brands.

• Sustainable- A strong brand makes a business competitive. A sustainable brand drives an organization
towards innovation and success. Example of sustainable brand is Marks and Spencer’s.

• Credibility- A strong brand should do what it promises. The way you communicate your brand to the
audience/ customers should be realistic. It should not fail to deliver what it promises. Do not exaggerate
as customers want to believe in the promises you make to them.

• Inspirational- A strong brand should transcend/ inspire the category it is famous for. For example- Nike
transcendent Jersey Polo Shirt.

• Uniqueness- A strong brand should be different and unique. It should set you apart from other
competitors in market.
 • Appealing- A strong brand should be attractive. Customers should be attracted by the promise you make
and by the value you deliver.

BRAND DECISIONS

Brand decisions, simply put, are decisions that one makes about a certain brand you are building or promoting.
Yes, this sounds like a very general definition, but this is mostly because brand decisions definitely cover a lot of
ground.

Let’s take a look at the four major branding decisions:

1. Brand Positioning

Brand positioning concerns how you want customers to perceive the brand as compared to its competitors. Your
brand can be positioned based on these three things:

• Attributes
This can be considered as the lowest level in terms of brand positioning. It mainly concerns the physical attributes
of the brand, such as the colors used, the overall design, and anything similar. If you are marketing a car, for
example, this would mostly involve whether you’re selling as SUV or a sedan, and the colors that it would be
available in.

Evidently, this is not exactly something that would set the brand apart from its competitors considerably because
it is always easy to change and mimic physical attributes. This is why this has to work hand in hand with other
factors that determine positioning.

• Benefits
The set of benefits that the target market would enjoy would also be part of brand positioning. Going with our
previous example, this would cover the car’s safety features, speed capabilities, and other similar specs.

• Values and Beliefs

Because benefits and attributes can be shared between competitors, the challenge really is to create a deep
emotional connection between the brand and the market. This is where a brand’s set of values and beliefs would
come in.

A great example of this is Coca-Cola. Their annual Christmas campaigns have become a cultural phenomenon,
which endears them to families all over the world. This shows that they value tradition, which makes the brand an
even greater hit during the holidays.
2. Brand Name Selection

This is a particularly tricky process, but coming up with the right decision could make or break your success. The
name of the brand has to be distinctive, catchy, and easy to remember.

In the past years, you have seen brands that focus on catching attention – Yahoo! and Google are perfect
examples. However, this trend has changed dramatically. Today, a lot of brands choose to pick names that carry
real definitions. Quora, for example, is the plural of “quorum”, which pertains to the minimum number of people
required before a group can make any decision or conduct business. Also, one of its founders, Charlie Cheever,
mentioned that the word is also cool in the sense that it starts with a “Q” and ends with an “A”, which pretty much
sums up what people do on the website.

3. Brand Sponsorship

When it comes to brand sponsorship, you would have to think about choosing among four options. Would you
like it to be a manufacturer’s brand, a private brand, a licensed brand, or a co-brand?

• Manufacturer’s Brand
Going for a manufacturer’s brand would mean marketing your own output. For example, Sony would still be
selling the products they manufacture as Sony TVs or Sony cameras. Now if they start manufacturing products to
be sold to resellers who will not be using the Sony brand, then these resellers would be using a private brand.

• Private Brand
Private brands have become bigger in recent years because consumers have also become less brand-conscious and
more practical. Evidently, products that carry a popular brand name would be more expensive compared to
private brands.

• Licensed Brand
Licensed brands are companies that use a certain name or symbol that is not necessarily created by a single
manufacturer. Hello Kitty, Disney, and Star Wars are perfect examples of licensed brands. You have hundreds of
manufacturers creating products that use these brands.

• Co-Brand
Co-branding would mean putting two brands together for a single product. A great example here would be
Nestle’s coffee machines. Obviously, it wasn’t Nestle who manufactured Nespresso. Instead, they had other
brands like Siemens and DeLonghi working on these machines.
4. Brand Development

Brand development covers four different sectors:

• Line Extension
If the product is just an addition to a current offering, this can be considered as a line extension. This means that
you don’t have to think of a separate brand name for the new product. A great example is Cherry Coke.

Although this could be a practical option, its use is also highly discouraged if you already have quite a lot of
products under a single brand. Aside from the fact that it could be confusing, there is also a risk of the original
branding losing its rea meaning.

• Brand Extension
When you say brand extension, it means coming up with an entirely new product line, but still under the same
brand. Kellogg’s did this with their Special K line, with an entire set of cereals, biscuits and other similar products
under it.

The advantage here is that you group the products accordingly, taking away the potential confusion that a simple
line extension presents. However, if the new product line receives bad publicity or does not work out, there is also
a risk of the original brand being dragged down.

• Multibrand
Huge companies apply the multibrand approach, which means that they have separate product lines and market
several brands under each category. In the USA alone, for example, Procter & Gamble sells 5 different shampoo
brands. This allows them to have a separate brand offering to different market segments.

• New Brand
Evidently, any new brand would fall under this segment. However, older manufacturers and businesses could also
use this approach if their new product does not fit into the existing brands they already have. This can also be
used when the existing brands do not have the same power or appeal that it used to have, or its owners were
hoping they would have.

BRAND AWARENESS

Brand awareness is the probability that consumers are familiar about the life and availability of the product. It is
the degree to which consumers precisely associate the brand with the specific product. It is measured as ratio of
niche market that has former knowledge of brand. Brand awareness includes both brand recognition as well as
brand recall. Brand recognition is the ability of consumer to recognize prior knowledge of brand when they are
asked questions about that brand or when they are shown that specific brand, i.e., the consumers can clearly
differentiate the brand as having being earlier noticed or heard. While brand recall is the potential of customer to
recover a brand from his memory when given the product class/category, needs satisfied by that category or
buying scenario as a signal. In other words, it refers that consumers should correctly recover brand from the
memory when given a clue or he can recall the specific brand when the product category is mentioned. It is
generally easier to recognize a brand rather than recall it from the memory.

Brand awareness is improved to the extent to which brand names are selected that is simple and easy to
pronounce or spell; known and expressive; and unique as well as distinct. For instance - Coca Cola has come to be
known as Coke.

There are two types of brand awareness:

• Aided awareness- This means that on mentioning the product category, the customers recognize your
brand from the lists of brands shown.

• Top of mind awareness (Immediate brand recall)- This means that on mentioning the product
category, the first brand that customer recalls from his mind is your brand.

The relative importance of brand recall and recognition will rely on the degree to which consumers make product-
related decisions with the brand present or not. For instance - In a store, brand recognition is more crucial as the
brand will be physically present. In a scenario where brands are not physically present, brand recall is more
significant (as in case of services and online brands).

Building brand awareness is essential for building brand equity. It includes use of various renowned channels
of promotion such as advertising, word of mouth publicity, social media like blogs, sponsorships, launching
events, etc. To create brand awareness, it is important to create reliable brand image, slogans and taglines. The
brand message to be communicated should also be consistent. Strong brand awareness leads to high sales and
high market share. Brand awareness can be regarded as a means through which consumers become acquainted
and familiar with a brand and recognize that brand.

Importance of Brand Awareness

A brand is the meaning behind your company's name, logo, symbols and slogans. Having a unique and
memorable brand helps you build brand awareness and create a long-term position in the marketplace. Brand
awareness is a measure of how well your brand is known within its target markets.

First Step
Creating brand awareness is usually the first step in building advertising objectives. Before you can create a
favorable impression or motivate customers to buy, they have to become aware of your brand and its meaning.
Marketing messages delivered through various media are often used to communicate the brand name and
important messages tied to its products. Making people aware that you exist helps drive traffic to your business
and create a buzz in the market.

Top of Mind

The highest level of brand awareness is top of mind awareness. This is when customers think of you first when
they need to make a purchase within your product category. You can build top of mind awareness through
repeated exposure and consistent delivery of a good product or service over time. This is a huge advantage in the
market when customers enter a buying situation and your brand immediately comes to mind first.

BRAND IMAGE

Today’s generation is quite impressionable and hence in order to enhance their personality, or to meet social
standards, they gravitate towards branded products that are creating a stir in the market. This brand image is
simply an impression or an imprint of the brand developed over a period of time in the consumer’s mindset.

This image of a brand is ultimately a deciding factor that determines the product sales. The brand image is very
important, as it is an accumulation of beliefs and views about that particular brand. The character and value of the
brand is portrayed by its image, as it is the main component in the scheme of things.

The brand image is eventually the mirror through which the company’s key values are reflected.

Example of brands with strong Brand image

Every brand tries to create an image that will take its company and products forward and for this, they spend lots
of money and implement many creative ideas.

For example, Colgate is a brand name known in every Indian household. The brand has been able to create an
image that defines trust, hope and belief. The consumer is convinced that the usage of Colgate products will give
satisfactory results.

The mindset of customers is set that using Colgate toothpaste will take care of their teeth and using the product
will result in better health and oral care. Thus, when in the market, the consumer will mostly buy Colgate, as the
brand Colgate has been synonymous with trust. Similarly, if there is another brand image etched in the consumers
mind, he will buy that particular product.

Other brands with strong brand image are

• Apple

• Google

• Adidas and many others

Even advertisements related to a brand try to build a strong image of the brand so as to get across the fact that the
brand can be trusted and hence people can rely on them. A branded product that has an encouraging reputation
and image saves a consumer’s time and energy.

As the brand is an established one, the clients are sure that, the products have already been tested and approved
and now the company will provide them the best possible service and merchandise.

Advantages of building a strong brand image

• The perception of a consumer towards a particular brand is in direct relation to the image of the brand.

• Having a strong brand image directly impacts the consumer buying behavior, and hence premium brands
as well as top brands have a target of building a strong and positive image of the brand.

• A positive brand image can make the decision process easier, thereby promoting a lot of repeat purchases as
well as primary purchases.

• A promising brand image conveys the success of the product and gives results with increased sales and
revenues.

• A positive image gives confidence to the customers as they feel that the brand is sincere and clear in
its vision to create the best.

• It is possible to build brand image with strong advertisements because of which companies are promoting
their products through various famous personalities to enhance their image of brand.

Disadvantages

Let us count on the disadvantages first before getting into what all is good about brand image
 • If an organization is unable to depict a satisfactory brand image, then the consequences can be felt quickly.
The brand might fail in the short term itself if the brand image created is negative.

• The product is principally dependent on its brand image and unfavorable or negative image results in the
disgrace of the company, and later on bringing the same brand becomes difficult.

• The main disadvantage of a brand image is that the brand and its products will always be identified with the
image until further changes in the brand image are impelled.

• If in any circumstances the image is compromised, then sales and revenues will also be hampered and
therefore it is necessary to gather a right team that will create and regularly maintain the brand image of a
product.

Film stars like Priyanka Chopra, Ranbir Kapoor, Sonam Kapoor, Shahrukh Khan and Salman Khan, Sports stars
like Sachin Tendulkar, M S Dhoni, and Virat Kohli are part of many advertisements. These personalities help to
create and maintain valuable image for the brand that proves beneficial in the long run.

The main advantage is that a customer is secure in the knowledge that the brand is dependable and will provide
him/her maximum benefits. The honor of a company is replicated by its brand image and it is this image that a
person looks towards at. Hence, brand and its image are very important for the success of a company.

BRAND PERSONALITY

Brand personality is the way a brand speaks and behaves. It means assigning human personality
traits/characteristics to a brand so as to achieve differentiation. These characteristics signify brand behaviour
through both individuals representing the brand (i.e. it’s employees) as well as through advertising, packaging,
etc. When brand image or brand identity is expressed in terms of human traits, it is called brand personality. For
instance - Allen Solley brand speaks the personality and makes the individual who wears it stand apart from the
crowd. Infosys represents uniqueness, value, and intellectualism.

Brand personality is nothing but personification of brand. A brand is expressed either as a personality who
embodies these personality traits (For instance - Shahrukh Khan and Airtel, John Abraham and Castrol) or distinct
personality traits (For instance - Dove as honest, feminist and optimist; Hewlett Packard brand represents
accomplishment, competency and influence). Brand personality is the result of all the consumer’s experience s
with the brand. It is unique and long lasting.

Brand personality must be differentiated from brand image, in sense that, while brand image denote the
tangible (physical and functional) benefits and attributes of a brand, brand personality indicates emotional
associations of the brand. If brand image is comprehensive brand according to consumers’ opinion, brand
personality is that aspect of comprehensive brand which generates it’s emotional character and associations in
consumers’ mind.
Brand personality develops brand equity. It sets the brand attitude. It is a key input into the look and feel of any
communication or marketing activity by the brand. It helps in gaining thorough knowledge of customers feelings
about the brand. Brand personality differentiates among brands specifically when they are alike in many
attributes. For instance - Sony versus Panasonic. Brand personality is used to make the brand strategy lively, i.e,
to implement brand strategy. Brand personality indicates the kind of relationship a customer has with the brand. It
is a means by which a customer communicates his own identity.

Brand personality and celebrity should supplement each other. Trustworthy celebrity ensures immediate
awareness, acceptability and optimism towards the brand. This will influence consumers’ purchase decision and
also create brand loyalty. For instance - Bollywood actress Priyanka Chopra is brand ambassador for
J.Hampstead, international line of premium shirts.

BRAND POSITIONING

Brand positioning refers to “target consumer’s” reason to buy your brand in preference to others. It is ensures
that all brand activity has a common aim; is guided, directed and delivered by the brand’s benefits/reasons to
buy; and it focusses at all points of contact with the consumer.

Brand positioning must make sure that:

• Is it unique/distinctive vs. competitors ?

• Is it significant and encouraging to the niche market ?

• Is it appropriate to all major geographic markets and businesses ?

• Is the proposition validated with unique, appropriate and original products ?

• Is it sustainable - can it be delivered constantly across all points of contact with the consumer ?
 • Is it helpful for organization to achieve its financial goals ?

• Is it able to support and boost up the organization ?

In order to create a distinctive place in the market, a niche market has to be carefully chosen and a differential
advantage must be created in their mind. Brand positioning is a medium through which an organization can
portray it’s customers what it wants to achieve for them and what it wants to mean to them. Brand positioning
forms customer’s views and opinions.

Brand Positioning can be defined as an activity of creating a brand offer in such a manner that it occupies a
distinctive place and value in the target customer’s mind. For instance-Kotak Mahindra positions itself in the
customer’s mind as one entity- “Kotak ”- which can provide customized and one-stop solution for all their
financial services needs. It has an unaided top of mind recall. It intends to stay with the proposition of “Think
Investments, Think Kotak”. The positioning you choose for your brand will be influenced by the competitive
stance you want to adopt.

Brand Positioning involves identifying and determining points of similarity and difference to ascertain the right
brand identity and to create a proper brand image. Brand Positioning is the key of marketing strategy. A strong
brand positioning directs marketing strategy by explaining the brand details, the uniqueness of brand and i t’s
similarity with the competitive brands, as well as the reasons for buying and using that specific brand. Positioning
is the base for developing and increasing the required knowledge and perceptions of the customers. It is the single
feature that sets your service apart from your competitors. For instance- Kingfisher stands for youth and
excitement. It represents brand in full flight.

There are various positioning errors, such as-

• Under positioning- This is a scenario in which the customer’s have a blurred and unclear idea of the
brand.

• Over positioning- This is a scenario in which the customers have too limited a awareness of the brand.

• Confused positioning- This is a scenario in which the customers have a confused opinion of the brand.

• Double Positioning- This is a scenario in which customers do not accept the claims of a brand.

ATTRIBUTE POSITIONING

Positioning by product attributes and benefits: It is to associate a product with an attribute, a product feature, or a
consumer feature. Sometimes a product can be positioned in terms of two or more attributes simultaneously. The
price/quality attribute dimension is commonly used for positioning the products.
 POSITIONING BY PRODUCT ATTRIBUTES AND BENEFITS

Associating a product with an attribute, a product feature or a consumer feature. Sometimes a product can be
positioned in terms of two or more attributes simultaneously. The price/ quality attribute dimension is commonly
used for positioning the products.

A common approach is setting the brand apart from competitors on the basis of the specific characteristics or
benefits offered. Sometimes a product may be positioned on more than one product benefit. Marketers attempt to
identify salient attributes (those that are important to consumers and are the basis for making a purchase decision)

• Consider the example of Ariel that offers a specific benefit of cleaning even the dirtiest of clothes because of
the micro cleaning system in the product.
• Colgate offers benefits of preventing cavity and fresh breath.
• Promise, Balsara’s toothpaste, could break Colgate’s stronghold by being the first to claim that it contained
clove, which differentiated it from the leader.
• Nirma offered the benefit of low price over Hindustan Lever’s Surf to become a success.
• Maruti Suzuki offers benefits of maximum fuel efficiency and safety over its competitors. This strategy helped
it to get 60% of the Indian automobile market.
POSITIONING BY PRICE/ QUALITY

Marketers often use price/ quality characteristics to position their brands. One way they do it is with ads that
reflect the image of a high-quality brand where cost, while not irrelevant, is considered secondary to the quality
benefits derived from using the brand. Premium brands positioned at the high end of the market use this approach
to positioning.
Another way to use price/ quality characteristics for positioning is to focus on the quality or value offered by the
brand at a very competitive price. Although price is an important consideration, the product quality must be
comparable to, or even better than, competing brands for the positioning strategy to be effective.
Parle Bisleri – “Bada Bisleri, same price” ad campaign.

POSITIONING BY USE OR APPLICATION

Another way is to communicate a specific image or position for a brand is to associate it with a specific use or
application.
Surf Excel is positioned as stain remover ‘ Surf Excel hena!’

Also, Clinic All Clear – “Dare to wear Black”.

Price Quality approach of Positioning

The price quality approach of positioning uses the relation between price and quality such that it optimally prices
a product according to the quality of the product to keep the product higher in the customers mind. Pricing does
not need to be high for higher positioning. For example – Walmarthas positioned itself in the minds of its
customer using low pricing rather than high pricing.

Lets review the basics. What is positioning? We know that positioning is related to what perception a customer
forms in his mind for your product. Both pricing and quality play a crucial role in forming the right perception in
the minds of customers – internal as well as external.

Lets take an example. You are offered an option to buy clothes. You might buy a jeans worth 1500 rs or you may
buy 3 jeans worth the same amount of money. Immediately what comes in your mind is that the 3 jeans will be of
lesser quality and therefore you might not get value for money. That’s the price quality approach of positioning
for you.

Several Brands and products use the price quality approach. They will keep the pricing higher to attract only the
cream customers and keep themselves exclusive. This high pricing also ensures that the product is placed as a
quality product in customers mind. However, price quality approach can be a double edged sword. Every sector
has lower priced product and thus entry in the sector with penetration pricing becomes easier.

The best approach of price - quality is premium automobiles like BMW,Ferrari. They maintain their quality such
that their customers are ready to give the highest pricing for the cars. Thus the quality and the pricing positions
the car to the topmost segment. Retail chains like walmart and others position themselves mainly through pricing.
Whereas consumer durables mainly position themselves through a combination of pricing and quality.

Summary – The price quality approach is an excellent positioning tool. However it needs to be used with care as
changes in the market can affect the pricing strategy and thereby the margins of a company.
PRICE POSITIONING STRATEGIES:

The Internet has dramatically changed hospitality pricing. Its speed and transparency have removed most barriers
between customers and suppliers. With OTAs like Hotwire, Orbitz, and Hotels.com, you no longer need be an
industry insider to find the best pricing to suit your needs. Yet, hotels and restaurants still need to make pricing
decisions; these new challenges simply up the ante. Today, we’re looking at five price positioning strategies,
explaining their merits (and drawbacks), and providing examples. When you’re done reading, download a free
price positioning worksheet to experiment with your own pricing strategy.
The Price-Value Matrix

Many factors will influence your prices, including your competitors’ rates and products. As the name implies,
your goal is to develop a pricing strategy that places your brand and its products in a certain position relative to

your competition. One way to visualize this is the price-value

The position of your products within this matrix is a function of your brand proposition, your competitors, and
your pricing objectives. Are you looking to maximize short-term revenues or profit? Are you seeking higher
profit margins in a luxury market with sporadic sales? Do you need to differentiate more to penetrate the market?
Or, is your business in survival mode?

Once you identify your pricing objectives, plot your prices and those of your competitors on the price-value
matrix. At a glance, you’ll see how your pricing lines up with your objectives. If your rates need tweaking—either
because they “say” the wrong things about your brand relative to competitors, or because they’re undermining
your pricing objectives—consider using the following strategies to position your rates or prices more
appropriately.
Price Positioning Strategies

Skim
This strategy clearly positions your company above the rest; it tells consumers something is special (i.e., worth
paying more for) about your products. For example, look at the prices The Old Homestead restaurant has set for
their steaks and chops. We can smell the fried onions and seared, aged prime meat already. We can envision the
long white aprons of the wait staff and the impeccable table side service. To skim, set your prices higher than the
competition does in order to “skim off” customers who are willing to pay more. This strategy can be highly
profitable, but be careful: Though high prices imply high quality for many customers, it’s still critical that they
understand why they’d pay more to stay or eat at your establishment.
Match
This strategy puts your pricing on par with the competition, but not necessarily for all rates. To match, set one
rate comparable to your competition and another slightly higher. This allows you to stay competitive for a larger
pool of customers, yet doesn’t undercut the competition

Penetrate
Being the low-priced option in your market has benefits and drawbacks. The strategy is primarily designed to get
people in the door and in seats. For new establishments, low prices often seem the best way to entice consumers
to try their products. But this strategy also can depress market prices, lower margins, and set a poor precedent as
your business grows. Do your prices reflect how consumers value your hotel or restaurant? Here’s what
consumers see as they peruse online hotel options; those using penetration pricing certainly stand out.

BRAND REPOSITIONING

Brand repositioning is when a company changes abrand's status in the marketplace. This typically includes
changes to the marketing mix, such as product, place, price and promotion. Repositioning is done to keep up with
consumer wants and needs.

Brand Repositioning and Types of Brand Repositioning

Brand Repositioning is changing the positioning of a brand. A particular positioning statement may not work with
a brand.
 For instance, Dettol toilet soap was positioned as a beauty soap initially. This was not in line with its core
values. Dettol, the parent brand (anti-septic liquid) was known for its ability to heal cuts and gashes. The
extension’s ‘beauty’ positioning was not in tune with the parent’s “germ-kill” positioning.

The soap, therefore, had to be repositioned as a “germ-kill” soap (“bath for grimy occasions”) and it fared
extremely well after repositioning. Here, the soap had to be repositioned for image mismatch. There are several
other reasons for repositioning. Often falling or stagnant sales is responsible for repositioning exercises.

After examining the repositioning of several brands from the Indian market, the following 9 types of repositioning
have been identified. These are:

• Increasing relevance to the consumer

• Increasing occasions for use
• Making the brand serious
• Falling sales
• Bringing in new customers
• Making the brand contemporary
• Differentiate from other brands
• Changed market conditions.
It is not always that these nine categories are mutually exclusive. Often one reason leads to the other and a brand
is repositioned sometimes for a multiplicity of reasons.

Lipton Yellow Label Tea:

Lipton Yellow Label Tea was initially positioned as delicious, sophisticated and premium tea for the global
citizen. The advertisements also echoed this theme. For instance, all the props and participants in the
advertisements were foreign. It is possible that this approach did not find favour with the customers.
The repositioning specifically addressed the Indian consumer through an Indian idiom.

Maharaja – the positioning:

Dishwasher in its initial Stages was possibly seen as an exotic product. Thus, Maharaja positioned it as a
product aimed at the upper crust. Thus, the positioning statement was “your guests get Swiss cheese, Italian Pizza
…… you get stained glassware.” But Indians are reluctant to use dishwashers because of deeply embedded
cultural reasons. Thus, the message had to be changed to appeal to the Indian housewife. Thus the positioning was
changed to “Bye, Bye Kanta Bai” indicating that the dishwasher signaled the end of the servant maid’s tyranny.
The brand, therefore, was repositioned from a sophisticated, aristocratic product to one that is functional and
relevant to the Indian housewife.

Visa Card – the Positioning:

Visa Card had to change its positioning to make itself relevant to customers under changed circumstances.
Initially it asked the customer to “pay the way the world does” (1981). This is to give its card an aura of global
reach. But as more and more cards were launched on the same theme, to put itself in a different league, it
positioned itself as the “world’s most preferred card” (1993). To highlight the services it provided, it shifted to the
platform of “Visa Power” (1995). This focus on explaining the range of services available with the card continues
till date (Visa Power, go get it).

Brand Extension - Meaning, Advantages and Disadvantages

Brand Extension is the use of an established brand name in new product categories. This new category to which
the brand is extended can be related or unrelated to the existing product categories. A renowned/successful brand
helps an organization to launch products in new categories more easily. For instance, Nike’s brand core product is
shoes. But it is now extended to sunglasses, soccer balls, basketballs, and golf equipments. An existing brand that
gives rise to a brand extension is referred to as parent brand. If the customers of the new business have values and
aspirations synchronizing/matching those of the core business, and if these values and aspirations are embodied in
the brand, it is likely to be accepted by customers in the new business.

Extending a brand outside its core product category can be beneficial in a sense that it helps evaluating product
category opportunities, identifies resource requirements, lowers risk, and measures brand’s relevance and appeal.

Brand extension may be successful or unsuccessful.

Instances where brand extension has been a success are-

• Wipro which was originally into computers has extended into shampoo, powder, and soap.

• Mars is no longer a famous bar only, but an ice-cream, chocolate drink and a slab of chocolate.

Instances where brand extension has been a failure are-

• In case of new Coke, Coca Cola has forgotten what the core brand was meant to stand for. It thought that
taste was the only factor that consumer cared about. It was wrong. The time and money spent on research
on new Coca Cola could not evaluate the deep emotional attachment to the original Coca- Cola.
 • Rasna Ltd. - Is among the famous soft drink companies in India. But when it tried to move away from its
niche, it hasn’t had much success. When it experimented with fizzy fruit drink “Oranjolt”, the brand
bombed even before it could take off. Oranjolt was a fruit drink in which carbonates were used as
preservative. It didn’t work out because it was out of synchronization with retail practices. Oranjolt need
to be refrigerated and it also faced quality problems. It has a shelf life of three-four weeks, while other
soft- drinks assured life of five months.

ADVANTAGES OF BRAND EXTENSION

Brand Extension has following advantages:

• It makes acceptance of new product easy.

• It increases brand image.

• The risk perceived by the customers reduces.

• The likelihood of gaining distribution and trial increases. An established brand name increases consumer
interest and willingness to try new product having the established brand name.

• The efficiency of promotional expenditure increases. Advertising, selling and promotional costs are
reduced. There are economies of scale as advertising for core brand and its extension reinforces each other.

• Cost of developing new brand is saved.

• Consumers can now seek for a variety.

• There are packaging and labeling efficiencies.

• The expense of introductory and follow up marketing programs is reduced.

• There are feedback benefits to the parent brand and the organization.

• The image of parent brand is enhanced.

• It revives the brand.

• It allows subsequent extension.

• Brand meaning is clarified.

• It increases market coverage as it brings new customers into brand franchise.

• Customers associate original/core brand to new product, hence they also have quality associations.
DISADVANTAGES OF BRAND EXTENSION

• Brand extension in unrelated markets may lead to loss of reliability if a brand name is extended too far.
An organization must research the product categories in which the established brand name will work.

• There is a risk that the new product may generate implications that damage the image of the core/original
brand.

• There are chances of less awareness and trial because the management may not provide enough
investment for the introduction of new product assuming that the spin-off effects from the original brand
name will compensate.

• If the brand extensions have no advantage over competitive brands in the new category, then it will fail.

LINE EXTENSION

A product line extension strategy is an approach to developing new products for your existing customers or for
prospects who do not currently buy from you. Extending a product line involves adding new features to existing
products, rather than developing completely new products. This can reduce the cost of product development as
well as increase opportunities to grow your revenue.

Compete More Effectively

To identify opportunities for product line extension, analyze your existing products and compare them with
competitive offerings. Your competitors may include different features, a wider range of sizes or product
variations aimed at different sectors of the market, such as luxury or budget versions. Adding features that your
competitors offer may enable you to deal with prospects that you cannot currently supply with existing products.
You may also be able to increase your market share by matching competitors’ product specifications but selling at
a lower price.

Meet Changing Needs

A product line extension strategy ensures you can meet your customers’ changing needs. They may require
products in smaller or larger package sizes. They may need different levels of product quality or performance to
meet their own operational needs. You may be able to take advantage of technological developments to offer the
same type of product with superior performance. Ask your sales representatives or contact customers directly to
find out if your current product range meets their needs and to identify opportunities to extend your product line.

• Segment Your Market

Extending your product line can help your company enter new market sectors. An engineering company, for
example, may extend its range by adding features that are specific to sectors such as the automotive or aerospace
industries. In addition to offering products that meet sector needs more closely, a product line extension strategy
also helps to position a company as a specialist supplier to each market sector.

• Maintain Customer Loyalty

Maintaining sales to existing customers is important to long-term revenue growth and profitability. By extending
your product line, you may be able to sell products that your customers are currently sourcing from competitors.
This helps to increase customer loyalty and grow revenue per customer.

• Reduce Marketing Costs

Adding new products or services to your existing line can help to strengthen your brand and reduce your
marketing costs. By using the same packaging designs, logos and advertising themes that feature on your existing
products, you can ensure that customers and prospects recognize the brand values of the new products without
having to run major advertising or marketing campaigns.

Advantages of a product line extension

• Established and loyal customer base

• Existing expertise
• Retailer relationships
• Low cost of production
• Low cost of development
• Provides market information
• Competitive barriers
• Easy to implement
• Possible economies of scale
• Supply relationships
• Meets variety needs of consumers

ESTABLISHED AND LOYAL CUSTOMER BASE

If the company provides another variation of an established brand, then they are leveraging the existing loyalty
and likeability of the brand. This means that immediate sales and profit are far more likely, as well as increasing
overall customer equity and customer lifetime value.

EXISTING EXPERTISE
By concentrating on the range of products that they already produce and market a company can be reassured that
it has the existing expertise within the company to be successful of a product line extension.

RETAILER RELATIONSHIPS

Remaining within the same product category and simply extending the product line, the firm is likely to have
established wholesaler and retailer distribution channels in place. This means that the availability of the new
product should be quite wide and achieved fairly quickly and probably without the need for excessive trade
promotions.

LOW COST OF PRODUCTION

As a company has existing expertise and processes in place for this category of product, then it is likely that their
production costs will be relatively low – as the new product will be produced utilizing the existing systems of the
company.

LOW COST OF DEVELOPMENT

Because the company has developed this category product before, there should be a relatively low-cost
development – primarily because they have the in-house expertise and knowledge, along with the necessary
IT/manufacturing capabilities.

PROVIDES MARKET INFORMATION

By having a range of similar products (within the same product category), the company can various marketing
mix offering for one of these brands/products at a time and is able to generate valuable market information by
utilizing the other brands/products as a control. This allows the company to engage in more marketing
experimentation and gain greater customer insights.

COMPETITIVE BARRIERS

By having a broader range of products within the same product category, makes it more difficult for competitors
to find an obvious gap in the marketplace. It would also have the impact of fragmenting the market and splitting
segments into niches. This may have the effect of making it non-viable for a competitor to bring a similar product
to the market.
EASY TO IMPLEMENT

Having produced a marketed this type of product before, it is highly likely that the new product development
process and marketing launch will be quite simple the company to implement. They should be able to do this
easily with existing personnel and probably without the need to outsource to consultants or other specialists.

POSSIBLE ECONOMIES OF SCALE

With a broader product range, and hopefully a greater level of sales volume, it may be possible to achieve
improved economies of scale – and create a lower cost structure and a higher profit unit margin.

SUPPLY RELATIONSHIPS

Supplier relationships should be enhanced because the firm is likely to purchase more materials from the existing
suppliers because they are manufacturing and/or producing a similar product or service.

MEETS VARIETY NEEDS OF CONSUMERS

Product line extension should also meet in with a variety needs of customers, say in a food market where variety
is important – or meet the needs of a different market segment.

BRAND LICENSING

By definition brand licensing is the renting or leasing of an intangible asset. It is also defined as an opportunity to
extend value. Companies extend their brands via licensing for a variety of reasons. Brand licensing enables
companies with brands that have high preference to unlock their brands’ latent value and satisfy pent-up demand.
Through licensing, brand owners have the ability to enter new categories practically overnight, gaining them
immediate brand presence on store shelves and often in the media. Let’s take a deeper look at the benefits that
make licensing so attractive to brand owners.

BENEFITS OF BRAND LICENSING:

There are ten key benefits to licensing your brand.Brand Licensing enables:
1. Brand Managers to extend their brands with minimal investment. Through the licensing arrangement, third
party manufacturers are responsible for everything from product development to inventory management to store
replenishment.
2. The brand to obtain supplementary marketing support. For the right to use the brand in their category, the
manufacturer must agree to spend a percentage of their net sales on marketing. This marketing commitment not
only supports the category licensed, but can be significant to the overall brand.
3. Trademark protection in the category. For a brand to benefit from trademark protection in a particular category,
it must be actively sold in that category. If the category lies vacant, others may claim rights to use the mark.
Extending a brand into a category via licensing helps brand owners meet the commerce standard.
4. Increased consumer connections and insights in the categories being licensed. Extending a brand via licensing
offers thousands of incremental opportunities to connect with consumers. By inserting a survey inside the licensed
package or a toll free number on the exterior, a brand owner can gain many additional insights about the brand.
5. A brand to gain incremental shelf space. If a brand owner chooses to extend a brand via licensing into a new
category, the brand gains tremendous additional exposure in those categories in every retail store the product is
sold. When sold into major chain retailers, the brand can gain thousands of additional feet of brand exposure in
each category.
6. Entrée into new distribution channels. By licensing the brand to a manufacturer which currently sells into a
retail channel where the brand currently does not have a presence, the brand can gain access to that channel via
the licensing relationship.
7. The brand to enter new regions. Similar to new channel access, a brand can gain entrée into new regions via a
manufacturer which has a presence in regions where the brand is currently not sold.
8. Access to patented technology. Many companies which choose to license brands offer proprietary innovation to
the brand owner. When the patented technology reinforces the brand’s position, the new product offered can be
met with tremendous consumer appreciation and pent up demand.
9. Knowledge transfer from the manufacturing partners who license the brand. A licensing arrangement provides
the opportunity for the brand owner and the manufacturer to share insights and knowledge across multiple
disciplines including product development, marketing, R&D and sales.
10. The brand owner to capture royalty revenue through the manufacturer’s sales of licensed product. This
symbiotic relationship helps to create new products for the marketplace that consumers crave. For every dollar in
revenue generated by the manufacturer, the brand owner receives a percentage in royalty payments, most of
which go straight to the bottom line.

FRANCHISING

Franchising is one of three business strategies a company may use in capturing market share. The others are
company owned units or a combination of company owned and franchised units.
 Franchising is a business strategy for getting and keeping customers. It is a marketing system for creating an
image in the minds of current and future customers about how the company's products and services can help
them. It is a method for distributing products and services that satisfy customer needs.

Franchising is a network of interdependent business relationships that allows a number of people to share:

• A brand identification

• A successful method of doing business

• A proven marketing and distribution system

In short, franchising is a strategic alliance between groups of people who have specific relationships and
responsibilities with a common goal to dominate markets, i.e., to get and keep more customers than their
competitors.

There are many misconceptions about franchising, but probably the most widely held is that you as a franchisee
are "buying a franchise." In reality you are investing your assets in a system to utilize the brand name, operating
system and ongoing support. You and everyone in the system are licensed to use the brand name and operating
system.

The business relationship is a joint commitment by all franchisees to get and keep customers. Legally you are
bound to get and keep them using the prescribed marketing and operating systems of the franchisor.

To be successful in franchising you must understand the business and legal ramifications of your relationship with
the franchisor and all the franchisees. Your focus must be on working with other franchisees and company
managers to market the brand, and fully use the operating system to get and keep customers.

ADVANTAGES OF FRANCHISING

The primary advantages for most companies entering the realm of franchising are capital, speed of growth,
motivated management, and risk reduction -- but there are many others as well.

1. CAPITAL

The most common barrier to expansion faced by today’s small businesses is lack of access to capital. Even before
the credit-tightening of 2008-2009 and the “new normal” that ensued, entrepreneurs often found that their growth
goals outstripped their ability to fund them.

Franchising, as an alternative form of capital acquisition, offers some advantages. The primary reason most
entrepreneurs turn to franchising is that it allows them to expand without the risk of debt or the cost of equity.
First, since the franchisee provides all the capital required to open and operate a unit, it allows companies to grow
using the resources of others. By using other people’s money, the franchisor can grow largely unfettered by debt.

Moreover, since the franchisee -- not the franchisor -- signs the lease and commits to various contracts,
franchising allows for expansion with virtually no contingent liability, thus greatly reducing the risk to the
franchisor. This means that as a franchisor, not only do you need far less capital with which to expand, but your
risk is largely limited to the capital you invest in developing your franchise company -- an amount that is often
less than the cost of opening one additional company-owned location.

2. MOTIVATED MANAGEMENT

Another stumbling block facing many entrepreneurs wanting to expand is finding and retaining good unit
managers. All too often, a business owner spends months looking for and training a new manager, only to see
them leave or, worse yet, get hired away by a competitor. And hired managers are only employees who may or
may not have a genuine commitment to their jobs, which makes supervising their work from a distance a
challenge.

But franchising allows the business owner to overcome these problems by substituting an owner for the manager.
No one is more motivated than someone who is materially invested in the success of the operation. Your
franchisee will be an owner -- often with his life’s savings invested in the business. And his compensation will
come largely in the form of profits.

The combination of these factors will have several positive effects on unit level performance.

Long-term commitment. Since the franchisee is invested, she will find it difficult to walk away from her
business.

Better-quality management. As a long-term “manager,” your franchisee will continue to learn about the
business and is more likely to gain institutional knowledge of your business that will make him a better operator
as he spends years, maybe decades, of his life in the business.

Improved operational quality. While there are no specific studies that measure this variable, franchise operators
typically take the pride of ownership very seriously. They will keep their locations cleaner and train their
employees better because they own, not just manage, the business.

Innovation. Because they have a stake in the success of their business, franchisees are always looking for
opportunities to improve their business -- a trait most managers don't share.

Franchisees typically out-manage managers. Franchisees will also keep a sharper eye on the expense side of
the equation -- on labor costs, theft (by both employees and customers) and any other line item expenses that can
be reduced.
Franchisees typically outperform managers. Over the years, both studies and anecdotal information have
confirmed that franchisees will outperform managers when it comes to revenue generation. Based on our
experience, this performance improvement can be significant -- often in the range of 10 to 30 percent.

3. SPEED OF GROWTH

Every entrepreneur I've ever met who's developed something truly innovative has the same recurring nightmare:
that someone else will beat them to the market with their own concept. And often these fears are based on reality.

The problem is that opening a single unit takes time. For some entrepreneurs, franchising may be the only way to
ensure that they capture a market leadership position before competitors encroach on their space, because the
franchisee performs most of these tasks. Franchising not only allows the franchisor financial leverage, but also
allows it to leverage human resources as well. Franchising allows companies to compete with much larger
businesses so they can saturate markets before these companies can respond.

4. STAFFING LEVERAGE

Franchising allows franchisors to function effectively with a much leaner organization. Since franchisees will
assume many of the responsibilities otherwise shouldered by the corporate home office, franchisors can leverage
these efforts to reduce overall staffing.

5. EASE OF SUPERVISION

From a managerial point of view, franchising provides other advantages as well. For one, the franchisor is not
responsible for the day-to-day management of the individual franchise units. At a micro level, this means that if a
shift leader or crew member calls in sick in the middle of the night, they're calling your franchisee -- not you -- to
let them know. And it's the franchisee’s responsibility to find a replacement or cover their shift. And if they
choose to pay salaries that aren't in line with the marketplace, employ their friends and relatives, or spend money
on unnecessary or frivolous purchases, it won't impact you or your financial returns. By eliminating these
responsibilities, franchising allows you to direct your efforts toward improving the big picture.

6. INCREASED PROFITABILITY

The staffing leverage and ease of supervision mentioned above allows franchise organizations to run in a highly
profitable manner. Since franchisors can depend on their franchisees to undertake site selection, lease negotiation,
local marketing, hiring, training, accounting, payroll, and other human resources functions (just to name a few),
the franchisor’s organization is typically much leaner (and often leverages off the organization that's already in
place to support company operations). So the net result is that a franchise organization can be more profitable.

7. IMPROVED VALUATIONS
The combination of faster growth, increased profitability, and increased organizational leverage helps account for
the fact that franchisors are often valued at a higher multiple than other businesses. So when it comes time to sell
your business, the fact that you're a successful franchisor that has established a scalable growth model could
certainly be an advantage.

When the iFranchise Group compared the valuation of the S&P 500 vs. the franchisors tracked in Franchise
Times magazine in 2012, the average price/earnings ratio of franchise companies was 26.5, while the average P/E
ratio of the S&P 500 was 16.7. This represents a staggering 59 percent premium to the S&P. Moreover, more than
two-thirds of the franchisors surveyed beat the S&P ratio.

8. PENETRATION OF SECONDARY AND TERTIARY MARKETS

The ability of franchisees to improve unit-level financial performance has some weighty implications. A typical
franchisee will not only be able to generate higher revenues than a manager in a similar location but will also keep
a closer eye on expenses. Moreover, since the franchisee will likely have a different cost structure than you do as
a franchisor (she may pay lower salaries, may not provide the same benefits packages, etc.), she can often operate
a unit more profitably even after accounting for the royalties she must pay you.

9. REDUCED RISK

By its very nature, franchising also reduces risk for the franchisor. Unless you choose to structure it differently
(and few do), the franchisee has all the responsibility for the investment in the franchise operation, paying for any
build-out, purchasing any inventory, hiring any employees, and taking responsibility for any working capital
needed to establish the business.

The franchisee is also the one who executes leases for equipment, autos, and the physical location, and has the
liability for what happens within the unit itself, so you're largely out from under any liability for employee
litigation (e.g., sexual harassment, age discrimination, EEOC), consumer litigation (the hot coffee spilled in your
customer’s lap), or accidents that occur in your franchise (slip-and-fall, employer’s comp, etc.).

GLOBAL FRANCHISING

Franchising is a pooling of resources and capabilities to accomplish a strategic marketing, distribution and sales
goal for a company. It typically involves a franchisor who grants to an individual or company (the franchisee), the
right to run a business selling a product or service under the franchisor's successful business model and identified
by the franchisor's trademark or brand.

The franchisor charges an initial up-front fee to the franchisee, payable upon the signing of the franchise
agreement. Other fees such as marketing, advertising or royalties, may be applicable and largely based on how the
contract is negotiated and set up.
Advertising, training and other support services are made available by the franchisor.

The Advantages & Disadvantages of International Franchises

When your franchise is successful, the thought of expansion is common, as it can lead to new financial
opportunities for you as a business owner. Expanding internationally can sometimes be a profitable venture, while
many businesses have flopped when they took that approach. Before expanding your franchise internationally,
weigh some of the pros and cons involved.

NEW MARKETS

When you expand the franchise internationally, you can sometimes take advantage of new markets that are
unfamiliar with your business model. For example, if you own a sandwich restaurant, you might open the first
sandwich restaurant of its kind in a developing market. When you own the first business of its kind in an
international market, you may be able to bring in substantial profits. When a new business comes into a region
and the people like it, it creates a cash cow for the owner.

FAVORABLE REGULATIONS

Depending on where you decide to expand, you may be able to take advantage of favorable government
regulations. In many countries, you do not have to submit to the same types of regulations that are required in the
United States. You may also be able to save money on taxes and the fees it takes to get started. If you pay lower
taxes in that country, it can help improve the bottom line for your business.

CULTURAL DIFFERENCES

One of the potential problems of expanding into other countries is overcoming the cultural barriers. Just because
something is popular in the United States does not necessarily mean that it will be popular in other countries.
Every country has its own culture, and you may not be able to accurately predict what people in that culture will
enjoy. Before getting involved in another country, it makes sense to do some market research so that you can
minimize this risk.

FINANCIAL RISK

When expanding into another country, you have to take into consideration the financial risks that you are taking
on as a business owner. For example, the exchange rates between currencies could lead to an unfavorable return
on your investment. You may also have a hard time getting access to the supplies and products you need in any
other country. Some countries charge tariffs and fees to ship products in, which could make your business less
profitable.

UNIT -5

BRAND EQUITY

BRAND EQUITY

Brand equity is a set of brand assets and liabilities linked to a brand name and symbol, which add to or subtract
from the value provided by a product or service.
In 1991 I published a book, Managing Brand Equity, that defines brand equity and describes how it generates
value. This model provided one perspective on brand equity that is worth another look now over twenty years
later since brand equity emerged as an important idea in the late 1980s.
Connecting “brand” to the concepts of “equity” and “assets” radically changed the marketing function, enabling it
to expand beyond strategic tactics and get a seat at the executive table. Marketing was reframed by an avalanche
of researchers, authors and executives who provided substance and momentum to this idea

My model posited that brand equity has four dimensions—brand loyalty, brand awareness, brand associations,
and perceived quality, each providing value to a firm in numerous ways. Once a brand identifies the value of
brand equity, they can follow a brand equity roadmap to manage that potential value.

The Brand Equity Outline

• Brand Loyalty
• Reduced marketing costs
• Trade leverage
• Attracting new customers via awareness and reassurance
• Time to respond to competitive threats
• Brand Awareness
• Anchor to which other associations can be attached
• Familiarity which leads to liking
• Visibility that helps gain consideration
• Signal of substance/commitment
• Brand Associations, including Perceived Quality
• Help communicate information
• Differentiate/Position
• Reason-to-buy
• Create positive attitude/feelings
• Basis for extensions
The introduction of brand loyalty to the model was and is still controversial as other conceptualizations position
brand loyalty as a result of brand equity, which consists of awareness and associations. But when you buy a brand
or place a value on it, the loyalty of the customer base is often the asset most prized, so it makes financial sense to
include it. And when managing a brand, the inclusion of brand loyalty as a part of the brand’s equity allows
marketers to justify giving it priority in the brand-building budget. The strongest brands have that priority.
 Another aspect of the definition of brand equity that I presented in my book was the argument that brand equity
also provides value to customers. It enhances the customer’s ability to interpret and process information,
improves confidence in the purchase decision and affects the quality of the user experience. The fact that it
provides value to customers makes it easier to justify in a brand-building budget. This model provides one
perspective of brand equity as one of the major components of modern marketing alongside the marketing
concept, segmentation, and several others.

ADVANTAGES OF STRONG BRAND EQUITY

While brand equity is largely intangible, its advantages are anything but. The value that a strong brand identity
can bring to your company translates to very real and measurable business benefits. Among them:

Increased margins. Let’s get to the bottom line first: Positive brand equity allows you to charge more for your
product or service, because people will be willing to pay a premium for your name just as they pay a premium for
jewelry that comes in a little blue box or electronic equipment with an apple on top. Is the quality of those
products significantly superior to competitors’ offerings? Maybe, maybe not. But the perception is that it is. And
when customers are willing to pay extra for a name they trust and/or value, that boosts your profit margins.

• Customer loyalty Customers are not only willing to pay more for a product with strong brand equity; they’re also
willing to stay loyal to a company over years and years, coming back to buy there again and again. In fact, some
companies have built such strong brand loyalty that even when they hit a bump in the road—a defective product
or a bad customer experience—their customers are willing to stick with them.

Expansion opportunities. Positive brand equity can facilitate a company’s long-term growth. By leveraging the
value of your brand, you can more easily add new products to your line and people will more willingly try your
new product. You can expand into new markets and geographies, and people there will recognize your brand,
make an instant positive connection, and follow you.

• Negotiating power. Positive brand equity can give you a considerable advantage in negotiating with vendors,
manufacturers and distributors. When suppliers recognize that consumers are enthusiastically seeking and buying
products that bear your name, they’ll want to work with you. And that, of course, puts you in an enviable
bargaining position that can lower your cost of goods sold.
Competitive advantage. Do you know who won’t be too happy about your company’s strong brand equity?
Your competitors. When customers are willing to pay a premium price for your products or services…when
customers
 will try your new product sight unseen, just because it has your logo on it…when customers in a new market
flock to you simply because of the reputation you’ve built elsewhere…when you can get better pricing from the
same vendors your competition is using (and thus undersell your competition)… that can mean very good things
for your business and not-so-good things for your competition.

• BRAND EQUITY

Brand Equity is the value and strength of the Brand that decides its worth. It can also be defined as the differential
impact of brand knowledge on consumers response to the Brand Marketing. Brand Equity exists as a function of
consumer choice in the market place. The concept of Brand Equity comes into existence when consumer makes a
choice of a product or a service. It occurs when the consumer is familiar with the brand and holds some
favourable positive strong and distinctive brand associations in the memory.

FACTORS CONTRIBUTING TO BRAND EQUITY

• Brand Awareness
• Brand Associations
• Brand Loyality

• Perceived Quality

BRAND EQUITY MODELS

Many research agencies have developed their own brand equity models that are executed in partnership with end-
user researchers. However, Phliip Kotler talks about the below models to measure brand equity in his book
‘Marketing Management – 13th Edition’ co authored by Kevin Keller. Below are the models to assess Brand
Equity :

BRAND ASSET VALUATOR – BAV Model Advertising agency Young and Rubicam (Y&R) developed a
model of brand equity called Brand Asset Valuator (BAV). Based on research with almost 200,000 consumers in
40 countries, BAV provides comparative measures of the brand equity of thousands of brands across hundreds of
different categories. There are four key components—or pillars— of brand equity, according to BAV.

• Differentiation measures the degree to which a brand is seen as different from others.

• Relevance measures the breadth of a brand’s appeal.

• Esteem measures how well the brand is regarded and respected.

• Knowledge measures how familiar and intimate consumers are with the brand.
Differentiation and Relevance combine to determine Brand Strength. These two pillars point to the brand’s future
value, rather than just reflecting its past. Esteem and Knowledge together create Brand Stature, which is more of a
“report card” on past performance.

Brand Asset Valuator (BAV Model)

Examining the relationships among these four dimensions—a brand’s “pillar pattern”—reveals much about its
current and future status. Brand Strength and Brand Stature can be combined to form a Power Grid that depicts
the stages in the cycle of brand development—each with its characteristic pillar patterns—in successive
quadrants. New brands, just after they are launched, show low levels on all four pillars. Strong new brands tend to
show higher levels of Differentiation than Relevance, while both Esteem and Knowledge are lower still.
Leadership brands show high levels on all four pillars. Finally, declining brands show high Knowledge—evidence
of past performance—relative to a lower level of Esteem, and even lower Relevance and Differentiation.
AAKER MODEL

Aaker views brand equity as a set of five categories of brand assets and liabilities linked to a brand that add to
or subtract from the value provided by a product or service to a firm and/or to that firm’s customers.

These categories of brand assets are:

• Brand loyalty

• Brand awareness

• Perceived quality

• Brand associations

• Other proprietary assets such as patents, trademarks, and channel relationships.

According to Aaker, a particularly important concept for building brand equity is brand identity—the unique set
of brand associations that represent what the brand stands for and promises to customers.

As per Aaker, brand identity as consisting of 12 dimensions organized around 4 perspectives:

• Brand-as-product (product scope, product attributes, quality/value, uses, users, country of origin)

• Brand-as-organization (organizational attributes, local versus global)

• Brand-as-person (brand personality, brand-customer relationships)

• Brand-as-symbol (visual imagery/metaphors and brand heritage).

Aaker also conceptualizes brand identity as including a core and an extended identity.

The core identity—the central, timeless essence of the brand—is most likely to remain constant as the brand
travels to new markets and products.

The extended identity includes various brand identity elements, organized into cohesive and meaningful groups.

BRAND RESONANCE PYRAMID

The brand resonance model also views brand building as an ascending, sequential series of steps, from bottom to
top. The steps are as below:
 • Ensuring identification of the brand with customers and an association of the brand in customers’
minds with a specific product class or customer need

• Establishing the totality of brand meaning in the minds of customers by strategically linking a host of
tangible and intangible brand associations

• Eliciting the proper customer responses in terms of brand-related judgment and feelings

• Converting brand response to create an intense, active loyalty relationship between customers and the
brand.

According to this model, enacting the four steps involves establishing six “brand building blocks” with customers.
These brand building blocks can be assembled in terms of a brand pyramid. The model emphasizes the duality of
brands—the rational route to brand building is the left-hand side of the pyramid, whereas the emotional route is
the right-hand side.

MasterCard is an example of a brand with duality, as it emphasizes both the rational advantage to the credit card,
through its acceptance at establishments worldwide, and the emotional advantage through its award-winning
“priceless” advertising campaign, which shows people buying items to reach a certain goal. The goal itself—a
feeling, an accomplishment, or other intangible—is “priceless” (“There are some things money can’t buy, for
everything else, there’s MasterCard.”).

Brand Resonance Pyramid

The creation of significant brand equity involves reaching the top or pinnacle of the brand pyramid, and will occur
only if the right building blocks are put into place.

• Brand salience relates to how often and easily the brand is evoked under various purchase or
consumption situations.

• Brand performance relates to how the product or service meets customers’ functional needs.
 • Brand imagery deals with the extrinsic properties of the product or service, including the ways in
which the brand attempts to meet customers’ psychological or social needs.

• Brand judgments focus on customers’ own personal opinions and evaluations.

• Brand feelings are customers’ emotional responses and reactions with respect to the brand.

• Brand resonance refers to the nature of the relationship that customers have with the brand and the
extent to which customers feel that they are “in sync” with the brand.

Resonance is characterized in terms of the intensity or depth of the psychological bond customers have with the
brand, as well as the level of activity engendered by this loyalty. Examples of brands with high resonance include
Harley-Davidson, Apple, and eBay.

BRAND RESONANCE

The Brand Resonance refers to the relationship that a consumer has with the product and how well he can relate
with it.
The resonance is the intensity of customer’s psychological connection with the brand and the randomness to
recall the brand in different consumption situations.

Brand Resonance Pyramid/Stages of Brand Development

Building this resonance involves a series of steps, as seen in Figure given below:

Building this resonance involves a series of steps:

The first level of the pyramid deals with establishing the identity of the brand. Keller suggests a single building
block for this phase and terms it brand salience. Salience refers to how easily or often a consumer thinks of the
brand, especially at the right place and right time. In building a highly salient brand, he argues that it is important
that awareness campaigns not only build depth (ensuring that a brand will be remembered and the ease with
which it is) but also breadth (the range of situations in which the brand comes to mind as something that should
be purchased or used).

The second layer of the pyramid deals with giving meaning to the brand and here Keller presents two building
blocks: brand performance and brand imagery. Brand performance is the way the product or service attempts to
meet the consumer’s functional needs. Brand performance also has a major influence on how consumers
experience a brand as well as what the brand owner and others say about the brand.
Delivering a product or service that meets and, hopefully, exceeds consumer needs and wants is a prerequisite for
successful brand building. In communicating brand performance, Keller identifies five areas that need to be
communicated: primary ingredients and supplementary features; product reliability, durability and serviceability;
service effectiveness, efficiency and empathy; style and design; and price

Brand imagery deals with the way in which the brand attempts to meet customers’ psychological and social needs.
Brand imagery is the intangible aspects of a brand that consumers pick up because it fits their demographic profile
(such as age or income) or has psychological appeal in that it matches their outlook on life (conservative,
traditional, liberal, creative,etc). Brand imagery is also formed by associations of usage (at work or home) or via
personality traits (honest, lively, competent, rugged, etc).

MEASURING BRAND EQUITY

Measuring the financial value of the brand usually converts the CFO to a staunch brand supporter and gets the
organization to view brands as assets that must be maintained, built and leveraged. In his book,Managing Brand
Equity, David Aaker writes about several approaches to valuing a brand as an asset. Interbrand has a methodology
to help public and private companies measure their brands’ values. Financial World, a recently defunct
publication, annually ranked top brands by their financial values (estimating the Coca-Cola brand to be worth
$48 billion in 1997).

Measuring brand equity helps you to maintain, build and leverage brand equity (that is, it helps you to understand
how to increase both the “A” and the “R” in the brand’s “ROA”). I will spend the remainder of this post
expounding on (b) measuring brand equity.
To better understand how to build brand equity we must first agree to a definition of brand equity. My favorite
definition is as follows: brand equity is the value (positive and negative) a brand adds to an organization’s
products and services. Brand equity may ultimately manifest itself in several ways. Three of the most important
ways are as the price premium (to consumers or the trade) that the brand commands, the long-term loyalty the
brand evokes and the market share gains it results in.

Brand Awareness

First, consumers must be aware that there are different brands in the product categories in which your brand
operates. Next, they must be aware of your brand. Ideally, your brand should be the first one that comes to their
minds within specific product categories and associated with key consumer benefits. Consumers should be able to
identify which products and services your brand offers. They should also be able to identify which benefit s are
associated with the brand. Finally, they should have some idea of where your brand is sold.

Accessibility

Your brand must be available where consumers shop. It’s much easier for consumers to insist upon your brand if
it is widely available. Slight brand preference goes a long way toward insistence when the brand is widely
available. The importance of convenience cannot be underestimated in today’s world.*

Value

Does your brand deliver a good value for the price? Do consumers believe it is worth the price? Regardless of
whether it is expensive or inexpensive, high end or low end, it must deliver at least a good value.

Relevant Differentiation

This is the most important thing a brand can deliver. Relevant differentiation today is a leading-edge indicator of
profitability and market share tomorrow. Does your brand own consumer-relevant, consumer-compelling benefits
that are unique and believable?

Emotional Connection

First, the consumer must know your brand. Then he or she must like your brand. Finally, the consumer must trust
your brand and feel an emotional connection to it. There are many innovative ways to achieve this emotional
connection–from advertising and the quality of front line consumer contact to consumer membership
organizations and company-sponsored consumer events.
 As you measure brand equity, keep the following points in mind:

• Include measures of awareness, preference, accessibility, value, relevance, differentiation, vitality,

emotional connection, loyalty and insistence.
• Include both behavioral and attitudinal measures (especially for loyalty).
• Tailor the study to your product categories and industry (especially benefit structure)
• Include competitive comparisons

Some of the more telling measures include the following:

• Top-of-mind unaided awareness (first recall)

• Position in the consideration set
• Emotional connection to the brand
• Perceived brand vitality
• Perceived points of difference (open ended question)
• Unique delivery against key benefits

BRAND AUDIT

A brand audit is a detailed analysis that shows how your brand is currently performing compared to its stated
goals, and then to look at the wider landscape to check how that performance positions you in the market.
The methodology will therefore differ depending on industries and individual companies. Regardless of the exact
criteria you choose to measure, an audit should allow you to:
• Establish the performance of your brand
• Discover your strengths and weaknesses
• Align your strategy more closely with the expectations of your customers
• Understand your place in the market compared to the competition
One option is to employ a branding agency to conduct a comprehensive audit. They may examine internal
branding: your positioning, voice, brand values, culture, USP, and product.
External branding can also be considered; logo and other brand elements, website, advertising, SEO, social media,
sponsorships, event displays, news and PR and content marketing.
They can also look at company infrastructure, such as customer service, HR policies, and sales processes.

Why is a brand audit important?

 A brand audit is a holistic way of looking at a business. The brand audit examines all the areas in which your
business interacts with the world. Before your business can prepare any effective marketing strategy or campaign,
it must first understand where your brand is currently positioned and how that position is perceived by your
employees, customers and market.

Brand audits are designed to gain a true understanding of customer perceptions and loyalties, company culture,
company identity, consistency of message and voice, as well as where you stand among your competitors.

So why is a brand audit important? Every business reviews and analyzes their company financial reports,
employee performance and company technology — why wouldn’t you do the same for your company brand —
the biggest and most important asset your company possesses?

Maintaining and analyzing your company brand is important because a consistent brand means you will have a
better chance of building actual brand equity among your target market. Building brand equity can help your
business:

• Spend less money attracting new customers

• Retain current customers

• Reposition the sale of your offerings from transactional to transformational with your customers

• Receive more word-of-mouth referrals

Taking an outside-in view of your company will drive initiatives that create greater market share and build
customer loyalty. The companies who manage their brand correctly by treating it like an asset become the
companies that customers grow to love and trust. These “big brand companies” have huge folders devoted to their
brand guidelines, with detailed instructions about how and where logos can be used, the color palette allowed and
what their promise to customers is.

BRAND TRACKING

Brand Tracking is a way to continuously measure the development of a brand within some key variables, such
as Ad Awareness, what brands the consumer prefer and what he/she is using. Brand tracking is a way to
monitor the results
Brand tracking studies allow marketers to monitor the health of the brand and provide insights into the
effectiveness of marketing programs implemented by the company.
 WHAT SHOULD BE TRACKED?
Each brand faces different issues, which often required customized tracking surveys. Nonetheless, at Relevant
Insights, we always recommend our clients to include measurements of awareness, usage, brand attitudes,
perceptions, and purchase intentin brand tracking studies.

• Awareness: both recall and recognition measures should be collected. They are different indicators of the
strength of the competition among brands in the minds of the consumers. A brand that first comes to mind in
certain situations is more likely to be considered than one that is only recognized when it is prompted to the
consumer.
• Usage: this can be measured through recency, frequency of usage, and total spending in the brand, and
product category. These brand tracking measures, not only tell us about consumer shopping behavior and
preferences, but also are indicators of market share and “share of wallet,” which is the amount of consumer
spending a brand is capturing and has a direct impact on a company’s revenues and profits.
• Brand Attitudes and Perceptions: this is usually captured through questions related to brand image and
associations that consumers develop as they experience the brand and are exposed to its positioning message
through PR, advertising and promotional programs. Many brand associations are often beliefs about product-
related attributes and benefits. However, brand associations also include non-product-related and symbolic
benefits. Product and non-product associations, as well as those related to price and value are important
sources of brand equity and should be part of brand tracking studies. Some brand associations are stronger
than others, are more easily recalled and are enough appealing that they become an important factor in a
consumer’s decision to buy a brand. Some brands may be perceived as unique, but without strong and favorable
brand associations, uniqueness really doesn’t matter (Keller, Strategic Brand Management, 1998).
• Purchase intent: measures of likelihood to buy a brand or switch to a competitor are also indicators of brand
health and should be part of brand tracking studies, but these questions should be put in context regarding specific
product or brand, reason for the purchase, time, channel, price and other relevant factors to the purchase decision,
so they can be predictive of actual purchase behavior.

WHEN AND WHO TO TRACK?

Brand tracking studies usually involve collecting quantitative data from consumers on a regular basis. One way to
do it is to continuously collect information, which allow us to control for unusual marketing activities, in the
analysis, and provide a more representative picture of how the brand stands in consumers’ mind and against
competitors. However, this type of brand tracking may not be feasible due to budget and resources constraints,
and there are other ways to do it (monthly, quarterly, annually, etc.) that can be equally effective.
When determining the frequency of data collection in brand tracking studies, we recommend clients to consider:
• Frequency of product purchase: for example durable goods with long purchase cycles can be tracked less
frequently.
• Marketing activity in the product category: a category where brands are constantly launching marketing
programs and promotions should be monitor more often.
• Level of competition in product category: highly competitive product categories, where new products and
competitors are constantly trying to break in, should be tracked regularly.
• Stability of brand associations: brands with an established image that don’t show appreciable changes over time,
can afford a less frequent brand tracking.
Brand tracking studies are often conducted with current customers, but monitoring non-users of the brand can
prove to be invaluable to the development of an acquisition and market penetration strategy in search for business
growth.

HOW TO INTERPRET BRAND TRACKING MEASURES?

Given the comparative nature of brand tracking studies, brand tracking measures tend to stay the same over time.
However, they should be revised from time to time to assess their reliability and sensibility. They may be stable
over time and thus reflect stability of brand associations, but they can also be unable to capture important shifts in
the market due to changes in socio demographic trends, competitive landscape and economic macro trends.
Another issue with brand tracking measures is defining what constitutes the desirable level of a particular metric.
Is a 50% level awareness good enough? It depends. It is all relative to the product category and the competitive
environment. In low involvement product categories and those with many competitors, it may be difficult to get
very high levels of awareness and strong brand associations, so the benchmark for what it is a good level for a
metric differs across industries and product categories.
Finally, each brand tracking study should be customized to capture the brand associations that contribute the most
to brand equity and the marketing activities that are effective at strengthening it. The goal is to identify key
drivers that have an impact on consumers’ brand choice and purchase behavior and develop marketing tactics that
can lead to brand growth and sustainability.

BRAND VALUATION APPROACHES AND METHODS:

Brand Valuation and Brand Equity:

Brand Valuation can be defined as the process used to calculate the value of a brand or the amount of money
another party is willing to pay for it or the financial value of the brand.

The concept of Brand Value, although similarly constructed to that of Brand Equity, is distinct. To put it simply,
while brand equity deals with a consumer based perspective, brand value is more of a company based perspective.
As early as 1991, Sri vastava and Shocker identified brand equity as a multidimensional construct composed of
brand strength and brand value. This indicates that brand equity is a concept a lot broader than brand value.

Evaluating Brands:

Before evaluating brands, two essential questions need to be answered i.e. what is being valued, the trademarks,
the brand or the branded business and secondly, the purpose for such valuation. This brings us to the answering
what the utility of undertaking brand valuation is. The process of brand valuation is of primal importance not only
for the brand and the respective owning company to improve upon the same but also for the purposes to increase
the market value and ascertain accuracy in instances of mergers and acquisitions. In other words, brand valuation
would comprise of technical valuation which can be utilized for balance sheet reporting, tax planning, litigation,
securitization, licensing, mergers and acquisitions and investor relations purposes and commercial valuation
which is operational for the purpose of brand architecture, portfolio management, market strategy, budget
allocation and brand scorecards. Thus, the application of brand valuation would be for strategic brand
management and financial transactions.

Current Trend/Practices in Brand Evaluation:

However, Brand Valuation is no longer limited to these two areas anymore. International Organization for
Standardization (ISO) came up with ISO 10668 – Monetary Brand Valuation in 2010, which laid down principles
which should be adopted when valuing any brand and is popularly followed by most firms indulging in valuation
of brands like Inter brand, Finance World and Brand Equity Ten. ISO 10668 is a ‘meta standard’ which succinctly
specifies the principles to be followed and the types of work to be conducted in any brand valuation. It is a
summary of existing best practice and intentionally avoids detailed methodological work steps and
requirements. As per ISO 10668, each brand is subjected to an analysis on three levels – Legal analysis,
Behavioral analysis and Financial Analysis. Keeping in mind that the nature and concept of value is difficult to
grasp on account of being subjective in nature, these three methods of analysis objectify the valuing of brands.

Legal Analysis is the method that draws a distinction between the trademarks, the brands and the intangible
assets involved and defines them as separate entities. After the brand valuer has clearly determined the intangible
assets and Intellectual Property rights included in the definition of the ‘brand’ in concern, (s)he is required to
assess the legal protection afforded to the brand by identifying each of the legal rights that protect it, the legal
owner of each relevant legal right and the legal parameters influencing negatively or positively the value of the
brand. Extensive Risk analysis and due diligence is required in the legal analysis and the analysis must be
segmented by type of IPR, territory and business category. In other words, the velour needs to observe and assess
the legal protection afforded to the brand by identifying each of the legal rights that protect the brand, the legal
owner of each of those legal rights and the legal parameters positively or negatively influencing the value of the
brand.
Behavioral analysis involves understanding and forming an opinion on likely stakeholder behavior specific to
geography, product and customer segments where the brand is operational. For perusal using this method, it is
necessary to understand the market size and trends, contribution of the brand to the purchase decision, attitude of
all stakeholder groups to the brand and all economic benefits conferred on the branded business by the brand.
Here, the brand valuer must also look into why a possible stakeholder would prefer the brand in comparison to
that of the competitors’ and the concept of brand strength which is comprised of future sales volumes, revenues
and risks.

Financial Analysis is the most frequently used brand valuation method and uses four approaches – Cost, Market,
Economic and Formulary approach. Often, a fifth approach is also considered. Special situation approach
recognizes that in some instances brand valuation can be related to particular circumstances that are not
necessarily consistent with external or internal valuations. Each case has to be evaluated on individual merit,
based on how much value the strategic buyer can extract from the market as a result of this purchase, and how
much of this value the seller will be able to obtain from this strategic buyer.

COST BASED APPROACH:

Cost Based approach is the approach more often used by Aaker and Keller and is primarily concerned with the
cost in creating or replacing the brand. The cost approach can be further divided into the following methods:

• Accumulated Cost or Historical cost method:

It aggregates all the historical marketing costs as the value (Keller 1998).In other words, the method involves
historical cost of creating the brand as the actual brand value. It is often used at the initial stages of brand creation
when specific market application and benefits cannot yet be identified. However, the shortfalls of this method are
that there exists difficulties as to what would classify as marketing costs and subsequent amortization of
marketing cost as percentage of sales over the brand’s expected life.In addition to that, it is sometimes difficult to
recapture all the historical development costs and this method does not consider long term investments that do not
involve cash outlay such as quality controls, specific expertise and involvement of personnel, opportunity costs of
launching the upgraded products without any price premium over competitors’ prices. The cost of creating the
brand might actually have little to do with its present value. Most alternatives suggested suffer from the same
shortcomings but there is one as proposed by Reilly and Schweihs which may be effective. They propose to
adjust the actual cost of launching the brand by inflation every year where this inflation adjusted launch cost
would be the brand’s value.

• Replacement Cost Method:

The Replacement Cost Method values the brand considering the expenditures and investments necessary to
replace the brand with a new one that has an equivalent utility to the company. Aaker (1991) proposes that the
cost of launching a new brand is divided by its probability of success. Although this method is easy in terms of
calculation, it neglects the success of an established brand. The first brand in the market has a natural advantage
over the other brands as they avoid clutter and with each new attempt, the probability of success diminishes.

• Use of Conversion Model:

Using the method here, one estimates the amount of awareness that needs to be generated in order to achieve the
current level of sales. This approach would be based on conversion models, i.e., taking the level of awareness that
induces trial that further induces regular repurchase (Aaker, 1991). The output so generated can be used for two
purposes: to determine the cost of acquiring new customers and would be the replacement cost of brand
equity. The major flaw in this system is that the differential in the purchase patterns of a generic and a branded
product is needed and the conversion ratio between awareness and purchase is higher for an unbranded generic
than the branded product and this indicates that awareness is not a key driver of sales.

• Customer Preference Model:

Aaker (1991) proposed that the value of the brand can be calculated by observing the increase in awareness and
comparing it to the corresponding increase in the market share. But he had identified the problem wit h this being
how much of the increased market share is attributable to the brand’s awareness increase and how much to other
factors. A further issue is that one would not expect a linear function between awareness and market share.

In alternative, another method is the Recreation method which is similar to the replacement method but involves
costs involved in creating the brand again, rather than simply the costs of replacement. Another distinction that
exists between the two is that the value computed through the replacement cost method excludes obsolescent
intangible assets. Another method is the residual value method states that the value of the brand is the discounted
residual value obtained subtracting the cumulative brand costs from cumulative revenues attributable to the brand.

MARKET BASED APPROACH:

Market based approach basically deals with the amount at which a brand is sold and is related to highest value
that a “willing buyer & seller” are prepared to pay for an asset. This approach is most commonly used when one
wishes to sell the brand and consists of methods herein stated:

• Comparable Approach or the Brand Sale Comparison Method

This method involves valuation of the brand by looking at recent transactions involving similar brands in the same
industry and referring to comparable multiples. In other words, this method takes the premium (or some other
measure) that has been paid for similar brands and applies this to brands that the company owns. The advantage
of this approach is that it looks at a third party perspective that is, what the third party is willing to pay and is easy
to calculate but the flaw in this method is that the data for comparable brands is rare and the price paid for a
similar brand includes the synergies and the specific objectives of the buyer and it may not be applicable to the
value of the brand at issue.

Brand Equity based on Equity Evaluation method

• Simon and Sullivan (1993) believe that brand equity can be divided into two parts:

• The “demand-enhancing” component, which includes advertising and results in price premium profits,

• The cost advantage component, which is obtained due to the brand during new product introductions and
through economies of scale in distribution.

Hence, they basically estimated the value of brand equity using the financial market value and the advantage of
this approach is that it is based on empirical evidence but shortfalls of this approach is that it assumes a very
strong state of efficient market hypothesis and that all information is included in the share price.

• Residual Method

Keller has proposed the valuation of the brand by means of residual value which would be when the market
capitalization is subtracted from the net asset value. It would be the value of the “intangibles” one of which is the
brand.

Another alternative approach that is suggested is that of usage of real options as proposed by Damodaran (1996).
The variables that need to be calculated are: risk free interest rate, implied volatility (variance) of the underlying
asset, the current exercise price, the value of the underlying asset and the time of expiration of the option. This
method is useful in calculating the potential value of line extensions but the inherent assumptions in this approach
make any practical application difficult.

INCOME BASED APPROACH:

Income Based or Economic Use approach is the valuation of future net earnings directly attributable to the
brand to determine the value of the brand in its current use (Keller, 1998; Reilly and Schweihs, 1999; Cravens and
Guilding, 1999). This method is extremely effective as it shows the future potential of a brand that the owner
currently enjoys and the value is useful when compared to the open market valuation as the owner can determine
the benefit foregone by pursuing the current course of action.

The methods used under the approach are as follows:

• Royalty Relief Method:

The Royalty Relief method is the most popular in practice. It is premised on the royalty that a company would
have to pay for the use of the trademark if they had to license it (Aaker 1991).
The methodology that needs to be followed here is that the valuer must firstly determine the underlining base for
the calculation (percentage of turnover, net sales or another base, or number of units), determine the appropriate
royalty rate and determine a growth rate, expected life and discount rate for the brand. Valuers usually rely on
databases that publish international royalty rates for the specific industry and the product. This investigation
results in a variety and range of appropriate royalty rates and the final royalty rate is decided after looking at the
qualitative aspects around the brand, like strength of the brand team and management. This method has an edge of
being industry specific and accepted by tax authorities but this method loses out as there are really few brands that
are truly comparable and usually the royalty rate encompasses more than just the brand.

• Differential of Price to sale ratios method:

The Differential of Price to Sale ratios Method calculates brand value as the difference between the estimated
price to sales ratio for a branded company and the price to sales ratio for an unbranded company and multiplies it
by the sales of the branded company. Why this method can be used is because information is readily available and
it is easy to conceptualize but the drawback is that the comparable firms are a limited few and there exists no
distinction between the brand and other intangible assets such as good customer relationships.

• Price Premium Method

The premise of the price premium approach is that a branded product should sell for a premium over a generic
product (Aaker, 1991). The Price Premium Method calculates the brand value by multiplying the price differential
of the branded product with respect to a generic product by the total volume of branded sales. It assumes that the
brand generates an additional benefit for consumers, for which they are willing to pay a little extra.The fault in
this method is that where a branded product does not command a price premium, the benefit arises on the cost and
market share dimensions.

• Brand Equity based on discounted cash flow:

The problem faced by this method is the same as when trying to determine the cash flows(profit) attributable to
the brand. From a pure finance perspective it is better to use Free Cash Flows as this is not affected by accounting
anomalies; cash flow is ultimately the key variable in determining the value of any asset (Reilly and Schweihs,
1999). Furthermore Discounted Cash Flow do not adequately consider assets that do not produce cash flows
currently (an option pricing approach will need to be followed) (Damodaran, 1996). The advantage of this model
is that it takes increased working capital and fixed asset investments into account.

• Brand Equity based on differences in return on investment, return on assets and economic value
added.

These models are based on the premise that branded products deliver superior returns, therefore if we value the
“excess” returns into the future we would derive a value for the brand (Aaker, 1991). This method is easy to
apply
and the information is readily available, but there is no separation between brand and other intangible assets and
does not adjust, by their volatility, the earnings of the two companies compared, including discount rate.

Other methods also include conjoint analysis, income split method, brand value based on future earnings,
competitive equilibrium analysis model, etc. The very fact that there are so many methods worth discussing under
the income or economic approach show how accurate and sought after this approach is.

FORMULARY APPROACH:

The Formulary approaches are those that are extensively used commercially by consulting other organizations.
This approach is similar to the income or economic use approach differing in the magnitude of commercial usage
and employing multiple criteria to determine the value of the brand. Within formulary approaches are the
following approaches:

• Interbrand Approach

Interbrand is a brand consultancy firm, specializing in areas such as brand strategy, brand analytics, brand
valuation, etc. It determines the earning from the brand and capitalizes them by making suitable adjustments.
(Keller, 1998) The firm bases its brand valuation on financial analysis, role of the brand and brand strength.

The firm attempts at determination of brand earnings by means of using a brand index which is based on 7 factors
namely –leadership, internationalization/geography, stability, market, trend, support and protection in the
descending order of weightage. This approach is popular and widely appreciated because of its ability to take all
aspects of branding into account. The difficulty in this approach is that it is difficult to determine the appropriate
discount rate because parts of the risks usually included in the discount rate factored into the Brand Index score.
In addition to that, even the capital charge is difficult to ascertain. Aaker reveals that “…the Interbrand system
does not consider the potential of the brand to support extensions into other product classes. Brand support may
be ineffective; spending money on advertising does not necessarily indicate effective brand building. Trademark
protection, although necessary, does not of itself create brand value.”

• Finance World Method

The Financial World magazine method utilizes the “brand index”, comprising the same seven factors and
weightings. The premium profit attributable to the brand is calculated differently. This premium is determined by
estimating the operating profit attributable to a brand, and then deducting the earnings of a comparable unbranded
product from this. This latter value could be determined, for example, by assuming that a generic version of the
product would generate a 5% net return on capital employed (Keller, 1998). The resulting premium profit is
adjusted for taxes, and multiplied by the brand strength multiplier.

• Brand Equity Ten

 As stated by Aaker, the Brand Equity Ten Method measures brand equity through 5 dimensions – loyalty,
perceived quality or leadership measures, other customer oriented association or differentiation measure like
brand personality, awareness measures and market behavior measures like market share, market price and
distribution coverage. Brand Equity ten, thus, looks at the customer loyalty dimension of brand equity and the
measures to create a measurement instrument.

• Brand Finance Ltd.

Brand Finance Ltd. is a UK based consulting organization which undertakes brand valuation by means of
identifying the position of the brand in the competitive marketplace, the total business earnings from the brand,
the added value of total earnings attributed specifically to the brand and beta risk factor associated with the
earnings. On the value so obtained, it discounts the brand added value after tax at a rate that reflects the brand risk
profile.

BRAND REINFORCEMENT

Definition: The Brand Reinforcement majorly focuses on maintaining the Brand Equity by keeping the brand
alive among both the existing and new customers. This can be done through consistently conveying the
meaning of brand in terms of:

• What are the products under the brand? What are its core benefits and how it satisfies the demand?

• How is the brand different from other brands? How it enables a customer to make a strong, unique and favorable
association in their minds?

Brand reinforcement includes regular monitoring of a product at all the levels of product life cycle ( viz.
Introduction Stage, Growth Stage, Maturity Stage and Decline Stage) to keep a check on the changes in the tastes
and preferences of customers.
 The marketers adopt this strategy to remind customers about the brand and its long-lasting benefits. In order to
keep the brand in the minds of the customer, several innovations, researches, and creative marketing programs are
made in line with the changing marketing trends.

Apart from innovation and research the brand reinforcement can be done through various marketing programs
such as:

• Advertising is one of the most common and easy tool of brand reinforcement. By showing the ads frequently on
TV, Internet, Bulletins, Billboard, Radio, etc. can make the brand deep-rooted in the minds of the customer.

• Exhibition provides a vital platform to the brands where the product with any new feature can be demonstrated to
the customer. Products seen in real gives an experience to the customer, and some image gets created in their
minds.

• Event and Sponsorship act as an aide to the brand reinforcement. The companies sponsor big events like sports,
political rallies, education, award functions, etc. with the objective of reminding the customer about their product
and creating the positive image in the minds of new prospects.

• Showroom layout also plays a vital role in strengthening the brand image in the minds of the customer. The way
the brands are placed in the retail outlets or stores reminds the customer about the product and also influences new
users through its appeal.

• Promotion is the most frequently used tool of brand reinforcement. Several companies adopt this strategy
wherein some special offers, freebies, discounts, gift packs, etc. are given along with the product. This is done
with the intention to retain the existing customers and attract new customers simultaneously.

Thus, each firm tries to maintain its brand position in the minds of all the prospective customers such that the
life of the product gets extended and remain in the race of competition.
BRAND RESONANCE

Definition: The Brand Resonance refers to the relationship that a consumer has with the product and how well
he can relate to it.

The brand resonance begins with:

• Brand Identification: The first and foremost step, is to ensure the brand identification with the customers, i.e.
creates awareness about the product and establish an association in the minds of customers with respect to its
usage and the segment for which it exists.
• Brand Establishment: To create a full meaning of the product in the minds of customers, so that they start
remembering it.

• Eliciting Response: Once the association is built with the customers, the next step is to elicit the responses, i.e.
what customers feel about the brand?

• Relationship: The next and final step is to convert the responses into building the customer’s strong relationship
with the brand.

In order to accomplish these four pre-requisites for creating the brand equity, the Six brand building blocks
need to be followed that are arranged in a pyramid-like structure called as Brand Resonance Pyramid.

• Brand Salience: The brand salience means, how well the customer is informed about the product and how often
it is evoked under the purchase situations?

The marketer should not only focus on just creating the awareness about the product but also includes the ease
with which the customers can remember the brand and the ability to recall it under the different purchase
situations.

• Brand Performance: The Brand performance means, how well the functional needs of customers are met?

At this level of the pyramid, the marketers check the way in which product is performing and how efficiently it is
fulfilling the needs of the customers.

• Brand Imagery: The Brand Imagery means, what product image the customer create in their minds?
 This aspect deals with the customer’s psychology or the feelings that how they relate to the product in terms of
their social needs.

• Brand Judgments’: The Brand Judgment means, What customer decides with respect to the product?

The customers make the judgment about the product by consolidating his several performances and the imagery
associations with the brand. On the basis of these, the final judgment is made about the product in terms of its
Perceived Quality, Credibility, Consideration, and Superiority.

• Brand Feelings: The Brand feelings means, what customers feel, for the product or how the customer is
emotionally attached to the product?

The consumer can develop emotions towards the brand in terms of fun, security, self-respect, social approval, etc.

Brand Resonance: The Brand Resonance means, what psychological bond, the customer has created with the
brand?

This is the ultimate level of the pyramid, where every company tries to reach. Here the focus is on building the
strong relationship with the customer thereby ensuring the repeated purchases and creating the brand loyalty.

The resonance is the intensity of customer’s psychological connection with the brand and the randomness to recall
the brand in different consumption situations.

BRAND EQUITY

Definition: The Brand Equity refers to the additional value that a consumer attaches with the brand that is unique
from all the other brands available in the market. In other words, Brand Equity means the awareness, perception,
loyalty of a customer towards the brand..e.g., The additional value a customer is willing to pay for Uncle Chips
against any local chips brand available with the shopkeeper.Brand Equity is the goodwill that a brand has gained
over time.
 Brand Equity can be seen in the way the customer thinks, feels, perceives the product along with its price and
market position and also the way brand commands profit and market share for the organization as a whole.

Customer Brand Equity can be studied in 3 different ways:

• The Different Responses of a customer towards the product or service helps in determining the brand equity. The
way customer thinks about the brand and considers it to be different from the other brands will generate a positive
response for that brand and will contribute to its goodwill.
E.g., Customer, have a positive response towards Mac laptops because of its anti- virus software.

• The responses can be generated only if customers have sufficient knowledge about the brand; thus, Brand
Knowledge is essential to determine the brand equity. The Brand knowledge includes the thoughts, feelings,
information, experiences, etc. that establish an association with the brand.
E.g., Brand Association reflects the knowledge about the product such as woodland is recognized for its rough
and tough styling.

• The different customer’s response that adds to the brand value depends solely on the Marketing of a Brand. The
strong brand results in substantial revenues for the organization and better understanding about the product among
the customers.

Thus, the marketers basically study the Customer-Based Approach wherein they study the response of a customer
towards the brand that can be reflected in their frequency of purchase. It focuses on customer’s perception i.e.
what they have read, felt, thought, seen about the brand and how it has helped them to satisfy their urge of need.

BRAND REVITALIZATION
 Definition: The Brand Revitalization is the marketing strategy adopted when the product reaches the maturity
stage of product life cycle, and profits have fallen drastically. It is an attempt to bring the product back in the
market and secure the sources of equity i.e. customers.

Example: Mountain Dew, A Pepsi product, was launched in 1969 with the tagline “Yahoo Mountain Dew” that
flourished in the market till 1990. After that the sales of mountain dew declined due to which it was re-positioned,
its packaging was changed, and the tagline was changed to “Do the Dew”. It targeted the young males showing
their audacity in performing the adventurous sports. This led the Mountain Dew to the fifth position in the
beverage industry.

Despite a good reinforcement strategy, a product has to be revitalized because of some uncontrollable factors such
as competition, the invention of new technology, change in tastes and preferences of customers, legal
requirements, etc.

The brand has to be revitalized because of the following reasons:

• Increased Competition in the market is one of the major reasons for the product to go under the brand
revitalization. In order to meet with the offerings and technology of competitor, the company has to design its
brand accordingly so as to sustain in the market.

• The Brand Relevance plays a major role in capturing the market. The brand should be modified in accordance
with the changes in tastes and preferences of customers i.e. it should cater the need of target market.

• Nowadays Globalization has become an integral part of any business. In order to meet the different needs of
different customers residing in different countries the brand has to be revitalized accordingly.
• Sometimes Mergers and Acquisitions demand the brand revitalization. When two or more companies combine,
they want the product to be designed from the scratch in a way that it appeals to both and benefits each
simultaneously.

• Technology is something that is changing rapidly. In order to meet with the latest trend, the companies have to
adopt the new technology due to which the product can go under complete revitalization.

• Some Legal Issues may force a brand to go under brand revitalization such as copyrights, bankruptcy, etc. In such
situations, the brand has to be designed accordingly, and the branding is to be done in line with the legal
requirements.

In order to overcome the problems mentioned above following are some ways through which Brand
Revitalization can be done:

• The Usage of a product can be increased by continuously reminding about the brand to customers through
advertisements. The benefits of the frequent use of a product can be communicated to increase the
consumption, e.g., the usage of Head & Shoulders on every alternate day can reduce dandruff.

• The untapped market can be occupied by understanding the needs of the new market segment. The brand
revitalization can be done to cater to the needs of new customers, e.g.; Johnson n Johnson is a baby product
company but due to its mild product line the same can be used by ladies to have a soft skin and hair.

• The brand can be revitalized by entering into an entirely New Market. The best example for this is Wipro, who
has entered into a baby product line.

• Another way of getting the brand revitalized is through the Re-positioning. It means changing any of the 4 P’s of
marketing mix viz. Product, price, place and promotion.The best example of re-positioning is Tata Nano. On its
launch, it was tagged as the “cheapest Car” that hurt the sentiments of customers, and the sales fell drastically. To
revive the sales, the new campaign was launched “Celebrate Awesomeness” that re-positioned its image in the
minds of the customer.
• A brand can be revitalized by Augmenting the Product and Services. The company should try to give something
extra along with the product that is not expected by the customer. Some additional benefits can revive the brand in
the market e.g. A plastic container comes with a surf excel 1 Kg pack that can be used for any other purpose.

• The brand can be modified through the Involvement of Customer The feedback about the product and services
can be taken from ultimate consumer and changes can be made accordingly. Customer’s involvement is best seen
in service sector wherein feedback forms are filled in at the time of availing the services such as hotels,
restaurants, clubs, flights, trains, etc.

This shows that brand revitalization is an essential to the success of any product. The firm takes all the necessary
steps to keep its product very much alive in the market.

DEFINITION OF BRAND CRISIS

.A special form of a product-harm crisis where the negative event centers on one particular brand or a set
of brands belonging to the same company In the long term, the incident can severely damage the affected
brand’s reputation.