INTRODUCTION

The purpose of this course is to provide an in-depth understanding of the issues and
considerations in the management of brands of products. Accordingly, selection of brands,
product development and branding strategies are illustrated. The role of product and brand
management in achieving strategic business goals is emphasized. The course seeks to develop
the student’s managerial skills for strategic product and brand planning, positioning and product
development. The course does not only emphasize on understanding the embedding principles
and frameworks, but also the practical applications. The course is intended to develop an
understanding of and competence in dealing with problems relating to management of existing
products, formulation of product-market strategy, planning and execution of new product
decisions, brand management strategies and policies. It gives basic insights as to how to
understand, build, measure, analyze and manage brands and product categories for a company.

Course Objectives:
The objective of this course is to develop the participant’s basic analytical skills, conceptual
abilities and substantive knowledge in the field of product and brand management from a variety
of perspective (multicultural, interdisciplinary, etc.) After completing the course students will be
able to:
 Have an in-depth understanding of product development and brand management
process.
 Review the strategic importance for organizations of managing brand and
product strategies.
 Evaluate the consumer decision process for brands, products, services.
 Know brand positioning techniques.
 Understand, build, measure, analyze and manage brands and product categories for a
company.
 Analyze the importance of branding and the issues involved in managing brands in
organization and in an international context.

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Course Contents:

UNIT ONE: Product Management Concepts:

1.1 The nature of products ……………………………………………………...4
1.2 Product management in the context of business strategy…………………8
1.3 The product life cycle model and its implications and application…………….11
1.4 Product portfolio decisions……………………………………………………18
UNIT TWO: The New Product Development Process:
2.1. The importance of innovation………………………………………………....24
2.2. The stages in the NPD process and their financial/risk implications..24
2.3. Test marketing and commercialization; the role of marketing research…..28
UNIT THRE: Introduction to Brand and Brand Management:
3.1. Definition and importance………………………………………………...34
3.2. Branding challenges and opportunities………………………………….........38
3.3. Brand equity concept………………………………………………………....40
3.4. Strategic brand management process………………………………………....41
UNIT FOUR: Identifying and Establishing Brand Positioning and Values:
4.1. Customer-based brand equity and brand positioning………………………...50
4.1.1Sources of brand equity…………………………………………….....52
4.1.2. Identifying & establishing brand…………………………………….52
4.1.3. Defining a brand mantra……………………………………………..53
4.2. Brand resonance and the brand value chain…………………………………53
4.2.1. Building a strong brand: The four steps of brand building………….54
4.2.2. The brand value /asset/strength……………………………………...55
UNIT FIVE: Planning and Implementing Brand Marketing Programs
5.1. Choosing brand elements to build brand equity……………………………59
5.1.1. Criteria for choosing brand elements………………………………..59
5.1.2. Developing brand elements…………………………………....60
5.2. Designing marketing programs to build brand equity…………………….60
5.2.1. Product, pricing and channel strategy……………………………….64
5.2.1. Integrating marketing communications to build brand equity………68
5.2.3. Leveraging secondary brand associations to build brand equity……69

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UNIT SIX: Measuring and Interpreting Brand Performance
6.1. Developing a brand equity measurement and management system…….73
6.2. Conducting brand audits…………………………………………...........73
6.3. Establishing a brand equity management system……………….............76
6.4. Maximizing internal branding………………………………………….78
UNIT SEVEN: Growing and Sustaining Brand Equity
7.1. Introducing and naming new products and brand extensions…………..81
7.2. Managing brands over time…………………………………………....84
7.3. Managing brands over geographic boundaries and market segments....87

Text Books:
 Jean-Noel (2008), the new Strategic brand management: A Guide to Growing More
Profitably. 4thed. Philadelphia: Prentice Hall.
 Philip Kotler, Kevin Lane Keller (2005), Marketing Management 13 th ed. New Delhi:
Prentice Hall.
References;
 Baker, Michael and Hart, Susan (2007), Product Strategy And Management.
2nded. New Delhi: Prentice Hall.
 Kevin Lane Keller, (2008). Strategic Brand Management: Building, Measuring, and
Managing Brand Equity. 3rd ed., New Delhi: Pearson Prentice Hall.
 Lehmann, D. R. andWiner, R. S. (2004), Product Management. 4 th ed. Boston:
McGraw-Hill International, 4th Edition.
 De Chernatony, L. and McDonald, M. (2004), Creating Powerful Brands. 3rd ed.
Butterworth Heinemann.
 Scott Davis, (2002). Brand Asset Management: Driving Profitable Growth,
Montreal: Design Management Institute

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UNIT ONE: PRODUCT MANAGEMENT CONCEPTS
Contents
1.0 Aims & Objectives
1.1 Definition of product
1.1.1 Levels of products
1.1.2 Product classification
1.2 Product management in the context of business strategy
1.3 The product life cycle model and its implications and application
1.3.1. Introduction stage
1.3.2 Growth stage
1.3.3. Maturity stage
1.3.4. Decline stage
1.3.5. Critique of the Product Life-Cycle Concept
1.4 Product portfolio decisions
1.4.1. Analyzing the current product Portfolio
1.4.2. The Boston Consulting Group Approach
1.4.3. Analyzing General Electric approach
1.5. Summary
1.6. Answer to Check Your Progress Exercise

1.0. Aims and objectives

A student beginning the study of any subject is wise at the outset to seek a general understanding
of its nature, its dimension and its place in the scheme of things. So the aim of this unit is to
present the core concept of the nature of products management and its characteristics.
By the time you finish this unit you should be able to:
 define product and its characteristics
 Product management in the context of business strategy
 identify the product life cycle models and its implication
 identify the product portfolio decisions

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1.1. The nature of products

What Is A Product?
We define a product as anything that can be offered to a market for attention, acquisition, use, or
consumption and that might satisfy a want or need. Products include more than just tangible
goods. To some, a product is a collection of features, or physical characteristics of the tangible
item or service. Other people might think of a product as a collection of advantages, or reasons
for having those features.
Broadly defined, products include physical objects, services, events, persons, places,
organizations, ideas, or mixes of these entities. Thus, throughout this text, we use the term
product broadly to include any or all of these entities. Because of their importance in the world
economy, we give special attention to services. Services are a form of product that consist of
activities, benefits, or satisfactions offered for sale that are essentially intangible and do not
result in the ownership of anything. Examples are banking, hotel, tax preparation, and home
repair services.

1.1.1 Product Levels: The Customer-Value Hierarchy

In planning its market offering, the marketer needs to address five product levels. Each level
adds more customer value, and the five constitute a customer value hierarchy.
 The fundamental level is the core benefit: the service or benefit the customer is really
buying. A hotel guest is buying "rest and sleep." The purchaser of a drill is buying
"holes." Marketers must see themselves as benefit providers.
 At the second level, the marketer must turn the core benefit into a basic product. Thus a
hotel room includes a bed, bathroom, towels, desk, dresser, and closet.
 At the third level, the marketer prepares an expected product, a set of attributes and
conditions buyers normally expect when they purchase this product. Hotel guests expect
a clean bed, fresh towels, working lamps, and a relative degree of quiet.
 At the fourth level, the marketer prepares an augmented product that exceeds customer
expectations. In developed countries, brand positioning and competition take place at this
level. In developing and emerging markets such as India and Brazil, however,
competition takes place mostly at the expected product level.

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  At the fifth level stands the potential product, which encompasses all the possible
augmentations and transformations the product or offering might undergo in the future.
Here is where companies search for new ways to satisfy customers and distinguish their
offering.

1.1.2. Product Classifications

Marketers have traditionally classified products on the basis of durability, tangibility, and use
(consumer or industrial) products. Each product type has an appropriate marketing-mix
strategy.
Durability and Tangibility: Marketers classify products into three groups according to
durability and tangibility:
1. Non-durable goods are tangible goods normally consumed in one or a few uses, such as
beer and soap. Because these goods are purchased frequently, the appropriate strategy is
to make them available in many locations, charge only a small markup, and advertise
heavily to induce trial and build preference.
2. Durable goods are tangible goods that normally survive many uses: refrigerators,
machine tools, and clothing. Durable products normally require more personal selling and
service, command a higher margin, and require more seller guarantees.
3. Services are intangible, inseparable, variable, and perishable products. As a result, they
normally require more quality control, supplier credibility, and adaptability. Examples
include haircuts, legal advice, and appliance repairs.
I, Consumer Goods classification: We classify the vast array of goods consumers buy on the
basis of shopping habits. We distinguish among:
 Convenience goods
 Shopping goods
 Specialty goods, and
 Unsought goods.
1) The consumer usually purchases convenience goods frequently, immediately, and with a
minimum of effort. Examples include soft drinks, soaps, and newspapers. Convenience goods
can be further divided. Staples are goods consumers purchase on a regular basis.
A buyer might routinely purchase Heinz ketchup, Crest tooth paste, and Ritz crackers.

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Impulse goods are purchased without any planning or search effort.
Candy bars and magazines can be impulse goods. Emergency goods are purchased when a need
is urgent-umbrellas during a rainstorm, boots and shovels during the first winter snow.
Manufacturers of impulse and emergency goods will place them in those outlets where
consumers are likely to experience an urge or compelling need to make a purchase.
2) Shopping goods are goods that the consumer characteristically compares on such bases as
suitability, quality, price, and style. Examples include furniture, clothing, used cars, and major
appliances. We further divide this category. Homogeneous shopping goods are similar in quality
but different enough in price to justify shopping comparisons. Heterogeneous shopping goods
differ in product features and services that may be more important than price. The seller of
heterogeneous shopping goods carries a wide assortment to satisfy individual tastes and must
have well-trained salespeople to inform and advise customers.
3) Specialty goods have unique characteristics or brand identification for which a sufficient
number of buyers are willing to make a special purchasing effort. Examples include cars, stereo
components, photographic equipment, and men's suits. A Mercedes is a specialty good because
interested buyers will travel far to buy one. Specialty goods don't require comparisons; buyers
invest time only to reach dealers carrying the wanted products. Dealers don't need convenient
locations, although they must let prospective buyers know their locations.
4) Unsought goods are those the consumer does not know about or does not normally think of
buying, such as smoke detectors. The classic examples of known but unsought goods arc life
insurance, cemetery plots, gravestones, and encyclopedias. Unsought goods require advertising
and personal-selling support.
II, Industrial Goods Classification: Industrial goods can be classified in terms of their relative
cost and how they enter the production process:
(Materials, parts, capital items, supplies, and business services). Materials and parts are goods
that enter the manufacturer’s product completely.
A) Materials, Materials fall into two classes;
(1) Raw materials
(2) Manufactured materials and parts.
Raw materials fall into two major groups: farm products (wheat, cotton, livestock, fruits and
vegetables) and natural products (fish, lumber, crude petroleum, iron ore).

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Farm products are supplied by many producers, who turn them over to marketing
intermediaries, who provide assembly, grading, storage, transportation, and selling services.
Their perishable and seasonal nature gives rise to special marketing practices, whereas their
commodity character results in relatively little advertising and promotional activity, with some
exceptions. At times, commodity groups will launch campaigns to promote their product-
potatoes, cheese, beef etc….
Manufactured materials and parts fall into two categories: Component materials (iron, yarn,
cement, wires) and component parts (small motors; tires, castings).
Component materials are usually fabricated further-pig iron is made into steel, and yarn is
woven into cloth. The standardized nature of component materials usually means that price and
supplier reliability lire key purchase factors.
Component parts enter the finished product with no further change in form, as when
small motors are put into vacuum cleaners, and tires are put on automobiles. Most
manufactured materials and parts are sold directly to industrial users. Price and service
are major marketing considerations, and branding and advertising tend to be less
important.
B) Capital items, Capital items are long-lasting goods that facilitate developing or managing the
finished product. They include two groups:
(1) Installations
(2) Equipment.
Installations consist of buildings (factories, offices) and heavy equipment (generators, drill
presses, mainframe computers, elevators). Installations are major purchases. They are usually
bought directly from the producer, whose sales force includes technical personnel, and a long
negotiation period precedes the typical sale.
Producers must be willing to design to specification and to supply post sale services. Advertising
is much less important than personal selling.
Equipment includes portable factory equipment and tools (hand tools, lift trucks) and office
equipment (personal computers, desks). These types of equipment don't become part of finished
product. They have a shorter life than installations but a longer life than operating supplies.
Although some equipment manufacturers sell direct, more often they use intermediaries, because
the market is geographically dispersed, the buyers are numerous, and the orders are small.

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Quality, features, price, and service are major considerations.
The sales force tends to be more important than advertising, although advertising can be
used effectively.
C) Supplies and business services,
Supplies and business service are short-term goods and services that facilitate developing or
managing the finished product. Supplies are of two kinds: maintenance and repair items (paint,
nails, and brooms) and operating supplies (lubricants, coal, writing paper, pencils). Together,
they go under the name of MRO goods. Supplies are the equivalent of convenience goods; they
are usually purchased with minimum effort on a straight-re-buy basis. They are normally
marketed through intermediaries because of their low unit value, and the great number and
geographic dispersion of customers. Price and service are important considerations, because
suppliers are standardized and brand preference is not high. Business services include
maintenance and repair services (window cleaning, copier repair) and business advisory
services (legal, management consulting, and advertising). Maintenance and repair services are
usually supplied under contract by small producers or are available from the manufacturers of the
original equipment. Business advisory services are usually purchased on the basis of the
supplier's reputation and staff.

1.2. Product management in the context of business strategy

Developing a product or service involves defining the benefits that it will offer. These benefits
are communicated and delivered by product attributes (characteristics) such as form, quality,
features, style and design. Products should be managed properly based on their attributes and
nature of product differentiation.

Form: many products can be differentiated in form-the size, shape, or physical structure of a
product. Consider the many possible forms taken by products such as aspirin.
Although aspirin is essentially a commodity, it can be differentiated by dosage size, shape, color,
and coating or action time.
Feature: Most products can be offered with varying features that supplement their basic
function. A company can identify and select appropriate new features by surveying recent buyers
and then calculating customer value versus company cost for each potential feature.

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The company should also consider how many people want each feature, how long it would take
to introduce it, and whether competitors could easily copy it. To avoid "feature fatigue," the
company also must be careful to prioritize those features that are included and find un-obtrusive
ways to provide information about how consumers can use and benefit from the feature.
Companies must also think in terms of feature bundles or packages. Auto companies often
manufacture cars at several "trim levels." This lowers manufacturing and inventory costs. Each
company must decide whether to offer feature customization at a higher cost or a few standard
packages at a lower cost.
Customization: Marketers can differentiate products by making them customized to an
individual. As companies have grown proficient at gathering information about individual
customers and business partners (suppliers, distributors, retailers), and as their factories are being
designed more flexibly, they have increased their ability to individualize market offerings,
messages, and media. Mass customization is the ability of a company to meet each customer's
requirements-to prepare on a mass basis individually designed products, services, and programs,
and communications.
Performance Quality: Most products are established at one of four performance levels: low,
average, high, or superior. Performance quality is the level at which the product's primary
characteristics operate. Quality is becoming an increasingly important dimension for
differentiation as companies adopt a value model and provide higher quality for less money.
Firms, however, should not necessarily design the highest performance level possible. The
manufacturer must design a performance level appropriate to the target market and competitors'
performance levels. A company must also manage performance quality through time.
Continuously improving the product can produce high returns and market share; failing to do so
can have negative consequences.
Style: style describes the product's look and feel to the buyer. Car buyers pay a premium for
Jaguar’s because of their extraordinary looks.
Aesthetics plays key role in such brands as, Apple computers, and Godiva chocolate, and Harley-
Davidson motorcycles. Style has the advantage of creating distinctiveness that is difficult to
copy. On the negative side, strong style does not always mean high performance. A car may look
sensational but spend a lot of time in the repair shop.

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Design: As competition intensifies, design offers a potent way to differentiate and position a
company's products and services.
In increasingly fast-paced markets, price and technology are not enough. Design is the factor that
will often give a company its competitive edge. Design is the totality of features that affect how a
product looks, feels, and functions in terms of customer requirements. Design is particularly
important in making and marketing retail services, apparel, packaged goods, and durable
equipment.
The designer must figure out how much to invest in form, features development, performance,
conformance, durability, reliability, reparability, and style. To the company, a well-designed
product is one that is easy to manufacture and distribute. To the customer, a well-designed
product is one that is pleasant to look at and easy to open, install, use, repair, and dispose of. The
designer must take all these factors into account. The arguments for good design are particularly
compelling for smaller consumer products companies and start-ups that don't have big
advertising dollars.
Branding: Perhaps the most distinctive skill of professional marketers is their ability to create,
maintain, protect, and enhance brands of their products and services. A brand is a name, term,
sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product
or service. Consumers view a brand as an important part of a product, and branding can add
value to a product.
Branding has become so strong that today hardly anything goes unbranded. Salt is packaged in
branded containers, common nuts and bolts are packaged with a distributor's label, and
automobile parts-spark plugs, tires; filters-bear brand names that differ from those of the
automakers.
Branding helps buyers in many ways. Brand names help consumers identify products that might
benefit them. Brands also tell the buyer something about product quality.
Buyers who always buy the same brand know that they will get the same features, benefits, and
quality each time they buy. Branding also gives the seller several advantages.
The brand name becomes the basis on which a whole story can be built about a product's special
qualities. The seller's brand name and trademark provide legal protection for unique product
features that otherwise might be copied by competitors. Branding also helps the seller to segment
markets.

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Packaging: Packaging involves designing and producing the container or wrapper for a product.
The package may include the product's primary container (the tube holding Colgate toothpaste);
a secondary package that is thrown away when the product is about to be used (the cardboard
box containing the tube of Colgate); and the shipping package necessary to store, identify, and
ship the product (a corrugated box carrying six dozen tubes of Colgate toothpaste).
Labeling printed information appearing on or with the package is also part of packaging.
Traditionally, the primary function of the package was to contain and protect the product.
In recent times, however, numerous factors have made packaging an important marketing tool.
Increased competition and clutter on retail store shelves means that packages must now perform
many sales tasks-from attracting attention, to describing the product, to making the sale.
Companies are realizing the power of good packaging to create instant consumer recognition of
the company or brand.

1.3. The product life cycle model and its implications and application
A company's positioning and differentiation strategy must change as the product, market, and
competitors change over the product life cycle (PLC). To say that a product has a life cycle is to
assert four things:
1. Products have a limited life.
2. Product sales pass through distinct stages, each posing different challenges, opportunities, and
problems to the seller.
3. Profits rise and fall at different stages of the product life cycle.
4. Products require different marketing, financial, manufacturing, purchasing, and human
resource strategies in each life-cycle stage.

Product Life Cycles : Most product life-cycle curves are portrayed as bell-shaped. This curve is
typically divided into four stages: introduction, growth, maturity, and decline.
1. Introduction-A period of slow sales growth as the product is introduced in the market Profits
are nonexistent because of the heavy expenses of product introduction.
2. Growth-A period of rapid market acceptance and substantial profit improvement.
3. Maturity---A slowdown in sales growth because the product has achieved acceptance by most
potential buyers. Profits stabilize or decline because of increased competition.
4. Decline----Sales show a downward drift and profits erode.
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1.3.1. Marketing Strategies: Introduction Stage and the Pioneer Advantage

Because it takes time to roll out a new product, work out the technical problems, fill dealer
pipelines, and gain consumer acceptance, sales growth tends to be slow in the introduction stage.
Profits are negative or low, and promotional expenditures are at their highest ratio to sales
because of the need to
(1) Inform potential consumers,
(2) Induce product trial, and
(3) Secure distribution in retail outlets.
Firms focus on those buyers who are the most ready to buy, usually in higher-income groups.
Prices tend to be high because costs are high. Companies that plan to introduce a new product
must decide when to enter the market. To be first can be rewarding, but risky and expensive. To
come in later makes sense if the firm can bring superior technology, quality, or brand strength.
Speeding up innovation time is essential in an age of shortening product life cycles.
Most studies indicate that the market pioneer gains the greatest advantage. What are the sources
of the pioneer's advantage? Early users will recall the pioneer's brand name if the product
satisfies them. The pioneer's brand also establishes the attributes the product class should
possess. The pioneer's brand normally aims at the middle of the market and so captures more
users. Customer inertia also plays a role; and there are producer advantages: economies of scale,
technological leadership, patents, ownership of scarce assets, and other barriers to entry. Pioneers
can have more effective marketing spending and enjoy higher rates of consumer repeat
purchases.

1.3.2. Marketing Strategies: Growth Stage

The growth stage is marked by a rapid climb in sales. Early adopters like the product, and
additional consumers start buying it. New competitors enter, attracted by the opportunities.
They introduce new product features and expand distribution. Prices remain where they are or
fall slightly, depending on how fast demand increases. Companies maintain their promotional
expenditures at the same or at a slightly increased level to meet competition and to continue to
educate the market. Sales rise much faster than promotional expenditures, causing a welcome
decline in the promotion-sales ratio.

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Profits increase during this stage as promotion costs are spread over a larger volume and unit
manufacturing costs fall faster than price declines, owing to the producer learning effect. Firms
must watch for a change from an accelerating to a decelerating rate of growth in order to prepare
new strategies.

1.3.3. Marketing Strategies: Maturity Stage

At some point, the rate of sales growth will slow, and the product will enter a stage of relative
maturity. This stage normally lasts longer than the previous stages and poses big challenges to
marketing management. Most products are in the maturity stage of the life cycle.
The maturity stage divides into three phases: growth, stable, and decaying maturity.
 In the first phase, the sales growth rate starts to decline. There are no new distribution
channels to fill. New competitive forces emerge.
 In the second phase, sales flatten on a per capita basis because of market saturation. Most
potential consumers have tried the product, and future sales are governed by population
growth and replacement demand.
 In the third phase, decaying maturity, the absolute level of sales starts to decline, and
customers begin switching to other products. The third phase of maturity poses the most
challenges. The sales slowdown creates overcapacity in the industry, which leads to
intensified competition. Competitors scramble to find niches. They engage in frequent
markdowns. They increase advertising and trade and consumer promotion. They increase
R&D budgets to develop product improvements and line extensions. They make deals to
supply private brands. A shakeout begins, and weaker competitors withdraw.
 The industry eventually consists of well-entrenched competitors whose basic drive is to
gain or maintain market share.
Three potentially useful ways to change the course for brands are: market, product, and
marketing program modifications.
Market Modification: A company might try to expand the market for its mature brand by
working with the two factors that make up sales volume: Volume = number of brand users x
usage rate per user.
Product modification: Managers also try to stimulate sales by modifying the product's
characteristics through quality improvement, feature improvement, or style improvement.

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Quality improvement aims at increasing the product's functional performance. A manufacturer
can often overtake its competition by launching a "new and improved" product.
Marketing program Modification: Product managers might also try to stimulate sale by
modifying other marketing program elements. They should ask the questions like:
 Prices, would a price cut attract new buyers?
 Distribution, Can the company obtain more product support and display in existing
outlets? Can the company introduce the product into new distribution channels?
 Advertising, Should we increase advertising expenditures? Change the message or ad
copy? The media mix? What about the timing, frequency, or size of ads?
 Sales promotion, Should the company step up sales promotion-trade deals, cents-off
coupons, rebates, warranties, gifts, and contests?
 Personal selling, should we change the basis for sales force specialization? Revise sales
territories or sales force incentives? Can we improve sales-call planning?
 Services, Can the company speed up delivery? Can we extend more technical assistance
to customers?

1.3.4. Marketing Strategies: Decline Stage

Sales decline for a number of reasons, including technological advances, shifts in consumer
tastes, and increased domestic and foreign competition. All can lead to overcapacity, increased
price cutting, and profit erosion. As sales and profits decline, some firms withdraw from the
market.
Those remaining may reduce the number of products they offer. They may withdraw from
smaller market segments and weaker trade channels, and they may cut their promotion budgets
and reduce prices further. Unfortunately, most companies have not developed a policy for
handling aging products.
Unless strong reasons for retention exist, carrying a weak product is very costly to the firm-and
not just by the amount of uncovered overhead and profit: There are many hidden costs.
Weak products often consume a disproportionate amount of management's time require frequent
price and inventory adjustments; incur expensive setup for short production runs; draw both
advertising and sales force attention that might be better used to make healthy products more
profitable; and cast a shadow on the company's image.

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 Fig: 1.1. Product life cycle

1.3.5. Critique of the Product Life-Cycle Concept

PLC theory has its share of critics. They claim that life-cycle patterns are too variable in shape
and duration to be generalized, and that marketers can seldom tell what stage their product is in.
A product may appear to be mature when actually it has reached a plateau prior to another
upsurge.
Critics also charge that, rather than an inevitable course that sales must follow, the PLC pattern is
the self-fulfilling result of marketing strategies and that skilful marketing can in fact lead to
continued growth.

Product Line Decisions

A product line is a group of products that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed through the same types of outlet, or
fall within given price ranges. For example, Volvo produces several lines of cars, Philips
produces several lines of hi-fi systems and Nike produces several lines of athletic shoes. In
formulating product line strategies, marketers face a number of tough decisions.

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Product Line-Length Decisions
Product line managers have to decide on product line length. Product line length is
influenced by company objectives. Companies that want to be positioned as full-line
companies or that are seeking high market share and market growth, usually carry longer
lines. Companies that are keen on high short-term profitability generally carry shorter
lines consisting of selected items. Over time, product line managers tend to add new
products either to use up excess manufacturing capacity, or because the sales force and
distributors are calling for a more complete product line to satisfy their customers, or
because the firm needs to add items to the product line to increase sales and profits.
However, as the manager adds items, several costs rise: design and engineering costs,
inventory carrying costs, manufacturing change over costs, order-processing costs,
transportation costs, and promotional costs to introduce new items. Consequently, the
company must plan product line growth carefully. It can systematically increase the
length of its product line in two ways: by stretching its line and by filling its line. Every
company's product line covers a certain range of the products offered by the industry as a
whole.
Product-Mix Decisions
Some companies may offer not one, but several lines of products which form a product mix or
product assortment. For example, a cosmetics firm may have four main product lines in its
product mix: cosmetics, jewelry, fashions and household items.
Each product line may consist of a range of items or sub-lines. Take cosmetics. This could be
broken down into several sub-lines - lipstick, powder, nail varnish, eye-shadows and so on. Each
sub-line may have many individual items.
For example, eye-shadows contain a string of items, ranging from different colors to alternative
application modes (e.g. pencil, roll-on, powder). A company's product mix has four important
dimensions: width, length, depth and consistency.
International Product Decisions
We now turn to some of the key issues that marketers consider in making international product
decisions. International marketers face special product and packaging challenges.
They must decide what products to introduce in which countries, and how much of the product to

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standardize or adapt for world markets. Companies must usually respond to national differences
by adapting their product offerings. Something as simple as an electrical outlet can create big
product problems: Those who have travelled to Europe know the frustration of electrical plugs,
different voltages, and other annoyances of international travel.
Packaging also presents new challenges for international marketers. Packaging issues can be
subtle. For example, names, labels and colors may not translate easily from one country to
another. Consumers in different countries also vary in their packaging preferences. Europeans
like efficient, functional, recyclable boxes with understated designs. In contrast, the Japanese
often use packages as gifts. Thus in Japan, Lever Brothers packages its Lux soap in stylish gift
boxes. Packaging may even have to be tailored to meet the physical characteristics of consumers
in various parts of the world. For instance, soft drinks are sold in smaller cans in Japan to fit the
smaller Japanese hand better. Companies may have to adapt their packaging to meet specific
regulations regarding package design or label contents. For instance, some countries ban the use
of any foreign language on labels; other countries require that labels be printed in two or more
languages.
Labelling laws vary greatly from country to country. The international firm would do well to
study these and modify its product packaging and labels to conform to local requirements. In
summary, whether domestic or international, product strategy calls for complex decisions on
product mix, product line, branding, packaging and service strategy. These decisions must be
made not only with a full understanding of consumer wants and competitors' strategies, but also
with considerable sensitivity to the regulatory environment affecting both product and
packaging.

1.4. Product/Business portfolio decisions

Guided by the company's mission statement and objectives, management now must plan its
business portfolio-the collection of businesses and products that make up the company. The best
business portfolio is the one 'that best fits the company's strengths and weaknesses to
opportunities in the environment.

The company must:

18
(1) Analyse its current business portfolio and decide which businesses should receive more, less,
or no investment; and

(2) Develop growth strategies for adding new products or businesses to the portfolio.

1.4.1. Analysing the Current Product Portfolio

The major activity in strategic planning is business portfolio analysis, whereby management
evaluates the businesses making up the company. The company will want to put strong resources
into its more profitable businesses and phase down or drop its weaker ones. Management's first
step is to identify the key businesses making up the company." These can be called the strategic
business units. A strategic business unit (SBU) is a unit of the company that has a separate
mission and objectives and that can be planned independently from other company businesses.

An SBU can be a company division, a product line within a division, or sometimes a single
product or brand. “The next step in business portfolio analysis calls, for management to assess
the attractiveness of its various SBUs and decide how much support each deserves. In some
companies, this is done informally. Management looks at the company's collection of businesses
or products and uses judgement to decide how much each SBU should contribute and receive.
The purpose of strategic planning is to find ways in which the company can best use its strengths
to take advantage of attractive opportunities in the environment. So most standard portfolio-
analysis methods evaluate SBUs on two important dimensions-the attractiveness of the SBU's
market or industry and the strength of the SBU's position in that market or industry. The same
cautions apply to using a product portfolio.

There are several types of portfolios. Perhaps the most famous is the one developed by the
Boston Consulting Group and called the BCG grid or matrix. Product portfolio management
suggests managing all products simultaneously as you would a financial portfolio, balancing risk
and return among all product investments. Most models involve a grid and suggest that product
decisions should be based on where each individual product, product line, technology platform,
or product category is along the combination of two dimensions.

The BCG grid is the simplest of the grid models, with dimensions of market share and market

19
growth. This model has been criticized for being too simple and too similar to the product life
cycle (which is also based on market growth).

A more advanced model developed by General Electric is called the GE grid (as illustrated
below). It has market attractiveness, or a composite measure of the potential for sales and profits
in a particular market segment, and business strength, or the strength of our offering relative to
other companies’ products, as its dimensions. Attractiveness determinants include market size,
growth rate, competitive structure, industry profitability, and environmental (legal, social, etc.)
factors. Determinants of strength can include our market share, our growth rate, the company’s
image, people resources, and other similar factors.

The best-known portfolio-planning method was developed by the Boston Consulting Group, a
leading management consulting firm.

1.4.2. The Boston Consulting Group Approach

Using the Boston Consulting Group (BCG) approach, a company classifies all its SBUs
according to the growth-share matrix. On the vertical axis, market growth rate provides a
measure of market attractiveness. On the horizontal axis, relative market share serves as a
measure of company strength in the market. By dividing the growth-share matrix as indicated,
four types of SBUs can be distinguished:

20
 Fig, 1.2. Product portfolio model

Stars: Stars are high-growth, high-share businesses or products. They often need heavy
investment to finance their rapid growth. Eventually their growth will slow down, and they will
turn into cash cows.

Cash caws: Cash cows are low-growth, high-share businesses or products. These established and
successful SBUs need less investment to hold their market share Thus; they produce a lot of cash
that the company uses to pay its bills and to support other SBUs that need investment.

Question marks: Question marks are low-share business units in high growth markets. They
require a lot of cash to hold their share, let alone increase it. Management has to think hard about
which question marks it should try to build into stars and which should be phased out.

Dogs: Dogs are low growth, low-share· businesses and products. They may generate enough
cash to maintain themselves but do not promise to be large sources of cash. The ten circles in the
growth-share matrix represent a company's ten current SBUs. Once it has classified its SBUs, the
company must determine what role each will play in the future.

21
One of four strategies can be pursued for each SBU. The company can invest more in the
business unit in order to its share. Or it can invest just enough to hold the SBU's share at the
current level. It can harvest the SBU, milking its short-term cash flow regardless of the long-term
effect. Finally, the company can divest the SBU by selling it or phasing it out and using the
resources elsewhere: As time passes, SBUs change their positions in the growth-share matrix.
Each SBU has a life cycle. Many SBUs start out as question marks and move into the star
category if they succeed. They later become cash cows as market growth falls, then finally die
off or turn into dogs toward the end of their life cycle. The company needs to add new products
and units continuously so that some of them will become stars and, eventua1ly; cash cows that
will help finance other SBUs.

1.4.3. The General Electric Approach General Electric introduced a comprehensive

portfolio planning tool called a strategic business-planning grid. Like the BCG approach, it uses
a matrix with two dimensions-one representing industry attractiveness and one representing
company strength in the industry. The best businesses are those located in highly attractive
industries where the company has high business strength. The GE approach considers many
factors besides market growth rate as part of industry attractiveness. It uses an industry
attractiveness index made up of market size, market growth rate, industry profit margin, amount
of competition, seasonality and cyclist of demand, and industry cost structure. Each of these
factors is rated and combined in: an index of industry attractiveness.

Fig: 1.3. GE matrix- model

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1.5. Summary

Because economic conditions change and competitive activity varies, companies normally find it
necessary to reformulate their marketing strategy several times during a product's life cycle.
Technologies, product forms, and brands also exhibit life cycles with distinct stages. The general
sequence of stages in any life cycle is introduction growth, maturity, and decline. The majority of
products today are in the maturity stage. Each stage of the product life cycle calls for different
marketing strategies. The introduction stage is marked by slow growth and minimal profits.

If successful, the product enters a growth stage marked by rapid sales growth and increasing
profits. There follows a maturity stage in which sales growth slows and profits stabilize. Finally,
the product enters a decline stage. The company's task is to identify the truly weak products;
develop a strategy for each one; and phase out weak products in a way that minimizes the
hardship to company profits, employees, and customers. Like products, markets evolve through
four stages: emergence, growth, maturity, and decline.

1.6. Check Your Progress Exercise

1) The types of products and services that can be purchased by ultimate users are:
A) Customer products C) Consumer products
B) Industrial products D) Line extensions
2) Which of the BCG business model that shows low-growth, high share business or product
and generate a lot of cash to support SBUs?
A) Cash cow C) Starts
B) Dogs D) Question marks

3) Business managers might also try to stimulate sales by modifying the activities of
distribution, advertising, and pricing. This operation specifically related to:
A) Market modification C) Marketing modification
B) Product modification D) Sales modification

23
 4.In planning its market offering, the market needs to address five product levels of product
characteristics, the fundamental level of any product that customer really buying is;
A) Expected product C) Core benefit
B) Basic product D) Potential product
Which of the followings are industrial goods that are used to facilitate developing or managing
the finished products?

A) Capital items C) Unsought goods

B) Specialty goods D) Durable goods

1. Discuss the four product life cycle stages and its marketing strategies?

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2. List and discuss the classifications of the consumer goods and Industrial goods.

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3. What do we mean by product portfolio and strategic business unit (SBU)?

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Answer to Check Your Progress Exercise

Multiple Choices: 1.C 2. A 3. C 4. C 5. A

Discussion: Question 1. Refer, Sub title product life cycle 1.1

Question 2. Refer, Sub title product classification 1.1

Question 3. Refer Sub title Product portfolio management 1.2

24
UNIT TWO: THE NEW PRODUCT DEVELOPMENT PROCESS
Contents
2.0. Aims and Objectives
2.1. The importance of innovation
2.2. The stages in the NPD process and their financial/risk implications.
2.2.1. New-Product Strategy
2.2.2. New-Product Development Process
2.2.3. The causes for new products failure
2.3. Test marketing and commercialization; the role of marketing research.
2.3.1. Test Marketing
2.3.2. Standard Test Markets:
2.3.3. Controlled-Test Markets:
2.3.4. Simulated Test Markets:
2.3.5. Test Marketing New Industrial Products:
2.3.6. Commercialization
3.0. Summary
3.1. Answer to Check Your Progress Exercise

______________________________________________________________________________
2.0. Aims & Objectives
Once the nature of the products have been defined, classified, and analyzed from an
organizational characteristics point of view, each firm’s product process must then be analyzed in
greater depth.
The aim of this unit is then to discuss the concepts of innovation and new product development
process.
After reading this unit you should be able to:
 Understand innovation and new product development process
 Discuss new product stages and its implication
 identify Test marketing and commercialization

25
 2.1. The importance of innovation

Innovative companies are finding ways to create new products quickly, and an important element
in their success is their corporate culture of innovation. Barriers to new product success usually
relate to a failure to secure one of the several keys to success. Innovation can mean many things,
such as innovative marketing strategy, innovative corporate structure, or innovative
manufacturing processes. In this chapter, our context is new product development, which is
dependent on creativity leading to innovation. Some companies are better at innovating than
others. In a study focusing on flexible manufacturing equipment, innovative companies were
found to have a corporate culture that supported innovation. This culture is dominated by a desire
for the firm to grow, to improve, and to take advantage of all possible opportunities.
Innovative firms tend to focus on opportunity risk while non-innovative firms focus on
investment risk. Several studies have consistently found several factors to contribute to the
likelihood of success. One factor is vision, or the degree to which the development team shares a
vision of what the new development project is supposed to accomplish. Another factor is a
structured new product development process. Finally, having a long-term perspective is another
important characteristic. In many ways, these factors may be characteristics of an innovative
culture. What is consistent about these studies though, is that attention to the basics is important
for new product success. As Peter Drucker once wrote, “When all is said and done, what
innovation requires is hard, focused, purposeful work.

2.2. The stages in the (NPD) process and their financial and risk implications
Because so many new products fail, companies are anxious to learn how to improve their odds
of new-product success. One way is to identify successful new products and find out what they
have in common. One study of new-product successes found that the no. one, success factor is a
unique superior product, one with higher quality, new features and higher value in use. Another
key success factor is a well-defined product concept prior to development, in which the company
carefully defines and assesses the target market, the product requirements and the benefits before
proceeding.
New products that meet market needs more closely than existing products invariably do well.
Other success factors included technological and marketing synergy, quality of execution in all
stages and market attractiveness.

26
2.2.1. New-Product Strategy
Effective product innovation is guided by a well-defined new-product strategy. The new-product
strategy achieves four main goals:

 First, it gives direction to the new-product team focuses on team effort-,

 Second, it helps to integrate functional or departmental efforts;
 Third, where understood by the new-product team, it allows tasks to be delegated to team
members, who can be left to operate independently;
 Fourth, the very act of producing and getting managers to agree on a strategy requires
proactive, not reactive, management, which increases the likelihood of a more thorough
search for innovation opportunities.

Successful innovative companies are placing more emphasis upon the use of definitive strategy
statements or a product innovation charter (PIC). The PIC draws managers' attention to the
reasons or rationale behind the firm's search for innovation opportunities, the product/market and
technology to focus on, the objectives (market share, cash flow, profitability, etc.) to be achieved,
and guidelines on the nature or level of innovativeness that will sell the new product. The charter
spells out the priority that managers should place on developing breakthrough products,
changing existing ones and imitating competitors' products.

2.2.2. New-Product Development Process

The new-product development process for finding and growing new products consists of the
following main steps.
Idea Generation
The PIC should then direct the search for new-product ideas. Idea generation should be
systematic rather than haphazard. Otherwise, although the company will find many ideas, most
will not be good ones for its type of business. To obtain a flow of new-product ideas, the
company can tap many sources. Chief sources of new-product ideas include internal sources,
customers, competitors, distributors and suppliers. Internal Sources, many new-product ideas
come from internal sources within the company.
The company can find new ideas through formal research and development. It can pick the
brains of its scientists, engineers, designers and manufacturing people.

27
Customers, almost 28 per cent of all new-product ideas come from watching and listening to
customers. The company can conduct surveys to learn about consumer needs and wants. It can
analyze customer questions and complaints to find new products that better solve consumer
problems. Company engineers or salespeople can meet with customers to get suggestions.
Competitors, about 30 per cent of new-product ideas come from analyzing competitors' products.
The company can watch competitors' ads and other communications to get clues about their new
products. Companies buy competing products, take them apart to see how they work, analyze
their sales, and decide whether the company should bring out a new product of its own.
Distributors, Suppliers and Others, resellers are close to the market and can pass along
information about consumer problems and new-product possibilities. Suppliers can tell the
company about new concepts, techniques and materials that can be used to develop new
products. Other idea sources include trade magazines, shows and seminars; government
agencies; new-product consultants; advertising agencies; marketing research firms; university,
commercial laboratories and science parks; and inventors.
Idea Screening
The purpose of idea generation is to create a large number of ideas. The purpose of the
succeeding stages is to reduce that number to a manageable few which deserve further attention.
The first idea-reducing stage is idea screening. The purpose of screening is to spot good ideas
and drop poor ones as soon as possible. As product development costs rise greatly in later stages,
it is important for the company to go ahead only with those product ideas that will turn into
profitable products.
Concept Development and Testing
Attractive ideas must now be developed into product concepts. It is important to distinguish
between a produce idea, a product concept and a product image. A product idea is an idea for a
possible product that the company can see itself offering to the market. A product concept is a
detailed version of the idea stated in meaningful consumer terms. A product image is the way
consumers perceive an actual or potential product. Concept testing calls for testing new-product
concepts with a group of target consumers. The concepts may be presented to consumers
symbolically or physically.

28
Marketing Strategy Development
The marketing strategy statement consists of three parts. The first part describes the target
market, the planned product positioning, and the sales, market share and profit goals for the first
few years. The second part of the marketing strategy statement outlines the product's planned
price, distribution and marketing budget for the first year. The third part of the marketing strategy
statement describes the planned long-run sales, profit goals and marketing mix strategy.
Business Analysis
Once management has decided on its product concept and marketing strategy, it can evaluate the
business attractiveness of the proposal. Business analysis involves a review of the sales, costs
and profit projections for a new product to find out whether they satisfy the company's
objectives. If they do, the product can move to the product development stage.
Product Development
So far, the product concept may have existed only as a word description, a drawing or perhaps a
crude mock-up. If the product concept passes the business test, it moves into product
development. Here, R & D or engineering develops the product concept into a physical product.
The product development step, however, now calls for a large jump in investment. It will show
whether the product idea can be turned into a workable product. The R & D department will
develop one or more physical versions of the product concept. R & D hopes to design a
prototype that will satisfy and excite consumers and that can be produced quickly and at
budgeted costs. Developing a successful prototype can take days, weeks, months or even years.
The prototype must have the required functional features and also convey the intended
psychological characteristics.
Why Do New Products Fail?
Concorde aircraft (an Anglo-French project), PCjr personal computer (IBM), (Walt Disney/ Euro
Disney Group), the C5 (Clive Sinclair's electric car) all have one thing in common - they all
failed to meet target returns on investment, and therefore joined the ranks of new-product failure.
Why do so many new products fail? There are several reasons. Although an idea may be good,
the market size may have been overestimated. Perhaps the actual product was not designed as
well as it should have been. It may be a 'me too" product which is no better than products that are
already established in the marketplace.

29
A high-level executive might push a favorite idea despite poor marketing research findings.
Sometimes the costs of product development are higher than budgeted and sometimes
competitors fight back harder than expected.

2.2.3. The causes for new products failure

1. New-product development is an expensive affair - it cost the companies a millions of dollars,
like; pharmaceutical firms spend a millions to develop a new drug; while developing a super-
jumbo project could cost billions.
2. New-product development takes time. Although companies can dramatically shorten their
development time, in many industries, such as Pharmaceuticals, biotechnology, aerospace and
food, new-product development cycles can be as long as 10-15 years. The uncertainty and
unpredictability of market environments further raise the risks of commercialization.
3. Unexpected delays in development are also a problem. History is littered with grand
pioneering engineering projects which have failed to satisfy the original expectations of bankers,
investors and politicians.
4. The new-product success record is not encouraging either. New products continue to fail at a
disturbing rate. One recent study estimated that new consumer packaged goods (consisting
mostly of line extensions) fail at a rate of 80 per cent. The same high failure rate appears to
afflict new financial products and services, such as credit cards, insurance plans and brokerage
services. Another study found that about 33 per cent of new industrial products fail at launch.
Despite the risks, firms that learn to innovate well become less vulnerable to attacks by new
entrants which discover new ways of delivering added values, benefits and solutions to
customers' problems.

2.3. Test marketing and commercialization; the role of marketing research.

2.3.1. Test Marketing
If the product passes functional and consumer tests, the next step is test marketing, the stage at
which the product and marketing program are introduced into more realistic market settings. Test
marketing gives the marketer experience with marketing the product before going to the great
expense of full introduction.

30
It lets the company test the product and its entire marketing program - positioning strategy,
advertising, distribution, pricing, branding and packaging, and budget levels - in real market
situations. The company uses test marketing to learn how consumers and dealers will react to
handling, using and repurchasing the product.
The results can be used to make better sales and profit forecasts. Thus a good test market can
provide a wealth of information about the potential success of the product and marketing
program.
When using test marketing, consumer-products companies usually choose one of three
approaches - standard test markets, controlled test markets or simulated test markets.
2.3.2. Standard Test Markets: Using standard test markets, the company finds a small number
of representative test cities, conducts a full marketing campaign in these cities and uses store
audits, consumer and distributor surveys, and other measures to gauge product performance.
2.3.3. Controlled-Test Markets: Several research firms keep controlled panels of stores which
have agreed to carry new products for a fee. The company with the new product specifies the
number of stores and geographical locations it wants. The research firm delivers the product to
the participating stores and controls shelf location, amount of shelf space, displays and point-of-
purchase promotions, and pricing according to specified plans. Sales results are tracked to
determine the impact of these factors on demand.
2.3.4. Simulated Test Markets: Companies also can test new products in a simulated shopping
environment. The company or research firm shows, to a sample of consumers, ads, and
promotions for a variety of products including the new product being tested. It gives consumers a
small amount of money and invites them to a real or laboratory store, where they may keep the
money or use it to buy items. The researchers note how many consumers buy the new product
and competing brands. This simulation provides a measure of trial and the commercials
effectiveness against competing commercials.
2.3.5. Test Marketing New Industrial Products: Business marketers use different methods for
test marketing their new products, such as: product-use tests; trade shows; distributor/dealer
display rooms; and standard or controlled test markets.
Product use test, Here the business marketer selects a small group of potential customers who
agree to use the new product for a limited time. The manufacturer's technical people watch how
these customers use the product.

31
From this test the manufacturer learns about customer training and servicing requirements. After
the test, the marketer asks the customer about purchase intent and other reactions. For some
products, product-use tests may involve both the business customer and final or end-user.
Trade show, these shows draw a large number of buyers who view new products in a few
concentrated days. The manufacturer sees how buyers react to various product features and
terms, and can assess buyer interest and purchase intentions.
Distributors and dealers display rooms, here the new industrial product may stand next to other
company products and possibly competitors' products. This method yields preference and pricing
information in the normal selling atmosphere of the product.
Standard or controlled test market; these are used to measure the potential of new industrial
products. The business marketer produces a limited supply of the product and gives it to the sales
force to sell in a limited number of geographical areas. The company gives the product full
advertising, sales promotion and other marketing support. Such test markets let the company test
the product and its marketing program in real market situations.
2.3.6. Commercialization
Test marketing gives management the information needed to make a final decision about whether
to launch the new product. If the company goes ahead with commercialization - that is,
introducing the new product into the market - it will face high costs. The company will have to
build or rent a manufacturing facility. It must have sufficient funds to gear up production to meet
demand. Failure to do so can leave an opening in the market for competitors to step in. For
example, London-based electronics company Psion's new Series 5 palmtop organizers, launched
in years before, were so popular that the firm could not meet demand initially, due to problems at
one of its component suppliers. The backlog of orders was taking some four months to clear.
Potentially, that left a gap in the hand-held computer market for American and Japanese rivals,
which built similar machines based on an operating system designed by US software giant
Microsoft. Companies may have to spend millions of pounds for advertising and sales promotion
in the first year of launch.
In addition to information about competitors and environmental happenings, marketers often
need formal studies of specific situations.
Managers cannot always wait for information to arrive in bits and pieces from the marketing
intelligence system. They often require formal studies of specific situations.

32
For example, Apple Computer wants to know how many and what kinds of people or companies
will buy its new ultra-light personal computer. Or a Dutch pet product firm needs to know the
potential market for slimming tablets for dogs.
What percentage of dogs are overweight, do their owners worry about it, and will they give the
pill Co their podgy pooches? In these situations, the marketing intelligence system will not
provide the detailed information needed, because, managers normally do not have the skills or
time to obtain the information on their own. They need formal marketing research.
Marketing research is the function linking the consumer, customer and public to the marketer
through information - information used: to identify and define marketing opportunities and
problems; to generate, refine and evaluate marketing actions; to monitor marketing performance;
and to improve understanding of the marketing process. Marketing researchers specify the
information needed to address marketing issues, design the method for collecting information,
manage and implement the data collection process, analyze the results and communicate the
findings and their implications. Marketing researchers engage in a wide variety of activities,
ranging from analyses of market potential and market shares to studies of customer satisfaction
and purchase intentions.
Every marketer needs research. A company can conduct marketing research in its research
department or have some or all of it done outside. Although most large companies have their own
marketing research departments, they often use outside firms to do special research tasks or
special studies. A company with no research department will have to buy the services of research
firms. Many people think of marketing research as a lengthy, formal process carried out by large
marketing companies. But many small businesses and non-profit organizations also use
marketing research. Almost any organization can find informal, low-cost alternatives to the
formal and complex marketing research techniques used by research experts in large firms.

2.4. Summary
Once a company has segmented the market, chosen its target customer groups and identified
their needs, and determined its desired market positioning, it is ready to develop and launch
appropriate new products and services. Marketing should participate with other departments in
every stage of new-product development. Successful new-product development requires the
company to establish an effective organization for managing the development process.

33
Companies can choose to use product managers, new-product managers, new-product
committees, new-product departments, or new-product venture teams.
Increasingly, companies are adopting cross-functional teams, connecting to individuals and
organizations outside the company, and developing multiple product concepts. Eight stages take
place in the new-product development process: idea generation, screening, concept development
and testing, marketing strategy development, business analysis, product development, market
testing, and commercialization. At each stage, the company must determine whether the idea
should be dropped or moved to the next stage.
The consumer-adoption process is the process by which customers learn about new products, try
them, and adopt or reject them. Today many marketers are targeting heavy users and early
adopters of new products, because both groups can be reached by specific media and tend to be
opinion leaders. The consumer-adoption process is influenced by many factors beyond the
marketer's control, including consumers' and organizations' willingness to try new products,
personal influences, and the characteristics of the new product or innovation.

2.5. Check Your Progress Exercise

1. The main step in the new product development process that emphasize on the activities of
reducing large volume of information in to good idea.
A) New product strategy C) Idea Generation
B) Idea Screening D) Idea Evaluation
2. Which one of the following statements is considered as a cause to the new product
failures?
A) It is an expensive affair C) It is time consuming
operation
B) Unexpected delays in development D) All are correct
3. The marketing strategy used to test new products in the methods of trade shows, product
use test, and dealers display rooms…is:
A) Simulated test marketing C) Standard test marketing
B) Industrial products test marketing D) Controlled test marketing

34
 1. What is the role marketing research specifically in the new product development
process?
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2. List and discuss the main steps in the process of new product development.
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3. What is Innovation and what is its importance?
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Answer to Check Your Progress Exercise

Multiple Choices: 1.C 2. D 3. B

Discussion: Question 1. Refer, Sub title test marketing and the role of marketing research, 2.3

Question 2. Refer, Sub title New-Product Development Process, 2.2

Question 3. Refer Sub title what is innovation and its importance, 2.1

35
UNIT THREE: INTRODUCTION TO BRAND AND BRAND
MANAGEMENT
Contents:
3.0. Aims and Objectives
3.1. Definition and importance.
3.1.1. Meanings of a brand
3.1.2. Historical Development
3.2. Branding challenges and opportunities.
3.3. Brand equity concept.
3.4. Strategic brand management process.
3.4.1. Business vision
3.4.2. Setting objectives
3.4.3. Crafting strategy
3.4.4. Implementing strategy
3.4.5. Evaluating performance
3.5. Summary
3.6. Check your progress Exercise

3.0. Aims and objectives

The aim of this unit is to show how we can identify brand challenges and manage strategic
branding activities. By the time you finish this unit you should be able to:
 Understand historic development of a brand
 describe the challenges of branding process
 explain the strategic brand management process

36
3.1. Definition and importance
Brands have become a major player in modern society. In fact they are everywhere. They
penetrate all spheres of our life: economic, social, cultural, sporting, even religion. A brand is
name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or
services of one seller or group of sellers and to differentiate them from those of competition.”
There are a number of interpretations of the term brand (De Chernatony 2003). They are
summarized as follows:

 A brand is simply a logo e.g. McDonald's Golden Arches.

 A brand is a legal instrument, existing in a similar way to a patent or copyright.
 A brand is a company e.g. Coca-Cola.
 A brand is shorthand - not as straightforward. Here a brand that is perceived as having
benefits in the mind of the consumer is recognized and acts as a shortcut to circumvent
large chunks of information. So when searching for a product or service in less familiar
surroundings you will conduct an information search. A recognized brand will help you
reach a decision more conveniently.
 A brand is a risk reducer. The brand reassures you when in unfamiliar territory.
 A brand is positioning. It is situated in relation to other brands in the mind of the
consumer as better, worse, quicker, slower, etc.
 A brand is a personality, beyond function e.g. Apple's iPod versus just any MP3 player.
 A brand is a cluster of values e.g. Google is reliable, ethical, invaluable, innovative and
so on.
 A brand is a vision. Here managers aspire to see a brand with a cluster of values. In this
context vision is similar to goal or mission.
 A brand is added value, where the consumer sees value in a brand over and above its
competition e.g. Audi over Volkswagen, and Volkswagen over Skoda - despite
similarities.
 A brand is an identity that includes all sorts of components; depending on the brand e.g.
Body Shop International encapsulates ethics, environmentalism and political beliefs.

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  A brand is an image where the consumer perceives a brand as representing a particular
reality e.g. Stella Artois Reassuring Expensive.

3.1.1. Meanings of Brand

American Marketing Association (AMA) A brand conveys a specific set of features, benefits and
services to buyers. It is a mark, a tangible emblem, which says something about the product. The
best brands, for example, often convey a warranty of quality. A brand can deliver up to four
levels of meaning:

1. Attributes. A brand first brings to mind certain product attributes. For example, Mercedes
suggests such attributes as 'well engineered', 'well built', 'durable', 'high prestige', 'fast',
'expensive' and 'high resale value'.
2. Benefits. Customers do not buy attributes, they buy benefits. Therefore, attributes must be
translated into functional and emotional benefits. For example, the attribute 'durable' could
translate into the functional benefit, 'I won't have to buy a new car every few years.' The attribute
'expensive' might translate into the emotional benefit, 'The car makes me feel important and
admired.
3. Values. A brand also says something about the buyers' values. Thus Mercedes buyers value
high performance, safety and prestige. A brand marketer must identify the specific groups of car
buyers whose values coincide with the delivered benefit package.
4. Personality. A brand also projects a personality. Motivation researchers sometimes ask, 'If this
brand were a person, what kind of person would it be?' Consumers might visualize a Mercedes
automobile as being a wealthy, middle-aged business executive. The brand will attract people
whose actual or desired self-images match the brand's image.
All this suggests that a brand is a complex symbol. If a company treats a brand only as a name, it
misses the point of branding. The challenge of branding is to develop a deep set of meanings or
associations for the brand.
Despite the limited popularity of generics, the issue of whether or not to brand is very much alive
today. This situation highlights some key questions: Why have branding in the first place? Who
benefits? How do they benefit? At what cost?

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Branding helps buyers in many ways: Brand names tell the buyer something about product
quality. Buyers who always buy the same brand know that they will get the same quality each
time they buy. Brand names also increase the shopper's efficiency. Imagine a buyer going into a
supermarket and finding thousands of generic products.
Brand names help call consumers' attention to new products that might benefit them. The brand
name becomes the basis upon which a whole story can be built about the new product's special
qualities.
Branding also gives the supplier several advantages: The brand name makes it easier for the
supplier to process orders and track down problems. The supplier's brand name and trademark
provide legal protection for unique production features that otherwise might be copied by
competitors. Branding enables the supplier to attract a loyal and profitable set of customers.
Branding helps the supplier to segment markets. For example, Cadbtiry can offer Daily Milk,
Milk Tray, Roses, Flake, Fruit and Nut and many other brands, not just one general confectionery
product for all consumers.
Branding also adds value to consumers and society: Those who favor branding suggest that it
leads to higher and more consistent product quality. Branding also increases innovation by giving
producers an incentive to look for new features that can be protected against imitating
competitors. Thus, branding results in more product variety and choice for consumers. Branding
helps shoppers because it provides much more information about products and where to find
them.
Brand Elements
* Brand Name *Brand Logos and Icons * Colors * Symbols * Music/Ear cons * Celebrities or
Personalities * Advertising slogans and jingles * Brand Alliances/Secondary * Associations
*Co-branding * Licensing * Sponsorship * Event Marketing * Celebrity Endorsement * Third-
party Endorsements

3.1.2. Historical Development

Brands have been used since ancient times. For example, to mark livestock, singular designs
were burned into animals' skin to identify the owner. Egyptian brick makers used brands to
identify their own bricks, and brands were later utilized to identify craftsmen's wares. A potter,
for example, would mark his pots by putting his thumbprint or some other personal tag on the

39
wet clay at the bottom of a vase or pot. Likewise, silversmiths would brand their pieces with
marks or initials. The value of craftsmen's wares soon became associated with their brands, as
consumers quickly learned to associate varying degrees of quality with the marked goods.

At least one source traces the roots of present branding techniques to 16th century whiskey
distillers, who burned their names into the tops of their whiskey barrels. It is only since the
second half of the 19th century that has branding evolved into an advanced marketing tool. The
industrial revolution and new communications systems made it easier for companies to advertise
brands over larger regions. Most importantly, improved modes of transporting goods emerged.
Manufacturers transported merchandise primarily by ship prior to the late 19th century. As a
result, large scale commercial branding was generally limited to regions served by particular
ports and companies near to those shipping points.

The development of the railroad system during the late 19th century, both in the United States
and in other parts of the industrialized world, gradually diminished the transportation constraint.
As manufacturers gained access to national markets, numerous brand names were born that
would achieve legendary U.S. and global status. Procter & Gamble, Kraft, Heinz, Coca-Cola,
Kodak, and Sears were a few of the initial brands that would become common household names
by the mid-20th century. At least four important evolutionary changes occurred to cast those
brands, and the entire branding concept for that matter, into the forefront of modern advertising
strategy:

(I) the internal combustion engine made possible the distribution of products into more remote
areas; (2) branding became a tool used to distinguish nearly homogeneous goods, such as eggs or
bananas; (3) legal systems were devised to recognize and protect brand names; and (4) branding
strategies were extended to encompass services, such as car repair.

An exemplary illustration of the evolution of branding is Guinness, an English beer. Started in

1750 by Arthur Guinness (1725-1803), the beer gained only local favor in a small region of the
United Kingdom before the 20th century. Improved shipping and distribution technologies
allowed Guinness to become one of the most recognized and successful brands in the world by
the 1980s, with distribution and manufacturing operations throughout the globe. A more popular

40
early example of branding in the United States is Coca-Cola, which dates back to the 1880s. As a
result of the technological factors discussed above, Coke achieved unsurpassed brand recognition
through its name and the (legally protected) shape of its soft drink bottle.

3.2. Branding challenges and opportunities

Branding means much more than just giving a brand name and signaling to the outside world that
such a product or service has been stamped with the mark and imprint of an organization. It
requires a corporate long-term involvement, a high level of resources and skills. If brands are
strong and powerful, they also face challenges regarding sustenance and growth. These
challenges vary in degree and intensity for various markets.

Competitive pressures and wars have led to a few difficult situations that companies have to face
challenges in branding. The following are the typical ones:

Brand proliferation: Owing to the reason of low growth, the classic response of marketing
people has been (and is) to develop new brands or extending/stretching existing brands into
different varieties. In many instances, products carry the label of “new” indicating new features.
But those are not recognized by consumers as really new. The result is “irritated consumers” who
think their buying decision has been made complicated into an unnecessary effort. The net result
is no increase in sales. To meet this challenge, manufacturers have to introduce products with
real meaningful added features that can be perceived as “performance benefits” and not just
cosmetic changes.

Consumer revolt: Because of the little differences that are not found meaningful, the consumers
are not willing to pay premium prices in most of the cases until real performance benefits are
perceived by them. The manufacturers find it hard to amass profits. For this reason, marketing
departments get under pressure to produce results.

Retailer power: Knowing brand managers being under pressure, retailers like to keep them
under pressure for promotions that suit retailers more than anyone else in the trade sections. With
retailers’ concentration, the balance of power between the manufacturer and the retailer has tilted
toward the retailer in products distribution and storage.

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The pressures mount and brand and marketing managers find themselves pressed from two fronts
internal (finance and top management) and external (retailers).

Media cost and fragmentation: Developments of cable and satellite systems offer enormous
choices, with the help of which you can reach fragmented audiences.

Under such circumstances, it has become challenging for brand managers to be practically aware
of the media costs and the effects of fragmenting a TV campaign. Not only that, they also have to
be able to plan an integrated communication campaign with various tools of communication at
their hands.

Policy issues: Within the same company, brand policy often conflicts with other policies. As
these are unwritten and implicit, they may seem innocuous, when in fact they are a hindrance to
a true brand policy. Current corporate accounting, as such, is unfavorable towards brands.
Accounting is ruled by the prudence principle: consequently, any outlay for which payback is
uncertain is counted as an expense rather than valued as an asset. This is the case of investments
made in communications in order to inform the general public about the brand’s identity.
Because it is impossible to measure exactly what share of the annual communications budget
generates returns immediately, or within a specified number of years, the whole sum is taken as
an operating expense which is subtracted from the financial year’s profits. Yet advertising, like
investments in machinery, talented staff and R&D, also helps build brand capital. Accounting
thus creates a bias that handicaps brand companies because it projects an undervalued image of
them.

Employee turnover: A high personnel turnover disrupts the continuity a brand needs. Yet
companies today actually plan for their personnel to rotate on different brands! Thus, brands are
often entrusted to young graduates with impressive degrees but little experience and the
promotion they expect often consists of being assigned to yet another brand! Thus, product
managers must achieve visible results in the short term. This helps to explain why there are so
many changes in advertising strategy and implementation as well as in decisions on brand
extension, promotion or discounts. These are in fact caused by changes in personnel. It is
significant that brands that have maintained a continuous and homogeneous image belong to
companies with stable brand decision makers.

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Failing to manage innovations has a very negative impact on brand equity. Even though
salespeople go up in arms when they are not given the responsibility of a strong innovation, it is
a mistake to assign to a weak brand, especially in multi-brand groups. When dealing with a weak
brand, attractive pricing must indeed be offered to distributors as an incentive to include the
latter in their reference listing.

But since the brand’s consumers do not expect this innovation (each brand defines its type and
level of consumer expectations), the product turnover is insufficient. Finally, such practices
foster a false collective understanding of what brands are, even among opinion leaders, which
contributes to the rumor that nowadays all products are just the same. The role of a brand
titleholder, like so many other things we have talked about so far, has two levels: the spirit of
brand management and the practice of it. The spirit of being a brand holder is so under -
appreciated and so often overlooked, and yet so powerful in its being, that is the single biggest
problem in most business today. Most of the people in the organization have no sense or
appreciation for how important it is to build and defined the company’s brands.

Your business does not exist separate from the brand; it exists to serve the brand. Think of it this
way: If a company simply acts as though it owns the brand, then it may make decisions for the
corporate good without carefully considering the impact on the brands. The brand
champion/holder philosophy recognizes that the brand owns the company. If your brands all die,
the company dies, too. And if your brands die, all you have left to sell is empty buildings or
office equipment. If the company dies because of some financial management issues, you can
still sell off a good brand name and see your work continue out into the future. So, the big
opportunity for all of us working to manage brands is to engage the minds and brand of the
whole organization around this idea: A brand is a living thing, and a good brand is a very
valuable asset. This mind-set should come from the very top of the organization and should
reflected constantly in communication between employees, and then to the outside world when
employees deal with suppliers, customers, and the media.

3.3. Brand equity concept

Brand equity is the added value endowed on products and services. It may be reflected in the
way consumers think, feel, and act with respect to the brand, as well as in the prices, market

43
share, and profitability the brand commands for the firm. An understanding of the concept of
brand equity helps us define the process of brand management.

It, therefore, must be understood before we can put definition in place. In a business, the owner’s
equity is the value of owner’s holding in the company. And, that is defined as the difference
between what a company owns in assets and what it owes in liabilities.

The larger the ratio of assets to liabilities, the larger is the owner’s equity. Likewise, brand
equity is the difference between a brand’s assets and brand’s liabilities. Brand assets are a
function of reputation, quality, relevance, and loyalty. Brand liabilities are incurred by brands
because of failures and questionable business practices that may increase costs and liabilities.
The larger the ratio of brand assets to brand liabilities, the greater is the brand equity. In other
words, if brand management is at the heart of marketing, then brand equity is at the heart of
brand management.

3.4. Strategic brand management process

With the overview in place, we now move on to the strategic process as it emerges while you
develop a new brand or sustain an existing one. For the sake of consistency of tutorial, the brand
management approach is going to be a reflection of the process explained by Scot Davis in his
book “Brand Asset Management”. All the chapters are included in the tutorial. The
understanding will come into a better light if viewed from the standpoint of developing a new
brand. Comprehensive in nature, it will automatically point out the measures needed to refresh an
existing brand, whenever and wherever the need arises.
Vision: The point of departure toward the process is to have a clear vision for your brand. Vision
is all about where you want to see your brand at the end of a certain period of your definition. In
very simple words, vision is the journey from here (present) to there (future). Brand vision tells
us about a brand’s growth and future direction. It is the most important statement before we
undertake the strategic management process. It tells us how our brand is going to help the
company achieve its goals – financial and strategic. Before going any further, it is important that
we learn how the strategic management process (SMP) works! An understanding of the basics of
the process will allow us to easily fit the vision into it and then understand how to proceed with
every successive strategic step of importance.

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The strategic management process (SMP) can be explained in five steps. Very early in the
strategy making process, managers ask themselves the question:
• What is our vision for the company?
• Where is the company headed?
• What kind of enterprise we want to build?
• What should be the company’s future make-up?
3.4.1. Step One: Business Vision, The above analysis creates organizational purpose and
identity and form very clearly the “VISION” of the company. You can feel from the discussion
how important it is to have a clear vision for the company and, also, how closely related that is to
creating vision for the brand! A mission statement speaks of the present form of business, the
products it is dealing in, the customers it is serving, and the areas in which it is operating etc. It
also talks of the commitments and values that are needed to let the company achieve its
objectives. It does not speak beyond that. But, the process of strategic management does not stop
there. It makes it imperative that managers see beyond the mission, or the present, to determine a
long-term direction that the company must take for tomorrow.
3.4.2. Step Two: Setting Objectives, after vision and mission are in place, the next step is
converting those statements into specific objectives. Any organization setting itself ambitious
and bold objectives become aggressive in its pursuits. Ambitious and bold should not be
misinterpreted as unrealistic. Organizational capabilities must be considered before setting
realistic objectives.
Targets Toward achievement of objectives, all managers across the company must get targets that
can be measured. Targets broken into divisions, departments, and then units develop a result
oriented work culture. It improves work performance with no confusion about who is supposed
to do what and who is stepping on whose toes!. The collective achievement of targets helps the
company to achieve its mission and assure fulfilling its vision.
Types of Objectives, Following are the two major types of objectives set in a typical organization
• Financial Objectives
• Strategic Objectives
The job of managers is to achieve both in order to improve competitive strength of the company.
While short range objectives keep the managers involved in accomplishing the mission, long
range objectives prompt them to think what to do next to achieve company’s vision.

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3.4.3. Step Three: Crafting a Strategy, Strategy is crafted in compatibility with the stated
objectives. Objectives are the “ends” and strategy is the “means” to achieve those ends. Strategy
deals with “whether to” and “how to” areas of the management process and seeks answers to the
following kind of “whether to” and “how to” questions.
•Whether to concentrate on one business or diversify?
• Whether to serve a large number of customers or operate in a niche?
• Whether to have a narrow product line or a wide one?
• Whether to achieve competitive advantage through lower costs, better quality, or unique
features?
• How to respond to competitive pressures?
• How to respond to changing preferences?
• How big a geographic market should be?
• How to grow the organization in the long run?
The “whether to” and “how to” aspects relate to branding strategies as much as they do to overall
business. If you come to think of it, many of the questions fall within the area of brand
management.
3.4.4. Step Four: Implementing Strategy, The fundamental is to assure “what are and should
be” the means at management’s disposal to achieve what is visualized. Implementation is all
about what must be done to achieve the desired performance goals by putting strategy at work.
Proficient execution consists of the following key aspects.
• Building an organization and developing a culture of motivating people by instituting reward
systems. •Developing budgets and steering resources into strategy critical areas of success.
• Installing information and operating systems.
3.4.5. Step Five: Evaluating Performance, What has been set as objectives and targets have got
to be evaluated to see if management is really moving along the path it envisioned for itself!
Movement identical with the planned path is generally not possible. If performance is above par,
then it is not bad. If not, then the following questions have to be considered:
• Change of strategic direction
•Business to be redefined
• Vision changed; narrowed or broadened or revised altogether

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•Performance standards to be lowered or raised. It is clear that all the above considerations relate
modifications and adjustments in the strategic frame work.
The Brand Vision: An understanding of the strategic management process makes it amply clear
that a company cannot carve its future path without accounting for its brand (s). Brands lay the
foundation for fulfilment of the vision and they also serve as the key stones for sustaining that
fulfilment.
If brands help the company achieve its strategic and financial goals, then a brand vision must
flow out of the company vision. The overall vision must specify the way the management looks
at the brand future in the long run. Brand future refers to
• Markets and market segments to be served
•Quality improvements to be achieved
•Envisioned changes to be met
•Investments, to be made, and any other factors that address brand movement in times to come.
The Brand Mission: Clarity of vision leads management to state the mission, that is
• What customers the company serves?
• Why it serves?
• What geographical areas it serves?
• What benefits it provides?
• What kind of results it predicts to achieve: Sales, Profits, and Market share
Since brand vision rolls out of the overall company vision, it is of high significance to learn how
it happens and why there are tremendous consistencies between the two: Company vision and
brand vision.
Brand planning process: The process consists of the following three major steps:
• Market definition
• Market Analysis
• Brand Analysis,
All three are further made up of different concepts that we have learnt about brand management
during this course. While going through this process, we will get a feeling of revising the whole
course relating those concepts.
Market definition: The first step is to define the market from customer’s point of view. You must
state in few words what kinds of needs the market fulfills. The definition should not be tailored

47
for different purposes and different time-scales. It should state all purposes fulfilled and time-
scales served. For example, if you want to introduce a drink, you may consider the market of all
kinds of drinks as thirst quenchers. This will include all cold drinks (cola and un-cola), juices,
energy drinks, squashes, and even drinking water etc. You may, however, define just one
segment of your concern for the time being with the understanding to include others at a later
stage.
Your choice should stem from your strategic considerations at any given point in time. You may
like to talk about your direct competitors and the attributes of competing products that have a
competing posture for your brand. Make no mistake that you confirm the legitimacy of your
considerations through brand chartering and not whims or personal preferences. You may also
like to talk about whether the market is growing fast, just stable, or declining. The stage of the
market growth cycle is going to have an impact on your brand’s movement.
Market analysis: You must have complete understanding who your buyers are and how they
constitute the market in terms of demographics. A complete understanding of their profile, how
much quantities they generally use, how does the brand fit into their lives, what problems it
solves, and what value it generates for them must form part of the planning process? An
understanding of your immediate segment in relation to other segments forming the market is of
crucial importance to brand planning. You must define various segments, because this definition
of yours is going to translate into your efforts to extend the range into those segments. Therefore,
you must mention various segments in your plan. You may recall different segments of interest to
company XYZ of sandwiches. You may also like to consider those changing trends that may
have the potential to create new segments in the near future. The ability to spot growth of new
segments will keep you pro-active and preemptive in your strategic moves. You must consider
who your major competitors are and what is the level of threat each one poses to your brand?
Your focus on competitors is almost as important as on consumers. In the market place you
cannot operate in a vacuum. The moves of your competitors will always keep you active in
considering the changes and improvements in yours. You must take into account the competitive
advantages in relation to your own and competitors’ brands, and strengths and weaknesses of all
major players. You need to decide which channels are to be used in view of the outreach needed
for your brand. Distribution of products, may those be tangible products or intangible services, is
the priority of any business to be successful. The objective is to reach the ultimate consumers in

48
the most cost-effective and delivery efficient way. For that you need to establish whether it is
going to be the market norm, or some ingenious method of distribution.
Brand analysis: The point of departure for this stage is the model that we discussed earlier.
The brand model: Whether we are dealing with a new brand or an existing one, we must make
sure that we are considering all the dimensions of the brand correctly. We must be clear about the
brand essence and values.
The core meaning of the brand has to be expressed internally and externally. The personality
should be such that imagery works instantaneously for customers to recognize the brand identity.
To achieve that, we have to make sure that communication media is integrated, working for the
same end with a coherent message and campaign. You must be clear about the place of the brand
as part of the architecture. There should be no inconsistencies. What is extremely essential at this
point is that all these factors are consistent with the market analysis.
Positioning: The definition of the model automatically should take you to the areas of
segmentation and differentiation. You cannot consider brand’s essence, core values, identity and
personality, and the imagery without taking into consideration the segment you are going to
target and the point of difference you are going to offer. These two elements of segmentation and
differentiation lay the ground for positioning. In the context of brand planning, you come up with
a statement that describes the brand from the point of view of differentiation. The concept is that
you position your brand in the mind of the consumer relative to competition in a way that it
points out key differences. You create a position that is not yet occupied in the consumer’s mind,
a position the consumer will own immediately. Positioning in a way is redefinition of the brand.
Objectives: It is here that you start working with numbers in terms of sales volume, revenues,
margins, and other financial returns on the brand. This necessitates coming up with sales
forecasts as the backbone of all projections and extrapolations that you make. You rationalize
your projections by taking into account competition and hence the total market size to
objectively arrive at a level that you think your brand can attain. Existing or a new brand, in both
cases you work with pragmatic parameters. One of the strategic aims here is to project the share
of the market that you envisage achieving during the plan period.
Brand picture: This part deals with the creative elements like brand vision, brand’s promise,
and brand’s contract. The most important task here is to see that all the elements look as
coherent part of the focused whole. They should be so closely and consistently related at every

49
point that they must look like one organic body, with no foreign part. To elaborate further, all
these strategic elements should revolve around the essence and positioning of the brand.
Delivery of promises and upholding of the contract will first legitimize and then strengthen
brand’s position.
Products and its variants: You must consider all the range items and sizes by flavors,
ingredients, recipes or whatever way the product is ranged.
You must consider all that is learnt about range and brand extension. You must keep into
consideration utility of different sizes meant for who, when, what, and where aspects. The
considerations must center on the strategic elements of promise and contract. Any distancing
between the two is going to make the plan incoherent, disjointed, and illogical.
Name: Despite having different and divergent opinions on the importance of name or the lack of
it, you should opt for a name that expresses brand’s position and enhances its identity. It
preferably should not be too general unable to evoke right imagery, and at the same time not too
narrow unable to offer you the opportunity of extension in future.
Packaging: This should highlight brand’s personality and leave a mark on the consumer. The
utility and usefulness of it should be fully considered; it should “not be overdone” and nor should
it give the impression of “much is left to be desired”.
Pricing: After having learnt the strategic side of pricing, it is our decision to go for cost plus
pricing or market-based pricing. As the logic goes, market-based pricing makes a lot more sense,
but then you must know both your customers and competition well. Any pricing strategy,
therefore, should be the cornerstone of margins that the company wants to make. Equally
important is to maintain the balance between the margins and the “value for money” proposition
to consumers. Any undue effort to make profits will attract competition. Last, but not the least,
pricing should be linked to the positioning of the product.
Advertising and promotions: To keep your brand into limelight and worthy of recall and
recognition, it is important to advertise according to a well thought-through plan. Advertising is
an investment and not an expense. It therefore should receive top level support toward brand
building. Media selection for the optimal impact is a very delicate and strategic decision. You
should work very closely with the agency. Nonetheless, it also is important for the brand to show
the potential of generating a healthy return on that investment. Promotions and other tools of
communication should also be integrated into the campaign sensibly.

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Channel partners: For the simple reason that you are out to not only sell, but also to leverage
your brand to the maximum, your decision about what channels to use should be very practical.
One way is to follow the market norm; the other is to think improvements by getting into
combinations of different members of the channel. Another way is to get you directly involved
into distribution. The objective is to maximize the outreach and hence availability of your brand
by keeping the distribution cost-effective, customer-friendly, and result-optimizing.
3.5. Summary
A brand is a name, term, sign, symbol, design, or some combination of these elements, intended
to identify the goods and services of one seller or group of sellers and to differentiate them from
those of competitors. The different components of brand-brand names, logos, symbols, package
designs, and so on-are brand elements. Brands offer a number of benefits to customers and firms.
Brands are valuable intangible assets that need to be managed carefully. The key to branding is
that consumers perceive differences among brands in a product category. Brand equity should be
defined in terms of marketing effects uniquely attributable to a brand. That is, brand equity
relates to the fact that different outcomes result in the marketing of a product or service because
of its brand, as compared to the results if that same product or service was not identified by that
brand.
Building brand equity depends on three main factors:
(1) The initial choices for the brand elements or identities making up the brand;
(2) The way the brand is integrated into the supporting marketing program; and
(3) The associations indirectly transferred to the brand by linking the brand to some other entity
(e.g., the company, country of origin, channel of distribution, or another brand).

3.6. Check Your Progress Exercise

1. One of the strongest brand challenge marketer faces in relation to product distribution
and storage is:
A) Media cost fragmentation C) Retailers power
B) Customers revolt D) Brand proliferation
2. What is the first major step in the activities of brand planning process?
A) Market definition C) Resource analysis
B) Market analysis D) Brand analysis

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 3. Which of the following elements are incorporated in the level of meanings to define
brand?
A) Attributes and value C) Personality
B) Benefits D) All are correct

1. What are the steps in the strategic management process? List and discuss the five steps in
the process of (SMP)
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2. What do mean by the term brand? Define the term from different perspectives.
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3. What are the three major steps in the brand planning process? List and discuss them in
detail.
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Answer to Check Your Progress Exercise

Multiple Choices: 1.C 2. A 3. D

Discussion: Question 1. Refer, Sub title Strategic management process, 3.4

Question 2. Refer, Sub title Brand definition and importance, 3.1

Question 3. Refer Sub title major steps in brand planning process, 3.4

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UNIT FOUR: IDENTFYING AND ESTABLISHING BRAND POSITIONING
VALUES
Contents:
4.0. Aims and objectives
4.1. Customer-based brand equity and brand positioning
4.1.1Sources of brand equity
4.1.2. Identifying & establishing bran
4.1.3. Defining a brand mantra
4.2. Brand resonance and the brand value chain
4.2.1. Building a strong brand: The four steps of brand building
4.2.2. The brand value /asset/strength
4.3. Summary
3.5. Check your progress Exercise
______________________________________________________________________________
4.0. Aims and objectives
Once the challenges for strategic branding practices have been defined, and analyzed the next
step is exercising brand management process. The aim of this unit is then to discuss the concepts
of brand equity, brand positioning, and brand value chain activities.
By the time you finish this unit you should be able to:
 Understand what brand equity and brand positioning is
 describe brand resonance and brand mantra
 explain the brand value chain branding steps

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4.1. Customer-based brand equity and brand positioning
Customer Based Brand Equity
Customer-based brand equity is the differential effect that brand knowledge has on consumer
response to the marketing of that brand. A brand has positive customer-based brand equity when
consumers react more favorably to a product and the way it is marketed when the brand is
identified, than when it is not identified. A brand has negative customer based brand equity if
consumers react less favorably to marketing activity for the brand under the same circumstances.
There are three key ingredients of customer-based brand equity.
First, brand equity arises from differences in consumer response. If no differences occur, then
the brand name product is essentially a commodity or generic version of the product.
Competition will probably be based on price.
Second, differences in response are a result of consumer's knowledge about the brand. Brand
knowledge consists of all the thoughts, feelings, images, experiences, beliefs, and so on that
become associated with the brand. In particular, brands must create strong, favorable, and unique
brand associations with customers, as have Volvo (safety), Hallmark (caring), and Harley-
Davidson (adventure).
Third, the differential response by consumers that makes up brand equity is reflected in
perceptions, preferences, and behavior related to all aspects of the marketing of a brand. Stronger
brands lead to greater revenue. The challenge for marketers in building a strong brand is
therefore ensuring that customers have the right type of experiences with products, services, and
their marketing programs to create the desired brand knowledge.

Positioning
An understanding of the category and the roles played by competition (all brands) leads us to
develop the positioning for our brand. Positioning is very central to having the right strategies at
work to achieve our brand management and overall business goals. Positioning is an approach to

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communication that solves communication problem by highlighting very special features of your
brand. It is important to understand why and how it started?
Positioning, “It is a concise statement that summarizes brand’s commitment or promise to target
consumers and actively communicates the advantage over competing brands.”

Going by the definition, positioning has three primary components:

• The component of company business
•The component of target market
•The component of point of difference and key benefits
The Positioning Era:. The authors of the concept believe that to be successful you have to touch
base with reality. The only reality that counts is what is already in the mind of the prospect.
Creativity for the sake of creating something new does not help. And, therefore, image building
through advertising meant to create something that does not already exist in consumer’s mind
doesn’t help. Creating something of that sort is very difficult, if not outright impossible, the
authors believe. In other words, the thrust of the concept of positioning is to do something
effectively with what already exists in prospect’s mind and then capitalize on it. Therefore, the
basic approach of positioning is not to create something new, but to manipulate what is already
there in the mind and to retie the connections that already exist, claim the authors. As a defense
mechanism against over-communication, the mind rejects a lot of information and accepts only
the one that matches with the prior knowledge, or that complements the prior knowledge.
The only defense mechanism is that a person has an oversimplified mind. Marketing people
therefore should ignore the sending side and do something with the receiving side – the
prospect’s mind. You concentrate on the prospect’s perceptions and simplify the process.
Positioning therefore is not something that you do to the product. It is something you do to the
prospect’s mind. You position the product in the mind of the prospect.
How positioning works: Experience has it that positioning works best when you emphasize on
things that are not. If you introduce chewing gum for health conscious people, you position it as
“sugar-free”, meaning it is not sugar.
The first car was advertised as the “horseless” carriage. It had no horse and hence it was
different. That positioned the new invention against the transportation of the time. You highlight
the differentiated feature by talking of something that is not there, but at the same time is in the

55
mind of the prospect. This is a good example of manipulating something that already exists in
prospect’s mind. Things -that are not -can be found in areas other than the basic product itself.
This implies that to effectively position a product in prospects’ mind, you do not always have to
talk about the product itself.
If you introduce a low-price item in response to a genuine need, you can position it from price
point of view and talk of the product as a low-price item, meaning it is not a high-price item.
Improving distribution with the help of a new product can go a long way in positioning it as the
one that has hassle-free distribution.

4.1.1. Sources of brand equity

A powerful brand has high sources of brand equity. Brands have higher brand equity to the extent
that they have higher brand loyalty, name awareness, perceived quality, strong brand
associations and other assets such as patents, trademarks and channel relationships. A brand
with strong brand equity is a valuable asset. In fact, it can even be bought or sold for a price.
Many companies base their growth strategies on acquiring and building rich brand portfolio!
Measuring the actual equity of a brand name is difficult. Because it is so hard to measure,
companies usually do not list brand equity on their balance sheets. Still, they pay handsomely for
it. For example, Nestle paid £2.5 billion to buy Rown-tree, six times its reported asset value.

4.1.2. Identifying & establishing brand

The terms “brand,” “branding,” and “brand identity” are sometimes treated as interchangeable,
but that’s not the case. Brand is the perception of the company in the eyes of the world. Branding
involves the marketing practice of actively shaping a distinctive brand. Brand identity is the
collection of all brand elements that the company creates to portray the right image of it to the
consumer.
How to develop a strong brand identity
Before you know what tangible elements you want to make up your brand identity, you
need to know who you are as a brand. Who you are as a brand is made up of a few key
elements:
Your mission (what’s your “why?”)

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Your values (what beliefs drive your company?)
Your brand personality (if your brand was a person, what kind of personality would they
have?)
Your unique positioning,(how do you differentiate yourself from the competition?).
Your brand voice: (if your brand was a person, how would it communicate?).
These elements are what define your brand, and before you start building your brand
identity, it’s important you have a clear understanding of each.
Once you’ve locked in who you are as a brand, it’s time to build the identity that will
bring your brand to life and show who you are to the people who matter most: your
customers. Here are their five steps for building a strong brand identity:
4.1.3. Defining a brand mantra

Brand mantra: To better establish what a brand represents, marketers will often define a
brand mantra. A brand mantra, as expressed by (Kevin Lane Keller in his book); Strategic
Brand Management is a short, three- to five-word phrase that captures the irrefutable
essence or spirit of the brand positioning.
It’s similar to "brand essence" or "core brand promise," and its purpose is to ensure that
all employees and external marketing partners understand what the brand most
fundamentally is to represent to consumers so they can adjust their actions accordingly.
Brand mantras are powerful devices. They can provide guidance about what products to
introduce under the brand, what ad campaigns to run, and where and how the brand
should be sold. They may even guide the most seemingly unrelated or mundane
decisions, such as the look of a reception area and the way employees answer the phone.

4.2. Brand resonance and the brand value chain

Brand characteristics fundamentally relate with the value brands offer their customers and create
for their companies. Value being at the heart of brands’ characteristics necessitates that brands be
managed accurately. Characteristics of Good Brands

 Short & simple

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  Easy to spell and read
 Easy to recognize & remember
 Adaptable to packaging needs
 Suggestive of product benefits

Brands, whether grown organically or through acquisitions, have to generate revenues, profits,
and net earnings to make businesses viable. The ability to generate financial results rests at the
core of brand value and power. It is because of this value and power that brands must be
sustained.

4.2.1. Building a strong brand: The four steps of brand building

The Four Steps of Brand Building

Building a strong brand, according to the Customer-Based Brand Equity model, can be thought
of in terms of a sequence of steps, in which each step is contingent upon the successful
completion of the previous step. All steps involve accomplishing certain objectives with
customers, both existing and potential. The first step is to ensure identification of the brand with
customers and an association of the brand in customers' minds with a specific product class or
customer need. The second step is to firmly establish the brand meaning in the minds of
customers by strategically linking a host of tangible and intangible brand associations. The third
step is to elicit the proper customer responses to this brand identity and brand meaning. The
fourth and final step is to convert brand response to create an intense, active loyalty relationship
between customers and the brand.
These four steps represent a set of fundamental questions that customers invariably ask about
brands, implicitly if not explicitly:
Step 1 : Who are you? (Brand identity)

Step 2 : What are you? (Brand meaning)

Step 3 : What about you? What do I think or feel about you? (Brand responses)

Step 4 : What about you and me? What kind of association & how much of a connection would I
like to have with you? (Brand relationships)

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There is an obvious sequence in this "branding ladder," that is, meaning cannot be established
unless identity has been created; responses cannot occur unless the right meaning has been
developed; and a relationship cannot be forged unless the proper responses have been elicited.

4.2.2. The brand value /assets/strength

Brand value is the ability of brands to deliver profits. A brand has no financial value unless it
can deliver profits. To say that lack of profit is not a brand problem, but it is a business problem
is to separate the brand from the business, an intellectual temptation.

Brand assets. These are the sources of influence of the brand (awareness/saliency, image, type
of relationship with consumers), and patents.

Brand strength. At a specific point in time as a result of these assets within a specific market
and competitive environment. They are the ‘brand equity outcomes’ if one restricts the use of the
phrase ‘brand equity’ to brand assets alone. Brand strength is captured by behavioral competitive
indicators: market share, market leadership, loyalty rates and price premium (if one follows a
price premium strategy).

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Figure 4.1. Keller’s brand equity model

Applying the Model

Let's look at each step and building block in detail, and discuss how you can apply the
framework and strengthen your brand.
Step 1: Brand Identity – Who Are You?
In this first step, your goal is to create "brand salience," or awareness – in other words, you need
to make sure that your brand stands out, and that customers recognize it and are aware of it.
Step 2: Brand Meaning – What Are You?
Your goal in step two is to identify and communicate what your brand means, and what it stands
for. The two building blocks in this step are: "performance" and "imagery."
Step 3: Brand Response – What Do I Think, or Feel, About You?
Your customers' responses to your brand fall into two categories: "Judgements" and "feelings."
These are the two building blocks in this step.
Your customers constantly make judgements about your brand: Quality, Credibility,
Consideration, and Superiority.
Customers also respond to your brand according to how it makes them feel. Your brand can
evoke feelings directly, but they also respond emotionally to how a brand makes them feel about
themselves.
Step 4: Brand Resonance – How Much of a Connection Would I Like to Have With You?
Brand "resonance" sits at the top of the brand equity pyramid because it's the most difficult – and
the most desirable – level to reach. You have achieved brand resonance when your customers
feel a deep, psychological bond with your brand.

4.3. Summary

Brand equity needs to be measured in order to be managed well. Brand audits measure "where
the brand has been," and tracking studies measure "where the brand is now" and whether
marketing programs are having the intended effects. A branding strategy for a firm identifies
which brand elements a firm chooses to apply across the various products it sells. In a brand
extension, a firm uses an established brand name to introduce a new product. Potential
extensions must be judged by how effectively they leverage existing brand equity to a new
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product, as well as how effectively the extension, in turn, contributes to the equity of the existing
parent brand.

Brands can play a number of different roles within the brand portfolio. Brands may expand
coverage, provide protection, extend an image, or fulfill a variety of other roles for the firm.
Each brand name product must have a well-defined positioning. In that way, brands can
maximize coverage and minimize overlap and thus optimize the portfolio. Customer equity is a
complimentary concept to brand equity that reflects the sum of lifetime values of all customers
for a brand.

4.4. Check Your Progress Exercise

1. Which of the followings are the key component parts of positioning?

A) The components of company business C) Components of target market
C) Components of key benefits D) All of the above

2. The followings are considered as high sources of brand equity to the powerful brand
except one:
A) Brand loyalty C) Brand awareness
B) Capital /resource D) Perceived quality
3. Which of the following statement belongs to the four steps represent a set of fundamental
questions that customers invariably ask about brands?
A) Who are you (Brand Identity) C) What are you (Brand
meaning)
B) What about you (Brand response) D) All are correct
4. Which of the following is the sources of influence of the brand (awareness/saliency,
image, type of relationship with consumers), and patents.
A) Brand value C) Brand strength
B) Brand asset D) All are correct
1. What are the three key ingredients of customer-based brand equity?
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
-----

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2. What is brand mantra and what is the functions/importance of this powerful device?
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
--------
3. What are the characteristics of a good brand?
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Answer to Check Your Progress Exercise

Multiple Choices: 1.D 2. B 3. D 4. B

Discussion: Question 1. Refer, Sub title customer based brand equity , 4.1

Question 2. Refer, Sub title Brand mantra, 4.1.3

Question 3. Refer Sub title brand resonance and the brand value, 4.2

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UNIT FIVE: PLANNING AND IMPLEMENTING BRAND MARKETING
PROGRAMS

Contents:
5.0. Aims and objectives
5.1. Choosing brand elements to build brand equity
5.1.1. Criteria for choosing brand elements
5.1.2. Developing brand elements.
5.2. Designing marketing programs to build brand equity
5.2.1. Product, pricing and channel strategy
5.2.2. Integrating marketing communications to build brand equity
5.2.3. Leveraging secondary brand associations to build brand equity
5.3. Summary
5.4. Check your progress exercises
__________________________________________________________________________
5.0. Aims and objectives
The learner who studies any subject is wise at the outset to seek a general understanding of its
nature, its dimension and its place in the scheme of things. So the aim of this unit is to identify
the core elements of a brand to build products brand and to effectively conduct marketing
activities.
By the time you finish this unit you should be able to:
 define and identify brand elements and its characteristics
 know how to develop brand elements
 Understand how to design marketing activities/ program
 Conduct integrated marketing communication

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5.1. Choosing brand elements to build brand equity
Choosing Brand Elements, brand elements are those trade-mark able devices that identify and
differentiate the brand. Most strong brands employ multiple brand elements. Nike has the
distinctive "swoosh" logo, the empowering "Just Do It" slogan, and the "Nike" name based on
the winged goddess of victory. Marketers should choose brand elements to build as much brand
equity as possible. The test of the brand-building ability of these elements is what consumers
would think or feel about the product if the brand element were all they knew. A brand element
that provides a positive contribution to brand equity, for example, conveys certain valued
associations or responses.

5.1.1. Criteria for choosing brand elements

There are six main criteria for choosing brand elements. The first three-memorable, meaningful,
and likable-are "brand building." The latter three-transferable, adaptable, and protectable-are
"defensive" and deal with how to leverage and preserve the equity in a brand element in the face
of opportunities and constraints.
1. Memorable-How easily is the brand element recalled and recognized? Is this true at both
purchase and consumption? Short names such as Tide, Crest, and Puffs are memorable brand
elements.
2. Meaningful-Is the brand element credible and suggestive of the corresponding category?
Does it suggest something about a product ingredient or the type of person who might use the
brand? Consider the inherent meaning in names such as DieHard auto batteries, Mop & Glo floor
wax, and Lean Cuisine low-calorie frozen entrees.
3. Likable-How aesthetically appealing is the brand element? Is it likable visually, verbally, and
in other ways? Concrete brand names such as Sunkist, Spic and Span, and Thunderbird evoke
much imagery.
4. Transferable-Can the brand element is used to introduce new products in the same or
different categories? Does it add to brand equity across geographic boundaries and market

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segments? Although initially an online book seller, Amazon.com was smart enough not to call
itself.
The Amazon is famous as the world's biggest river, and the name suggests the wide variety of
goods that could be shipped, an important descriptor of the diverse range of products the
company now sells.
5. Adaptable-How adaptable and up-datable is the brand element? The face of Betty Crocker has
received more than eight makeovers over her 75 years and she doesn't look a day over 35!
6. Protect able-How legally protect-able is the brand element? How competitively protect-able?
Names that become synonymous with product categories-such as Kleenex, Kitty Litter, Jell-a,
Scotch Tape, Xerox, and Fiberglass-should retain their trademark rights and not become generic.

5.1.2. Developing brand elements

Brand elements can play a number of brand-building roles. If consumers don't examine much
information in making their product decisions, brand elements should be easy to recognize and
recall and inherently descriptive and persuasive. The likability and appeal of brand elements may
also play a critical role in awareness and associations leading to brand equity. The Keebler elves
reinforce home-style baking quality and a sense of magic and fun for their line of cookies. Of
course, brand names aren't the only important brand element. Often, the less concrete brand
benefits are, the more important it is that brand elements capture intangible characteristics. Like
brand names, slogans are an extremely efficient means to build brand equity. They can function
as useful "hooks" or "handles" to help consumers grasp what the brand is and what makes it
special, summarizing and translating the intent of a marketing program.

5.2. Designing marketing programs to build brand equity

Building Brand Equity
Overview
 How do marketing activities in general—and product, pricing, and distribution strategies in
particular—build brand equity?
 How can marketers integrate these activities to enhance brand awareness, improve the
brand image, elicit positive brand responses, and increase brand resonance?
New Perspectives on Marketing

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The strategy and tactics behind marketing programs have changed dramatically in recent years as
firms have dealt with enormous shifts in their external marketing environments:
 Digitalization and connectivity (through Internet, intra-net, and mobile devices)
 Dis-intermediation and re intermediation (via new middlemen of various sorts)
 Customization and customization (through tailored products and ingredients provided to
customers to make products themselves)
 Industry convergence (through the blurring of industry boundaries)
Implications for the Practice of Brand Management
They have a number of implications for the practice of brand management. Marketers are
increasingly abandoning the mass-market strategies that built brand powerhouses in the 1950s,
1960s, and 1970s to implement new approaches. Even marketers in staid, traditional industries
are rethinking their practices and not doing business as usual.
Integrating Marketing Programs and Activities
Creative and original thinking is necessary to create fresh new marketing programs that break
through the noise in the marketplace to connect with customers. Marketers are increasingly
trying a host of unconventional means of building brand equity.
Personalizing Marketing
All of these approaches are a means to create deeper, richer, and more favorable brand
associations. Relationship marketing has become a powerful brand-building force. It Can slip
through consumer radar, May creatively create unique associations, May reinforce brand imagery
and feelings
Nevertheless, there is still a need for the control and predictability of traditional marketing
activities. Models of brand equity can help to provide direction and focus to the marketing
programs
Personalizing Marketing Concepts
 Experiential marketing
 One-to-one marketing
 Permission marketing
Reconciling the New Marketing Approaches
One-to-one, permission, and experiential marketing are all potentially effective means of getting
consumers more actively involved with a brand.

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Experiential Marketing
 Focuses on customer experience
 Focuses on the consumption situation
 Views customers as rational and emotional elements
 Uses electric methods and tools
One-to-One Marketing: Competitive Rationale
 Consumers help to add value by providing information.
 Firm adds value by generating rewarding experiences with consumers.
 Creates switching costs for consumers
 Reduces transaction costs for consumers
 Maximizes utility for consumers
 Experiential marketing connects a product to unique and interesting experiences
 “The idea is not to sell something, but to demonstrate how a brand can enrich a customer’s
life”
One-to-One Marketing: Consumer Differentiation
 Treat different consumers differently because of different needs and different values to
firm, it may be for current and future (lifetime value)
 Devote more marketing effort on most valuable consumers (and customers)
The Fundamental Strategies of One-to-One Marketing:
 Focus on individual consumers through consumer databases, Respond to consumer
dialogue via interactivity Customize products and services
One-to-One Marketing: Five Key Steps
 Identify consumers, individually and addressable
 Differentiate them by value and needs
 Interact with them more cost-efficiently and effectively
 Customize some aspect of the firm’s behavior
 Brand the relationship
Permission Marketing (Seth Godin)

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“Encourages consumers to participate in a long-term interactive marketing campaign in which
they are rewarded in some way for paying attention to increasingly relevant messages.”
(I) Anticipated, (II) Personal (III) Relevant

Permission marketing can be contrasted to interruption marketing.

Five Steps in Permission Marketing
1. Offer the prospect an incentive to volunteer.
2. Offer the interested prospect a curriculum over time, teaching consumers about the
product.
3. Reinforce the incentive to guarantee that prospect maintains the permission.
4. Offer additional incentives to get more permission from the consumer.
5. Over time, leverage the permission to change consumer behavior toward profits.

Brand Equity drivers

Marketers build brand equity by creating the right brand knowledge structures with the right-
consumers, (Philip Kotler and Kavin Keller on the book: Marketing Management). Discussed
about this process depends on all brand-related contacts-whether marketer initiated or not. From
a marketing management perspective, however, there are three main sets of brand equity drivers:
1. The initial choices for the brand elements or identities making up the brand (brand names,
URLs, logos, symbols, characters, spokespeople, slogans, jingles, packages: -By creating a line
of nontoxic household cleaning products with bright colors and sleek designs totally unique to
the category, Method racked up $32 million in sales in 2010. Because of a limited advertising
budget, the company believes its attractive packaging and innovative products must work harder
to express the brand positioning.
2. The product and service and all accompanying marketing activities and supporting marketing
programs: Liz Claiborne's fastest-growing label is Juicy Couture, who’s edgy, contemporary
sportswear and accessories have a strong lifestyle appeal to women, men, and kids. Positioned as
an affordable luxury, the brand creates its exclusive cachet via limited distribution and a
somewhat risqué name and rebellious attitude
3 Other associations indirectly transferred to the brand by linking it to some other entity (a
person, place, or thing): -The brand name of New Zealand vodka 42 below refers to both latitude
that runs through New Zealand and the percentage of its alcohol content. All the packaging and
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other visual cues are designed to leverage the perceived purity of the country to communicate the
positioning for the brand.

5.2.1. Product, pricing and channel strategy

Integrating the Brand into Supporting Marketing Programs
Supporting marketing mix should be designed to enhance awareness and establish desired brand
image. Product strategy; Pricing strategy; Channel strategy
Product Strategy
“At the heart of a great brand is invariably a great product”
 How do consumers form their opinions of the quality and value of a product?
 How can marketers use the relationship marketing perspective in formulating product
strategy and offerings?
 Perceived quality and value
 Brand intangibles
 Total quality management and return on quality
 Value chain
 Relationship marketing
 Mass customization: Customization addresses the need for individuality NIKEiD
 After marketing: Activities that occur after customer purchase (User Manuals,
Complimentary Products). To achieve the desired brand image, product strategies
should focus on both purchase and consumption
 Loyalty programs: Loyalty programs offer different mixtures of services, newsletters,
premiums and incentives for a firm’s “best” customer
Packaging strategy
 This section should cover the functional aspect, the delivery system, and the graphics. It
definitely is the domain of personality, identity, and imagery.
 Brand persona plays an important role here. It is explained with the help of the following
example: If the target market is teenage girls, the package should be designed to fit a
teenage hand.

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  The colours should be appealing to the target and totality of graphics should create an
impression of something soft, inviting, and caring. When you pay attention to this aspect,
you will find a lot of inconsistencies in many brands.
 Do not forget to support in a written manner all actions that you want taken. This
amounts to explaining reasons, why you are doing what you are doing? By giving
explanations you will realize how consistent or inconsistent you are in your effort.
Pricing Strategy
 Price premiums are among the most important brand equity benefits of building a
strong brand.
 Consumer price perceptions: Consumers often rank brands according to price tiers
in a category.
 Setting prices to build brand equity
Value pricing
a) Product design and delivery: Innovations , improvements , and convenience
b) Product costs: Outsourcing , material substitution , technology, product
reformulation , factory iimprovement, Cost reductions can’t
sacrifice quality
c) Product price: Understand what consumers are willing to pay, if there are
premiums and then adjust it for cost and competition
 Everyday low pricing: Everyday base prices; A strategy based on low pricing as well
as discounts and promotions to consumers at regular intervals.
Channel Strategy
The manner by which a product is sold or distributed can have a profound impact on the
resulting equity and ultimate sales success of a brand. Channel strategy includes the design and
management of intermediaries such as wholesalers, distributors, brokers, and retailers. What is
the best place for your consumers to find your product and how will you get it there is going to
be the basis of your strategy? State that in a few lines. If there is a part that deals with making it
cost-effective, do mention that. Cost-effectiveness, however, should not compromise availability.
The communication strategies: Starting with coining the name to communicating it with
benefits so that positioning takes hold, you formulate all the relevant strategies.

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Naming Strategy: State what the name should connote, what are the strategic elements behind
that –function, image, or overall positioning, or what? A statement of this strategy is going to be
helpful for a new as well as an existing brand in terms of variations, extensions, and
improvements.
Copy strategy: An extremely important and interesting for brand managers, this strategy should
be stated in a little detail. You have to remember four things: First, state the benefit promised to
the consumer. Again, this takes you into the realm of promises. You may also like to state this on
the package in an attractive way for consumer education and a claim that you deliver the
promises.
Second, you must state the support for believing that the promise is true. Who knows when you
reach this point you yourself may get into a doubt about your ability to deliver the promise!
Third, state the emotional benefit to the promise. This takes you back into the concept of brand
value pyramid. You will know how far up the pyramid your brand really can go.
Fourth and lastly, you must decide the tone of advertising and the personality or character you
wish the brand to have.
Media strategy: This states, how you will reach your target consumers with the message. You
should be very careful given the diversity and fragmentation of today’s media – especially, in
terms of TV channels. State things in broad terms and make plans separately. This takes you back
into budget allocations.
Sales promotion strategy: Consumer Promotion, State your objective very clearly in the
following terms:
• Are you after trial, re-purchase, loading, increased usage?
• Which sizes are best-promoted? How frequently?
• Will you promote everywhere or regionally?
• Will you schedule for seasonality or holidays?
Trade Promotion,
• What is your expectation from trade to help you realize your objectives?
• What kind of deals and incentives you are willing to offer to trade?
Translate all that into numbers and see if those fit into budgetary allocations?
Merchandising strategy: This deals with how you wish to see your brand at the retail level?
What section and where on the shelf? This defines the area of interaction with sales people who

71
are going to help you achieve this objective. This is a matter to be discussed at the brand-level
cross-functional committee. Knowing the objective, you state the strategy.
The resource strategies: These strategies deal with different kinds of resources that you need to
implement your strategies.
These strategies also flow out of brand vision, its positioning and management commitment.
You, as brand managers, may not make decisions to deploy the requisite resources, but you
nonetheless should be clear about the strategic importance of such resources. State everything as
part of your strategy and present the draft plan to top management for their consideration.
Management strategy: What human resources are going to be involved in the whole effort?
How are they going to be helpful in letting the company achieve its objectives? How will they be
guided, motivated, and compensated? State all the factors briefly as part of your strategy. You
have an opportunity to explicitly state the importance of the functioning of various committees
we have been talking about as internal marketing effort and also for measuring brand
performance.
You may also recall the incentives that we discussed for those with good performance. Good
performance is related to brand performance. The whole exercise falls within the areas of cross
functional committees.
Sales strategy: State the importance of making sure that our distribution strategy works well and
our sales are registered according to the plan. Any requirements of additional staff or changes
have got to be taken into a strategic account. State all the factors as part of the strategy.
External resource strategy: State as part of the strategy the kind of resources to be employed
here.
• Market research
• Event management experts
• Other sales promotion experts
Testing strategy: You mention, as your strategy, what kind of testing mechanisms are sound?
• Market research
• Ad research
• Test markets etc.
Channel Design

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  Direct channels: Selling through personal contacts from the company to prospective
customers by mail, phone, electronic means, in-person visits, and so forth
 Indirect channels: Selling through third-party intermediaries such as agents or broker
representatives, wholesalers or distributors, and retailers or dealers, Push and pull strategies

Push and Pull Strategies

By devoting marketing efforts to the end consumer, a manufacturer is said to employ a pull
strategy. Alternatively, marketers can devote their selling efforts to the channel members
themselves, providing direct incentives for them to stock and sell products to the end consumer.
This approach is called a push strategy.
Not every plan is going to have all these sections. But, the principles are the same. So, some may
have additional sections, the need for which is to be ascertained by the brand management
people. Knowing your circumstances and the market situation, you must decide which aspects of
the overall brand management process need more attention than others. With the understanding
of all fundamentals, you now should be the best guide to determine that. Offer value to the
consumer, create it for the brand, and make the business profitable!

5.2.2. Integrating marketing communications to build brand equity

Use an integrated marketing communications strategy Experience has shown that advertising and
promotions when used together create a compound impact. The reasons are common sense-
based. A mix of all communications has a better chance of achieving synergy. If synergy is to be
achieved, then advertising and promotions have to be mutually consistent, so that they can
complement each other’s effect. Having the two tools complement each other leads to a
cumulative impact in the minds of customers in a coherent way. Fragmented messages at
unrelated times do not create as much of an impact as consolidated messages through all the
possible vehicles of communications. The integration therefore calls for certain methods to be
followed. The generally followed principles are:

Principle of IMC (Integrated Marketing Communication)

1. Always look for opportunities to blend various possibilities of communication.

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2. Ensure that all of them convey the same message, consistently.

3. Track all expenditure by product, promotional tools, and relate the observed effects with
improvements in future applications.

4. Create a philosophy of capabilities and cost effectiveness of each tool. It forces you to
consider all the possible tools at your disposal to communicate brand’s positioning directly with
your customers by making sure nothing is left uncovered.

5.2.3. Leveraging secondary brand associations to build brand equity

Leveraging Secondary Associations
The third and final way to build brand equity is, in effect, to "borrow" it. That is, create brand
equity by linking the brand to other information in memory that conveys meaning to consumers.
The "secondary" brand associations can link the brand to sources, such as the company itself
(through branding strategies), to countries or other geographical regions (through identification
of product origin), and to channels of distribution (through channel strategy); as well as to other
brands (through ingredient or co-branding), characters (through licensing), spokespeople
(through endorsements), sporting or cultural events (through sponsorship), or some other third-
party sources (through awards or reviews).
For example, assume Burton Co.-makers of snowboards as well as ski boots, bindings, clothing,
and outerwear-decided to introduce a new surfboard called "The Dominator." Burton has gained
over a third of the snowboard market by closely aligning itself with top professional riders and
creating a strong amateur snowboarder community around the country. In creating the marketing
program to support the new Dominator surfboard, Burton could attempt to leverage secondary
brand knowledge in a number of different ways:
It could leverage associations to the corporate brand by "sub branding" the product, calling it
"Dominator by Burton." Consumers' evaluations of the new product would be influenced by how
they felt about Burton and how they felt that such knowledge predicted the quality of a Burton
surfboard.
• Burton could rely on its rural New England origins, but such a geographical location would
seem to have little relevance to surfing.
Burton could also sell through popular surf shops in the hope that its credibility would "rub off"
on the Dominator brand.

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• Burton could co-brand by identifying a strong ingredient brand for its foam or fiberglass
materials (as Wilson did by incorporating Goodyear tire rubber on the soles of its Pro-Staff
Classic tennis shoes).
• Burton could find one or more top professional surfers to endorse the surfboard, or it could
sponsor a surfing competition or even the entire Association of Surfing Professionals (ASP)
World Tour.
Burton could secure and publicize favorable ratings from third-party sources such as Surfer or
Surfing magazine.
Thus, independent of the associations created by the surfboard itself, its brand name, or any other
aspects of the marketing program, Burton could build equity by linking the brand to these other
entities.

5.3. Summary
Brand is a mental game where each element tells a story about the brand itself and these stories
are destined together to a single goal to draw a distinct image in the consumers mind.
Differentiation is an inevitable part of the brand management, which can be done by positioning
and integrated marketing communication. However, this differentiation starts from developing
each brand element distinctively to avoid the ‘’me too’’ approach. Brand was born to separate a
group of products from that of others; but nowadays, brand is used by consumers to differentiate
them within society.
Product quality depends not only on functional product performance but on broader performance
considerations as well, like speed, accuracy, and care of product delivery and installation; the
promptness, courtesy, and helpfulness of customer service and training; and the quality of repair
service. Brand attitudes may also depend on more abstract product imagery, such as the
symbolism or personality reflected in the brand. The product is at the heart of brand equity.
Product strategy entails choosing: Tangible and intangible benefits the product will embody,
Marketing activities that consumers desire and the marketing program can deliver, and Lear n
how to know the audience, listen (the best) customers and engage them.
The pricing strategy can dictate: How consumers categorize the price of the brand, how firm or
how flexible they think the price is, based on how deeply or how frequently it is discounted.
Consumers rank brands according to price tiers in a category. Price groups: Range of acceptable

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prices that indicate the flexibility and breadth marketers can adopt in pricing their brands within
a tier. Value-based pricing strategies: Attempting to sell the right product at the right price to
better meet consumer wishes.
Channel design: Classified into direct and indirect channels. Direct channels sell through
personal contacts from the company to prospective customers by mail, phone, electronic means,
and in-person visits. Indirect channels sell through third-party intermediaries such as agents or
broker representatives, wholesalers or distributors, and retailers or dealers. Nike, Branded Nike-
town stores, NikeStore.com, Outlet stores, Retail, Catalog retailers and Specialty stores.
Integrating marketing communications thus involves mixing and matching different
communication options to establish the desired awareness and image in the minds of consumers.
Interactive marketing communications were identified as an important growth area in marketing.
Interactive marketing communications offers marketers much versatility in that virtually any
aspect of brand building can be addressed via interactive marketing communications to
potentially impact brand equity.

5.4. Check your progress Exercise

1. What are the main criteria in choosing brand elements?

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2. List and discuss about designing marketing programs to build brand equity
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3. What are elements of channel strategies? Discuss types of channel strategies.

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4. What do we mean by integrated marketing communication? Discuss the four principles of

IMC?
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Answer to Check Your Progress Exercise

Discussion questions:

Question 1, Refer, Sub title criteria in choosing brand elements, 5.1.1

Question 2. Refer, Sub title designing marketing programs, 5.2

Question 3. Refer Sub title channel strategy, 5.2.1

Question 4. Refer Sub title integrating marketing communications, 5.2.2

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UNIT SIX: MEASURING AND INTERPRETING BRAND
PERFORMANCE

Contents:
6.0. Aims and object
6.1. Developing a brand equity measurement and management system
6.1.1. Brand Audit
6.1.2. Brand Tracking
6.2. Conducting brand audits
6.3. Establishing a brand equity management system
6.3.1. Brand Reinforcement
6.3.2. Brand Revitalization
6.4. Maximizing internal branding
6.5. Summary
6.6. Check your progress exercise

6.0. Aims and objectives

The purpose of this unit is to discuss about the core concepts of brand equity management and
brand audit activities. After reading this unit, you must be able:
 to explain the brand tracking and brand audit
 to conduct brand audit activities and brand equity management
 to establish a brand equity management system.
 To explain brand reinforcement and brand revitalization
 To maximize internal branding activities

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6.1. Developing a brand equity measurement and management system
Measuring Brand Equity
Given that the power of a brand resides in the minds of consumers and the way it changes their
response to marketing, there are two basic approaches to measuring brand equity. An indirect
approach assesses potential sources of brand equity by identifying and tracking consumer brand
knowledge structures. A direct approach assesses the actual impact of brand knowledge on
consumer response to different aspects of the marketing. "Marketing Insight: The Brand Value
Chain" shows how to link the two approaches. The two general approaches are complementary,
and marketers can employ both. In other words, for brand equity to perform a useful strategic
function and guide marketing decisions, marketers need to fully understand:
(1) The sources of brand equity and how they affect outcomes of interest, as well as
(2) How these sources and outcomes change, if at all, over time. Brand audits are important for
the former; brand tracking for the latter.
6.1.1. A brand audit is a consumer-focused series of procedures to assess the health of the
brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity.
Marketers should conduct a brand audit whenever they're considering important shifts in
strategic direction. Conducting brand audits on a regular basis, such as annually, allows
marketers to keep their fingers on the pulse of their brands so they can manage them more
proactively and responsively. Audits are particularly useful background for managers as they set
up their marketing plans.
6.1.2. Brand-tracking studies
Brand tracking studies collect quantitative data from consumers on a routine basis over lime to
provide marketers with consistent, baseline information about how their brands and marketing
programs are performing on key dimensions. Tracking studies are a means of understanding
where, how much, and in what ways brand value is being created, to facilitate day-to-day
decision making.

6.2. Conducting brand audits

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What is a 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, and product.
External branding can also be considered; logo and other brand elements, website, advertising,
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.
Perform your own brand audit
However, you can chose to audit yourself using data that should be readily available. There are a
wide range of metrics you can measure, but which ones are important will change on a case by
case basis.
1. Create a framework
You should start by looking at your mission and strategic objectives to create a framework.
You want to consider who your target customers are, the marketing plan to reach them, and the
layout of the business landscape you operate in. Some companies will be able to refer to their go
to market strategy. This consists of the overarching plan that includes target customers
(geographically, job roles, sectors, buyer personas etc), product portfolio, distribution channels,
partnerships, competitors, and pricing.
2. Question your customers
It can be easy to rely on web and social numbers alone, but this will not give a complete picture.
You can conduct surveys by telephone, email, on your website or as part of the sales process.
Services like Smart Survey will let you create online questionnaires for free. A mixture of

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quantitative and qualitative feedback will provide a more rounded view. Understanding the
customer experience at each touch point will be an important part of your audit.
As there is plenty of data available these subjective customer stories will help humanize the audit
and provide an idea of how people perceive your brand.
They can also help to uncover answers to questions that cannot be easily told by data, such as
rating the customer service- experience or why someone ultimately chose your brand over the
competition.
3. Review your web analytics
As 81% of consumers conduct on-line research before making a purchase (going up to 94% in
B2B cases), the traffic to your website is an important, if obvious, place to start. Have a look at
your web analytics program to discover how your website is performing.
Monitoring paid and organic channels is standard practice for working out if your SEO or
display adverts are succeeding or need optimizing. You can also look deeper to see if traffic is
coming from the markets you are targeting.
It’s also worth reviewing which channels drive traffic: you want there to be a mix of sources to
mitigate against any sudden drops in one area. An over-reliance on organic search could be
undone by one simple Google update.
Obviously, conversions and conversion rates should always be monitored. A deeper analysis as
part of your brand audit will tell you if you are attracting the right kind of traffic, and which
types of content are working best.

4. Review social data

Social data can help further flesh out the overview of your brand, giving access to audience data
that is unavailable through other channels.
The demographic information available through social media allows you to better understand
your audience. You may want to reposition your messaging if your actual audience differs from
your perceived audience.
Social intelligence tools like Brand watch can be used to gain a deeper understanding of your
customers, examining their interests outside your brand to inform marketing. Location-based
social data can complement web location data.

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You can find out who is linking to your website, just one way of uncovering influencers.
Sentiment analysis allows you to gain an overview of the wider public opinion around your
brand, or specific campaign or product.
A linguistic analysis using categorization of mentions can inform you of the associations with
your brand. Combining this data with an audience analysis gives you opportunities to reposition
or highlight strengths, and answering the needs of the market.
5. Review sales data
Of course sales data will be at the forefront of your on-going monthly reporting, but examining it
in conjunction with the rest of the audit data will help to identify problem areas.
The context provided by an analysis of the entire customer journey can bring out specific areas
that are causing problems, or opportunities to further exploit.
6. Look at your competitors
No brand exists in isolation. The final part of conducting a brand audit involves looking at your
competitors to understand your place in the market. There is an entire landscape of competitor
analysis tools that will do a lot of the work for you. Rankings, back links, content, adverts,
rankings, traffic, emails and price tracking can all be investigated.
Social data can provide the same data about your competitors as your own brand, as it is not
gated in the same way a lot of other data is. In addition to the methods listed above,
calculating share of voice shows how much of the online conversation you are earning, and how
that conversion differs in different markets.
7. Take action and monitor results
A brand audit should highlight areas for action. A detailed plan of findings should be followed by
a series of actionable targets, with a time-line of expected results. After, you have taken action on
each area monitor progress and results.
An on-going process of measurement will inform if your targets are being reached, but you may
wish to repeat the audit process after a reasonable amount of time. However you chose to go
forward, keep in mind that the landscape will continue to change and brands need to continually
update and innovate to stay relevant and ahead of the competition.

6.3. Establishing a brand equity management system

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Managing Brand Equity: Effective brand management requires a long-term view of marketing
actions. Because consumer responses to marketing activity depend on what they know and
remember about a brand, short-term marketing actions, by changing brand knowledge,
necessarily increase or decrease the long-term success of future marketing actions.
6.3.1. Brand Reinforcement
As a company's major enduring asset, a brand needs to be carefully managed so that its value
does not depreciate. Many brand leaders of 70 years ago remain brand leaders today- Coca-Cola,
Heinz, and Campbell Soup-but only by constantly striving to improve their products, services,
and marketing. Brand equity is reinforced by marketing actions that consistently convey the
meaning of the brand in terms of:
(1) What products the brand represents, what core benefits it supplies, and what needs it satisfies,
as well as:
(2) How the brand makes products superior, and which strong, favorable, and unique brand
associations should exist in the minds of consumers. Nivea, one of Europe's strongest brands, has
expanded its scope from a skin cream brand to a skin care and personal care brand through
carefully designed and implemented brand extensions reinforcing the Nivea brand promise of
"mild,""gentle," and "caring" in a broader arena. Reinforcing brand equity requires innovation
and relevance throughout the marketing program.
The brand must always be moving forward-but moving forward in the right direction, with new
and compelling offerings and ways to market them. Brands that fail to move forward-such as
Kmart, Levi Strauss, Montgomery Ward, Oldsmobile, and Polaroid-find that their market
leadership dwindles or even disappears. An important part of reinforcing brands is providing
marketing support that's consistent in amount and kind. Consistency doesn't mean uniformity
with no changes: Many tactical changes may be necessary to maintain the strategic thrust and
direction of the brand. Unless there is some change in the marketing environment, however, there
is little need to deviate from a successful positioning. When change is necessary, marketers
should vigorously preserve and defend sources of brand equity.
In managing brand equity, marketers must recognize the trade-offs between activities that fortify
the brand and reinforce its meaning, such as a well-received new product improvement or a
creatively designed ad campaign, and those that leverage or borrow from existing brand equity
to reap some financial benefit, such as a short-term promotional discount that just emphasizes the

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lower price. At some point, failure to reinforce the brand will diminish brand awareness and
weaken brand image.

6.3.2. Brand Revitalization

Changes in consumer tastes and preferences, the emergence of new competitors or new
technology, or any new development in the marketing environment can affect the fortunes of a
brand. In virtually every product category, once-prominent and admired brands-such as Smith
Corona, Zenith, and TWA-have fallen on hard times or even disappeared. Nevertheless, a number
of brands have managed to make impressive comebacks in recent years, as marketers have
breathed new life into their customer franchises. Volkswagen, Dr. Scholl's, and Hyperion
Solutions software have all seen their brand fortunes successfully turned around to varying
degrees in recent years. Often, the first thing to do in revitalizing a brand is to understand what
the sources of brand equity were to begin with. Are positive associations losing their strength or
uniqueness? Have negative associations become linked to the brand? Then decide whether to
retain the same positioning or create a new one, and if so, which new one. Sometimes the actual
marketing program is the source of the problem, because it fails to deliver on the brand promise.
Then a "back to basics" strategy may make sense, as it did for HarleyDavidson.

6.4. Maximizing internal branding

The matter does not end at formation of committees to formulate strategies. Once the strategy is
in place and committees formed for execution, it becomes imperative to start communicating for
the purpose of educating employees at different levels and functions of the organization. Without
communication, education is difficult, and without education results remain improbable. The
ultimate objective of the brand-based education is to create a culture in which brand vision is
understood, brand picture upheld, and brand positioning fully owned. There could be a variety of
approaches toward education regarding brand promise and positioning. Some of the approaches
adopted by good companies are the following:
• Internal groups focusing on education through lectures
• Company publications
• Speaker series by outside experts about their experiences

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• Interactive training modules in which knowledge is imparted on segmentation, differentiation,
promise, and positioning etc. The idea of all the training and education programs is to learn the
concepts and then immediately apply those to real life situations within their areas.
Some companies also measure internally the brand perception of their own staff members and
then compare that with the brand perception of customers in the market place.
The gaps highlight areas to be stressed in terms of training and education. The interaction with
staff under such conditions really help the company make their staff understand brand
positioning, which is the key to success.
Tools to effective communication

1. Let the employees know the research

It may not be a bad idea to let the employees know how the company arrived at the brand
vision, brand picture, brand positioning, and the overall brand-based customer model.
Letting them know how competition stacks up against your brand and what are the
customer expectations from your brand (as per research findings) will buy them in to the
strategic thinking of the company. Letting them also know the overall objectives the
company is expecting to achieve will win over their confidence in the company and the
project for the good of the strategies. Lack of confidence and cooperation from other
functional areas always is caused by the thinking on their part that marketing and
branding people are attempting to do creative things in isolation.

2. Make sure the employees understand the results company is seeking

As a continuation of the attempt to let them know overall objectives, you must make
them understand the results that are expected. Gain their support for those parts of the
objectives that fall into their respective areas. To achieve that, break objectives into
different levels and involve the internal teams to fix those for people in their respective
areas. Let them have a sense of ownership.
3. Let the employees know game and action plan
Employees also have to be guided about what actions they are to take in light of the
strategies. Tell them specifically any changes that are desired in their daily routines and
activities. Educate them on any new activities that are required on their part to deliver the

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 promise and uphold the contract. Give them targets and measure their performance
against those targets.

6.5. Summary

For any marketers, it is of supreme importance to understand a consumer mind and also current
level of brand knowledge among consumers because this understanding lays foundation for
formulation of marketing communication strategies. A particular attention is required to design
measurement system for source of brand equity.
One of the primary measurement systems is capturing the response of customer in a basic
questionnaire format, where in, they are asked to express feeling with regards to particular
feature of brand and overall experience in using a service. Another qualitative research technique
looks to capture consumer behavior in understanding her purchase decision.
The purpose of a brand audit is to ascertain how your business is performing in the eyes of your
customers. The first step of your brand audit process is to create a framework. Make sure you
identify what kind of traffic is increasing, before assuming everything looks like it’s going well.
And other activities should implement. After all of your action plans are executed, monitor the
progress by repeating the brand audit process. Remember…brand audit is a continuous exercise
and must be conducted regularly.

6.6. Check Your Progress Exercise

1. What are the two approaches used to measure brand equity?
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2. How can we maximize internal branding and the techniques to used
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3. List and discuss the seven steps used to measure brand audit.
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Answer to Check Your Progress Exercise

Discussion Question 1, Refer, Sub title developing a brand equity measurement, 6.1

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 Question 2. Refer, Sub title Maximizing internal branding, 6.4

Question 3. Refer Sub title perform your brand audit, 6.4

UNIT SEVEN: GROWING AND SUSTAINING BRAND EQUITY

Contents:
7.0. Aims and objectives
7.1. Introducing and naming new products and brand extensions
7.1.1. Brand extension
7.1.2. Advantages of brand extension
7.1.3. Disadvantages of brand extension
7.2. Managing brands over time
7.2.1. Brand Concept Management
7.2.2. Brand Identity and Aaker
7.3. Managing brands over geographic boundaries and market segments
7.4. Summary
7.5. Check your progress exercise

7.0. Aims and objectives

As the preceding units have indicated, effective branding management strategy formulation is
dependent up on sound information from the market place.
Therefore, the aim of this unit is to give brief explanation on the activities of brand extension and
managing brand over geographic boundaries.
By the time you finish this unit you should be able to:
 To introduce new brand products/naming
 To divide market based on geographical location and brand type
 Know how to manage brand over time

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7.1. Introducing and naming new products and brand extensions
A company grows through its new products: they make it possible to gain a differential in
products and services over the competition. They also make it possible to focus advertising on
news that will interest the market. Finally, they provide the springboard for a revitalization of
strategic image features of the brand. For every launch of a particular innovation, the same
question arises from the parents of the project: what shall we call it? The question of naming new
products is important: it is not at all a euphonic problem (does the name sound nice?), but a
fundamental one. In reality, the first question should be: do we need to call it anything?

7.1.1. Brand Extensions

A brand-extension (or brand-stretching) strategy is any effort to use a successful brand name to
launch new or modified products in a new category. Procter & Gamble put its Fairy name on
laundry powder and dish-washing detergent with effective results. Swatch spread from watches
into telephones. And Honda stretched its company name to cover such different products as its
cars, motorcycles, snow blowers, lawn mowers, marine engines and snowmobiles. This allows
Honda to advertise that it can fit 'six Hondas in a two-car garage'. A brand-extension strategy
offers many advantages.
First, brand extensions capture greater market share and realize greater advertising efficiency
than individual brands.
Second, a well-regarded brand name helps the company enter new product categories more
easily as it gives a new product instant recognition and faster acceptance. Sony puts its name on
most of its new electronic products, creating an instant perception of high quality for each new
product. Thus, brand extensions also save the high advertising cost usually required to
familiarize consumers with a new brand name. At the same time, a brand-extension strategy
involves some risk. Poorly conceived brand extensions. In each of these cases the brand name
was not appropriate to the new product, even though it was well made and satisfying. This
problem occurs when the established brand name is launched into a very different market from
the original brand and target customers in the new market do not value the brand's associations.

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A brand name may also lose its special positioning in the consumer's mind through overuse.
Brand dilution occurs when consumers no longer associate a brand with a specific product or
even highly similar products.
Business observers, for example, have questioned the 'elasticity' of the Virgin name. Richard
Branson has extended the Virgin name, which appears on a huge range of disparate products,
ranging from music and entertainment media shops, airlines and Internet services to personal
financial services, cola drinks and bridal wear. They wonder if Virgin may run the risk of
overusing the brand's power of quality, innovation, value for money and fun, and its emotional
'take on the big bullies and give you something better' associations. Finally, brand extensions can
hurt the core values of the original product when managers get it wrong.
The American Milwaukee Miller Brewing Company stuck the Miller name, synonymous with a
hefty 'good-ol'-boys' brew, on its new 'Lite' beer. Miller Lite became a highly successful beer, but
by muddying the sharp associations of the Miller name, the company hurt Miller High Life, the
original beer, whose sales subsequently fallen. Miller's original beer was advertised to older
drinkers on the basis of traditional American values, while Miller Lite targeted the under-24s
using tongue-in-cheek endorsements from sportsmen and comics. Transferring an existing brand
name to a new customer segment or product group requires great care. The best result is one
when the extension enhances the core brand and builds the sales of both current and new
products. Companies that are tempted to transfer a brand name must research whether the brand's
associations fit the new product.
7.1.2. Advantages of brand extensions:
Two main advantages of brand extensions are that they can facilitate new-product acceptance and
provide positive feedback to the parent brand and company.
Improved odds of new product success, Consumers can make inferences and form expectations
about the composition and performance of a new product based on what they already know about
the parent brand and the extent to which they feel this information is relevant to the new product.
For example, when Sony introduced a new personal computer tailored for multimedia
applications, the Vaio, consumers may have felt comfortable with its anticipated performance
because of their experience with and knowledge of other Sony products.
By setting up positive expectations, extensions reduce risk. It also may be easier to convince
retailers to stock and promote a brand extension because of increased customer demand.

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From a marketing communications perspective, an introductory campaign for an extension
doesn't need to create awareness of both the brand and the new product, but instead it can
concentrate on the new product itself.
Extensions also can avoid the difficulty-and expense-of coming up with a new name and allow
for packaging and labeling efficiencies. Positive feedback effects, besides facilitating acceptance
of new products, brand extensions can also provide feedback benefits. They can help to clarify
the meaning of a brand and its core brand values or improve consumer loyalty and perceptions of
the credibility of the company behind the extension.
Another benefit of a successful extension is that it may also serve as the basis for subsequent
extensions. During the 1970s and 1980s, Billabong established its brand credibility with the
young surfing community as a designer and producer of quality surf apparel. This success
permitted it to extend into other youth-oriented areas, such as snowboarding and skateboarding.

7.1.3. Disadvantages of brand extension:

On the downside, line extensions may cause the brand name to be less strongly identified with
anyone product, Rise and Trout call this the "line-extension trap "By linking its brand to
mainstream food products such as mashed potatoes, powdered milk, soups, and beverages,
Cadbury ran the risk of losing its more specific meaning as a chocolates and candy brand.
Brand dilution, it occurs when consumers no longer associate a brand with a specific product
or highly similar products and start thinking less of the brand. If a firm launches extensions
consumers deem inappropriate, they may question the integrity of the brand or become confused
and perhaps even frustrated: Which version of the product is the "right one" for them?
Retailers reject many new products and brands because they don't have the shelf or display space
for them. And the firm itself may become overwhelmed.
The worst possible scenario is for an extension not only to fail, but also to harm the parent brand
image in the process. Fortunately, such events are rare. "Marketing failures," where insufficient
consumers were attracted to a brand, are typically much less damaging than "product failures,"
where the brand fundamentally fails to live up to its promise. Even then, product failures dilute
brand equity only when the extension is seen as very similar to the parent brand.
New brands: Firms that favor a multiband approach are likely to create a new brand to
differentiate a new product, whether it is introduced into an existing or a new-product category.

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However, for some companies, a new brand may be created because it is entering a new-product
category for which none of the company's current brands seems appropriate.
For example, Toyota established a separate family name - the Lexus - for its new luxury
executive cars in order to create a distinctive identity for the latter and to position these well
away from the traditional mass-market image of the 'Toyota' brand name. Alternatively, a
company may be compelled to differentiate its new product, and a new brand is the best route to
signal its identity.
• Brand Repositioning, However well a brand is initially positioned in a market, the company
may have to reposition it later, A competitor may launch a brand position next to the company's
brand and cut into its market share. Or customer wants may shift, leaving the company's brand
with less demand. Marketers should consider repositioning existing brands before introducing
new ones. In this way, they can build on existing brand recognition and consumer loyalty.
Repositioning may require changing both the product and its image.

7.2. Managing brands over time

The long-term success of a brand depends on marketer’s ability to select a brand meaning prior
to market entry and operational zing that meaning in the form of an image, and maintaining that
image over time. The fact that several brands have been able to maintain their image for more
than 100 years (e.g. Ivory’s ‘purity’ image) supports their position. A brand image has both a
direct effect on sales and a moderating effect on the relationship between product life cycle
(PLC) strategies and sales. Finally, a brand image is not simply a perceptual phenomenon
affected by the firm’s communication activities alone.
It is the understanding consumers derive from the total set of brand-related activities engaged in
by the firm. Unfortunately, positioning/repositioning statements do incorporate what the brand
image should be but they do not indicate how the image can be managed over time. Instead,
short-term market driven factors such as current consumer needs and competitors are used as a
basis for managing the brand’s image/position and there is no strategic orientation (David A.
Aaker).

7.2.1. Brand Concept Management

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(BCM)taking a strategic long-term approach, C.W. and Debbie Macinnis, presented a normative
framework termed brand concept management (BCM) for selecting, implementing and
controlling brand image over time to enhance market performance.
The framework consists of a sequential process of selecting, introducing, elaborating and
fortifying a brand concept. The brand concept guides positioning strategies, and hence the brand
image, at each of these stages. Three types of brand concepts are developed based on consumer
needs, namely Functional, Symbolic and Experiential concept.
• A brand with a functional concept is defined as one designed to solve externally generated
consumption needs or in other words a product that fulfills immediate consumption needs should
be driven by a functional concept.
• A brand with a symbolic concept is one designed to associate the individual with a desired
group, role or self-image. This is ideal for products that fulfill internally generated needs like
self-enhancement or ego identification.
• A brand with an experiential concept is designed to fulfill internally generated needs for
stimulation or variety. Products that fulfill experiential needs and provide sensory pleasure,
variety, and/or cognitive stimulation should be driven by an experiential concept. Once a broad
needs-based concept has been selected, it can be used to guide the positioning strategy through
the three management stages of introduction, elaboration and fortification.
In the introductory stage of BCM a set of activities are designed to establish a brand
image/position in the marketplace during the period of market entry.
During the elaboration stage, positioning strategies focus on adding value to the brand’s image
so that its perceived superiority relative to the competitors can be established or sustained.
In the final stage of BCM, the fortification stage, the aim is to link an elaborated brand image to
the image of other products produced by the firm in different product classes. The specific
strategy implemented at the three different stages depends upon the initial concept type.
A brand concept can be viewed as a long-term investment developed and nurtured to achieve
long-run competitive advantage. The concept can especially prove useful in establishing,
maintaining and enhancing long-term customer relationships. In fact consumers enter into
relationships with brands because continuity of interaction, and not the reduction of choice, is an
important motivating factor (Jagdish Sheth).

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The BCM model ensures a continuity of interaction with the brand and an increasing array of
choices as it goes from the introduction to the elaboration and fortification stage.
The three different concepts provide clarity to the brand and the successive stages help increase
consumer loyalty and involvement with the brand.
Staying true to a single concept can help a brand build a consistent and unambiguous long-term
relationship with the consumers. But the success of a brand concept depends upon such factors as
the effectiveness and efficiency of positioning efforts and the competitive environment. Even a
brand whose image has been managed successfully can decline if the brand concept ceases to be
valued by the target customers and the market trends in a particular category shift significantly. A
single brand can also fulfill more than one type of need e.g. traveling first class with a premium
Airlines could fulfill both symbolic needs as well as experiential needs, therefore making a
single brand concept insufficient as the underlying basis for long-term brand strategy. Despite
some of the critiques of BCM it is still one of the most elaborate frameworks for long-term brand
management in the current literature.

7.2.2.Brand Identity and Aaker:

Aaker, defines brand equity as a set of five categories of brand assets and liabilities linked to a
brand, its name, and symbol that add to or subtract from the value provided by a product or a
service to a firm and/or to that firm’s customers. These categories of brand assets are:
(1) Brand loyalty,
(2) Brand awareness,
(3) Perceived quality,
(4) Brand associations, and
(5) Other proprietary assets (e.g. patents, trademarks, and channel relationships). These assets
provide value to both the customers and the firm in the long-term.
According to Aaker, a particularly important concept for building and managing long-term brand
equity is that of Brand identity. Brand identity according to Aaker is a unique set of brand
associations and these associations represent what the brand stands for and imply a promise to
customers from the organization members. Brand identity structure includes a core and extended
identity.

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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 brand identity
elements, organized into cohesive and meaningful groups.

7.3. Managing brands over geographic boundaries and market segments

In current times every company is wanting to be a global player, some companies this out of
compulsion, for some its natural extension, whatever the case companies need to have marketing
programs, which can create and sustain brand equity across geographical boundaries and
market segments. It is clear there are many reasons for becoming global player, but there are
outright advantages also for global marketing programs. Looking at the production side, as
production increases per unit cost of the product will decrease, thereby reducing cost of the
marketing program. As standardization increases in packaging, distribution and other marketing
activities cost associated with them would decrease.
For example, Sony its marketing campaign has universal appeal thereby assigning equal cost to
products and geographies. Another advantage is that with global presence and acceptance
confidence with consumer reaches altogether a different level. It creates a sense of pride and
ownership looking at the universal demand for the product. With the uniform marketing program
across geographical boundaries, companies can have consistent brand knowledge, this is
especially important for mobile consumers. Furthermore, another advantage for companies is the
ability to sell a good product universally at one goes, thereby gaining a complete first mover
advantage. But with advantages in operating on a global there are also challenges and
disadvantages. With standardization companies are unable to satisfy needs of consumer, which
comes with different culture, demographics, etc., For example, consumption of carbonated drinks
and beer is much more in USA, Australia in comparison to that of India and China. As perception
and needs vary from culture to culture, consumer response to a standard marketing program may
not equally have felt as per company acceptation.

Every product undergoes a life cycle which begins from the day it is launch in the market, so
every geographical location may be having different product life cycle stage, so marketing
programs also accordingly have to vary. Other challenge companies’ face is that of
environmental like social, political and regulatory.

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Therefore, a brand to succeed across geographical boundaries companies need to device
marketing programs, which can create global consumer, based brand equity. And for that
marketing programs have to highlight point of differences and point of similarities across
boundaries.

Furthermore, companies should understand brand building is tedious and time consuming. Brand
name, logos, symbol has to be designed in a way that it properly communicates brand knowledge
and not creates confusion in consumer’s mind. And at the same time construct and execute a
global brand equity measurement system so that focus always remains of develop a strong
consumer based brand equity.

Reasons for over geographic boundaries’ marketing

1. Regionalization is an important recent trend that, perhaps on the surface, seems to run counter
to globalization.
 Need for more focused targeting
 The shift from national advertising to sales promotions Drawbacks
 Production headaches ◦ Marketing efficiency may suffer and costs may rise
2. Perception of slow growth and increased competition in domestic markets
 Belief in enhanced overseas growth and profit opportunities
 Need to diversify risk
3. Economies of scale in production and distribution: Primary advantages of global marketing
program are the manufacturing efficiencies and lower costs that derive from higher volumes in
production and distribution.
4. Lower marketing costs: Uniformity in Packaging, advertising, promotion, and other marketing
communication activities.
5. Power and scope Brand is widely available may signal that the product is high quality and
convenient to use.
6. Consistency in brand image: Maintaining a common marketing platform all over the world
helps to maintain the consistency of brand and company image.
7. Ability to leverage good ideas quickly and efficiently: Marketers can leverage good ideas
across markets as long as the right knowledge transfer systems are put into place.

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8. Uniformity of marketing practices: a standardized global marketing program may simplify
coordination and provide greater control of the way; the brand is being marketed in different
countries.
9. Differences in consumer needs, wants, and usage patterns for products: Differences in cultural
values, economic development, and other factors across nationalities, consumer behaviour with
respect to many product categories are fundamentally different.
10. Differences in Consumer Response to Marketing Mix Elements: Consumers in different parts
of the world vary in their attitude towards and opinions about marketing activity.
11. Differences in brand and product development and the competitive environment Products
may be different stages of their cycle in different countries. Moreover, the perceptions and
positions of particular brands may also differ considerably across countries.
12. Differences in the legal environment one of the challenges in developing a global ad
campaign is the maze of constantly changing legal restrictions that exist from country to country.
13. Standardization vs. Customization
14. According to Levitt, because the world is shrinking—due to leaps in technology,
communication, and so forth—well- managed companies should shift their emphasis from
customizing items to offering globally standardized products that are advanced, functional,
reliable, and low priced for all.
15. To build brand equity, it is often necessary to create different marketing programs to address
different market segments.
 Identify differences in consumer behaviour ◦ How they purchase and use products
 What they know and feel about brands
 Adjust branding program and Choice of brand elements
 Nature of supporting marketing program
16. To build customer-based brand equity, marketers must:
 Establish breadth and depth of brand awareness
 Create points-of-parity and points-of- difference
 Elicit positive, accessible brand responses and active brand relationships
17. Understand similarities and differences in the global branding landscape
 Don’t take shortcuts in brand building
 Establish marketing infrastructure

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  Embrace integrated marketing communications
 Cultivate brand partnerships and Balance standardization and customization
 Balance global and local control and define operable guidelines

7.4. Summary
Strong internal branding is vital to the success of all external branding efforts, ensuring employee
commitment to company values and an understanding of how to deliver them.
Many organizations, however, neglect internal branding. Internal branding goes beyond
communication to evolving employee behaviour and company culture. Involve employees:
create excitement around a central theme to inform, engage and persuade. Successful internal
branding is a journey, not a one-and-done activity; it will cement employee commitment to the
company and ensure alignment with its values and behaviour, helping with recruitment, retention
and relationships at every customer touch point.
Typically, any given company would fall in any of the following four categories in terms future
expansion strategies; with current products and current market companies deal with market
penetration strategy; with new products and current market companies deal with product
development strategies; with current products and new market companies deal with market
development strategy; and with new products and new market companies deal with
diversification strategy. Clearly companies have to tackle tactical and strategically brand
extension and naming of new products almost at any stage of growth.
The markets in which companies operate are highly dynamic in nature. There is constant
evolution in products, introduction of new technology, government rules, regulatory framework,
consumer taste and preference. One way of brand management over time is to strengthen brand
equity by developing marketing programs, which express brand knowledge consistently as not to
confuse the consumer.
An interesting phenomenon has raised its head in recent time where companies are focusing on
regional markets in an effort to counter globalization.
In current times every company is wanting to be a global player, some companies this out of
compulsion, for some its natural extension, whatever the case companies need to have marketing

97
programs, which can create and sustain brand equity across geographical boundaries and market
segments. An interesting phenomenon has raised its head in recent time where companies are
focusing on regional markets in an effort to counter globalization. In this regionalization,
companies focus on geographic locations treating them as market segments.

7.5. Check Your Progress Exercise

1. How business managers introduce and name new products and implement brand extensions
activities?
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2. What are the methods /two approaches to manage brands over time?
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3. What are the means used managing brands over geographic boundaries and market
segments?
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4. What are the main reasons for over geographic boundaries’ marketing?
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Answer to Check Your Progress Exercise

Discussion: Question 1, Refer, Sub title Developing a brand equity measurement, 7.1

Question 2. Refer, Sub title managing brands over time, 7.2

Question 3. Refer Sub title perform your brand audit, 7.3

Question 4. Refer Sub title reasons for over geographic boundaries marketing, 7.3

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