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Brand Management

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Brand Management (MKT624)
VU
Lesson 28
BRAND ARCHITECTURE
Introduction
Discussion on brand architecture from the standpoint of managing brands continues from the
previous lecture. We shall learn two more strategies relating brand-product relationship before
we summarize the concept as it applies to brand management.
5. Source brand strategy
This is very close to umbrella brand strategy with one exception ­ every product has a
different brand name
Figure 36
under the source name.
This is a two-tiered
structure with double
branding1. Most of the
Japanese  cars  are
examples of the source
brand strategy.
One product starts and
gets sub-divided into
sub-species
giving
them different names.
As is already learnt,
different  names  are
given  to  different
products  to  fulfill
different
promises.
Each product with a
different name carries
one specific contract.
The  power  of  the
source  supports  the
offspring  until  they
become
established
brands in their own
right.
The sub-brands or the
offspring become so strong owing basically to strength of the source that a point comes
when the source takes the back seat and offspring emerge as the main brands because of
their own promise.
If you look at the source brand on Japanese cars, you may not find that. The brand
expression is limited only to the logo of the source, because the offspring have
developed a strong identity of their own.
It is a unique situation in which the brand strategy offers a two-level sense of difference
and depth2. The family spirit dominates! Toyota and Honda are excellent examples of
this strategy. And, there are many more.
6. Endorsing brand strategy
The endorsing brand is generally the company name, which takes on the overtones of a
brand name. It covers groups of diverse products in the shape of product brands, line
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brands and range brands. Strong company names support different brands that
demonstrate their originality - LU in the category of biscuits on the Pakistani market is
an example of this strategy. Cars by GM (General Motors) are another example on the
side of consumer durables.
The endorsing brand strategy is one of the least expensive ways of giving substance to a
company name as a brand name. The company name in return gives strength to the
product brand name.
What strategy to choose?
The six models discussed are the typical cases of branding policies adopted by different
companies as brand architecture. Different strategies have different advantages and
disadvantages to offer. There is no prescribed list of "dos" and "don'ts". In reality, there is no
fixed model for a certain situation. Companies use one or a combination of the models
discussed.
It is not a matter of style. It is very strategic in nature aimed at promoting company's products
with a long term view. The nature of arrangements used by the companies is developed in
response to the strategic situations of those companies, their markets, competition, and
company resources.
The choice of brand architecture of a company, therefore, is a reflection of the strategy it
chooses under a certain set of circumstances. It must be considered in the light of three factors:
the product; consumer behavior, the firm's competitive position.
Summary
Brand architecture is creation and management of different brands as an arrangement
compatible with the strategic situation of a company. The strategic situation demands a certain
action on part of the company as a response to fulfilling the market needs. Given the
circumstances of the moment, companies decide on strategic issues of whether to go for a
stand-alone brand, an extension, or a combination of both. As part of the architecture, brands
then are managed as a portfolio or a set of portfolios.
What is important is to formulate the right strategy for managing brands. There are six types of
different strategies companies generally employ for this purpose. It is the job of the business
managers to determine which one suits their purposes the most.
Bibliography:
1. Jean-Noel Kapferer: "Strategic Brand Management ­ Creating and Sustaining Brand
Equity Long Term"; Kogan Page (200)
2. Jean-Noel Kapferer: "Strategic Brand Management ­ Creating and Sustaining Brand
Equity Long Term"; Kogan Page (200)
Suggested readings:
1. Jean-Noel Kapferer: "Strategic Brand Management ­ Creating and Sustaining Brand
Equity Long Term"; Kogan Page (187-210)
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Brand Management (MKT624)
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CHANNELS OF DISTRIBUTION
Introduction
Moving on to channels of distribution, the thrust is going to be on creating channels that
optimize availability of your brands to customers with highest possible cost efficiencies.
Depending on the nature of brand architecture, managers have to decide on the channel partners
that offer a high level of compatibility with the goal of achieving operation and cost benefits.
Why Channels?
With brand architecture in place, we are now ready to optimally develop the brand-consumer
relationship in terms of making the brand available to him. Unless we have means to ascertain
that the brand is available at the place of our target market's choice, we cannot ensure
marketing success in any field of the marketing area. To make our brand available we need
help of different businesses that form channels.
Not one firm can master all the channel functions and, therefore different channel members get
into arrangements to help each other achieve their respective goals. Channel members are
distributors, wholesalers, retailers who form a vital chain of supply for transfer of our brand
from one hand to another.
The strategic question here is how many hands do we need to ensure efficient and cost effective
transfer of our brand to the consumer? There are quite a few functions that are performed
between the point of production and the point where the brand finally gets into the hands of the
ultimate consumer.
The final touch is given, in many cases, by retailers, especially when you are dealing with
consumer products. Why is it that some companies choose the conventional channels, while
others seem to be a little adventurous by putting up their own retail stores, and yet a few others
who may prefer direct marketing are a few questions that need to be answered through
discussion here!
With the basic objective of making our brand valuable and powerful, we must consider a few
strategic options that lay the foundation for the nature of channels that leverage our brand and
give it power. Those considerations could be the following:
Strategic Options
1. The nature of the product-market relationship
We must firstly be clear about the nature of our product - whether it is a consumer
product, a specialized product, or an industrial product along with its application.
Consumer consumables will have a channel more elaborate than durables. Specialized
products may have a different set-up of specialized dealers or company's own outlets.
Industrial products may yet be sold in another way or through a combination of both.
Customer relationship management (CRM) takes on an added dimension if company
sells directly and applications are technical requiring company's guidance1.
2. The make-up of the segment in terms of volume constituents
We must be sensitive to how much what category of customers constitute toward the
total volume of business. That understanding will shed light on the channel make-up.
As an example, if the market is divided by 80-20 rule, that is, 20% of customers
constitute 80% of business; we may have two different channels of distribution,
meaning a combination. We may cover the 80% market through our own sales force,
while use dealers for the remaining 20% of the market that may be sparse.
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3. The level of growth of the segment
If the segment is growing fast, we may like to follow the conventional methods in
vogue; if it is well established, old and growing slowly, we may like to think of
something new and different to gain power.
4. The amount of power that your brand and your company enjoy in the market place
An important determinant, power becomes the basis of negotiations. The one who has
more power negotiates from a position of strength, as a traditional rule in all walks of
life. If you are a new brand and a new company, you may like to resort to the strength
of regionally strong distributors; conversely, if your brand is strong it may attract those
distributors to you thus adding to your power.
It is, however, difficult for one party to monopolize power within the distribution
channels system or the supply chain. It boils down to the positive part played by each
member of the channel that enhances overall power of all and hence lead to profitability
for all. This highlights the fact that it basically is a partnership in which all have to play
positive regardless of the amount of power he handles.
Three strategic areas channels impact
Having considered the factors that should lay the foundation for the right channels; we must
also be concerned about the strategic areas that are impacted by our choice of channels2. The
choice of channels therefore becomes very strategic in itself.
1. Customer value
The nature of channels either enhances or reduces customer value based on service
quality and the efficiency with which the channels make products available. Customer
value means real performance, delivering what was promised so that the customer
gets the right combination of product quality, fair price, and good service.
If the quality of service is poor and customers cannot enjoy that product's benefits due
to non-availability, customers will switch to a competitive brand. High quality of
product is not a guarantee of high customer value if the product is delivered
inefficiently. Anything that is promised to be delivered direct and fast will lose its very
purpose if it is not delivered the way it is promised.
2. Sales revenues
With the prime objective of developing an effective distribution outreach, marketing
channels determine the number of existing and potential customers. The total number of
customers is the basis of revenue. This relates the reality that customers want to buy at
locations of their choice. If a company cannot identify the potential locations (meaning
if the company is lacking on one account of customer value), it is bound to lose its
customers and hence potential revenues.
3. Profitability
The structure of marketing channels has a direct bearing on margins and profitability.
Effective outreach has a cost. The cost is paid for logistics, warehousing, inventory
management and as margins to all members of the channel. How much does it affect
profitability is an important question!
Keeping in view the impact of all the three factors, coupled with historical background,
a company decides on what channels it should choose and how it will manage those to
attain its goals.
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Two companies dealing in the same product can have different marketing channels
designed to reach the same customers in the same market. A graphic illustration in the
next lecture explains this phenomenon.
Summary
Strategic considerations must be taken in their proper perspective to decide the right channels
for our business. We must carefully study the product-market relationship, the level of business
enjoyed by different segments and their size as constituents of the overall market, the growth of
segments, and the amount of power enjoyed by different members.
With that in mind, we should move on to the next step that lets us study the impact of the
under-study nature of channels on the areas of customer value, sales revenue, and profitability.
Bibliography:
1. Roger J. Best: "Market-Based Management ­ Strategies for Growing Customer Value
and Profitability"; Prentice Hall (273)
2. Roger J. Best: "Market-Based Management ­ Strategies for Growing Customer Value
and Profitability"; Prentice Hall (272)
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Table of Contents:
  1. UNDERSTANDING BRANDS – INTRODUCTION:Functions of Brand Management, Sales forecast, Brand plan
  2. INTRODUCTION:Brand Value and Power, Generate Profits and Build Brand Equity
  3. BRAND MANIFESTATIONS/ FUNDAMENTALS:Brand identity, Communication, Differentiation
  4. BRAND MANIFESTATIONS/ FUNDAMENTALS:Layers/levels of brands, Commitment of top management
  5. BRAND CHALLENGES:Consumer Revolt, Media Cost and Fragmentation, Vision
  6. STRATEGIC BRAND MANAGEMENT:Setting Objectives, Crafting a Strategy, The Brand Mission
  7. BRAND VISION:Consensus among management, Vision Statement of a Fast Food Company, Glossary of terms
  8. BUILDING BRAND VISION:Seek senior management’s input, Determine the financial contribution gap
  9. BUILDING BRAND VISION:Collect industry data and create a brand vision starter, BRAND PICTURE,
  10. BRAND PICTURE:Brand Value Pyramid, Importance of being at pinnacle, From pinnacle to bottom
  11. BRAND PERSONA:Need-based segmentation research, Personality traits through research
  12. BRAND CONTRACT:The need to stay contemporary, Summary
  13. BRAND CONTRACT:How to create a brand contract?, Brand contract principles, Understand customers’ perspective
  14. BRAND CONTRACT:Translate into standards, Fulfill Good Promises, Uncover Bad Promises
  15. BRAND BASED CUSTOMER MODEL:Identify your competitors, Compare your brand with competition
  16. BRAND BASED CUSTOMER MODEL:POSITIONING, Product era, Image Era, An important factor
  17. POSITIONING:Strong Positioning, Understanding of components through an example
  18. POSITIONING:Clarity about target market, Clarity about point of difference
  19. POSITIONING – GUIDING PRINCIPLES:Uniqueness, Credibility, Fit
  20. POSITIONING – GUIDING PRINCIPLES:Communicating the actual positioning, Evaluation criteria, Coining the message
  21. BRAND EXTENSION:Leveraging, Leveraging, Line Extension in detail, Positive side of line extension
  22. LINE EXTENSION:Reaction to negative side of extensions, Immediate actions for better managing line extensions
  23. BRAND EXTENSION/ DIVERSIFICATION:Why extend/diversify the brand,
  24. POSITIONING – THE BASE OF EXTENSION:Extending your target market, Consistency with brand vision
  25. DEVELOPING THE MODEL OF BRAND EXTENSION:Limitations, Multi-brand portfolio, The question of portfolio size
  26. BRAND PORTFOLIO:Segment variance, Constraints, Developing the model – multi-brand portfolio
  27. BRAND ARCHITECTURE:Branding strategies, Drawbacks of the product brand strategy, The umbrella brand strategy
  28. BRAND ARCHITECTURE:Source brand strategy, Endorsing brand strategy, What strategy to choose?
  29. CHANNELS OF DISTRIBUTION:Components of channel performance, Value thru product benefits
  30. CREATING VALUE:Value thru cost-efficiency, Members’ relationship with brand, Power defined
  31. CO BRANDING:Bundling, Forms of communications, Advertising and Promotions
  32. CUSTOMER RESPONSE HIERARCHY:Brand-based strategy, Methods of appropriations
  33. ADVERTISING:Developing advertising, Major responsibilities
  34. ADVERTISING:Message Frequency and Customer Awareness, Message Reinforcement
  35. SALES PROMOTIONS:Involvement of sales staff, Effects of promotions, Duration should be short
  36. OTHER COMMUNICATION TOOLS:Public relations, Event marketing, Foundations of one-to-one relationship
  37. PRICING:Strong umbrella lets you charge premium, Factors that drive loyalty
  38. PRICING:Market-based pricing, Cost-based pricing
  39. RETURN ON BRAND INVESTMENT – ROBI:Brand dynamics, On the relevance dimension
  40. BRAND DYNAMICS:On the dimension of knowledge, The importance of measures
  41. BRAND – BASED ORGANIZATION:Benefits, Not just marketing but whole culture, Tools to effective communication
  42. SERVICE BRANDS:The difference, Hard side of service selling, Solutions
  43. BRAND PLANNING:Corporate strategy and brands, Brand chartering, Brand planning process
  44. BRAND PLANNING PROCESS:Driver for change (continued), Brand analysis
  45. BRAND PLAN:Objectives, Need, Source of volume, Media strategy, Management strategy