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Brand Management

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Brand Management (MKT624)
VU
Lesson 13
BRAND CONTRACT
How to create a brand contract?
The objective of this lecture is to learn how a company should go ahead with creation of a
brand contract in a way that its brand gets duly leveraged
The key to developing the contract lies in making the promises known to customers. The more
customers are knowledgeable of the brand's promises, the more they are inclined to be bound
into a contract. A customer bound by a contract is a loyal customer.
Promises present themselves in two different forms ­ implicit and explicit. Implicit promises
are taken for granted, that is, customers must see those delivered whether the brand talks about
those or not. Tea is an excellent example of carrying implicit promises of smell, color, and taste
regardless of what brand name it carries. Any good brand of tea has to have the features
mentioned in the example.
Some promises are explicitly claimed through well-designed communication. A personal
computer with features relating processor's specifications, the size of the hard disk, and the
capacity of the random access memory (RAM) have got to be communicated very specifically,
not left to customers' imagination. Any promises that the company makes but cannot deliver
amount to a breach of the contract.
A brand contract may also contain some negative promises that must be eradicated from the
contract. Negative promises creep into the contract due to company's inability to address
certain problems or challenges. One example of negative promises can be of an automobile
company falling short on its promise of 3S ­ sales, spares, and service. If the company cannot
cope with the challenge of maintaining free availability of spares at affordable prices, the
company has unintentionally brought a negative promise into the contract.
As another example, think of a cellular phone company that may talk a lot about efficiency of
service, low rates at particular time of the day, and many other options to its subscribers. If the
service cannot catch up with the growing demand of customers by way of frequency distortions
or non-connectivity, then the company has definitely brought into the contract a negative
promise.
The two companies (car and cell phone) have to fix the negative contracts and then prove they
no longer deprive the customers of their needs or inflict the service. Powerful brands have the
resilience to bounce back if corrective action is taken in timely manner.
Need for upholding the contract
Unless the breach of contract is fixed, the brand will suffer in sales, in image and spoil other
programs. To make the contract complete and effective shortcomings have to be removed.
A hypothetical brand contract
With the understanding of mechanism of a contract, we can proceed toward hypothetically
creating a brand contract of the fast food company we discussed earlier. This company has
decided to talk about all the relevant promises on the package of the product. The terminology
of "contract" is very intra-company and is not used when it comes to communicating with the
market. Although not using any head is generally the norm of the market, this company has
chosen to label its promises under the head of "product integrity".
·  The company promises to offer you world class quality of meat, and a compatible level of
quality breads.
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Brand Management (MKT624)
VU
·
The company maintains all the critical control points involved in maintaining the minus
20-degree temperature for its meat ingredients. It makes sure there is no bacterial growth
in the vital ingredients.
·  All other condiments have been selected with the sophistication of a world class chef for
your eating pleasure.
·  Our kitchen is immaculately clean; if you were to see that you not only will overindulge
in eating but also recommend our sandwich forcefully to others.
·  We undertake to deliver the order within 30 minutes.
·  Our staff is efficient, skillful, and courteous who deliver on time with a smile.
·  We claim to have revolutionized the lunch service ­ unique product that couples efficient
service, and hence offer you a unique experience.
·  The value for money that we offer is second to none. Compare our prices with those of
competitors.
As brand manager, you may like to retain the above promises as they appear, discard a few, or
make adjustments in line with the dynamics of the market. Even if you do not wish to
communicate the above contract on the package, you must have this as guidelines for your own
staff. Keeping all employees mindful of what the company wishes to deliver amounts to
strengthening their commitment toward the product and stands as part of the internal marketing.
Brand contract therefore represents total consensus and commitment on everyone's part.
Since the contract is validated by the market, it is important that the market is adequately
educated on all the promises and the factors that make those promises deliverable. Should the
customers find the promises fulfilled, the contract stands upheld.
Promises change with changing strategies and circumstances. The fast food business started as
lunch-time delivery service. Assuming that the service has been successful, the business would
like to expand itself by creating small restaurants. The induction of restaurants will bring a
change in promises, which may look like the following:
·  Our restaurant is a modern, utility based set-up. No frills, no make-ups, straight forward,
down to earth atmosphere and pricing make it an experience of a life time!
·  The atmosphere is friendly, warm, and home-like in the real sense of the word.
·  Our preparation procedures are highly industrialized, that is, we do the same thing again
and again to maintain standardization.
If customers feel the same kind of satisfaction from their product and service, it is a reflection
of the brand contract that the management has created. That wins customers' trust and gives the
brand value and power.
Brand contract principles
There are four basic principles that we use in creating a contract1. The principles are pretty
straight forward. Use the same market research that you used for brand image exercise. Add a
few more questions and the model for research is ready. Never forget to include competition in
your research projects. Without comparisons, you may not come up with the best contract.
1. Understand customers' perspective
Go back to the sandwich project and see the kind of questions you should ask:
·  In purchasing our sandwich, what benefits you expected?
·  Did it meet your expectations? If yes, how? If no, why?
·  Tell us the most important aspects of product quality ­ taste, freshness, smell, size,
filling, and overall presentation.
·  What promises our brand makes?
·  Do other brands make different promises? If yes, how?
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Brand Management (MKT624)
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What really triggered your decision to buy our brand and do you see your decision
worth making?
·  What is it that we can do more to improve our service and product?
The basic objective is to make this exercise customer driven. You must take into account
the opinions of the key purchase influencers. Be ready to face a few negative comments.
Fix the situation if the comments make sense.
Bibliography:
1. Scot M. Davis: "Brand Asset Management ­ Driving Profitable Growth through Your
Brands"; Jossey-Bass, A Wiley Imprint (79)
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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