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Brand Management

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Brand Management (MKT624)
Lesson 14
Brand contract principles
The remaining three principles are discussed in this lecture.
2. Translate into standards
There are a host of activities that are to be undertaken before you put a product together.
This implies you are putting together different promises. Not one department is involved
in carrying out a task that is as comprehensive as putting a product together. The
numerous activities, therefore, have to be standardized by ensuring optimal and accurate
input from every employee of all departments, starting with purchasing right through
production and selling.
Well-coordinated actions will result from standardization of activities and lead to meeting
promises as made. If we go back to the example of sandwiches, all actions involved from
product preparation to delivery have to be standardized under a common set of guidelines
­ production, delivery, sales, and transportation. One action out of the standards can land
the company into trouble by affecting one or a set of promises the company has explicitly
made with its customers.
All standardized actions are the touch points brand management has with other functions.
They must converge, so that you can uphold your contract. Any lapses at the cold storage
in terms of maintenance of the requisite temperature will lead to abuse of meat quality.
Inefficient transportation of ingredients may cause delays in preparation and delivery of
product. Lack of training of staff may not keep the service as pleasant as the company
may claim. These possibilities exemplify the need for all to work like a cohesive whole in
which all actions are repeated accurately according to standards day in and day out.
3. Fulfill Good Promises
Once standards are in place, it is the job of managers to develop a standards-compliant
culture. Such a culture keeps all checks in place and prevents people from omitting major
as well as minor tasks. Companies should not become complacent at this juncture and
leave things to juniors or chances in the hope that all systems are being followed. Systems
and procedures being in place is no guarantee of compliance of standards. Strict
adherence to procedures is even more important than constituting those procedures.
Execution is gaining more and more importance nowadays ­ even more than strategies.
Management must involve itself to ensure adherence of all procedural tasks to the
standards for fulfillment of promises.
Fulfillment of good promises, at times, escapes attention because management is shifting
its business strategy. Shift comes in shape of expansion of business, a major change in
distribution, or entry into a new line altogether. It is here that commitment of
management as part of brand vision counts. The example of business expansion through
adding restaurants to its line expresses this phenomenon. The company has to ensure that
existing good promises keep getting translated into benefits and the new ones get
absorbed into the basket of benefits offered to customers.
In case of a new offer, if the new line is pursued in more enthusiasm than the promises of
the existing brand require, then you may damage your brand.
4. Uncover Bad Promises
Through a consistent contact with the marketplace and through research studies, one can
easily uncover the negative promises. Once uncovered, the strategy to fix those and turn
Brand Management (MKT624)
them into good promises should not be difficult. One must convert the shortcomings into
Summary ­ lecture 13 and brand contract part of lecture14
Brand contract is a function of promises made and fulfilled. Companies have to be very careful
in making promises, for the promises not fulfilled turn into negative promises and can
undermine the brand's reputation.
The whole company should be involved while it puts together the promises to be delivered, for
that constitutes upholding the contract. There are four fundamental principles that guide us to
develop a brand's contract. First of all, we must understand the customer's perspective and then
get on to developing features that are full of promises. We, then, should move on to developing
standards for delivering the promises and follow that step with fulfilling good promises. We
must not forget to undertake an effort to unearth any bad promises that the contract may carry
with it.
In short, understand the good promises. Communicate them to customers, identify new
promises that may improve the brand contract, uncover the negative ones, fix them, and then
develop brand contract.
The intention of developing a brand-based model is to understand the beliefs and behavior of
customers. This understanding leads us to determine why customers buy what they buy. This
also makes us understand buyers' underlying motives for taking the decisions they take to buy
brands of their preference. With the intention to win over customers and retaining them over a
long period of time, we study their purchasing actions toward our brands and those of
The behavior of buyers goes under a change with changing circumstances. And, so do their
beliefs. This evolution dictates that brands also change and correspond to the changing
behavior of buyers. It is for this reason that brands also are kept contemporary so that they can
respond to customers' evolving behavior. If a company does not do that, competition will take
In an attempt to keep customers loyal and to prove that their needs and beliefs are paramount,
companies innovate and achieve differentiation. Since everyone follows the same thinking,
innovations become market standards and all competitors follow suit with similar brands of
good quality. Eating into the area of differentiation, competitors try to erase the advantage that
your brand enjoys. This becomes a challenging question for brand managers, who have to have
an answer to this challenge.
The model should conform to value pyramid
The answer lies in making your brand so powerful that customers can emotionally relate
themselves with it. Brand at the top of the brand value pyramid conforms more to a brand-
based model. Staying at the pinnacle of the pyramid involves the process of continuously
renewing the brand difference. This renewal rejuvenates the brand and keeps it contemporary,
and, hence, stays as the basis of customer preference.
Continuously renewing the difference makes your product more acceptable, for it is perceived
as the one conforming to the changing behavior and beliefs of customers. In most of the
consumer products categories, the percentage of customers who are loyal to just one brand is
not very high, and that places good brands with differentiating and evolved features at a fairly
decent level of acceptability. Figure 20 testifies this phenomenon1.
Brand Management (MKT624)
The higher the percentage of
U s e rs L o y a l to O n e B ra n d
loyal customers to just one brand,
In p erce n t
the more sensitive is the decision
Figure 20
to bring about a change in that
brand. Those who smoke will
agree that a change in package
design of a cigarette pack may be
58  61  65
44  44  46  47  48  53
perceived as a change in the taste
33  35
profile of the smoke. Such a
perception may throw the brand
out of consumers' favor. Loyalty
to one brand in the category of
cigarettes is the highest ­ 71% as
per the above graphics.
P ro d u c ts
Conversely, changes in fashion
Source: W all Street Journal October 19, 1989
jeans  may  provide  brand
managers with opportunities to gain more customers, for not more than 33% of customers are
loyal to just one brand. This also makes room for other brands in the market. Continuous
rejuvenation of brands is important so that you can stay within the favorable limits of the
customers who look for points of difference.
Three primary questions
The brand-based model answers three questions relating how and what sides of customer
1. How do consumers choose one brand over another?
2. How does your brand stack up against competition?
3. What opportunities exist for brand growth and expansion?
Question 1
To answer this question, we have to be clear about three factors:
a. We must know what customer buying criteria is
b. We must rate that criteria
c. We must know who makes buying decisions
Factor a - customer buying criteria
The criteria for buying relate to all attributes that a brand carries with it.
Most of the attributes are price, easy availability, convenience, quality, good history,
innovativeness (for manufactured goods), consistent performance, fit with customer's
personality, good relationship at personal level, good representatives, past experiences,
length of relationship, and advertising to name a few important ones. These factors have
been cited in most of the consumer research models and, hence, should be taken seriously.
Customer-friendly attributes generate trust among customers. Trust runs across all the
attributes that create it. If customers believe in the quality of your brand, they will
perceive the price right, believe it will give them consistent performance, and develop a
good relationship with the brand. Trust implies that customers know what they are going
to buy and therefore needs to be built.
1. Geoffery Randall: "Branding ­ A Practical Guide to Planning Your Strategy";
Kogan Page (41)
2. Scot M. Davis: "Brand Asset Management ­ Driving Profitable Growth through
Your Brands"; Jossey-Bass, A Wiley Imprint (93)
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