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Brand Management

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Brand Management (MKT624)
VU
Lesson 26
BRAND PORTFOLIO
Introduction
Due to limitations of line and brand extensions, companies have to go for a portfolio of brands.
Portfolios offer advantages. At the same time, they also are not without disadvantages. The
lecture discusses both.
Brand portfolio and segmentation
Every market can be segmented by product, customer expectation, or the type of customers. A
chain of hotels may like to have its presence in different segments of the hotel market by
having three-, four-, and five-star hotels. Its presence in three different segments addresses
different needs of customers within those segments.
Customers in the three-star segment are economy-oriented audience interested in neat
accommodation with no frills at affordable pricing in a middle class area of town. Conversely,
customers in the five-star segment are desirous of high comfort, pampering, sophisticated
ambience, and high status. Customers in the four-star category fall in between the two ends of
the spectrum.
The example illustrates different products and different types of customers with different
expectations. Considering the variance of factors among different segments, it is obvious for
the company not to sell its services through three kinds of hotels under the same brand name.
With the same name, customers in the five-star segment will feel degraded and under-served,
while those in three- and four-star segments will expect to have upgraded service offered at the
five-star set-up at the pricing of three- and four-star accommodations. It will lead to quite a
confusing situation devoid of a rationale.
The company therefore should consider different brand names for the simple reason that all
three products relate to a particular set of corporate objectives through segmentation and
differentiation. This implies that depending on the corporate objectives, degree of competition,
and company's resources, the
The Positioning Map
company should decide about the
Multi-brand portfolio
number of brands it should be
having. In this case, it looks
Price
apparent to have three brand
names for three different hotels.
It, however, is a multi-stage
Own
process that drives one to decide
Competition
the practical number of brands.
The stages are related with a
historical study of the segments
that you have been in or are
interested in.
Quality
Low
High
All strategies flow out of two
areas of marketing ­ segmentation
and differentiation. That owes to
the external growth factor of the
total  category.  As  mentioned
above,  given  the  degree  of
competition
and
historical
perspective of the whole category,
Figure 31
you position different brands in
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Brand Management (MKT624)
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different segments. To address differentiation, you may not successfully do that by way of
having just one brand do all the jobs for you. It is graphically illustrated.
Segment variance
If the variance in terms of segments is too broad like in the case of the hotel, then one brand
will work at cross purposes. You have to have different brands. If the variance is narrow, then
you may go for an extension. But, you may still go for some distinction in name that signifies
differentiation. It can be exemplified by way of calling one economy and the other executive.
By competing at the bottom of the top segment (top right quadrant), you are defining new
boundaries, repositioning the competition, and keeping it off-limits to your top-of-the-line
offering, which is surrounded by two direct competitors. You are a little more expensive there,
but less expensive at the bottom of the segment where you have a nice fighting brand with
higher quality than those offered by two others.
The variance in segmentation corresponds to different positions. That is, different positions on
the positioning grid necessitate different brand names. A multiple brand policy therefore
corresponds to a segmented market, where various expectations in each segment are not only
different, but also seen as incompatible by consumers.
The above means customers in upscale segment will never accept the same brand name unless
there is differentiation between their brand and the one that is perceived inferior. You may go
back to the hotel example. As a comparison and conclusion, we can say that
·  while brand extensions correspond to a strategy of domination and competitive
advantage via low costs
·  the multi-brand strategy is a logical consequence of a differentiation strategy and as
such cannot coexist with low costs in view of reduced scale economies, technical
specialization, specific sales networks, and necessary advertising budgets
Yet it should not mean that companies are prepared to spend unlimited sums in the areas of
multi-brands. The objective to cut costs never escapes managers' attention. They like to offer
differentiation at the end of the production process, thus trying to make brands appear different.
The tendency to achieve productivity gains via fragmentation of the assembly line at the fag
end of the process kills two birds with one stone:
·  Companies try to achieve differentiation there and
·  Companies try to reap the benefits of the learning curve, which is characterized by a lot
of common features
Most of the multi-brands of cars make use of such productive gains. Look at the models by
Toyota and see the differences between the base model and the saloon model. Differentiation
seems to take place after having had the gains of productivity in terms of the shape of the
model. Even the latest "Altis" with a bigger engine is subjected to the philosophy of production
harmony and cohesion.
What makes it necessary to have different brands?
1. Collective play
One brand cannot develop the market. It's the collective positions and communication
campaigns that educate the customers about different features different brands offer.
When different players collectively promote their respective differences, it tends to
promote the market collectively. Combined advertising offers a combined view of the
whole category thus improving the whole category. Multiplication of players, therefore,
becomes essential.
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2. Market coverage
The role played by multiple players automatically strengthens the concept of
segmentation, because they all opt for different segments by positioning them uniquely.
Such situations lead to coverage of the market that is not possible with just one brand.
Different price-quality-indexes (PQIs) emerge and one brand revolving around all PQIs
is bound to lose its identity.
3. Effective fight to competition
You introduce a new brand to position it right below established competitors' pricing.
You don't do that with the original brand, for that amounts to cutting brand's pricing
and hurting its image. Refer to figure 31. In other words, it offers you to create the
territory of marketing battle away from that of your original brand.
4. Fills the market and keeps the competition out
It offers you the opportunity in line with the fundamental that says a multiplication of
players is important. A strong player can take on the role of a multi-supplier by having
different brands and hence keeping the competition out.
5. Protects the main brand image
If the new entry is not successful, it doesn't hurt the original brand.
6. Responsive to retailers' needs
A multi-brand policy fulfills needs of different retailers, because different retailers cater
to the needs of a different level of clientele and, hence, needing an array of different
brands for different customers with different demographic backgrounds is essential.
Actually, the identity of retailers is defined by the selection of different brands they
carry and specialize in selling.
7. Takes over where extensions feel limited
A multi-brand policy emerges from the limitation of extensions to look after all the
segments of the market. A sophisticated market is bound to be confused by extension of
one brand, if it addresses different quality and needs-fulfilling criteria across different
zones of customers' attitudes. Electronics offer a perfect example. Japanese electronics
companies offer more than one brand of televisions and musical instruments by being
sensitive to the following psychographics.
·  There are customers who buy on the basis of technical innovation and, hence, don't
care about the price.
·  There are customers who buy on the basis of basic need-fulfillment, and hence, are
economy-oriented
·  There are customers who buy on the basis of reliability and durability
If you classify customers in the above three segments, you may like to have different
brands for those segments. You, therefore, have to relate different features and benefits
with the brands' attributes. One brand extension cannot do that.
Constraints
1. Clear meanings
In multi-brand portfolios, each brand must have its clear meaning. If the differential
between brands is minimal and not meaningful, then not only the customers, but also
sales people feel confused and offended.
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2. Cost management
Costs always remain a prime objective of all businesses. They try to keep so many
common features, which should not expose themselves to the point of undesirability.
Should consumers perceive commonalities not appealing and rather offending, then
managing costs for the sake of keeping them low can endanger brand's image capital?
Businesses must maintain a balance between such cost management and image capital
of the brand.
Developing the model ­ multi-brand portfolio
·  Just on the lines of brand extensions, we have to go by the following steps:
·  Look for opportunities and growth areas.
·  Analyze and assess the potential each opportunity offers in targeting customers in each
segment.
·  Go for the brand strategy that explains its positioning, its reason for being, and the
strategic framework for executions of tactics.
Suggested readings:
1. Jean-Noel Kapferer: "Strategic Brand Management ­ Creating and Sustaining Brand
Equity Long Term"; Kogan Page (281-285)
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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