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Brand Management

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Brand Management (MKT624)
VU
Lesson 42
SERVICE BRANDS
Introduction
The emphasis of this lecture is on the nature of service brands and application of brand
management concepts to them.
Service Brands
Service brands are finding out very fast similarities involved in the branding process with that
of tangible product brands. There is not much difference in developing a service product and
then leveraging it as a brand; may that be a banking product, insurance product, one by a car
rental company, or a courier service.
You develop brand picture, brand contract, create a position for it, and then communicate that
position from the standpoint of differentiation and segmentation. All service businesses are
getting convinced by one fact that they already are into a branding age and, therefore, having a
distinction and differentiation of their products with that of competition is the only way to keep
them different from the rest of the crowd.
With the exception of banking, insurance, and certain computer services, most of the businesses
are a combination of tangible products and intangible services. Even manufacturers provide
services like after-sales etc. Taking a look at restaurants, car rentals, airline tickets, and other
travel services explains the phenomenon. There is a physical product that you use or come into
contact with because that is what you pay for; the rest is service.
We, however, are dealing with the service element that is intangible and want to see what is it
that should be done to brand that element.
The difference
There are four elements that really set services apart from other tangible products. Those are:
·  Intangibility: You cannot see a service. It cannot be felt and touched.
·  Perish ability: You cannot store services like inventory items. Seats not sold are lost
for ever.
·  Inseparability: You cannot separate a service from a product. Service is sold right at
the time of delivery. Service therefore is the product.
·  Variability: Services are offered by people who vary in temperament, behavior, and
values. The same service offered at a different time or place can vary from the other.
The above elements imply that:
1. Marketing and operational areas in a service firm are more closely intertwined than
they are in a manufacturing concern ­ restaurants and banks are perfect examples.
2. The core values of a brand must be understood by all through internal marketing to
be able to build the brand on a consistent basis.
For both implications, the staff or people responsible for delivery have to know what they
are delivering. However, there are certain problems with service selling, which make it a
hard area of selling:
Hard side of service selling
1. Services can be copied easily: Because of this factor, businesses find it very hard as to
how to differentiate. You will agree that differentiation through different physical
features is easy to demonstrate than through something that does not have tangible
features.
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2. Services are hard to summarize and communicate: Expressing the core of a service
brand is a lot more difficult than that of a tangible product brand. Tangible products can
be shown and explained, whereas the intangibility of service products does not offer this
ease to itself.
It is because of the difficulty of expression that service brands generally have slogans.
The attempt is made to communicate the inner core of the brand through an outward
expression. The expression may be very appropriate and may not be in certain cases. It
is a real challenge! "We serve with a smile" and "This is where you feel secure" are
examples of slogans.
3. Quality is hard to evaluate: Services cannot be laid side by side like products sit on the
retail shelves. This offers the difficulty of comparison for buyers and communication
for sellers. It also offers buyers the problem of not being able to judge the value for their
money. This further leads to pricing problem on part of the sellers.
4. Standardization is difficult: Because of the involvement of the human factor,
standardization into routines and procedures becomes difficult while you sell services.
The paradox comes to the surface while a service is delivered by a highly motivated
person who is also empowered.
The moment you prescribe procedures that seem to carry away or diminish
empowerment, it affects the level of motivation of that person and, hence, the quality of
service. Imposition of controls therefore brings in the conflict between motivation and
empowerment and that breeds contradiction1.
5. No inventories: Unlike tangible products that can be stored in view of fluctuating
demand for different seasons; services cannot be stored.
Lack of responsiveness to customers during peak times is a renowned problem that
must be faced and handled by services. Examples are utility bill deposits at banks and
long queues at retail stores during EID shopping. Service sellers have to either hire
extra staff or do something more ingenious to cope with such situations.
Solutions
In order to overcome these problems, we have to look at the ways and means toward brand
building of service products. Why do two couriers offering overnight delivery service
anywhere in the country charge differently? In our national market, the strongest brand (TCS)
charges about 20-25% more as compared to many of its competitors. The one charging more is
definitely a strong brand.
This exemplifies that problems are solvable and there are tools and techniques to the problems.
1. Capitalize on additional elements: It is not that the service setup is full of handicaps. It
also has some extra elements which if exploited sensibly add value to the brand and can
leverage it to phenomenal heights.
Apart from the "four Ps" of marketing mix, the three additional elements of service
brands are people, process, and physical evidence. Well trained people are the real
assets of the company. Take the example of the courier company that you think is the
largest in the country - TCS. It is the people who have made it what it is. Through their
service, they have assured the target market of delivery of the product's contract. That
testifies perfect handling of the service they sell.
If people in that company are so well trained and deliver perfectly, then that must owe
to what the management has turned into a well structured process. It is the meshing of
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the two elements in a way that the paradox of empowerment and motivation is also
taken care of.
Another example is airlines giving personalized service to their passengers in terms of
food of their choice. If passengers have a strong perception that this airline will not
breach the contract and deliver on the promise, it is a test that the airline is using its
people and the process to its best.
The airline is able to do that because of having a process backed by contemporary
technology. This not only strengthens its data bank of passengers, but also highlights
their socio-cultural background, a piece of information that leverages brand-building
efforts.
Getting back to the example of the courier TCS, we must take a look at the physical
evidence that that company has in the form of their collection points (offices).
Remember, in services, pure or hybrid, the physical evidence carries weight of
unlimited proportions.
An appearance of the office, the staff, and other manifestations of standardized nature
enhance the image in your eyes of the brand. It is that appearance in evidence with
which you and I develop emotional relationships.
Think of a fast food company just delivering out of its kitchen food at your doorstep
versus another company doing the same but also having restaurants here and there. You
will definitely develop emotional ties with the latter which has its presence through
physical evidence also.
The need to be savvy at the décor and other elements of the physical existence takes on
very important dimensions.
2. Innovate continuously: Since services can be copied easily with not as great an
investment as that in a manufacturing concern, the only options but very credible ones
are that you:
·  Maintain differentiation of delivery (in cases like fast food and courier service)
·  Carry out continuous innovation of products to stay ahead of competition (in cases
of banking and insurance consumer products and travel and logistical services)
Toward brand-building effort, companies have got to invest into human resource that
can give practical shape to both the options.
In order to achieve that, brand managers should approach the effort in just about the
same way as they would for tangible products. A brand-based customer model should
be developed.
3. Improve distribution: Just like in case of tangible products, the markets of services also
require effective distribution and outreach. Just look at the banking industry. To be able
to penetrate the markets, they have to have meaningful presence in all areas. The more
the areas covered, the higher the sales. Today's consumer banking is very customer-
centric and product models are customer-based. From personal credits to credit cards to
deposits to car financing and the like, banks are into a real marketing mode. Their
mission is all about fulfilling customer needs. Needs have a better chance to be fulfilled
if services are sold closer to points of customers' preference. Any bank with thin
presence should not hope for a big share of the market.
Insurance industry in our country is not as developed as banks, because it has not paid
due attention to the retail side of business. It has been focused on big accounts, that is,
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industries and other big businesses. The retail side has as much potential as the
corporate side carries. The answer lies in prioritizing their strategic moves.
4. Make the brand tangible: The effort should be towards making the service tangible.
This can be done by keeping the premises through which the service is delivered very
standardized having a striking uniqueness. This is very closely related to the physical
evidence phenomenon as well as communicating your position.
The attributes of service can be summed up on positioning. You can see that in
advertising campaigns of airlines through which the businesses attempt to highlight
their positioning of hospitality. The element of tangibility along with the summing up of
the main attribute on positioning differentiates the brand and stimulates sales.
5. Use testimonials: Those services that cannot be easily summed up on positioning ­
unlike showing an umbrella for an insurance product or hospitality reflected by an
airline's airhostess ­ should be communicated with the help of testimonials, that is, a
celebrity talking about the benefits the service provides. Nothing gives credibility to
service benefits more than having a celebrity endorsing the company's claim.
It goes without saying that the claim has got to be very consistent with positioning and
the brand contract. Endorsement works best when the promise is perceived deliverable.
6. Develop a continuing relationship: The importance of this factor takes on added
importance when it comes to selling services. In most of the cases of service selling, the
data about customers is maintained and updated. This is an advantage that service
selling offers businesses. What is an imperative becomes easy to maintain. Customers
have got to be cultivated. A continuous touch with them enables the company
o To communicate any new product developments and quality initiatives.
o To measure brand dynamics on different dimensions that tell you the
return on brand investment.
o To maintain customer loyalty toward your brand.
7. Manage consumers: This refers to improving the process to preempt any negative
situations that arise out of fluctuating demand in service. Supermarkets and general
stores have to keep an allowance for serving their customers efficiently during high
sales periods. The inability to do so turns the positive situation into a negative one.
8. Industrialize the service: This boils down to setting overall systems and procedures and
their implementation at every point of sale that you have. You must control all the
variables by way of standardizing them and then training people to handle those in a
very consistent and mechanical way. A consistent output according to standard
operating procedures "SOPs" guarantees quality service. Examples are fast food
restaurants and courier services. McDonald's is a classical example of industrializing
the service. A burger is made in exactly the same way and in as much the time in
Karachi as it takes in Kuala Lumpur.
Standard procedures ensure a balance between motivation and empowerment.
9. Select and train staff carefully: To be able to recruit and then train staff according to the
mission of the company and the vision of the brand is a hard task. Once recruited, the
staff members must gain full understanding of the service they are to deliver. This
understanding calls for complete desire, honest intention, passionate inspiration, and
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engagement in terms of delivering the service. Major airlines are an example of this
phenomenon.
There are companies that offer incentives not on improved sales, but on feedback of
improved service. Such a feedback is possible only if the company has a mechanism to
gauge the brand dynamics, i.e. have the models in place to measure the service or brand
performance on different strategic dimensions. Such measures tell you customer
satisfaction and their loyalty.
Summary
Branding is penetrating the service selling areas very fast. Service businesses have a growing
realization on their part of the importance of brand management. The principles are no different
when it comes to leveraging a service brand. Managers, however, have to be sensitive to the
additional elements of people, processes, and physical evidence to make their services
distinctive and differentiated. These elements offer opportunities to compensate for the inherent
drawbacks in service selling. If capitalized in a sensible way, these elements lay the foundation
for real leveraging of the brand.
Suggested readings:
1. Geoffrey Randall: "Branding ­ A Practical Guide to Planning Your Strategy", Kogan
Page (92-100)
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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