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Brand Management

UNDERSTANDING BRANDS – INTRODUCTION:Functions of Brand Management, Sales forecast, Brand plan Next >>>
 
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Brand Management (MKT624)
VU
Lesson 1
UNDERSTANDING BRANDS ­ INTRODUCTION
Brand management as one of the marketing functions has been around for as long as we have
known professional marketing.
But, it has been a part of the traditional marketing approach in which many functions of today's
brand management were performed in a spread out fashion by the marketing manager and a
combination of his team members like the sales manager, the advertising and communications
manager, and the marketing administration manager to name a few. The terminology of brand
management was not used.
Brand management, in its present integrated form, has come into limelight and focus over the
last 20 years. The functional execution has undergone transformation in terms of its description
as a substantive job under one head. This implies that the overall functions of brand
management are full of substance and therefore are described specifically under the head -
brand management and not as disparate parts of the overall marketing functions.
In other words, brand management has not lost its primary roots that are well-entrenched in
marketing; it only has acquired explicitly defined dimensions within which the function
operates.
To further elucidate the point, there have been functional adjustments within the overall
marketing functions only to bring into clear and sharp focus the specific functions and job of
brand management.
Brand management now presents itself as a distinct part of an integrated marketing approach in
which it connects with all the touch points within and outside of the marketing department.
The whole concept can be exemplified by seeking your attention toward two fruit baskets; one
full of mixed fruits and the other having compartments carrying different fruits of each type in
each compartment. Each type comes into a sharper focus! So do the touch points.
This course is going to give you a clear understanding of what a brand is, why and how it is
managed, and what are the dynamics involved in managing brands in the present day
competitive market.
What is a Brand and Brand Management?
We all know from our study of the basic marketing course and also as consumers that a brand is
"a name, term, sign, symbol, design, or a combination of them intended to differentiate one
product from those of the competitors".
Perhaps, the most distinctive professional skills of marketing persons are their abilities to
create, maintain, and protect a brand in a hostile market. These abilities call for a collective
input on part of all within the marketing department and other departments.
Brand creation, therefore, is the end product of a team of professionals and not just one person.
It is a team effort. If the art of conceptualizing the brand rests with marketing, then the actual
creation of it is the cornerstone of the overall company team.
How Brand Management Came into Being?
We also know that brands have been around for as long as we can look back into the modern
business management. However, we need to have a distinct understanding of how brand
management came into being in its present form.
Over the decades as businesses and competition grew, in case of multinational corporations in
particular, the growth of brands exploded. With economic growth and the technological
advances of the later half of the 20th century in particular, various industries ranging from the
areas of foods to pharmaceuticals to textiles to cars to electronics and many other registered
impressive growth.
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Brand Management (MKT624)
VU
·
Growth of industries attracted more players, who along with the existing ones felt the
need to make their presence felt by way of differentiating their products from each
other. Hence, the drive toward brand management got progressive impetus.
·  The more competitive the markets became, the more they tried to get into the areas of
distinction and differentiation and created conditions worthy of sophisticated
management techniques. Hence, the emphasis on brand management became
increasingly evident.
·  The stronger the brands emerged, the higher the value they created for the company and
led businesses into diversified areas, and hence, brand management became ever more
obvious and sophisticated.
Growth, however, is not something that takes place overnight. A tremendous effort in terms of
time and money is required. Despite the effort, results do not stand guaranteed.
To cope with that possibility, companies tried to acquire brands from each other instead of
creating their own. The practice is still on. Also, growth took place not only within the same
category, but also across categories. Growth across categories owed to strength of brands. This
implies that a strong brand with high loyalty offers its company the temptation to get into
another category (for example, from milk to juices) with higher chances of success.
Whether it was only one product category or diversified product categories, the amount of
activities dictated that all product categories be managed separately. Various areas or markets
in which different corporations were dealing (for example, a company could be producing or
trading products ranging from detergents to foods to personal care) made it imperative for those
corporations to bring every single category in the first place and brand/s in the second under
acute scrutiny for better management.
It became clear to corporations that to bring the marketing effort relating different brands into a
sharp focus, they needed to have different people (brand managers) looking after different
brands.
Empirical evidence has it that professionals working across product categories tend to lose
focus, make less-than-highly qualitative decisions, and in the end hurt the products and brands,
making the whole process either less profitable or even a loss-bearing-proposition.
Conversely, especially designated managers, who have the sole responsibility of managing
their designated brands, can concentrate on developing a cost-effective marketing-mix for the
brands they are responsible for. The attached figures 1 and 2 illustrate the evolution of the layer
of product and brand management, with the passage of time.
First, the product(s) was brought into focus and put under the charge of a product manager. As
an example, one product manager dealt with all the brands of biscuits. Competitive pressures
demanded more sophistication and gradually paved the way for management of each brand by a
separate manager. Each manager took the role of a brand manager. This is how brand
management took shape. And, this is the way it drives brands of today.
The figures clarify that product and brand management is practical when a company is dealing
in more than one product category or more than one brand within one category.
It is also obvious that product and brand management does not replace the traditional functional
structure. It merely adds more layers to the organization for the purpose of improving
functionality. Brand management, therefore, is a function of the marketing effort and not a
substitute to it. Refer to figure 3.
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Brand Management (MKT624)
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Traditional Functional
Structure
Figure 1
Marketing Manager
Marketing
Marketing
Communications
Administration
Sales Manager
Manager
Manager
Figure 2
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Brand Management (MKT624)
VU
Functions of Brand Management
While performing the core functions of brand management, brand managers:
·  Develop long range competitive
strategy for success of the brand.
All tactical moves that form part
Long-term
of the strategy are formulated for
Strategy
execution by relevant personnel
of the company.
Identify
·  Prepare in coordination with  Sales Forecast
opportunities -
Budgets
sales personnel sales forecasts
Improve'ts
and dovetail the same into
marketing plans and budgets.
Sales forecasts serve as the basic
Brand
denominator of all budgetary
Management
figures, which are divided and
sub-divided into small pieces to
Gather
be  achieved  by  different
Intelligence on
Work with Ad
personnel
in
different
Brand
Agencies
departments.
Perform'ce
·  Work with advertising and other
Support from
related  agencies  (promotional
Sales Force
and  research)  to  develop
and Trade
advertising copy, communication
Figure 3
strategies,
and
plans
for
execution of advertising and promotional campaigns.
·  Stimulate support of the brand among the sales force and trade members (distributors,
wholesalers, and retailers) through communicating lucidly all the rationale for brand
plan.
·  Gather intelligence on the brand's performance to see how the brand stacks up against
competition, customer and trade attitudes develop and change, and new problems and
opportunities arise. Identification of problems, their solutions and further improvements
are part of the function that keeps brand managers busy for most of the time.
·  Meet changing market needs through improving and initiating new products/brands.
This function is an extension of the preceding one and, as mentioned, cannot be
performed convincingly unless problems are identified and changing needs pinpointed.
Why so much talk about brand management?
What is the background of so much talk about brand management? As and when competition
among products in various categories of consumer items intensified, it made the question of
"how to grow business?" larger and larger for business managers.
We have to remember there are only two ways to grow your business, namely
·  Through organic growth
·  Through acquisitions
As the markets grew more and more mature (western markets), the route to growth through
organic means went from tough to tougher. The lower rate of category growth, intensified
competition, well-established consumer preferences, and a host of other factors made it tough
for businesses to invest into organic growth mechanism and wait for results over an extended
period of time.
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Brand Management (MKT624)
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That paved the way for the other optional route, that is, through acquisitions. Business
managers found it more business-savvy and prudent to start buying existing businesses with
strong brand names.
Why? This owed to the simple reason that strong brands assured long term earnings, healthy
cash flows, and, hence, attractive bottom lines. It was in this background that the 1980s
witnessed a lot of activity in terms of buying and selling of businesses.
The cash rich and financially strong companies were willing to buy (and still are) the intended
target companies at a price many times more than the value of their stocks and price earnings.
The happenings on that front were dramatic. The prices paid were astronomical; the intention
was to buy an established company and own its strong brand.1
What really drove the business managers to be that aggressive was the potential they saw in the
brands that could generate high earnings, positive cash flows, and good profitability on a
consistent basis.
The businesses that were being acquired confirmed their realization that the real value of their
businesses did not lie in plants, buildings, and machinery; it rather lay outside the tangible
domain of their business, into the value of their brand, meaning into the minds of their potential
customers.2 And that is precisely what acquirers buy ­ positions in the mind of potential
consumers.
That awareness took strong roots in the 1980s and it has given brands a new financial
dimension in terms of their value; that value is reflected in balance sheets of the companies as
brand's financial value or equity.
Organic growth or inorganic (through acquisitions), what is important is the fact that brands
must be sustained in a competitive and hostile environment regardless of who owns them, at
any particular point in time!
We shall realize the importance of sustaining brands as we go along the course by looking into
the background of developments in the area of brand management.
The understanding of the background in light of market dynamics will throw light on the
variables that play their role in making brands strong and stronger. We shall see that it is not
just a few mechanical steps that lay the foundation for good brand management; it also is the
perpetual existence of a compatible brand-based organization that makes leveraging of the
brand possible. It is the commitment on part of all in the organization that good things happen
to brands.
A realistic understanding on part of the management and staff paves the way for deciding
whether to strengthen an existing own brand, refresh it, develop a new one, or acquire someone
else's strong brand.
Existing or new, own or acquired, managers face challenges on the road to brand management.
You, as brand management students, will visualize and understand the challenges, and have a
good grip of the tools at your disposal to meet the challenges and beat them for leveraging your
brands.
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Brand Management (MKT624)
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Glossary of terms
Category: A category is a collection of similar competitive branded products that have more or
less the same features. If there are three players in the area of packaged yogurt, then the
respective brands of those three players form the category. The total number of brands may
exceed three, however. If imported brands also start making inroads into the market, then they
also add to the category.
Sales forecast: An estimate of future demand. Different brands have different forecasts.
Budgets: A summary of probable expenditures and income for a given period (usually a year),
embodying a systematic plan for meeting expenses.
Copy: An expression which refers to all the information that we communicate through the ads
to our customers. In case it is a TV commercial, you call that the "story board", but the "SB"
also draws its essence from the copy of advertising.
Brand plan: It is a planning document that reflects your extensive efforts toward defining the
market, analyzing it, and considering all the elements of brand management. It is very strategic
in nature and you should be able to develop one by the time you finish the course.
Organic growth: Business growth that takes place because of the internal working of the
organisms (different parts) within an organization. The term is used as against growth that
emerges as a result of acquisition of a running business.
Bottom line: The last line of the profit and loss account showing net profit or loss.
Stocks: The capital or fund that a corporation raises through the sale of shares; the shares that
each shareholder possesses.
Leverage: An advantage that comes through a certain action. In the context of branding, it is
the use of various marketing tools to bring your brand to an advantageous position.
Bibliography:
1.
Jean-Noel Kapferer: Strategic Brand Management ­ Creating and Sustaining Brand
Equity Long Term, Kogan Page (15-18)
2.
Jean-Noel Kapferer: Strategic Brand Management ­ Creating and Sustaining Brand
Equity Long Term, Kogan Page (15-18)
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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