INTRODUCTION TO

BRANDING
• Why do companies such as Coca-Cola,
Microsoft, IBM and Disney seem to achieve
global marketing success so easily? Why
does it seem such an effort for others?
• Why do we, as consumers, feel loyal to
such brands that the mere sight of their logo
has us reaching into our pockets to buy their
products?
 The meaning of brands
• Brands are a means of differentiating a
company’s products and services from those of its
competitors.
• There is plenty of evidence to prove that
customers will pay a substantial price premium
for a good brand and remain loyal to that brand. It
is important, therefore, to understand what brands
are and why they are important.
• McDonalds sums this up nicely in the following
quote emphasizing the importance of brands:
• “…it is not factories that make profits, but
relationships with customers, and it is company
and brand names which secure those
relationships”
• Businesses that invest in and sustain leading
brands prosper whereas those that fail are left to
fight for the lower profits available in commodity
markets.
• “If Coca-Cola were to lose all of its
production-related assets in a disaster, the
company would survive. By contrast, if all
consumers were to have a sudden lapse of
memory and forget everything related to
Coca-Cola the company would go out of
business.”

• Coca-Cola
 What is a brand?
• One definition of a brand is as follows:
• “A name, term, sign, symbol or design, or a
combination of these, that is intended to identify the
goods and services of one business or group of
businesses and to differentiate them from those of
competitors”.
• Interbrand - a leading branding consultancy - define a
brand in this way:
• “A mixture of tangible and intangible attributes
symbolized in a trademark, which, if properly
managed, creates influence and generates value”.
 Brand Equity
• “Brand equity” refers to the value of a brand. Brand
equity is based on the extent to which the brand has
high brand loyalty, name awareness, perceived
quality and strong product associations. Brand
equity also includes other “intangible” assets such as
patents, trademarks and channel relationships.
 Brand image

• “Brand image” refers to the set of beliefs

that customers hold about a particular
brand. These are important to develop well
since a negative brand image can be very
difficult to shake off.
 Brand extension

• “Brand extension” refers to the use of a

successful brand name to launch a new or
modified product in a new market. Virgin is
perhaps the best example of how brand
extension can be applied into quite diverse
and distinct markets.
 Branding gives the seller several
advantages
• Seller’s brand name and trademark provide legal
protection of unique product features
• Branding gives the seller the opportunity to attract a
loyal and profitable set of customers.
• Branding helps the seller segment markets.
• Strong brands help build corporate image, making it
easier to launch new brands and gain acceptance by
distributors and consumers.
 Benefits of Branding
TO A BUYER
• Help buyers identify the product that they
like/dislike.
• Identify marketer
• Helps reduce the time needed for purchase.
• Helps buyers evaluate quality of products
especially if unable to judge a products
characteristics.
• Helps reduce buyers perceived risk of purchase.
• Buyer may derive a psychological reward from
owning the brand, IE Rolex or Mercedes.
BRANDS - BUILDING A BRAND

• What factors are important in building

brand value?
• Professor David Jobber identifies seven
main factors in building successful brands,
as given next:
 Quality
• Quality is a vital ingredient of a good brand.
Remember the “core benefits” – the things
consumers expect. These must be delivered well and
consistently. The branded washing machine that
leaks, or the training shoe that often falls apart when
wet, or a watch which needs frequent adjustments
will never develop brand equity.
• Research confirms that, statistically, higher quality
brands achieve a higher market share and higher
profitability than that of their inferior competitors.
 Positioning
• Positioning is about the position a brand occupies
in a market in the minds of consumers. Strong
brands have a clear, often unique position in the
target market.
• Positioning can be achieved through several means,
including brand name, image, service standards,
product guarantees, packaging and the way in
which it is delivered. In fact, successful positioning
usually requires a combination of these things.
 Repositioning
• Repositioning occurs when a brand
tries to change its market position to
reflect a change in consumer’s tastes.
This is often required when a brand
has become tired, perhaps because its
original market has matured or has
gone into decline.
 Communications
• Communications also play a key role in building a
successful brand. We suggested that brand
positioning is essentially about customer perceptions
– with the objective to build a clearly defined
position in the minds of the target audience.
• All elements of the promotional mix need to be used
to develop and sustain customer perceptions.
Initially, the challenge is to build awareness, then to
develop the brand personality and reinforce the
perception.
 First-mover advantage
• Business strategists often talk about first-
mover advantage. In terms of brand
development, by “first-mover” they mean
that it is possible for the first successful
brand in a market to create a clear
positioning in the minds of target
customers before the competition enters
the market. There is plenty of evidence to
support this.
 Long-term perspective
• The need to invest in the brand over the
long-term is utmost essential. Building
customer awareness, communicating the
brand’s message and creating customer
loyalty takes time. This means that
management must “invest” in a brand,
perhaps at the expense of short-term
profitability.
 Internal Marketing
• Finally, management should ensure that the brand is
marketed “internally” as well as externally. By this we mean
that the whole business should understand the brand values
and positioning. This is particularly important in service
businesses where a critical part of the brand value is the
type and quality of service that a customer receives.
• Think of the brands that you value in the restaurant, hotel
and retail sectors. It is likely that your favorite brands invest
heavily in staff training so that the face-to-face contact that
you have with the brand helps secure your loyalty.
 An Effective Brand Name
● Is easy to pronounce
● Is easy to recognize and remember
● Is short, distinctive, and unique
● Has a positive connotation
● Reinforces the product image
● Is legally protectable
 Branding Strategies
Brand
Brand No
No Brand
Brand

Manufacturer’s
Manufacturer’s Private
Private Brand
Brand
Brand
Brand

Individual
Individual Family
Family Combi-
Combi- Individual
Individual Family
Family Combi-
Combi-
Brand
Brand Brand
Brand nation
nation Brand
Brand Brand
Brand nation
nation
Manufacturers’ Brands Versus
Private Brands
Manufacturers’
Manufacturers’ The
The brand
brand name
name of
of aa
Brand
Brand manufacturer.
manufacturer.

A
A brand
brand name
name owned
owned by by aa
Private
Private wholesaler
wholesaler or
or aa retailer.
retailer. Also
Also
Brand
Brand known
known as
as aa private
private label
label or
or store
store
brand.
brand.
 Types of brand

• There are two main types of brand – manufacturer

brands and own-label brands.
• Manufacturer brands
• Manufacturer brands are created by producers and bear
their chosen brand name. The producer is responsible
for marketing the brand. The brand is owned by the
producer.
• By building their brand names, manufacturers can gain
widespread distribution (for example by retailers who
want to sell the brand) and build customer loyalty
(think about the manufacturer brands that you feel
“loyal” to).
 Private Label brands
• Own-label brands are created and owned by
businesses that operate in the distribution channel –
often referred to as “distributors”.
• Often these distributors are retailers, but not
exclusively. Sometimes the retailer’s entire product
range will be own-label. Own-label branding – if
well carried out – can often offer the consumer
excellent value for money and provide the
distributor with additional bargaining power when it
comes to negotiating prices and terms with
manufacturer brands.
 Advantages of Private Brands
• Earn higher profits
• Less pressure to mark down
prices
• Ties customer to wholesaler or
retailer
 Advantages of
Manufacturers’ Brands
• Develop customer loyalty
• Attract new customers
• Enhance prestige
• Ensure dealer loyalty
 Individual Brands Versus
Family Brands
Individual
Individual Using
Using different
different brand
brand names
names for
for
Brand
Brand different
different products.
products.

Marketing
Marketing several
several different
different
Family
Family products
products under
under the
the same
same
Brand
Brand brand
brand name.
name.
 Branding Policies
• First question is whether to brand or not to brand.
Homogenous products are difficult to brand Branding
policies are:
• Individual Branding: Naming each product differently
P&G, facilitates market segmentation and no overlap.
• Overall Family Branding: All products are branded with the
same name, or part of a name, IE Nokia, promotion of one
item also promotes other items.
• Line Family Branding: Within one product line.
• Brand Extension Branding: Use one of its existing brand
names as part of a brand for an improved or new product,
usually in the same product category.
75% new products are brand extensions!!
 1. Coca-Cola

• $67,000 million
• Based in U.S.
• Flagging appetite for soda has cut demand for Coke, but the
beverage giant has a raft of new products in the pipeline that could
reverse its recent slide.
 2 Microsoft

• $56,926 million
• Based in U.S.
• Threats from Google and Apple haven't yet offset the power of its Windows and Office monopolies.
•
 3 IBM

• $56,201 million
• Based in U.S. Having off-loaded its low-profit PC business to Lenovo, IBM is marketing on the
strategic level to corporate leaders.
•
 4.GE

• $48,907 million
• Based in U.S. The brand Edison built has extended its reach from ovens to credit cards, and the
"Ecomagination" push is making GE look like a protector of the planet.
•
 5.Intel

• $32,319 million
• Based in U.S. Profits and market share weren't the only things slammed by
rival AMD. Intel's brand value tumbled 9%, as it loss business from high-
profile customers.
 6.Nokia

• $30,131 million
• Based in Finland .Fashionable designs and low-cost models for the
developing world enabled the mobile phone maker to regain ground
against competitors.
 7.Toyota

• $27,941 million
• Based in Japan. Toyota is closing in on GM to become the world's
biggest automaker. A slated 10% increase in U.S. sales this year will
help even more.
 8. Disney

• $27,848 million
• Based in U.S. New CEO Robert Iger expanded the brand by buying
animation hit-maker Pixar and beefing up digital distribution of TV
shows through the Internet and iPods.
 9.McDonald's

• $27,501 million
• Based in U.S. A new healthy-living marketing campaign—and the
premium-priced sandwiches and salads that came with it—have led to
a fourth year of sales gains.
 10.Mercedes-Benz

• $21,795 million
• Based in Germany The new S-Class sedan and M-Class SUV are
helping repair a tarnished quality reputation. High costs and weak
margins will take longer to fix.
 Here's how we calculate the power
in a name

• INTERBRAND TAKES lots of ingredients into account

when ranking the world's most valuable brands. To even
qualify for the list, each brand must derive about a third of
its earnings outside its home country, be recognizable
outside of its base of customers, and have publicly
available marketing and financial data. One or more of
those criteria eliminate such heavyweights as Visa, Wal-
Mart, Mars, and CNN. Interbrand doesn't rank parent
companies, which explains why Procter & Gamble doesn't
show up. And airlines are not ranked because it's too hard
to separate their brands' impact on sales from factors such
as routes and schedules.
• BUSINESSWEEK CHOSE Interbrand's methodology because it
evaluates brands much the way analysts value other assets: on the
basis of how much they're likely to earn in the future. The projected
profits are then discounted to a present value, taking into account the
likelihood that those earnings will actually materialize.
• THE FIRST STEP IS figuring out what percentage of a company's
revenues can be credited to a brand. (The brand may be almost the
entire company, as with McDonald's Corp., or just a portion, as it is
for Marlboro.) Based on reports from analysts at J.P. Morgan Chase,
Citigroup, and Morgan Stanley, Interbrand projects five years of
earnings and sales for the brand. It then deducts operating costs, taxes,
and a charge for the capital employed to arrive at the intangible
earnings. The company strips out intangibles such as patents and
management strength to assess what portion of those earnings can be
attributed to the brand.
• FINALLY, THE BRAND'S strength is assessed to
determine the risk profile of those earnings
forecasts. Considerations include market
leadership, stability, and global reach—or the
ability to cross both geographic and cultural
borders. That generates a discount rate, which is
applied to brand earnings to get a net present
value. BusinessWeek and Interbrand believe this
figure comes closest to representing a brand's true
economic worth.