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Brand Management Strategies and Extensions
- 1. 1 Jack Buckner Strategic Brand ManagementStrategic Brand Management Exeter MBA and MScExeter MBA and MSc –– Day 4Day 4 Lecture 1Lecture 1 Brand ManagementBrand Management Jack Buckner Brand ManagementBrand Management Brand Portfolios / architectureBrand Portfolios / architecture Corporate brandsCorporate brands Brand extensionsBrand extensions SubSub--brandsbrands Brand alliancesBrand alliances
- 2. 2 Jack Buckner Some definitionsSome definitions Most brands are part of a wider organizationMost brands are part of a wider organization Brand architectureBrand architecture –– the structure andthe structure and organization of brandsorganization of brands Brand hierarchyBrand hierarchy –– the differentthe different organizational levels within a brand systemorganizational levels within a brand system SubSub--brandbrand –– an identified division (other ofan identified division (other of products) within a brandproducts) within a brand Jack Buckner Brand HierarchiesBrand Hierarchies ResolutionResolution EnhancementEnhancement NutrasweetNutrasweetMrMr GoodwrenchGoodwrench service systemservice system BRANDEDBRANDED FEATUREFEATURE LaserjetLaserjet IVIV SESE CarnationCarnation InstantInstant Breakfast SwissBreakfast Swiss ChocolateChocolate ChevroletChevrolet Lumina SportsLumina Sports CoupeCoupe SUBBRANDSUBBRAND LaserjetLaserjet IVIVCarnationCarnation InstantInstant BreakfastBreakfast ChevroletChevrolet LuminaLumina PRODUCT LINEPRODUCT LINE BRANDBRAND HP Jet BrandHP Jet BrandCarnationCarnationChevroletChevroletRANGE BRANDRANGE BRAND HPHPNestleNestleGeneral MotorsGeneral MotorsCORPORATECORPORATE BRANDBRAND Aaker : Building Strong Brands
- 3. 3 Jack Buckner Brand Architecture alternativesBrand Architecture alternatives Product Range BrandProduct Range Brand Umbrella BrandUmbrella Brand Endorser BrandEndorser Brand Kapferer: Strategic Brand Management Jack Buckner Product Range Brand StrategyProduct Range Brand Strategy Company Brand A Product A Positioning A Brand B Product B Positioning B Brand N Product N Positioning N
- 4. 4 Jack Buckner Product Range Brand StrategyProduct Range Brand Strategy Allows multiple market entry and flexibilityAllows multiple market entry and flexibility Consumer oriented branding not corporateConsumer oriented branding not corporate brandingbranding Encourages innovation and risk taking (failure willEncourages innovation and risk taking (failure will reflect less on corporate brand)reflect less on corporate brand) Possible to control greater shelf space with strongPossible to control greater shelf space with strong brandsbrands BUT expensive and requires sophisticatedBUT expensive and requires sophisticated organizationorganization ExampleExample –– P & G (Ariel, Tide, Crest, Pampers,P & G (Ariel, Tide, Crest, Pampers, Pringle)Pringle) Jack Buckner Umbrella Brand StrategyUmbrella Brand Strategy BRAND Products or Services Specific communications by product or service A A B B N N
- 5. 5 Jack Buckner Umbrella Brand StrategyUmbrella Brand Strategy Builds brand equity at the corporate levelBuilds brand equity at the corporate level Corporate brand strength is criticalCorporate brand strength is critical Reduces marketing investment in new categoriesReduces marketing investment in new categories Allows fastAllows fast--follower strategies in innovativefollower strategies in innovative companiescompanies Easier for horizontal rather than vertical extensionEasier for horizontal rather than vertical extension (in some categories)(in some categories) Risk of overRisk of over--stretchingstretching ExamplesExamples –– Sony, Canon, SchweppesSony, Canon, Schweppes Jack Buckner Endorser Brand StrategyEndorser Brand Strategy Endorsing Brand Brand A Product or range A Promise A Brand B Product or range B Promise B Brand N Product or range N Promise N
- 6. 6 Jack Buckner Endorser Brand StrategyEndorser Brand Strategy Allows dual brand equity to developAllows dual brand equity to develop Quality seal of approvalQuality seal of approval Cheaper method of building brand equity inCheaper method of building brand equity in company namecompany name Use product brands to express different aspects ofUse product brands to express different aspects of personalitypersonality Requires comprehensive understanding of brandRequires comprehensive understanding of brand valuesvalues ExamplesExamples –– GM, ICI, 3M, HSBCGM, ICI, 3M, HSBC Jack Buckner Brand architecture debateBrand architecture debate –– 3M3M In 1981 created 244 new brandsIn 1981 created 244 new brands Over 1500 trademarksOver 1500 trademarks Established branding committeeEstablished branding committee –– 3M to be sign off on all products (except3M to be sign off on all products (except cosmetics)cosmetics) –– Ban the use of more than 2 names on oneBan the use of more than 2 names on one productproduct –– Clear guidelines for branding to all subsidiariesClear guidelines for branding to all subsidiaries –– Brand decision treeBrand decision tree
- 7. 7 Jack Buckner Brand ArchitectureBrand Architecture –– the carthe car industryindustry Toyota / LexusToyota / Lexus BMW / MiniBMW / Mini Mercedes / Smart CarMercedes / Smart Car FordFord Audi / VolkswagenAudi / Volkswagen GMGM Critical issue is clear structure andCritical issue is clear structure and understandingunderstanding Jack Buckner Brand ExtensionBrand Extension -- ProsPros Facilitate new product acceptanceFacilitate new product acceptance Increase profitsIncrease profits Avoid cost of developing a new brandAvoid cost of developing a new brand Appeal to new consumersAppeal to new consumers Revitalize the brandRevitalize the brand Prevent marketing myopiaPrevent marketing myopia
- 8. 8 Jack Buckner Brand ExtensionBrand Extension -- ConsCons Hurt parent brand imageHurt parent brand image Dilute brand image (diluted investment)Dilute brand image (diluted investment) Confuse consumersConfuse consumers Alienate existing consumersAlienate existing consumers Retailer resistanceRetailer resistance Jack Buckner Some brand extension researchSome brand extension research Successful brand extensions have aSuccessful brand extensions have a perceived fit (the basis for fit may vary)perceived fit (the basis for fit may vary) High quality brands stretch further thanHigh quality brands stretch further than average quality brandsaverage quality brands A prototype brand can have difficultyA prototype brand can have difficulty extendingextending Vertical extensions can be difficultVertical extensions can be difficult Most effective advertising focuses on theMost effective advertising focuses on the extension (not the parent)extension (not the parent) Keller – Strategic Brand Management
- 9. 9 Jack Buckner Nike and the Skate marketNike and the Skate market Skateboarding – fast expanding sport New brands emerged – Etnies, DC Traditional sports brands struggled – image, distribution Nike – 4 attempts in 1990’s – ACG separate division Orange County office – big brand approach “We were hurt by the fact we were the number one sports company” Recognised brand extension not possible Savier – new brand Hurley acquired - $50 million Jack Buckner Extend profits, not product linesExtend profits, not product lines Why do companies extend their brands?Why do companies extend their brands? –– Customer segmentationCustomer segmentation –– Consumer desiresConsumer desires –– Pricing breadthPricing breadth –– Excess capacityExcess capacity –– ShortShort--term gainterm gain –– Competitive intensityCompetitive intensity –– Trade pressureTrade pressure The pitfalls of proliferationThe pitfalls of proliferation –– Weaker line logicWeaker line logic –– Lower brand loyaltyLower brand loyalty –– Under exploited ideasUnder exploited ideas –– Stagnant category demandStagnant category demand –– Poorer trade relationsPoorer trade relations –– Increased costIncreased cost Quelch and Kenny – HBR September 94
- 10. 10 Jack Buckner Extend profits, not product linesExtend profits, not product lines RecommendationsRecommendations –– Improve cost accountingImprove cost accounting –– Allocate resources to winnersAllocate resources to winners –– Research consumer behaviourResearch consumer behaviour –– Manage deletionsManage deletions –– CoCo--ordinate marketingordinate marketing –– Work with channel partnersWork with channel partners Findings debatedFindings debated –– Energizing a brand?Energizing a brand? –– Manage a dynamic environment?Manage a dynamic environment? –– Consumers are forgivingConsumers are forgiving –– Marketers as biologistsMarketers as biologists HBR on Brand Management Jack Buckner SubSub--brandsbrands Vertical extensionVertical extension –– Upwards (The silver bullet conceptUpwards (The silver bullet concept –– Audi TT)Audi TT) –– Downwards (Levis signature range)Downwards (Levis signature range)
- 11. 11 Jack Buckner Guess the Brand?Guess the Brand? ““I believe there is no limit to what a brandI believe there is no limit to what a brand can do. You can ignore those who go oncan do. You can ignore those who go on about brand stretching.about brand stretching.”” “…“…attitude is, weattitude is, we’’ll just getll just get …….to do a.to do a personal appearance and it will help thepersonal appearance and it will help the brand.brand.”” ““There are times a brand has to sayThere are times a brand has to say ‘‘nono’’ to ato a brand extension.brand extension.”” Jack Buckner
- 12. 12 Jack Buckner The Virgin EmpireThe Virgin Empire Richard Branson founded in 1972Richard Branson founded in 1972 –– record shoprecord shop Virgin airlinesVirgin airlines –– 19841984 1986 went public, 1988 private1986 went public, 1988 private midmid--19901990’’ss –– over 100 companiesover 100 companies 19971997 –– railwaysrailways Virgin.com and telecommunications late 1990Virgin.com and telecommunications late 1990’’ss 19991999 –– sold 49% airlines to Singapore Airlinessold 49% airlines to Singapore Airlines 20002000 –– withdraws from clothingwithdraws from clothing 20022002 –– appoints first Brand Marketing directorappoints first Brand Marketing director Jack Buckner Virgin Brand ValuesVirgin Brand Values Richard BransonRichard Branson ““Have a goHave a go”” Quality, fun, challenge, innovation,Quality, fun, challenge, innovation, provocativeprovocative Stylish, young, irreverentStylish, young, irreverent
- 13. 13 Jack Buckner VirginVirgin SuccessesSuccesses –– music, travel, hotelsmusic, travel, hotels FailuresFailures –– clothing, computersclothing, computers ““For every Virgin Atlantic or Virgin music groupFor every Virgin Atlantic or Virgin music group there have been numerous failures.there have been numerous failures.”” ““For a company so diversified, it is vulnerablyFor a company so diversified, it is vulnerably dependent on a single brand.dependent on a single brand.”” ““I can do what I want.I can do what I want.”” Virgin DirectVirgin Direct –– ““we are going to exist for 200we are going to exist for 200 years and clearly Richard is not.years and clearly Richard is not.”” ““Well, we would not launch a cigarette.Well, we would not launch a cigarette.”” Jack Buckner BrandstretchBrandstretch (David Taylor)(David Taylor) ““Why 1 in 2 extensions fail, and how to beat theWhy 1 in 2 extensions fail, and how to beat the odds.odds.”” Virgin: the biggest ever brand ego trip?Virgin: the biggest ever brand ego trip? Strengthen the coreStrengthen the core Vision, ideas, focus, deliveryVision, ideas, focus, delivery Brand architectureBrand architecture HeroesHeroes –– Gillette Mach 3,Gillette Mach 3, Bacardi BreezerBacardi Breezer,, Blockbuster, PampersBlockbuster, Pampers VillainsVillains –– Tango Tropical, LeviTango Tropical, Levi’’s suits,s suits, easyGroupeasyGroup
- 14. 14 Jack Buckner Brand AlliancesBrand Alliances SonySony –– SiemensSiemens Star allianceStar alliance McDonaldsMcDonalds –– Cadburys CrCadburys Crèème Eggsme Eggs IntelIntel Movies / Video GamesMovies / Video Games Jack Buckner adidas / Cocaadidas / Coca--ColaCola Strategic alliance proposalStrategic alliance proposal Global brandsGlobal brands Collective marketing assetsCollective marketing assets Similar target audiencesSimilar target audiences
- 15. 15 Jack Buckner adidas / Cocaadidas / Coca--ColaCola A global adidas branded sports drinkA global adidas branded sports drink adidas providesadidas provides –– Sports credibilitySports credibility –– Sports exposure and networkSports exposure and network CocaCoca--Cola providesCola provides –– Product expertiseProduct expertise –– Global distributionGlobal distribution Jack Buckner adidas / Cocaadidas / Coca--ColaCola Income potential for adidasIncome potential for adidas But risk of brand dilution greater for adidasBut risk of brand dilution greater for adidas CocaCoca--Cola brand equity and marketingCola brand equity and marketing capacity significantly greater than adidascapacity significantly greater than adidas Budgets would dwarf adidas brandBudgets would dwarf adidas brand’’s effortss efforts Distribution issuesDistribution issues