Brand Management
Lecture 1 & 2: Brand Management
Example: McDonald’s
• How important is the brand logo and what
can we do about it?
• What are the associations people have with
this brand:
o Fast food
o Cheap
o Addictive
o Unhealthy
• Change of logo: red & yellow à green &
yellow, why?
o To make the associations with the brand more healthy, sustainable
o Green looks more like nature
o When people perceive a green background, they perceive it more healthy
o Is this a good decision? Nope
§ Fast food and healthy don’t go together
• Why do you think this does not work and why do you think that the green color would work
for Coca Cola (old exam)?
Insights:
• The colors that people use in its logo have a
meaning on its own à
• Logo redesigns
o Stay relevant with current trends
History:
People used to just buy products
• Undifferentiable by seller/manufacturer
• Often sold loose
• Quality highly variable
• In competitive markets we have many manufacturers/sellers for the same commodity
How do I get a buyer to prefer and buy my ‘commodity’?
® Differentiate it from competition and make it more attractive, by branding your
‘commodity’.
o Differentiate: make your product special, give positive associations, value is
important
o Branding: a process
Why logos?
• Recognition
• Most important brands originate from the late 19th century and people could not read à
therefore a logo
Branding: it’s origins
• Derived from old Norse word ‘brandr’ meaning ‘to burn’
• Marks on Chinese porcelain, pottery jars from Grecian, Roman, and Indian artifacts
dating from 1300BC
• Cattle Ranchers
, • Bakers to mark their bread – English law in 1266
o The law says it should be 800g à branding as a guarantee of minimum 800g
• The Moon & The Stars (1851) – P&G brand
• Uneeda biscuits – 1898 – first nationally branded biscuit
Brand: what is a brand?
Brand: a name, term, sign, symbol, or design or a combination of them, intended to identify the
goods and services of one seller or group of sellers and to differentiate them from those of
competition
® Example: Louis Vuitton à Why do they cost so much? Why would you be willing to buy it?
o Prestige
o High quality
o People want to be identified with the brand
® In practice: a brand creates a certain amount of meaning, reputation, preference, and so on in
the eyes of the customer
Different perspectives 1 – Brands vs. products:
Product: anything that can be offered to a market for attention, acquisition, use, or consumption
that might satisfy a need or want (Kotler) à Anything that has some kind of value can be offered
® 4 Levels (Levitt)
o Core benefit (Jumbo à supermarket, Shell à Gas, car à drive)
o Tangible product (Perfumes are to are a large extent sold because they have a nice
package, a car with a nice color or other features)
o Augmented product (You can buy a car or lease it + guarantee for car protection)
o Total product (including brand, ‘status’, added value: we are willing to spent 1200 for
a device which is worth 2000, Landsale has done everything correct but no one likes
it). à includes: what does the customer think about the product
® Brand management perspectives:
o Brand from the organizations’ point of view: physical product
§ We think what it should be and we offer it like that, we hope that people like
it (Product à throw it to the customer à inside out)
§ Problem Philips: they were very good at innovating products but very bad on
Marketing
o Brand from the customers’ point of view: psychological product
§ What are the needs/desires of the customer (outside in)
§ How do people perceive the brand/product and how will it influence your
brand?
® Branding philosophy:
Inside out vs. outside in
Old exam: Is BM developed from product
driven or people driven brand philosophy
and how/why?
® Brands are intangibles that have become
the key source of corporate value (it used
to be tangible assets, now intangible assets)
Example: Diet Coke vs. Diet Pepsi
® Blind taste test
o Prefer Pepsi Sample 51%
o Prefer Coke 44%
o No preference 5%
,® Identified taste test:
o Prefer Pepsi sample 23%
o Prefer Coke 65%
o No preference 12%
® The coca cola brand was part of the American culture. Changing the CC recipe brought down
the sales
Brand: a product, but one that adds other dimensions (total product) that differentiate it in
some way from other products designed to satisfy the same need.
® These valued differences can be:
o Rational and tangible
o Symbolic, emotional, and intangible
Product: Brand:
- Can be touched by the customer - Intangible: lives in the customer’s mind (people
(tangible) are willing to spend way more than it is worth)
- Can be copied - Unique
- Can be outdated - Potentially timeless
- Involves transactions - Forms basis of connections (people like to show
status/prestige)
Redefining what a brand is:
• What is the meaning of the brand?
• E.g., Nike, Starbucks, Coca Cola
o These people knew how to reach the
people à customer based brand
equity
Different perspective 2 – Organization vs. Customer:
Brands are intangibles that have become the key source of corporate value
® From identification to identity (how the brand is settled in your mind)
® The reality is that most valuable assets that many firms have may not be tangible assets, but
intangible assets (management skills, marketing, financial, and operation expertise, and
most important, the brands themselves) à a brand is a valued (in)tangible asset that needs
to be handled carefully
® Example NABC: Hungry (need)
Let’s go to campus center (approach)
It has great food, it’s quiet (benefits/costs ) à differentiate
And we can continue out discussion better than at McDonald’s (competition/alternative)
o We naturally create value propositions in our everyday live
o When translated to the business environment, they are remarkably rare
§ Only sending à why should you buy it with me?
o Remember: only your customer determines your value
Lens of Customer: what’s in it for me?
Engagement, convenience, fitness for use à
customer value (total value)
Lens of organizationà value proposition
These two lenses don’t match à in marketing
we need to build a bridge between these two
perspectives
, Customer value: the difference between what a customer gets form a product and what he/she
has to give in order to get it
• Best service
• Status
• Less risk
• Convenience
• Time efficient
• Authenticity (‘it’s the ‘real’ thing’)
• Bargain
• Social belonging, etc.
Functional, social, emotional, and altruistic benefits
Balance between gains and pains à
Value proposition: a promise of value to be delivered and
acknowledged, and a belief from the customer that value will
be appealed and experienced
® A value proposition can apply to an entire organization or
parts thereof, customer accounts, products/services or
brands(Gains = cost/benefits analysis)
o Benefit segmentation: how can we segment the
market based on the benefits they’re looking for
o Value proposition: product/brand, competitors,
what are the gain creators of the company, and
what are the pain relievers of the company?
o Customer value: customers compare these
competitors
o Customers compare gains with pains à so focus
on gain creators and pain relievers (reduce costs)
Example: Airbnb
• Gains according to Airbnb’s customers à Cheap,
personal contact, locals à unique experience, more
authentic
o Property owner: why should (not) I rent out
my room? à additional income
• Oains according to Airbnb’s customers à Safety, clean
• Gain creators of Airbnb à Create an app, friendly website
• Pain relievers of Airbnb à Property owners: Insurance for mess, secure with payments
• Problem: what can go wrong?
o Mismatch between offers and what the customers want
o Marketing research is needed to define the gains and pains at certain point in
time
o Solution does not solve the problem
(Bad) example: Segway
This evolutionary transportation device with serious ‘cool factor’ never reached its expected
potential.
® What went wrong: the value proposition did not resonate
o Failure to properly segment the market; they target basically everyone
o “Need” was missing à the problem they were solving was vague
o The problem couldn’t change behavior (we’re hooked on cars)
o May be priced too high for a problem I don’t have, etc.
