LECTURE 1 AND 2: BRAND MANAGEMENT
Brand and brand management
- Example McDonald’s: since 3 years they have a new logo because of the associations that are
connected with this brand (more healthy). Why color green? Green is more like nature. Will
this change work? Is it a good decision? It needs more than only a change in the color.
- Example Coca Cola: will the same logo for Coca Cola Light work?
The colors people use in logos have a message on its own. Red is excitement, yellow is optimism,
orange is friendly, purple is wise, blue is trust, green is peaceful, grey is balance.
Logo redesigns in 2018: Dunkin Donuts to Dunkin, to shift perceptions of the brand away. Google
AdWords to Google Ads, to help advertisers/publishers choose the right solutions for their business.
Its history
Once upon a time there were commodities:
- Undifferentiable by seller/manufacturer
- Often sold loose
- Quality highly variable
- In competitive markets we have many manufacturers and sellers for the same commodity
Question: How do I get a buyer to prefer and buy my ‘commodity’? Why should they choose me?
Why should I buy what you’re selling?
Answer: Differentiate it from competition and make it more attractive/remembered/valuable.
How: By branding your ‘commodity’. Not just giving your brand a name or logo.
Branding
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. In practice: a brand creates a certain amount of meaning, reputation, preference, and
so on in the eyes of the customer.
Why do we use logos? Recognition for people, easy to remember.
Different perspectives
Brands vs. products
Product = anything that can be offered (by an organization or company) to a market for attention,
acquisition, use, or consumption that might satisfy a need or want. (Kotler)
Four levels of a product (Levitt):
- Core benefit: what is the core function of the product? (a to b with a car)
- Tangible product (navigation system in a car)
- Augmented product (car guarantee)
- Total product (car)
Brand management perspectives:
- Physical product = brand from the organizations’ point of view (inside-out)
- Psychological product = brand from the customers’ point of view (outside-in)
Branding philosophy:
,Inside-out: product-driven brand philosophy
Outside-in: people-driven brand philosophy
Exam question: Is this course from a product-driven or people-driven brand philosophy? Explain why.
Does is start from the customer or from the company?
Brand are intangibles that have become the key source of corporate value. Intangible assets are
nowadays more important than tangible assets were in the past. Is it just a product or something
more? Example Pepsi vs. Coke: blind taste test results in a higher preference for the Pepsi sample
(51%). Identified taste test (brand names revealed) results in a higher preference for Coke (65%).
How is this possible? Just on the taste (tangible, core product level): winner is Pepsi. But when all the
information is available, people preferred Coke. Conclusion: it’s just more than only the product.
Coke changed the recipe, because Pepsi tasted more sweet than Coke.
Brand = a product, but one that adds other dimensions that differentiate it in some way from other
products designed to satisfy the same need. These valued differences can be:
- Rational and tangible
- Symbolic, emotional and intangible
Product Brand
Tangible: can be touched by the customer Intangible: lives in customer’s mind
Can be copied Unique
Can be outdated Potentially timeless
Involves transactions Forms basis of connections
Organization vs. customer
The reality is that most valuable assets that many firms have may not be tangible assets, but
intangible assets (management skills, marketing, financial and operations expertise and most
important, the brands themselves).
Keep in mind: a brand is a valued (in)tangible assets that needs to be handled carefully.
Lens of the organization: processes, employees, products = value proposition
Lens of the customer: engagement, convenience, fitness for use = customer value
The value proposition has to meet with the customer value. There should be some fit between what
we do and what the customer wants. As a marketeer you should shrink this to the same level.
Everyday example: I understand that you are hungry (= need). Let’s go to the campus center (=
approach). It has great food, it’s quiet (= benefits/costs). And we can continue our discussion better
than at McDonald’s (= competition/alternative).
, - We naturally create value propositions in our everyday life
- When translated to the business environment, they are remarkably rare
- Remember: only your customer defines your value
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.
Business Model Canvas
Porters Value Chain
Customers think in forms of gains and pains. What is the best way to deal with this as a company? As
a customer is looking for gains and pains, the best solution to focus on is: how can we reduce the
pains (costs) and increase the gains (benefits)?
Example Airbnb:
- What are the gains according to Airbnb’s customers? = cheap, together with locals
- What are the pains according to Airbnb’s customers? = tourists will make a mess of it
- What are the gain creators of Airbnb? = huge assortment
- What are the pain relievers of Airbnb? = secure platform, guarantee
What can go wrong between the value proposition and the customer value?
- Not aware of the pains and gains of the customer
- The gain creators do not fit the gains = misfit problem
- The pain relievers do not fit the actual pains = misfit problem
Example Segway: the value proposition didn’t resonate. Failure to properly segment the market, they
targeted everyone. The problem they were solving was vague, need was missing. The product
couldn’t change behavior. It may be priced too high for most.
Value proposition
- Your value proposition is a statement that includes your important customer and market
o Need along with your new, compelling, and defensible …
o Approach to address that need with superior …
o Benefits per costs when compared to the …
o Competition and/or other alternatives
- Four parts of your value proposition are the fundamentals: they must always be answered
- Successful value proposition are quantitative and easy to understand and remember
See the relationship between the brand position statements (lecture 3&4)
Quantify your value proposition:
, Customer value = the difference between what a customer gets from a product, and what he or she
has to give in order to get it. Best service, status, less risk, convenience, time efficient, authenticity,
bargain, social belonging, etc.
Why are brands important?
1. Consumers
- Identification of source of product
- Assignment of responsibility to product maker
- Risk reducer (different kinds of risk)
- Search cost reducer (e.g. heuristic)
- Bond/pact with maker of product
- Symbolic device
- Signal of quality
2. Manufacturers
- Means of identification to simplify handling or tracing
- Means of legally protecting unique features
- Signal of quality level (e.g. made by …)
- Means of endowing products with unique associations
- Source of competitive advantage (barriers of entry)
- Source of financial returns
- E.g.: Uber, Facebook, Amazon
Can anything be branded? The key to branding is that consumers perceive differences among brands
in a product category/the brand resides in the minds of consumers so: give a label (how to identify)
and provide meaning (what it does).
What can be branded?
1. Physical goods
- Fast moving packaged consumer goods: almost 100% products are branded
