Brand Management

Prof. Dr. Bienert

2nd class

Prof. Dr. M. Bienert, Brand Management

 What is Business ?
There is only one valid definition of business purpose: to create a satisfied
customer. It is the customer who determines what the business is. For it is
the customer, and he alone, who through being willing to pay for a good
service, converts economic resources into wealth, things into goods.

What the business thinks it produces is not of first importance -especially

not to the future of the business and to its success. What the customer
thinks he is buying, what he condors "value", is decisive ... Because it is
its purpose to create a customer, any business enterprise has two -and only
these two- basic functions: marketing and innovation ...

Actually marketing is so basic that it is not just enough to have a strong

sales force and to entrust marketing to it. Marketing is not only much
broader than selling, it is not a specialised activity at all. It is the whole
business seen from the point of view of its final result, that is, from the
customer`s point of view.
(Peter Drucker, 1954)

Prof. Dr. M. Bienert, Brand Management 2

 Brands as Strategic Assets

The history of brands: Greek amphoras, cattle, industrialization, product

availability and trust

Brands as the dominant factor in industries since the mid1980ies:

consumers buy branded products that promise tangible and intangible
benefits created by the efforts of a company.

Brands influenced prices paid in M&As: in the 1980ies it was usually 7 –

8 times earnings, now it may be as high as 20 – 25 times earnings.

The shift from manufacturers to distributor brands: discuss examples.

What is a brand?

Prof. Dr. M. Bienert, Brand Management 3

 Brand Definitions

• Customer Perspective
“A brand is a set of mental associations, held by the customer, which add to
the perceived value of a product or service” (Keller). The associations
should be unique (exclusivity), strong (saliency), positive (desirable).
This definition focuses on the perceived value by the customer, the product
itself is left out of the scope. However, it should be included as one
important part – as should be emotions.

• Conditional Asset
Brand may be posted in the balance sheet as intangible assets.
Brands as conditional assets: products or services are a prerequisite for
brands, they are not all and everything. Brands start with creating a product
or service (or place) that embody the brand.
Without benefits there is no brand value: the financial value drives brand
value, brand awareness, image, attachment, preference have no value
unless they deliver financial benefits. Thus, brand (assets) are conditional in
this way as well.

Prof. Dr. M. Bienert, Brand Management 4

 Brand Definitions

• Legal Perspective
“a sign or set of signs certifying the origin of a product or service and
differentiating it from the competition”
From the legal perspective a brand has a birthday: its registration day, they
become property. One of the sources of loss of rights is degenerescence,
that is a distinctive brand name has become a generic term.

• Brand as a Name that Influences Buyers (Kapferer)

- saliency
- differentiability
- intensity
- trust
In our attention economy consumers cannot spend much time before
making choices. Brands must convey certitude, trust: they are a time and
risk reducer. A brand as existing when it has acquired power to influence
the market.
Kapferers (living) brand system: brand concept (value proposition), brand
name and symbols, product or service.

Prof. Dr. M. Bienert, Brand Management 5

 Brand Definitions
The triangle of concept, name and product or service

brand concept (value proposition),

brand name and symbols product or service

Kapferers brand system is a living system because the brand should be:

1- embodied in products, services, places

2- enacted by people at contact points
3- activated by deeds and behaviors
4- distributed

Prof. Dr. M. Bienert, Brand Management 6

 Brand Definitions:
Assets, Strength, Value

Brand assets * Brand strength * Brand value

Brand awareness Market share Net discounted cash flow

Brand reputation (attributes, Market leadership attributable to the brand after
benefits, competence, Market penetration paying the cost of capital
know-how, etc.) Share of requirements invested to produce and run
Brand personality Growth rate the business and the cost of
Brand deep values Loyalty rate marketing
Brand imagery Price premium
Brand reference of attachment
Patents and rights

* Conditional not direct consequence

Prof. Dr. M. Bienert, Brand Management 7

 Brand Assets, Strength, Value:
Which of these to measure?

Marketing directors consider the following characteristics important and track them:

- Brand awareness (65%)

- Strength of brand positioning (39%) (concept, personality, image)

- Strength of signs of recognition (36%) (logo, codes, packaging)

- Brand authority with consumers (24%) (brand esteem, status, loyalty)

Prof. Dr. M. Bienert, Brand Management 8

 Functions of Brands

Function Customer Benefit

Identification To be clearly seen, to make sense of the offer, to quickly identify the
sought-after products
Practicality To allow savings of time and energy through identical repurchasing and
loyalty.
Guarantee To be sure of finding the same quality no matter where or when you buy
the product or service.
Optimization To be sure of buying the best product in its category, the best performer for a
particular purpose.
Badge To have confirmation of your self-image or the image that you present to others.
Continuity Satisfaction created by a relationship of familiarity and intimacy with the brand
that you have been consuming for years.
Hedonistic Enchantment linked to the attractiveness of the brand, its logo, its
communication and its experiential rewards.
Ethical Satisfaction linked to the responsible behavior of the brand in its relationship
with society (ecology, employment, citizenship, advertising which doesn’t shock.)

Prof. Dr. M. Bienert, Brand Management 9

 Brand Profitability

The financial value of a brand is the difference between the extra revenue
generated by the brand and the associated costs for the next few years,
discounted.

Generators of profit:

1. price premium

2. attraction and loyalty

3. higher margin

Prof. Dr. M. Bienert, Brand Management 10

 Brand Profitability
Corporate Resources

Investments: productivity, Mktg Investments Distribution Investments

Know-how, patents forecasting changes of (proximity, availability,
consumer values and and communication)
life styles
Level of objective Brand relevance and Share of Voice
quality and cost adaptation to its Share of Mind
of quality present market Share of Shelf

Competition Brand saliency Customers

-other brands Perceived value - involvement
- hard discounts Vis-à-vis competition - price sensitivity
- distributor owned brands - buying criteria

Level of Incremental Cost advantages

sustainable price premium attraction and loyalty due to market leadership

Extending brand equity

beyond its category and country

Prof. Dr. M. Bienert, Brand Management 11

 Brands and Corporations –
corporate brands
Companies based their success on product brands, they are now starting to
create and sustain corporate brands in order to make company actions, values
and missions more salient and to diffuse specific added values. Stakeholder
approaches thrive: reputation among them is built. Reputation and share
performance are linked.
Fombrun is using six factors to rank companies reputations:
1. Emotional appeal (trust, admiration, respect)
2. Products and services (quality, innovativeness, value for money, etc.)
3. Vision and leadership
4. Workplace quality ( well-managed, appealing workplace, employee talent)
5. Financial performance
6. Social responsibility
Example: Nike – corporate and / or commercial brand? Nike as a company
heavily criticized.

Prof. Dr. M. Bienert, Brand Management 12

 Corporate Reputation
and Corporate Brand

Build the “brand behind the brand”: companies that start building product
brands decide to create corporate brands to make company actions, values and
missions more salient (current example: Unilever).

Companies reputation becomes more and more important: “image” has fallen into
disrepute as companies have been seen as “image makers”. Reputation has
more depth, is more involving, companies try to meet the expectations of
stakeholders. Reputation takes the company as a whole.
Factors of global reputation:
• emotional appeal (trust, admiration, respect)
• products and services (quality, innovativeness, value for money, etc.)
• vision and leadership
• workplace quality (well-managed, appealing, employee talent)
• financial performance
• social responsibility

Prof. Dr. M. Bienert, Brand Management 13

 Corporate Reputation
and Corporate Brand
Differences to product brands:

- Product brands are more imaginary, relying on intangible values, e.g.

Marlboro’s intangible values are pure construction

- For companies this cannot be the same: reality leaves fewer degrees of
freedom

- Corporate brands must tailor their profile to meet expectations of multiple

publics / stakeholders: core value must be tailored for this global audience

Manage:

- Spillover effects

- Different approaches: umbrella (GM, GE reveal corporation behind brand),

separation (LVMH: 41 different brands with separate
communication and marketing)

Prof. Dr. M. Bienert, Brand Management 14