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Jack Buckner

Strategic Brand ManagementStrategic Brand Management

Exeter MBA and MSc Exeter 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

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Jack Buckner

Some definitionsSome definitions

�� Most brands are part of a wider organizationMost brands are part of a wider organization

�� Brand architecture Brand architecture –– the structure and the structure and

organization of brandsorganization of brands

�� Brand hierarchy Brand hierarchy –– the different the different

organizational levels within a brand systemorganizational levels within a brand system

�� SubSub--brand brand –– an identified division (other of an identified division (other of

products) within a brandproducts) within a brand

Jack Buckner

Brand HierarchiesBrand Hierarchies

Resolution Resolution

EnhancementEnhancement

NutrasweetNutrasweetMrMr

GoodwrenchGoodwrench

service systemservice system

BRANDED BRANDED

FEATUREFEATURE

LaserjetLaserjet IV IV

SESE

CarnationCarnation

Instant Instant

Breakfast Swiss Breakfast Swiss

ChocolateChocolate

Chevrolet Chevrolet

Lumina Sports Lumina Sports

CoupeCoupe

SUBBRANDSUBBRAND

LaserjetLaserjet IVIVCarnation Carnation

Instant Instant

BreakfastBreakfast

Chevrolet Chevrolet

LuminaLuminaPRODUCT LINE PRODUCT LINE

BRANDBRAND

HP Jet BrandHP Jet BrandCarnationCarnationChevroletChevroletRANGE BRANDRANGE BRAND

HPHPNestleNestleGeneral MotorsGeneral MotorsCORPORATE CORPORATE

BRANDBRAND

Aaker : Building Strong Brands

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Jack Buckner

Brand Architecture alternativesBrand Architecture alternatives

�� Product Range Brand Product 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

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Jack Buckner

Product Range Brand StrategyProduct Range Brand Strategy

�� Allows multiple market entry and flexibilityAllows multiple market entry and flexibility

�� Consumer oriented branding not corporate Consumer oriented branding not corporate brandingbranding

�� Encourages innovation and risk taking (failure will Encourages innovation and risk taking (failure will reflect less on corporate brand)reflect less on corporate brand)

�� Possible to control greater shelf space with strong Possible to control greater shelf space with strong brandsbrands

�� BUT expensive and requires sophisticated BUT expensive and requires sophisticated organization organization

�� Example Example –– 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

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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 innovative follower strategies in innovative

companiescompanies

�� Easier for horizontal rather than vertical extension Easier for horizontal rather than vertical extension

(in some categories)(in some categories)

�� Risk of overRisk of over--stretchingstretching

�� Examples Examples –– 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

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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 in Cheaper method of building brand equity in

company namecompany name

�� Use product brands to express different aspects of Use product brands to express different aspects of

personalitypersonality

�� Requires comprehensive understanding of brand Requires comprehensive understanding of brand

valuesvalues

�� Examples Examples –– GM, ICI, 3M, HSBCGM, ICI, 3M, HSBC

Jack Buckner

Brand architecture debate Brand 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 (except 3M to be sign off on all products (except cosmetics)cosmetics)

–– Ban the use of more than 2 names on one Ban 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

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Jack Buckner

Brand Architecture Brand Architecture –– the car the car

industryindustry

�� Toyota / LexusToyota / Lexus

�� BMW / MiniBMW / Mini

�� Mercedes / Smart CarMercedes / Smart Car

�� FordFord

�� Audi / VolkswagenAudi / Volkswagen

�� GMGM

�� Critical issue is clear structure and Critical issue is clear structure and understandingunderstanding

Jack Buckner

Brand Extension Brand 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

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Jack Buckner

Brand Extension Brand 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 a Successful 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 than High quality brands stretch further than average quality brandsaverage quality brands

�� A prototype brand can have difficulty A prototype brand can have difficulty extendingextending

�� Vertical extensions can be difficultVertical extensions can be difficult

�� Most effective advertising focuses on the Most effective advertising focuses on the extension (not the parent)extension (not the parent)

Keller – Strategic Brand Management

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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

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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 concept Upwards (The silver bullet concept –– Audi TT)Audi TT)

–– Downwards (Levis signature range) Downwards (Levis signature range)

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Jack Buckner

Guess the Brand?Guess the Brand?

�� ““I believe there is no limit to what a brand I believe there is no limit to what a brand

can do. You can ignore those who go on can do. You can ignore those who go on

about brand stretching.about brand stretching.””

�� “…“…attitude is, weattitude is, we’’ll just get ll just get …….to do a .to do a

personal appearance and it will help the personal appearance and it will help the

brand.brand.””

�� ““There are times a brand has to say There are times a brand has to say ‘‘nono’’ to a to a

brand extension.brand extension.””

Jack Buckner

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Jack Buckner

The Virgin EmpireThe Virgin Empire

�� Richard Branson founded in 1972 Richard Branson founded in 1972 –– record shoprecord shop

�� Virgin airlines Virgin airlines –– 19841984

�� 1986 went public, 1988 private1986 went public, 1988 private

�� midmid--19901990’’s s –– over 100 companiesover 100 companies

�� 1997 1997 –– railwaysrailways

�� Virgin.com and telecommunications late 1990Virgin.com and telecommunications late 1990’’ss

�� 1999 1999 –– sold 49% airlines to Singapore Airlinessold 49% airlines to Singapore Airlines

�� 2000 2000 –– withdraws from clothingwithdraws from clothing

�� 2002 2002 –– 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

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Jack Buckner

Virgin Virgin

�� Successes Successes –– music, travel, hotelsmusic, travel, hotels

�� Failures Failures –– clothing, computersclothing, computers

�� ““For every Virgin Atlantic or Virgin music group For every Virgin Atlantic or Virgin music group there have been numerous failures.there have been numerous failures.””

�� ““For a company so diversified, it is vulnerably For 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 Direct Virgin Direct –– ““we are going to exist for 200 we 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

Brandstretch Brandstretch (David Taylor)(David Taylor)

�� ““Why 1 in 2 extensions fail, and how to beat the Why 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

�� Heroes Heroes –– Gillette Mach 3, Gillette Mach 3, Bacardi BreezerBacardi Breezer, ,

Blockbuster, PampersBlockbuster, Pampers

�� Villains Villains –– Tango Tropical, LeviTango Tropical, Levi’’s suits, s suits, easyGroupeasyGroup

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Jack Buckner

Brand AlliancesBrand Alliances

�� Sony Sony –– SiemensSiemens

�� Star allianceStar alliance

�� McDonalds McDonalds –– Cadburys CrCadburys Crèème Eggsme Eggs

�� IntelIntel

�� Movies / Video GamesMovies / Video Games

Jack Buckner

adidas / Cocaadidas / Coca--ColaCola

�� Strategic alliance proposalStrategic alliance proposal

�� Global brands Global brands

�� Collective marketing assetsCollective marketing assets

�� Similar target audiencesSimilar target audiences

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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 marketing Cola 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