1. Topic Gateway Series
Brand Management
Brand Management
Topic Gateway Series No. 3
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Prepared by Ray Perry and Technical Information Service
Revised November 2008
2. Topic Gateway Series
Brand Management
About Topic Gateways
Topic Gateways are intended as a refresher or introduction to topics of interest
to CIMA members. They include a basic definition, a brief overview and a fuller
explanation of practical application. Finally they signpost some further resources
for detailed understanding and research.
Topic Gateways are available electronically to CIMA members only in the CPD
Centre on the CIMA website, along with a number of electronic resources.
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CIMA members and students should sign into My CIMA to access these services
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Brand Management
Brand management
Definition and concept
From the company perspective, a brand is:
‘…a name, term, symbol or design, or a combination of them, which is intended
to signify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors.’
Kotler, 2000
From the customer perspective, a brand is a shorthand which differentiates one
product or service from others. A successful brand is able to shortcut the decision
making process because the buyer trusts the brand promise, which may be based
on quality, reliability, image, price or service level.
A brand may be one product or service or a range. The difference is that brand
attributes are physical and emotional, for instance, ‘snob value’. A product alone
does not necessarily have such attributes. A brand gives the product or service a
personality.
Brand management is a marketing role with specific marketers responsible for
brands or products. The objective is to ensure that brand differentiation is clearly
understood and that all promotional messages are consistent. Additional
products and services, known as brand extensions, must be logical and consistent
with the values of the brand.
Context
In the current syllabus, CIMA students will learn and may be examined on this
topic in paper P6 ‘Management Accounting Business Strategy’. A study system
for this paper is available from CIMA Publishing. www.books.elsevier.com
Related concepts
Added value; brand equity; customer relationship management; product
management.
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Brand Management
Overview
A company decides whether to invest in branding based on how difficult it is to
differentiate its products. In general, the motivation to invest in brands is to be
able to charge a price premium. In a market where all products are equal, such as
coal, milk, or paper, products are commoditised. Here the only advantage is price
discounting, which is not in the long term interest of the organisation.
Willingness to pay a premium is based on tangible and intangible benefits. This is
called brand equity. Without equity, there is no brand. A brand with very large
equity is termed a power brand. Here the customer has deep affinity with the
brand, for instance, the owner of a Porsche who covets the macho driving
experience, or somebody who wears a favourite cosmetics brand.
Benefits of the brand
Benefits of a brand from a customer perspective are:
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time saving – products not trusted are easily disregarded. This makes repeat
purchase an easier choice
•
minimises risk of unhappiness with the purchase
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makes a statement about the customer – for instance, a Rolex watch implies
wealth, while Nike suggests sport and youth
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can lead to a feeling of pleasure in the purchase
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self-reassurance that the correct decision has been made.
For companies, the benefits of branding include:
•
a premium pricing opportunity
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protection from competitors – branding makes it harder for competitors to
attack the product and acts as a barrier to market entry
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building brand loyalty – studies have shown that it costs a factor of seven
times more to attract a new customer than to persuade an existing customer
to buy again
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easier communication with customers and potential customers
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ability to advertise a whole range so that promotional cost per product is
reduced
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guaranteed retail stocking where applicable
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Brand Management
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greater ease to introduce new products
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a longer life for recognised products
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risk factors – customers forgive brands they trust. For instance, Perrier and
Coke have had quality issues, Euro Disney had financial problems and Shell
has been attacked over environmental issues.
Brand components
A brand consists of various components:
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attributes – for instance, Mercedes cars are considered to be well built
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benefits – makes the customer feel important, for instance, a gold credit card
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values – for instance, a Nikon camera gives a quality image
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culture – an Armani suit makes you look good
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personality – what does it say about me? For instance, reading the FT implies I
understand commerce.
Application
Branding policies
There are various types of brand policy.
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A parent brand – where the company brand is used as an umbrella but not on
products, for instance, Diageo.
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Individual brands – where separate brand names are applied to different
groups of products. Disadvantages are lack of economies, advantages are that
if a new brand group is a flop the rest of the business is not affected. An
example of an individual brand is Procter and Gamble’s Clairol brand of
shampoos.
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Family brands – all products and services have the same brand or an element
of the same name, for instance, Ford Mondeo and Ford Fiesta cars, Vodafone
or Shell Oil.
•
Line family brands – where the company brands only some of its products
with the company name but has different lines with a different branding. For
instance, Prudential developed Egg as a distinct brand from Prudential in the
UK banking sector.
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Brand Management
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Extension brands – where the company name is used as part of a name to
expand into new products or sectors, for instance, Virgin Cars, Virgin Mobile,
Virgin Records.
Brand extensions and risk
Brand extension is one way to reduce marketing costs. It must be relevant to the
product. For instance, a car manufacturer extending to bicycles would be a risk if
customers do not see the logic. Extensions can also expose the brand to the
dangers of brand dilution or of confusing the customer.
Vertical extension occurs when a brand is extended up or downmarket. For
instance, Holiday Inn extended the brand downwards with Holiday Inn Express
which they believed did not put the brand at risk. However, in moving upscale
they created a new brand called Crowne Plaza.
Rules for branding
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The product or service must be fit for purpose.
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Advertising cannot fool the customer.
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A good logo or message won’t help poor performance.
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Must appeal emotionally to achieve the price premium.
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Differentiation must be consistent and relevant.
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Market research is an essential pre-requisite.
Types of brand in the supply chain
Manufacturing brands – the producer stimulates demand by promotion, quality
and guarantees which encourage retailers to stock the product, for instance,
Barbie dolls.
Service brands – the provider advertises to the customer base and contact is
directly with the company or its appointed agents, for instance, Cisco systems.
They compete on quality of service like Virgin Air Premium Class or First Direct
bank, or on speed like McDonald’s or FedEx.
Retail brands – generally retailers use corporate branding of the organisation, for
instance, HSBC bank or Tesco, and apply their name to in-house product ranges.
Ingredient brands – a component which is marketed as a separate brand, usually
on quality, performance or uniqueness, for instance, Intel processors, Nutrasweet
or Lycra.
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Brand management in practice
There are four levels of brand development:
1. tangible product – where products have some degree of competitive
advantage such as performance or features
2. basic brand – some degree of differentiation or unique position
3. augmented brand – a number of additional products or services, and repeat
purchase achieved
4. potential brand – customers are not willing to accept substitutes and are loyal
to the brand.
Brand management focuses on:
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ensuring the quality is high and maintained
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maintaining service to a high level with consistency
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making sure the brand is differentiated and that advertising reinforces the
brand.
Importantly, a good brand takes years to build but if the underpinning credibility
is undermined, it can be destroyed in seconds. One example is the impact of
Enron on Arthur Andersen.
The role of the brand manager is to develop and to protect the brand. The brand
manager also manages relationships with third parties such as research agencies,
promotional agencies, PR companies and the media.
The manager produces collateral or advertising materials and decides which
channels to market to use in order to maximise impact. These might include
magazines, newspapers, TV, direct mail, email or in-store POS (point of sale)
material.
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Brand Management
Brand composition
It is important for the organisation to understand the attributes, benefits and
essence of the brand. Using the Virgin brand as an example, the make up of a
brand is shown below.
Figure 1. Virgin: The anatomy of a brand
Attributes
Brand logo
Value for Money
Good quality
Great Customer Service
Innovation
Fun (youthful)
Imagery
Friendly
Independent
Rising to competitive challenge
Brand core
Supporting the ripped-off, under-served customer
Break into market and shake it up
This is sometimes called ‘positioning’ the brand. A successfully positioned brand
is well understood. Messages to customers must be in line with all aspects of the
positioning in order to influence perception. This includes:
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product and service – what we are selling
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price – what we charge to whom
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place of distribution – how is it purchased (e.g. shop, telephone, the Internet)
and how it gets to the customer
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promotion – how we communicate and encourage uptake
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physical evidence – such as literature, logos or designs
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processes – for instance, call centre
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people – sales force, contact staff.
This is called the marketing mix or the seven ‘Ps’.
The more targeted the activity, the more cost efficient the campaign. Advertising
at the Football World Cup or Superbowl may look good, but a focus on direct
mail to people who share the attributes of the core buyers may be far more cost
effective.
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Brand Management
In business to business markets, direct marketing, database marketing and
building, monitoring and nurturing relationships is increasingly the key to
communicating brands successfully.
Brand measurement
An important issue is how to measure brand success and the effectiveness of
marketing campaigns. For tactical campaigns the basic measures of success are:
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uplift in sales during and immediately after the promotional activity
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market share change
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market growth
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growth in first time buyers
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acquisitions on the customer database
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inbound calls relating to the activity.
However, many campaigns are focused on building the brand and influencing
the consumer over a long period of time. For this, market research tracking
exercises can be used to ascertain impact on:
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brand awareness
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brand loyalty
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perceived quality
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brand associations.
Typically market research would try to establish the value of the brand based on
the following criteria.
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Value – how does perceived value differ between those who buy and those
who don’t?
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Respect – is it a credible brand?
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Relevance – does it meet the needs?
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Performance – what does the brand excel in? For instance, quality, efficiency,
delivery.
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Popularity – is it growing?
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Recommendation – would buyers recommend to others?
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Brand Management
Another key element of success is whether staff understand the differentiation of
the brand, and could explain the brand instantly to a customer. This is particularly
relevant in a service business.
Why brands fail
Matt Haig in ‘Brand Failures’ points to the seven deadly sins of branding.
1. Brand amnesia – owners forget what the brand stands for. For instance, Coca
Cola changed its formula with disastrous results.
2. Brand ego – think they can sell anything, for instance, Harley Davidson selling
perfume.
3. Brand deception – promoting attributes it can’t live up to.
4. Brand fatigue – lack of creativity.
5. Brand paranoia – protecting the market by filing lawsuits rather than
innovating.
6. Brand irrelevance – must stay relevant. For instance, camera manufacturers
cannot ignore the shift to digital cameras.
7. Brand megalomania – very few brands can diversify into completely different
areas without diluting the brand.
References
Arnold, David (1992). The handbook of brand management. London: Century
Business
Haig, Matt (2003). Brand failures. London: Kogan Page
Kotler, Philip (2000). Marketing management. London: Prentice Hall
Further information
Articles
Full text available from Business Source Corporate through My CIMA
www.cimaglobal.com/mytime
[Accessed 7 November 2008]
Anand, D. The importance of brand management. Managing Intellectual
Property, May 2008, Issue 179, pp 131-132
Banerjee, S. Strategic brand-culture fit: a conceptual framework for brand
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Brand Management
management. Journal of Brand Management, May 2008, Volume 15, Issue 5,
pp 312-321
Bartram, P. Brand power. Management Accounting, June 2000, pp16-18
Haigh, D. Brand valuation: stand up and be counted. CIMA Insight, April 2004.
Available from: www.cimaglobal.com/insight
[Accessed on 7 November 2008].
Hankinson, G. The management of destination brands: five guiding principles
based on recent developments in corporate branding theory. Journal of Brand
Management, February 2007, Volume 14, Issue 3, pp 240-254
Hinshaw, M. A survey of key success factors in financial services marketing and
brand management. Journal of Financial Services Marketing, September 2005,
Volume 10, Issue 1, pp 37-48
Keller, K., Sternthal, B. and Tybout, A. Three questions you need to ask about
your brand. Harvard Business Review, September 2002, pp 80-86
Lagerqvist, A.M., Wolff, R. and Lindberg, B. Use brand management to increase
profits. Managing Intellectual Property, April 2007, Issue 168, pp 140-143
Roslender, R. and Hart, S. Making the case for value brands. CIMA Insight,
December 2004. Available from: www.cimaglobal.com/insight
[Accessed on 7 November 2008].
Roslender, R. and Hart, S. Accountants forge clear links with marketing. CIMA
Insight, October 2004. Available from: www.cimaglobal.com/insight
[Accessed on 7 November 2008].
Sandberg, K. Building brand: a road map. Harvard Management Update,
July 2001
Brand Mangement 2.0. EContent, September 2008, Volume 31, Issue 7,
pp 30-31
Articles
Abstract only available from Business Source Corporate through My CIMA
www.cimaglobal.com/mycima
[Accessed 7 November 2008]
Beverland, M. Brand management and the challenge of authenticity. Journal of
Product and Brand Management, 2005, Volume 14, Issue 7, pp 460-461
Grassi, W. The new strategic brand management: creating and sustaining brand
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equity long term. Journal of Product and Brand Management, 2006, Volume 15,
Issue 1, pp 81-82
Krake, F. Successful brand management in SMEs: a new theory and practical
hints. Journal of Product and Brand Management, 2005, Volume 14, Issue 4,
pp 228-238
Books
Abraham, D. (2008). Brand risk: adding risk literacy to brand management.
Aldershot: Gower
Asker, D. (1996). Building strong brands. New York: London: Free Press
de Chernatonay, L. and McDonald, M. (1998). Creating powerful brands.
Oxford: Butterworth Heinemann
Dhar, M. (2007). Brand management 101: 101 lessons from real-world
marketing. Singapore: John Wiley
Doyle, Peter (2000). Value based marketing: marketing strategies for corporate
growth and shareholder value. New York: Chichester: Wiley
Haigh, M. (2003). Brand failures: the truth about the 100 biggest branding
mistakes of all time. London: Kogan Page
Kapferer, J.N. (2008). The new strategic brand management: creating and
sustaining brand equity long term. 4th ed. London: Kogan Page
Keller, K.L. (2007). Strategic brand management: building, measuring and
managing brand equity. 3rd ed. Harlow; Upper Saddle River, NJ: Prentice Hall
Kotler, P., Waldemar, P. and Michi, I. (2006). B2B brand management. Berlin;
New York: Springer
Murray, R. (2007). Churnmore: a true taste of brand management. London:
Williams Murray Hamm
Perry, R. (2001). Marketing unwrapped. Chichester: Wiley
Upshaw, L. (1995). Building brand identity. Chichester: Wiley
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