Some analysts see brands as the major enduring asset of a company, outlasting the com- pany’s specific products and facilities. John Stewart, co-founder of Quaker Oats, once said,
‘If this business were split up, I would give you the land and bricks and mortar, and I would keep the brands and trademarks, and I would fare better than you.’ A former CEO of McDonald’s agrees: ‘If every asset we own, every building, and every piece of equipment were destroyed in a terrible natural disaster, we would be able to borrow all the money to replace it very quickly because of the value of our brand. . . . The brand is more valuable than the totality of all these assets.’17
Thus, brands are powerful assets that must be carefully developed and managed. In this section, we examine the key strategies for building and managing brands.
Brand equity
Brands are more than just names and symbols. Brands represent consumers’ perceptions and feelings about a product and its performance – everything that the product or service means to consumers. In the final analysis, brands exist in the minds of consumers.
The real value of a strong brand is its power to capture consumer preference and loyalty.
Brands vary in the amount of power and value they have in the marketplace. Some brands, such as Coca-Cola, Mercedes, Nike, Disney and others, become larger-than-life icons that maintain their power in the market for years, even generations. These brands win in the marketplace not simply because they deliver unique benefits or reliable service. Rather, they succeed because they forge deep connections with customers.
A powerful brand has high brand equity. Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service. Branding consultancy Interbrand specialises in analysing, interpreting and valuing brands. Its analysis considers the competitive strength of the brand, the role the brand plays in the purchase decision, and the financial performance of the branded products or services. In evaluating brand strength Interbrand believes it has identified 10 key factors,18 and these are listed in Table 7.2.
A brand must be distinct, or consumers will have no reason to choose it over other brands.
But the fact that a brand is highly differentiated does not necessarily mean that consumers
will buy it. The brand must stand out in ways that are relevant to consumers’ needs. But even a differentiated, relevant brand is far from a shoe-in. Before consumers will respond to the brand, they must first know about and understand it. And that familiarity must lead to a strong, positive consumer–brand connection.
A brand with strong brand equity is a very valuable asset. Brand valuation is the process of estimating the total financial value of a brand. According to Interbrand, the world’s most valuable brands in 2014 were Apple at $118bn followed by Google at $107bn and Coca-Cola at $82bn. The most valuable European brands in the top 100 were Mercedes-Benz and BMW, both at around $32bn, with Louis Vuitton some way behind on $25bn.19
High brand equity provides a company with many competitive advantages. A powerful brand enjoys a high level of consumer brand awareness and loyalty. Because consumers expect stores to carry the brand, the company has more leverage in bargaining with resellers. Because the brand name carries high credibility, the company can more easily launch line and brand extensions, as when Coca-Cola used its well-known brand to introduce Diet Coke and recently Coke Life, and when Unilever extended the Dove brand to include shampoos and conditioners.
A powerful brand offers the company some defence against fierce price competition.
Above all, a powerful brand forms the basis for building strong and profitable customer relationships. Therefore, the fundamental asset underlying brand equity is customer equity – the value of the customer relationships that the brand creates. A powerful brand is impor- tant, but what it really represents is a profitable set of loyal customers. The proper focus of marketing is building customer equity, with brand management serving as a major market- ing tool.
Internal External
Clarity
Clarify internally about what the brand stands for and its values, positioning and proposition. Clarity, too, about target audiences, customer insights, and drivers. Because so much hinges on this, it is vital that these are articulated and shared across the organisation
Commitment
Internal commitment to brand, and a belief internally in the importance of brand. The extent to which the brand receives support in terms of time, influence and investment
Protection
How secure the brand is across a number of dimensions:
legal protection, proprietary ingredients or design, scale or geographical spread
Responsiveness
The ability to respond to market changes, challenges and opportunities. The brand should have a sense of leadership internally, and a desire and ability to constantly evolve and renew itself
Authenticity
The brand is soundly based on an internal truth and capability. It has a defined heritage and a well-grounded value set. It can deliver against the (high) expectations that customers have of it
Relevance
The fit with customer/consumer needs, desires and decision criteria across all relevant demographics and geographies Differentiation
The degree to which customers/consumers perceive the brand to have a differentiated positioning distinctive from the competition
Consistency
The degree to which a brand is experienced without fail across all touch points or formats
Presence
The degree to which a brand feels omnipresent and is talked about positively by consumers, customers and opinion formers in both traditional and social media
Understanding
Not only is the brand recognised by customers, but also there is an in-depth knowledge and understanding of its distinctive qualities and characteristics. (Where relevant, this will extend to consumer understanding of the company that owns the brand)
TABLE 7.2 Interbrand’s key brand strength factors
Building strong brands
Branding poses challenging decisions to the marketer. Figure 7.3 shows that the major brand strategy decisions involve brand positioning, brand name selection, brand sponsorship and brand development.
Brand positioning
Marketers need to position their brands clearly in target customers’ minds. They can posi- tion brands at any of three levels.20 At the lowest level, they can position the brand on product attributes. Thus, marketers of Aquafresh toothpaste can talk about the product’s innovative ingredients and good taste. However, attributes are the least desirable level for brand positioning. Competitors can easily copy attributes. More important, customers are not interested in attributes as such; they are interested in what the attributes will do for them.
A brand can be better positioned by associating its name with a desirable benefit. Thus, Aquafresh marketers can go beyond the brand’s ingredients and talk about the resulting decay prevention or teeth whitening benefits. Some successful brands positioned on benefits are Volvo (safety), Duracell (extended use), The North Face (adventure), FedEx (guaranteed on-time delivery), Nike (performance) and Lexus (quality).
The strongest brands go beyond attribute or benefit positioning. They are positioned on strong beliefs and values. These brands deliver emotional benefits. Thus, Aquafresh’s mar- keters can talk not just about ingredients and decay-prevention benefits, but about how these give customers ‘a whole new experience of clean’.21 Successful brands engage customers on a deep, emotional level. Brands such as Starbucks, Christian Louboutin and Apple rely less on a product’s tangible attributes and more on creating surprise, passion and excitement surrounding a brand.
When positioning a brand, the marketer should establish a mission for the brand and a vision of what the brand must be and do. A brand is the company’s promise to deliver a specific set of features, benefits, services and experiences consistently to the buyers. The brand promise must be simple and honest. The Travel Inn hotel chain, for example, offers clean rooms, low prices and good service but does not promise expensive furniture or large bathrooms. In contrast, Ritz-Carlton offers luxurious rooms and a truly memorable experi- ence but does not promise low prices.
Brand name selection
A good name can add greatly to a product’s success. However, finding the best brand name is a difficult task. It begins with a careful review of the product and its benefits, the target market and proposed marketing strategies. After that, naming a brand becomes part science, part art and a measure of instinct (see Marketing at Work 7.1).
FIGURE 7.3
Major brand strategy decisions
Late 2013 saw the almost simultaneous launch of two new gaming consoles from Sony and Microsoft. Sony played it safe – the PlayStation 3 would be followed by . . . the PlayStation 4. Microsoft took a different strategy. The previous generation console was called the Xbox 360, so the new one (the third in the series) would be called . . . Xbox One.
Why pick this name? When challenged on it, Jeff Henshaw – who heads up Xbox projects at Microsoft – said:
It only takes a little while before you realize what’s going on underneath that name. There’s something very powerful about it. Xbox One really embodies the concept that this is the first device, the com- bination of this very powerful console that brings all its eight cores, 8GB of RAM, super fast memory, super powerful dedicated audio and video process- ing subsystems. There’s incredible power in this device, married with the next generation of Kinect for really enabling those subtle interactions between you and your entertainment. So to us, One is really the embodiment that this becomes one device that addresses all the entertainment that you want to enjoy on your TV, and brings it to you in a way that’s so simple, that it can be the only input you have connected through your television. It is truly the one place to go for all this. So One ends up being a deeply meaningful thing to us here. It’s almost a bar that we are striving to achieve, and I think we nailed it really well with the Xbox One.
Regrettably for Jeff, the combination of letters and graphic design of the chosen name and logo has led to many calling it the Xbone. Whether that will come to be a name of affection or disdain remains to be seen.
It is not just new products that go through the nam- ing process. Fairly recently, UK consumers found one of their favourite insurance companies – Norwich Union – persuading them that in the future it should be called
‘Aviva’, and that this was a really good idea. It is reason- able to suppose that rather a lot of those consumers were a bit confused by the whole idea. After all, Norwich Union had great brand recognition in the UK, and the name is derived from the name of a town in eastern England (Norwich) where the company was founded in 1797; not a particularly famous town outside the UK, but a well- loved town by the British, famous for a football team of modest success (known as ‘the Canaries’ because they play in yellow kit – their fans are known as the ‘Yellow Army’), and close to some family-friendly holiday resorts
on the North Sea coast. So, Norwich, a well-liked town, and Norwich Union, a well-known name.
Why, then, ‘Aviva’? The name has no literal meaning in English, although it does raise associations with French (à vivre) and Spanish (viva) expressions with which many English people are familiar, and which have generally
‘lively’ meanings. The Aviva company was formed in 2002 by a merger between Norwich Union and CGU plc, with the aim of creating an insurance company to compete on the global stage. CGU plc itself had a ‘modern’ sounding name; names formed solely of letters became something of a fashion in the 1990s (e.g. British Telecommunica- tions became simply BT). CGU was formed in 1998 when insurance companies Commercial Union and General Accident merged. In May 2002, this company merged with Norwich Union to form CGNU, and then in April 2002 the shareholders approved the change of name to Aviva. So, by the time that Aviva was trying to persuade British consumers to drop ‘Norwich Union’ and to think
‘Aviva’ as the top-of-mind brand name, Aviva had been the legal company name for nearly seven years.
The strategic reasoning behind the name change was explained on the Aviva website:
As a global company, we need a name and a brand that will be recognised anywhere. The name Aviva brings together more than 40 different trading names around the world. It’s perfect for us because it’s short, memorable and feels positive and lively.
Of course, another key advantage of ‘Aviva’ over ‘Norwich Union’ is that it takes a lot less effort to type! If you take a quick look at the standard English-language com- puter keyboard you will see that the least accomplished keyboard user can probably manage a–v–i–v–a without too much difficulty (you might also reflect that a–v–a–v–a would have been even easier). Why is this important? Well, the truth is that more and more consumer insurance ser- vices, like car insurance, travel insurance and home insur- ance, are being sold direct over the Internet. So a name that is easy to remember, easy to type and easy to spell is a definite advantage. In fact, ‘Norwich’ is a particular problem even for people born and brought up in England because of that silent ‘w’ in the middle; it is an easily mis- spelt word. Online marketing of insurance is a cut-throat business. If the consumer does not get the desired website first time around, then it is very easy to opt for another provider, particularly if the name is simpler to type.
By the way, there really is an insurance company – one of Aviva’s rivals – called ‘AXA’, and its website is