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2. TYPES OF BRANDS

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2. TYPES OF BRANDS

2. TYPES OF BRANDS

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  • 1. Contents Using this guide Introduction Checklist 2. TYPES OF BRANDS “Isn’t branding only relevant in the fmcg sector?” Case studies Use bookmarks in the left-hand panel to navigate this guide – click on the bookmarks tab on the left of your screen or [F5]. Search for specific words by using: Ctrl + F (PC) or Apple = F (Mac). To Branding website © The Chartered Institute of Marketing 2003
  • 2. 2. TYPES OF BRANDS HOME eGUIDE 1 Defining brands Contents > Using this guide eGUIDE 2 Types of brands eGUIDE 3 How brands work eGUIDE 4 Brand strategy > Introduction > Common features of all brands > Sources that influence perception of brands and degree of control > Differentiating features of brands eGUIDE 5 Managing and developing brands > Different types of brands > Checklist eGUIDE 6 Brand portfolio and architecture > Case studies eGUIDE 7 Measuring brands and their performance The above ‘offline’ links require all the eGuide pdfs to have been downloaded from the Branding website and placed in the same single folder on your hard disk. To Branding website © The Chartered Institute of Marketing 2003 2
  • 3. 2. TYPES OF BRANDS HOME Using this guide Navigation There are a number of ways to make your way round this guide: >Bookmarks Gives a topic overview of the guide – first select the bookmarks tab on the left of the screen (alternatively use [F5] key), then click on to a topic to link to the relevant page. >Next/previous page Clicking on the left or right of this icon, at the bottom right of each page, will enable you to move forward or back, page by page. >Tool bar The tool bar at the bottom of the screen is another way to skip through pages, by clicking on the arrows. >Margin icons These icons, in the margins to the left of the main text, link to various types of information. See next page for a complete list of these margin icons. >Links Click on a highlighted word to navigate to a related page – either in the guide or on the World Wide Web. >Search You can also search the guides using [Ctrl] + F for PC (or [Apple] = F for Mac) to bring up the ‘find’ dialogue box and then simply type in your search term and click the ‘find’ button. HOME >To home page Clicking on this icon, in the top right of every page, will take you to the home page of this eGuide. >To other eGuides eGUIDE 1 Clicking on these icons, to be found on the contents page and sometimes as a margin icon, will take you to the home page of that particular eGuide – if you have downloaded the relevant pdf and stored it in the same folder. BACK >Back to main text Clicking the ‘back’ button will return you to the point in the main text you were directed from. To Branding website © The Chartered Institute of Marketing 2003 3
  • 4. 2. TYPES OF BRANDS HOME >To Branding website Clicking on the ‘@’ icon at the bottom left of each page will take you to the home page of the Branding website. This link will only work when you are online. Margin icons We’ve added icons in the margins of the text to highlight particular types of information: >Further details Indicates additional material on the same subject. This information may be located within the same eGuide; in one of the other six eGuides (in which case the link will only work if the pdfs of the other eGuides have been downloaded into the same folder); or on a separate website (in which case the link will only work if the pdf is being viewed online). >Case study This signals a story that will illustrate theory applied in practice. Click on the icon to view the example and, once you have finished, select ‘back’ to return to where you were originally. >Checklist Points to a summary page. >Resources Links through to the online Brand Store section where you will find further resources on the topic being discussed. >FAQs Gives answers to frequently asked questions. To Branding website © The Chartered Institute of Marketing 2003 4
  • 5. 2. TYPES OF BRANDS HOME Introduction “Isn’t branding only relevant in the fmcg sector? ” Branding as a discipline is probably most commonly associated with fmcg [but] brands are developed in every category. Branding as a discipline is probably most commonly associated with fmcg (fast moving consumer goods) – physical products bought more or less routinely. Many consumer companies such as Coca-Cola, Unilever, Nestlé and Procter & Gamble have set the standard for brand marketing. However, brands are developed in every category and it is important to understand what these categories are and how the process of branding differs in each one. Perhaps the most significant development is the evolution of the organisation brand which introduces the idea of stakeholders as a key target audience. To Branding website © The Chartered Institute of Marketing 2003 5
  • 6. 2. TYPES OF BRANDS HOME Common features of all brands Figure 2.1: Brand Mind SpaceTM FUNCTIONAL DIMENSION concerns the perception of benefit of the product or service associated with the brand SOCIAL DIMENSION concerns the ability to create identification with a group BRAND MIND SPACE MENTAL DIMENSION is the ability to support the individual mentally SPIRITUAL DIMENSION is the perception of global or local responsibility Source: Gad, T. (2001) 4-D Branding: Cracking the corporate code of the network economy. London, FT Prentice Hall, p. 18. > A brand is a mix of rational, sensual and emotional rewards to the consumer. A successful brand is an identifiable product, service, person or place, augmented in such a way that the buyer or user perceives relevant, unique added values which match their needs most closely. Furthermore, its success results from being able to sustain these added values in the face of competition. [de Chernatony, L., 1998] > Brands exist in the minds of people (consumers, employees, other stakeholders). They are not something that a company/organisation sells, but what the users of the brand perceive. They are the culmination of a user’s total experience with the product or service (or company) over many years. Clear and distinctive brand propositions can influence stakeholders’ attitudes in your favour. Related reading eGuide1: Defining Brands To Branding website © The Chartered Institute of Marketing 2003 6
  • 7. 2. TYPES OF BRANDS HOME The brand owner has direct control and influence over some sources, indirect control over other sources and no control at all over still others. > People derive their beliefs and utilities of brands from many sources. The brand owner has direct control and influence over some sources, indirect control over other sources and no control at all over still others. “Products are made and owned by companies. Brands, on the other hand, are made and owned by people... by the public... by consumers. “People come to conclusions about brands as a result of an uncountable number of different stimuli, many of which are way outside the control of the product’s owner. “Much of what influences the value of a brand lies in the hands of its competitors.” [Bullmore, 2001] > The more sources the brand owner can exercise a coherent influence over, the more integrated and secure the brand will be. One way in which the brand managers can become more focused on integrated brand development programmes is by considering the journeys each of their stakeholders undertakes as they come into contact with the organisation. [de Chernatony, L., 2001] Figure 2.2: Striving for an integrated brand journey Stakeholder How did they become aware of your brand? How do stakeholders further develop opinions about your brand through interacting with each other? When then deciding to have further dealings with you, what routes do they follow? Do all the brand communicators reinforce the brand's core values? What roles do staff and technology play throughout the stakeholders' journeys – do they support the brand's core values? What mechanisms are in place to reinforce the brand's values after the transaction? Source: de Chernatony, L. (2001) From Brand Vision to Brand Evaluation. Oxford, Butterworth Heinemann. To Branding website © The Chartered Institute of Marketing 2003 7
  • 8. 2. TYPES OF BRANDS HOME Figure 2.3: Stakeholder reaction to brand: the brand owner has direct control over some aspects, indirect control over others and no control over still others Start here 3 Awareness Experience Attitudes Image ORGANISATION INPUT Vision Values Products Services Performance Presentation Communication 1 OTHER INPUT Gossip Rumour Media comment Word of mouth Pressure groups Word of Web STAKEHOLDERS' MENTAL INVENTORY Figure 2.3 shows how stakeholders’ perception of the brand can be influenced by any point of contact with it, be it through brand communications, direct experience or word-ofmouth. The more control can be exercised over each of those elements, the more consistent the perception of the brand, both in time and across all stakeholders. Residual Mental Image 2 > Stakeholder reaction to the organisation brand changes daily > The mechanism for this is a continuous process Source: Davidson, H. (2002) The Committed Enterprise. Oxford, Butterworth Heinemann. To Branding website © The Chartered Institute of Marketing 2003 8
  • 9. 2. TYPES OF BRANDS HOME Sources that influence perception of brands and degree of control Direct control: > the product (eg, ingredients, formulation and technical efficiencies). Limited control: > all of company’s broader activities that impact perception (eg, employment practices, environment policy, social policies and material sourcing). > media good news (placed stories). > the service component (eg, nature of service, numbers of staff, degree of training and specific deliverables). No control: > media bad news. > the promotion (eg, how much, what content and where exposed). The fragmentation of media channels, the explosive growth of the Internet, and the changing attitudes of consumers have all chipped away at the 30second network TV spot as the prime medium for brand communication. > the distribution (eg, where purchased or experienced). > accidents. > activity of competitors. > activities of individual employees. > the packaging (eg, type, materials and design). > the price. > the choice of partner/associate/links, with other companies, for example. “The rules of the (brand communication) game have changed beyond recognition. The fragmentation of media channels, the explosive growth of the Internet, and the changing attitudes of consumers have all chipped away at the 30-second network TV spot as the prime medium for brand communication. To Branding website © The Chartered Institute of Marketing 2003 9
  • 10. 2. TYPES OF BRANDS HOME “What’s more, the way in which consumers form their opinions of brand is increasingly complex. Companies may distinguish between main media, promotions, public relations, sponsorship, product placement and the Internet. Consumers and potential consumers make no such distinction. “They may read disturbing reports of a company in a newspaper, see its trucks being badly driven on the motorway, be infuriated by incomprehensible instruction leaflets, be driven mad by the company’s call centre, receive graceless and misspelled letters from head office. Each of these encounters has the potential to inflict serious harm on a brand’s reputation.” [Fitzgerald, 2001] Differentiating features of brands The balance between tangible and service elements inherent in a brand will affect the following: > how purchased/used/experienced. Fmcg products are traditionally dependent on wide distribution networks. However, through the use of e-commerce many have started to sell direct to consumers. > frequency of purchase/use/experience. Fmcg products are bought much more frequently, as the name suggests, than big ticket items. > amount of thought/research/comparison typically undertaken prior to purchase/experience. The consumer decision process will vary according to how much risk they perceive in buying a product or service. The consumer decision process will vary according to how much risk they perceive in buying a product or service – the risk will depend on price, quality variance, trust in the brand and other factors. > degree of customisation available. To Branding website © The Chartered Institute of Marketing 2003 10
  • 11. 2. TYPES OF BRANDS HOME The intangibility of services makes them much more suited to customisation than fmcg products, which offer a wide variety but little customisation. All brands have one goal – to enhance their perceived value. Different types of brands In terms of complexity, the branding issues multiply as the underlying product becomes less tangible. Product brands lie at the relatively simple end of the scale. They are easy to understand. Service brands are on the other end of the scale, as they are difficult to evaluate prior to purchase. Although all brands have one goal – to enhance their perceived value – it is important to understand how that value delivery differs across different types of brands. [Goodchild, Callow, 2001] Product brands (1) Fast moving consumer goods (fmcg) such as cereals, drinks, washing powders, personal care, confectionery. Case study: Kleenex Characteristics: >Cost Inexpensive. To Branding website © The Chartered Institute of Marketing 2003 11
  • 12. TYPES OF BRANDS HOME >Balance of product to service Almost exclusively tangible product, although service component can be present (eg, customer-care lines). Figure 2.4: The evaluation spectrum of products and services GOODS SERVICES >How purchased Mainly through conventional fmcg distribution networks – supermarkets, other shops, vending machines, relatively large volume outlets. >Frequency of purchase Frequent. High in search qualities High in experience qualities Surgery Legal services Hi-fi repair Haircut Lawn fertilizer Restaurant meal Motor vehicle Difficult to evaluate Chair Easy to evaluate China 2. High in credence qualities >Degree of research/thought/search prior to purchase Typically none, the brand is part of the consumer repertoire, likely to be habitual. >Degree of customisation Very little. Often wide range of variants but no real customisation for individual customers. Source: de Chernatony, L. (1998) Creating Powerful Brands. Oxford, Butterworth Heinemann, p. 216. To Branding website © The Chartered Institute of Marketing 2003 12
  • 13. 2. TYPES OF BRANDS HOME Product brands (2) Big ticket items (eg, appliances, cars, houses, boats, furniture, and luxury items such as jewellery, high fashion and watches). Characteristics: >Cost Expensive. >Balance of product to service Service is likely to take on a more important role, before, during and after purchase. It is always harder to brand something you can’t touch. >How purchased Traditionally through specialised outlets (luxury = high status outlets) but increasingly more widely distributed. For example, luxury cosmetics are now available in chemists, electrical appliances in supermarkets and computers available for purchase via the Internet. >Frequency of purchase Infrequent. >Degree of research on purchase A great deal of thought, research and comparison goes into the decision, although with luxury goods, investment is more emotional than financial. >Degree of customisation Can be considerable. Service brands Service brands are characterised by the need to maintain a consistently high level of service delivery throughout hundreds, or even thousands of staff. Although a product component may be involved, it is essentially the service that is the brand. These are more complex than product brands for two reasons: both because it is always harder to brand something you can’t touch and because they are delivered directly by employees. [Goodchild, Callow, 2001] Case study: easyJet To Branding website © The Chartered Institute of Marketing 2003 13
  • 14. 2. TYPES OF BRANDS HOME Characteristics: >Intangibility Service brands can seldom be tried out in advance, which requires the establishment of a greater degree of trust. >Inseparability of production and consumption Services cannot generally be stockpiled in advance but are produced and consumed in real time. >Inconsistency Since humans are usually instrumental in delivering services. [Goodchild, Callow, 2001] Different categories of service brands: >Classic service brands eg, airlines, hotels, car rentals and banks. The meanings of retail >Pure service providers eg, member associations like The Automobile brands are more heavily Association or RAC. derived from consumer’s direct experience rather than from advertising. >Professional Service Brands eg, advisors of all kinds – accountancy, management consultancy. >Agents eg, travel agents and estate agents. This category of a brand has become endangered by the rise of the Internet. Unless value is added in some way, these middlemen will become extinct. An example is the demise of the ordinary travel agent, as customers book their flights and hotels online. Luxury travel agents compete by providing personal service and having exclusive contacts. >Retail brands eg, supermarkets, fashion stores and restaurants. Retail Brands are complex and multifaceted. Consumers have a much more involved and interactive experience with retail brands. The meanings of retail brands are more heavily derived from consumer’s direct experience rather than from advertising. [Gordon, 1996] To Branding website © The Chartered Institute of Marketing 2003 14
  • 15. 2. TYPES OF BRANDS HOME Retail brands will differentiate themselves in different ways, including: > explicit customer oriented policies – eg, Prêt à Manger, Carphone Warehouse. > Particularly unique combination of offerings – eg, Selfridge. > Concentration in one category or breadth of range – eg, Amazon, Toys-R-Us. > Own label – eg, Tesco Finest, M&S St Michael. Brands from other spheres The Internet needs to be fully-integrated into the total brand-building of [a] company. E-brands The Internet is a medium that presents new challenges for brand owners, but the underlying principles of branding are unchanged. The Internet is developing a more direct style of relationships between customers and brand owners, and all those interactions give an opportunity for strengthening the brand identity. A distinction needs to be made between ‘e-tailers’ like Amazon.com, whose primary activity is to deliver physical products, and other e-brands, which focus on delivering a service or experience, like lastminute.com or monster.co.uk. In both cases, however, it is the intangibles, the brand values that will attract online customers. Case study: Amazon Five success factors for e-branding: [Aaker, 2002] 1. A clear brand identity – knowing your brand and what associations you want it to have, what user profiles, brand personality, organisational associations, emotional and functional benefits. 2. The Internet needs to be fully-integrated into the total brand-building of your company – no longer can the Internet be perceived as another communication medium to be managed by silo organisations of specialists. 3. Website design needs to be consistent with brand presence off-line – the website look, feel and personality need to support the brand’s overall identity. To Branding website © The Chartered Institute of Marketing 2003 15
  • 16. 2. TYPES OF BRANDS HOME 4. Consumers need to be motivated to return to the site – motivation usually involves information, entertainment and interactive communications. Only when off-line and on-line efforts are truly linked, will traffic be driven to the website. integrity of the brand, and promote it at every turn. But successful branding can have a great effect on raising awareness of the charity and its mission, and on fund-raising. 5. Only when off-line and on-line efforts are truly linked, will traffic be driven to the website – the big pay-off occurs when visiting the website is not a discrete action, but rather part of a larger brand experience. Nation brands Related reading New ways of thinking lead to countries being positioned as tourist destinations, enhancing status of goods and services produced, and aiding under-developed countries. [Anholt, 2000] Brands, the Web and Brand Strategy Related reading Building Digital Brands Journal of Brand Management website Special Issue: Nation Branding, April 2002, Vol. 9, No.4/5 Media brands eg, newspapers, magazines, television channels. Not-for-profit organisation brands Non-profits are often at a disadvantage when it comes to branding. After all, they don’t have the deep pockets of corporations who can afford to hire brand specialists, nor do they have staff whose job it is to protect the Government brands Governments and political parties often have strong brands as they are centred on passionately held core values, eg low taxes for Republicans, environmental issues for the Green party. Branding is important in both securing votes and in international diplomacy. To Branding website © The Chartered Institute of Marketing 2003 16
  • 17. 2. TYPES OF BRANDS HOME Global brands Through the 1990s, the notion of the ‘global’ brand developed: the same ‘sight and sound the world around’. Companies have been marketing their products and brands in different countries for decades. However they were almost always marketed according to local conditions. The exceptions are the famous ones – Coca-Cola, Marlboro, McDonald’s and a few others. Through the 1990s, as companies became more centrally controlled, as media became more global and the countries at least of the developed world began to show similar characteristics, the notion of the ‘global’ brand developed: the same ‘sight and sound the world around’. This has always been something of an overstatement: rarely is a brand identical in each of its markets but there was a belief that many efficiencies could be effected if brands in different countries shared certain common features: positioning, strategy, packaging, certain types of advertising and so forth. This idea has remained a powerful one but increasingly, companies are taking second looks at their global property and realising that too strong a central control risks being out of touch with the local community. Consequently, although major companies still try to ensure that positioning is similar in all major markets, they are allowing more local output in the communications. Because these brands are very valuable to the company, they are often referred to as ’power’ brands or ’pillar’ brands. Related reading 2002 Global Brands Scoreboard from Interbrand website The Brand Chartering Handbook International Marketing Features of global brands [Quelch, 1999] > strong in home market – cash flow generated from domestic market enables the company to fund a global roll-out > at least minimum level of awareness, recognition and sales all over the world To Branding website © The Chartered Institute of Marketing 2003 17
  • 18. 2. TYPES OF BRANDS HOME > the products meet the same human needs world-wide, even though the physical product may be adapted locally (eg, McDonald’s). The decision whether to standardise or localise brands when expanding internationally should be led by adding value to the final consumer, not by reducing costs or facilitating HQ control. > consistent positioning. Several other factors may affect the decision: [Quelch, 1999] > consumers value the provenance of the brand, its country of origin, and even associate the country’s expertise with specific products (eg, German cars, American jeans). > focus on a specific product category. >use single corporate brand name. Act local, think globcal The brand’s core values can be global, although the brand needs to have local relevance. “While there are global brands that have a global presence, they don’t have global consumers. The brand’s core values can be global, although the brand needs to have local relevance. To bring it to life you need to be flexible and re-enact the brand as appropriate. It is the think global, act local strategy.” [Gavin Emsden, Nestlé UK’s head of consumer insight and planning for beverages] > regulatory environments vary from country to country, especially in pharmaceuticals, financial services and utilities. > the Internet allows adoption of a standardised global strategy without investing in distribution systems in each country. > the threat of parallel imports from low-price to high-price countries. Anti-globalisation debate: related reading International Branding: Resolving the globallocal dilemma To Branding website © The Chartered Institute of Marketing 2003 18
  • 19. 2. TYPES OF BRANDS HOME Organisation brands Case study: Levi’s “Every organisation is a brand, since people have a mental image of it.” [Davidson, 2002] What is an organisation brand? It is neither a product/service nor a corporate brand, it is wider than both. It relates to all stakeholders and in many cases is rarely advertised. The organisation brand represents the impression people inside and outside the organisation have of it. Figure 2.5: How organisation brands differ from product/service brands Organisation brand (eg Procter & Gamble) Product/service brand (eg Tide) > Impacts all stakeholders > Flag for all employees > Brand for Wall Street > May or may not be customer brand (IBM is, Procter & Gamble is not) > Brand for media, NGOs, regulators > May not be advertised at all (eg, Procter & Gamble) > Marketed to customers/consumers > Limited impact on employees > Limited Wall Street impact > Always a customer brand > Low interest to media, NGOs, regulators, unless specific incident > Likely to be heavily advertised Every company, large or small, is a brand in this sense. Every college, school and hospital is too. Save the Children and Harvard University are organisation brands, but not corporate brands. Everyone would agree that Pampers or Ariel is a brand. What about their owner, Procter & Gamble? You have to search hard to find Procter & Gamble on the back of the package. Yet to Wall Street, suppliers, partners, retailers, and P&G employees, Procter & Gamble is an important ’organisation brand’. Organisation brands like P&G, Unilever and General Motors, are not consumer brands, but market to all other stakeholders. Others like IBM, Tesco and McDonalds have a dual role and are also consumer brands. Figure 2.5 summarises how organisation brands differ from product/service brands. Related reading The Committed Enterprise eGuide 6: Managing brand portfolio and brand architecture Source: Davidson, H. (2002) The Committed Enterprise. Oxford, Butterworth Heinemann. To Branding website © The Chartered Institute of Marketing 2003 19
  • 20. 2. TYPES OF BRANDS HOME Checklist Understanding the characteristics of different types of brands Constructing a consumer journey A particularly useful way of understanding the particular features of different types of brands and the key stages in how consumers buy and use your particular category is what is called a ’consumer journey’. (It is sometimes also called a ’consumer buying system’.) This is a framework that looks at the purchase process from the consumer standpoint and asks a series of questions that help define the ’rules’ of different types of brands. >What triggers or stimulates the purchase in the first place? Is it a habitual process with purchase stimulated by simply running out? Is it a gift item where a special occasion is the trigger? Is it a seasonal purchase? Is it an infrequently purchased, very expensive item? Each category and sometimes each individual brand will have a set of circumstances that typify how consumers relate to your category/brand and this helps establish the consumer’s mind-set that leads to at least consideration of purchase. >How much searching or comparison does the consumer engage in before purchase? For example, luxury or gift items will involve quite a lot of thinking and searching compared to fmcg; big ticket items will involve comparisons on every dimension compared to the cheap, semi-automatic fmcg purchase. With service brands, the search stage is a critical one in establishing competitive advantage through service. >Where/how does this searching take place? On the Internet? Through catalogues? In a shop (what kinds of outlets)? Consulting friends? Over how long a period of time? Who else is involved in the searching? >How much customisation takes place? What kinds of demands do consumers make? How is your particular category structured to meet them? What opportunities can you identify that haven’t been met? To Branding website © The Chartered Institute of Marketing 2003 20
  • 21. 2. TYPES OF BRANDS HOME >What channels/promotional vehicles are most appropriate for this type of brand and how do consumers use these vehicles? In addition to the conventional categories in the media mix, are there other sources of influence, eg, middle men or direct salespeople? To Branding website © The Chartered Institute of Marketing 2003 21
  • 22. 2. TYPES OF BRANDS HOME CASE STUDIES 1. Kleenex: not a brand to be sniffed at 2. Easyjet: the Web’s favourite airline 3. Amazon: the get big fast brand 4. Levi’s: rebel without a cause To Branding website © The Chartered Institute of Marketing 2003 22
  • 23. 2. TYPES OF BRANDS HOME 1. Kleenex: not a brand to be sniffed at 2. easyJet: the Web’s favourite airline More people buy Kleenex facial tissue that any other brand in the UK, it has remained the number one brand since it first began production in 1924 and enjoys a continuous advertising presence and 100% share of voice as the only company advertising facial tissues. With low fares, one of the youngest fleets in the industry and a steadily expanding range of destinations, easyjet has changed the face of European budget travel and become the carrier of choice for many business and leisure travellers. The strength and longevity of the Kleenex brand are based on originality, regular innovation, quality control and heavy promotion. In 1996 Kleenex was named as the fastest growing brand in the UK and is in the top 40 of all grocery brands. The current tightening of company travel budgets has led to companies turning to the low cost airlines as a viable alternative for European travel. Easyjet has used this hardening of the market to its advantage, growing to a FTSE 250 company with routes to 36 key European airports in seven years. Further details can be found under ‘Kleenex’ on the Superbrands website BACK The airline was launched in 1995 by Stelios Haji-Ioannou and was positioned as a ‘people’s brand’; a David champion to take on the airline Goliaths. Stelios is a great admirer of Virgin’s consumer champion strategy and sought the advice of Richard Branson before setting up easyjet. Note that he is known universally as Stelios as opposed to HajiIoannou, which is as much to do with his informal approach as to the length of his name. To Branding website © The Chartered Institute of Marketing 2003 23
  • 24. 2. TYPES OF BRANDS HOME Easyjet achieves low costs by consistently adhering to a ‘no frills’ business model. Quick turnaround times, online seat sales, and no refreshments on-board have all contributed to cheaper fares, but the biggest cost saving has been the cutting out of travel agents. Without commission charges, easyjet can sell seats at prices other airlines cannot compete with. Easyjet also implements a yield management strategy, prices are closely linked to demand and how far in advance a seat is booked. Peak time seats are significantly more expensive than seats taken at non-peak times, which means easyjet is able to maximise seat sales for every flight. In keeping with the company’s strategic philosophy, easyjet does not have a large marketing budget; its marketing relies primarily on sales promotions, public relations and is ostensibly word of mouth. The in-house marketing team design the ads and have taken a deliberately economical approach. The planes have the phone numbers emblazoned on their sides in easyjet’s signature orange colour and Stelios himself is a master of publicity stunts, which are highly effective with minimal costs. The ‘no frills’ approach, emphasis on online sales and the slogan ‘The © The Chartered Institute of Marketing 2003 Web’s favourite airline’ have all contributed to the perception of the brand as a new airline for the 21st century: cheap, cheerful and fuelled by the new media revolution. Easyjet is a pioneer of the European budget travel market and when the brand was launched they were virtually the only budget European carrier. In the wake of their success, however, direct competitors such as Ryanair and Virgin Express have emerged and major players such as British Airways have raised their game in the budget market by charging less for some fares now than 10 years ago, providing stiff competition. With recent bad publicity due to the aggressive defence of the easyjet name and colour, and pilots arguing that their turnaround rates are not sustainable, it remains to be seen whether the people’s brand can stay at the top of its game. BACK 24
  • 25. 2. TYPES OF BRANDS HOME 3. Amazon.com: the get big fast brand Internet retail giant Amazon.com was founded in 1994 by its charismatic CEO Jeff Bezos. His principle was to exploit the burgeoning world of online book sales by becoming the early market leader and doing whatever it took to grow quickly. Bezos initially founded the company on the basis that he was ready and willing to lose money for five years before it would make a profit, a sensible idea in a brave new world ‘littered with corpses who do new things and expect them to be profitable quickly’. He was right about Amazon.com losing money, but hadn’t quite predicted the scale. Having lost over $300,000 in 1995, Bezos was running out of money and was forced to desperately bid for local investment into his pioneering company to fund the growth he craved. Bezos’ campaigning secured investment of $1million and he immediately began ploughing it into the company, recruiting top staff and buying new warehouses and larger offices as he sought to get as great a head start over the competition as possible. Book superstores such as Barnes & Noble and Borders hadn’t © The Chartered Institute of Marketing 2003 entered into online sales yet and Bezos knew they would crush small competition when they turned their attention to the developing market. Amazon.com began to grow exponentially; by focussing on PR and customer service they secured excellent ‘word of mouth’ approval and generated invaluable awareness without needing to raise huge marketing budgets. On 16 May 1996 the Wall Street Journal ran a feature about Amazon.com as the lead story on its front page and the brand really broke. Investors were soon competing to plough venture capital into Amazon.com and Bezos began to build the business as fast as he could. Any ideas of profits were forgotten for the near future as Amazon.com focussed on building the brand and dominating the market. Advertising budgets were allocated for the first time and the brand was marketed on the range of choice, convenience, price and customer focus. By 2000, by spending money and spreading the word quickly, Amazon.com had grown from humble beginnings to a business with 20 million customers and a turnover in excess of $550million a quarter. 25
  • 26. 2. TYPES OF BRANDS HOME At the end of 2002 the company announced a profit for the first time. Whilst other dotcom businesses have floundered and become expensive flops, Amazon.com has established itself as a market leader, synonymous with book selling online. With international markets still growing quickly, new product lines and still only 5% of books in America sold online the future looks rosy. Big investments and big vision paid dividends for Amazon.com. Bezos knew the company would have to grow quickly to compete and became a market leader. As a pioneer, Amazon.com had impeccable timing; and in making their URL their brand name – ensuring association with the growing Internet market from the beginning – and focussing heavily on customer service to ensure vital word-ofmouth buzz, they were able to secure the necessary investment to ensure their exponential growth. Amazon.com ‘got big quickly’ and that was the key to their success. BACK © The Chartered Institute of Marketing 2003 4. Levi’s: Rebel without a cause First manufactured for the gold miners of California in the 1850s, Levi Strauss and Co quickly established a brand reputation for producing tough, hard-wearing jeans for tough, hard-working miners, and they saw the brand grow slowly along the American West coast throughout the depression and into World War II. The post war explosion of youth culture and the large baby boom generation of young people in the 1950s provided the opportunity Levi’s needed to develop the brand and expand nationally and internationally. Jeans were the garment of choice for a new generation looking to rebel against convention and, as the classic manufacturer, Levi’s became the brand of choice and a status symbol worn by rock stars, actors and the ‘cool’. The brand rested on the attached connotations of originality and rebellion. A brief flirtation with baby clothing, polyester suits and running gear in the 1970s and early 1980s was quickly abandoned as consumers couldn’t buy into this ethos with these products. Levi’s had begun to 26
  • 27. 2. TYPES OF BRANDS HOME abandon the brands core values, detaching themselves in part from what their consumers were buying into, and as the experiment failed their marketers began to work on a campaign to stabilise the brands image. The result was a great success. Commencing with an advert featuring Nick Kamen walking into a laundrette sporting the classic, relaunched 501 jean, Levi’s focussed their campaign on their identity as the originals. The ads featured classic soundtracks such as The Clash’s ‘Should I Stay or Should I Go’. Levi’s were the originals, they were rugged and enduring, good enough for gold-rush miners and good enough for modern life. Focussing on the brands core values of classic identity saw Levi’s reap the rewards throughout the late 1980s and early 1990s, beating sales targets and achieving double digit growth on an annual basis. The problem was the brand became static and trends eventually caught up with them. Sales were noticeably down at the start of 1997 and nosedived by the end of the year. Between 1997 and 2000, Levi’s lost over 50% of its consumption among its core customers (16- to © The Chartered Institute of Marketing 2003 24-year-olds) as youth culture diversified and moved towards new fashions. This shift presented a great challenge for Levi’s. They had to adapt to the new climate, whilst not losing the brands’ focus and alienating loyal customers. Brand managers sought to revitalise the brand and, after extensive market research, launched new product ranges such as Sta-Prest and Engineered denim in 2000 as a new product for a new generation to own as their own. The modernisation of the brand was a success as it appealed to a contemporary youth culture and sales are now on the upturn after several years of decline. A heavy focus on PR and extensive use of the Internet in addition to the standard TV advertisements to promote the campaign were important but the key was the increased attention paid to market research. The Brand Vision team formed a new ‘Youth Panel’ to give them insight into their consumer base and prevent them from ever losing sight of their target audience again. The panel employs both the most fashion-forward youths throughout Europe and mainstream young men and women. Research has become 27
  • 28. 2. TYPES OF BRANDS HOME integral to the business, to the extent that products in line development have been dropped based on feedback, something that ‘would have been unthinkable four years ago’. BACK © The Chartered Institute of Marketing 2003 28