Ch 13 Branding 18june09 N43 57


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  • Ch 13 Branding 18june09 N43 57

    1. 1. <ul><li>Brand Recognition/2007+/- </li></ul>
    2. 2. Branding <ul><li>A brand is a name, term, design symbol or any other feature that identifies a seller’s product from a competitive product. </li></ul>-Verbal part of the brand <ul><li>a symbol, design or distinctive coloring or lettering. Ex. A brand name written in a distinctive way (Logo) </li></ul>Logos & Symbols are learned (Learning Theory) Brand Names Brand Marks
    3. 4. Brand Terminology <ul><li>Copyright … the exclusive right to reproduce, publish and sell the matter and form of a literary, musical or artistic work. </li></ul><ul><li>Premise : An idea is property that one can sell, trade or profit from - an intellectual real estate </li></ul><ul><li>Trademark : 10 year legal protection to brand name or brand mark but renewed indefinitely </li></ul>
    4. 5. Brand Terminology <ul><li>Trade Character …a brand mark personified </li></ul><ul><li>Patent …inventions that have to do with function or design “Registered U.S. Patent Office” </li></ul><ul><li>4,546,490 U.S. patents through Dec. 1985 </li></ul><ul><li>3300 mousetrap patents issued since the first one in 1790 </li></ul>
    5. 7. Benefits of Branding <ul><li>B U Y E R S </li></ul><ul><li>Identify products via Brand Recognition </li></ul><ul><li>Shopping efficiency is facilitated </li></ul><ul><li>- Search time ( ) </li></ul><ul><li>- Association of quality level ( ) </li></ul><ul><li>- Perceived risk decrease ( ) </li></ul><ul><li>- Facilitates repeat purchasing ( ) </li></ul>
    6. 8. Benefits of Branding <ul><li>S E L L E R S </li></ul><ul><li>Identify products via Brand Differentiation </li></ul><ul><li>Selling efficiency is facilitated </li></ul><ul><li>- New product acceptance </li></ul><ul><li>- Legal protection </li></ul><ul><li>- Brand loyalty is assisted </li></ul><ul><li>- Pricing at a premium </li></ul><ul><li>- Promotional effectiveness </li></ul>Taglines
    7. 9. Society’s View of Branding <ul><li>Disadvantages: </li></ul><ul><ul><li>brand proliferation, </li></ul></ul><ul><ul><li>trivia differentiation, </li></ul></ul><ul><ul><li>higher prices </li></ul></ul><ul><ul><li>over promotion of image (status) as a “tangible” benefit </li></ul></ul><ul><li>Advantages : </li></ul><ul><li>Higher quality </li></ul><ul><li>Rate of innovation increases </li></ul><ul><li>Shopping efficiency </li></ul><ul><li>Stabilize prices </li></ul>
    8. 10. A Continuum of Brand Familiarity Brand Non recognition Brand insistence Brand Brand Brand recognition preference insistence
    9. 11. Brand Identity Crisis Ford Aims to Resolve (WSJ, 15 Dec 98, B12) <ul><li>Mercury………………...Brand identity problems </li></ul><ul><li>Mountaineer……………Explorer </li></ul><ul><li>Sable…………………….Taurus </li></ul><ul><li>Mystique………………..Contour </li></ul>
    10. 12. Brand Loyalty Principles <ul><li>Definition : A customer’s favorable attitude toward a brand and likelihood of consistent purchase. </li></ul><ul><li>Consumers tend to buy 1 or 2 brands in a given product category </li></ul><ul><li>Overall, brand satisfaction is relatively high, making new product introductions difficult </li></ul><ul><li>Era of Perceived Parity </li></ul><ul><li>Parity = brands in the product category perform at basically the same level </li></ul><ul><li>ex’s: disposable razors (74%), laundry detergents, shampoo, canned soups, beer, paper towels, deodorants </li></ul>
    11. 13. Brand Loyalty Principles <ul><li>As perceived risk increases, the preference for branded products increases </li></ul><ul><li>Tends to increase with age </li></ul><ul><li>Higher among heavy users </li></ul><ul><li>Decreases as inter-purchase time increases </li></ul>
    12. 14. <ul><li>Smokers, especially 18-24 year olds, are brand loyal. </li></ul>Brand Loyalty CIGARETTES 71% LAUNDRY DETERGENT 51% GARBAGE BAGS 23% AUTOMOBILE(s) 47% MEN 51% AGE 60+ : 60% WOMEN 43% 18-29 : 42% Midwesterners 52% Easterners 42% Applied
    13. 15. Relationship Between Customer Satisfaction and Loyalty
    14. 16. Brand Equity (Marketing + Financial) BRAND EQUITY (VALUE) BRAND AWARENESS BRAND LOYALTY BRAND QUALITY BRAND ASSOCIATIONS & service Canon/XEROX Bristol Myers Squibb
    15. 17. Brand Equity: Spanning the Globe Branch, Shelly. “ACNielsen Gives 43 Brands Global Status.” WSJ, B8, Oct. 31, 2001.
    16. 18. Brand Licensing Examples (paying fees to use trademark rights owned by others) Revenue Sources (1986) (1991) Trademarks/Brand names 28% 34% Cartoon characters 24% 20% Sports celebrities 11% 17% Designers (clothing, etc.) 7% 9% Theatrical feature film stars 7% 7%
    17. 20. Types of Brand Sponsorship <ul><li>Manufacturers’ Brands </li></ul><ul><ul><li>- dominate most sales (food, auto’s, appliances) </li></ul></ul><ul><ul><li>- consumer appeal: low risk - good quality - prestige </li></ul></ul><ul><ul><li>- well promoted (presold) and relatively higher prices </li></ul></ul><ul><li>Private (dealer) Brands – Middlemen Brands </li></ul><ul><ul><li>substantial sales: 80% clothing & 1/3 food </li></ul></ul><ul><ul><li>- consumer appeal: price/quality - comparison shopper </li></ul></ul>
    18. 21. Manufacturer’s Brands Distributed By Channel Members <ul><li>Advantages </li></ul><ul><li>Increased </li></ul><ul><ul><li>- turnover </li></ul></ul><ul><ul><li>- product quality </li></ul></ul><ul><ul><li>- dealer prestige </li></ul></ul><ul><li>Mfg. Support </li></ul><ul><ul><li>- Pre sold via mass promotion </li></ul></ul><ul><ul><li>- Cooperative promotions $ </li></ul></ul><ul><li>Disadvantages </li></ul><ul><li>Mfg. Controls </li></ul><ul><ul><li>- price, quality </li></ul></ul><ul><ul><li>- incentive to local market </li></ul></ul><ul><li>lower gross margin </li></ul><ul><li>if widely distributed, less store loyalty & less premium price </li></ul><ul><li>If heavily discounted, less prestige </li></ul>MAYTAG
    19. 22. Reasons for store usage of Private Brands … Provide higher profits/higher margins Establish price/value image for stores Provide greater selection for customers Create customer loyalty 47% 31% 16% 4% 88% na. 26% 26% Promotion Magazine, July. 1994 Grocery Drug
    20. 23. Branding and Consumer Perception Of Quality  The Association of Food, Beverage and Consumer Products Companies, “ Consumers Give Brand Name Food, Consumer Products Top Ratings”, Mar. 24, 2005, When asked to describe the quality of national brand products, a % of consumer described them as excellent.
    21. 24. Consumers’ Perceptions of Store & Manufacturers’ Brands for Selected Product Groups Source: “Store Brands at the Turning Point,” Consumer Research Network, 3624 Market Street, Philadelphia, PA.
    22. 25. Manufacturer’s Brands Dealer Brands The Brand Race Battle of the Brands JOGGING IN A JUG Power Juice <ul><li>Competition between manufacturers’ and middlemen's brands for distribution power. </li></ul><ul><li>Who is winning the Battle? Whoever controls the consumer. </li></ul>GE  Battle of Brands  SEARS
    23. 26. Types of Brand Sponsorship <ul><li>Generic Name : describes a product class as part of our standard vocabulary </li></ul><ul><li>- c onsumer appeal: price conscious relative to quality </li></ul><ul><ul><li>Relatively low sales/packages have stark lettering </li></ul></ul><ul><li>Mixed Brand Strategy = Combination of above </li></ul>Generic brands Co-branding <ul><li>Two different brand teams create a new product. </li></ul><ul><li>E.g., General Foods & Hershey’s created “Reese’s Peanut Butter Puffs” cereal </li></ul>MILK
    24. 27. Senior Worries Average Annual Cost of Top 50 Prescription Drugs Used by the Elderly Lueck, Sarah. “Drug Prices Far Outpace Inflation.” WSJ, D2, July 10, 2003
    25. 28. Effects Of Generic And Brand-Name Competition On Drug Pricing  “ How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry”, July 1998,
    26. 29. Brand Selection Criteria <ul><li>1. Past Experience </li></ul><ul><li>2. Price </li></ul><ul><li>3. Quality </li></ul><ul><li>4. Recommendations by others </li></ul><ul><li>5. Brand popularity (panache) </li></ul>Price + Quality =Value
    27. 30. Brand Strategy Decisions <ul><li>Family Branding – Black & Decker </li></ul><ul><li>- one name for several products </li></ul><ul><li>Individual Branding – Tide - Cheer </li></ul><ul><li>- separate name for each product item </li></ul><ul><li>Branding Extension – Diet Coke </li></ul><ul><li>- established name is given to “new” product </li></ul><ul><li> modifications (ex. Arrid “Extra Dry”) </li></ul><ul><li>Combinations - Company Name (IBM) </li></ul><ul><li>- ex. Separate GM division (Pontiac, Buick etc.) </li></ul>
    28. 31. Comparative Sales Performance <ul><li>Share of market secured during 1st two yrs. </li></ul><ul><li>Household Products (28) </li></ul><ul><li>new name (14) </li></ul><ul><li>line extension (14) </li></ul><ul><li>Food Products (36) </li></ul><ul><li>new name (10) </li></ul><ul><li>line extension (26) </li></ul>1 of 2 6.7% 3.3% 6.5% 1.9%
    29. 32. <ul><li>Brand extensions’ success is influenced by the degree of perceived “fit” between the brand and the extended product categories. </li></ul><ul><li>So, why are some products with a negative fit successful? Examples: Yamaha tennis rackets, Panasonic bicycles, Jeep luggage and portable CD players. </li></ul><ul><li>Inconsistencies are due to: Failure to account for consumers’ adoption tendencies! !!!? </li></ul>Klink&Smith,JMR,August 01 Brand Extensions
    30. 33. Brand Names <ul><li>Weak Names </li></ul><ul><li>Eastern Airlines </li></ul><ul><li>Theragran-M </li></ul><ul><li>TI-99-4 </li></ul><ul><li>Anacin </li></ul><ul><li>Strong Names </li></ul><ul><li>US Airlines </li></ul><ul><li>Apple Computer </li></ul><ul><li>Excedrin, Bufferin </li></ul><ul><li>1 of 10 brands contribute to product success (1949) </li></ul><ul><li>1.2 of 10 brands contribute to product success (1974) </li></ul><ul><ul><li>- 52% neutral - 36% negative -12% positive </li></ul></ul>
    31. 34. What’s in a Name? <ul><li>Think about your name. Now think about how others perceive you </li></ul><ul><li>Every name sends forth “psychological vibrations” </li></ul><ul><li>EXAMPLES </li></ul><ul><li>Elmer probably won’t get as good grades as David </li></ul><ul><li>Anita, extremely sexy. Anne, beautiful but untrustworthy. Andrew, sincere but immature. Eric a big winner </li></ul>
    32. 35. Look-Alike Names Lead to Drug Mix-Ups <ul><li>EVISTA Osteoporosis </li></ul><ul><li>E-VISTA* Combats itching </li></ul><ul><li>Imferon Iron replacement </li></ul><ul><li>Interferon Cancer therapy </li></ul><ul><li>Xanax Anxiety treatment </li></ul><ul><li>Zantac Gastric ulcer treatment </li></ul>
    33. 36. Criteria for selecting an Effective Brand Name Easy to say Easy to spell Easy to recall EFFECTIVE BRAND NAME Communicates Product uses, benefits Legal protection, & consider media usage Be Distinctive, No Negative connotations Mnemonic Quality
    34. 37. April 4, 1975 <ul><li>Founder Bill Gates drops out of Harvard after receiving an offer to develop a new microcomputer. </li></ul><ul><li>Gates moves to New Mexico with high school friend Paul Allen and they create Microsoft. </li></ul><ul><li>Selecting a brand name – Bill Gates wanted to create something that would be easy to remember and make sense. Micro (for microcomputers) and soft (for software) </li></ul>
    35. 38. Sources for Creating the “Right” Brand Name <ul><li>Synthetic Names…interesting sounds but no meaning ex(s): Kodak, Exxon </li></ul><ul><li>Company founders - Famous people - Patriots ex(s): Ford, Lincoln, Andrew Jackson </li></ul><ul><li>Myths …Initials… Animals/ Fish…Alphanumerics </li></ul><ul><li>(Atlas tires) (RCA) (Cougar) (RX7) </li></ul><ul><li>Recognize and match the emotions associated with brand name to fit the attitudes consumers have toward the product category </li></ul>DRAGON HOT SAUCE
    36. 39. Brand Name Protection <ul><li>Legal Registration with the U.S. Patent and Trademark Office protects a brand for ten years with indefinite renewals. </li></ul><ul><li>Guard against generic use </li></ul><ul><li>Protect against counterfeiting </li></ul><ul><li>Sounds alike </li></ul><ul><ul><li>- Sasson vs. Sason vs. Sassoon </li></ul></ul><ul><ul><li>- Squirt vs. Quirst </li></ul></ul><ul><ul><li>- Lexis vs. Lexus (1989) </li></ul></ul><ul><li>Stimulates the same mental reaction </li></ul><ul><li> - Mr. Stain vs. Mr. Clean </li></ul><ul><li>Duplicates a competitors’ overall marketing strategy </li></ul>Trademark Infringement Brand Name Protection
    37. 40. How does Kleenex differentiate its products to carve out its niche?  © 2004 Kimberly-Clark Worldwide, Inc. Reprinted with Permission.
    38. 41. Trademark or Generic Name? <ul><li>A trademark is considered a generic name when the public uses it to describe a class of products such as aspirin rather than identify a particular brand </li></ul><ul><li>Generic (once Branded) Examples: </li></ul><ul><li>Nylon . . . Kerosene . . . </li></ul><ul><li>Escalator . . . Formica . . .Cellophane . . . </li></ul>
    39. 42. Trademark or Generic Name? <ul><li>FTC can convert a trademark to a generic name if … </li></ul><ul><ul><li>- …Present trademark confuses buyers…about the comparative value and true nature of competing products </li></ul></ul><ul><li> </li></ul><ul><li> - … Present trademark limits competition…as customers </li></ul><ul><li>are diverted away from competitors </li></ul><ul><li> </li></ul><ul><li> - …Competitors are barred from using the old trademark </li></ul><ul><li> (when it becomes a generic name) </li></ul>
    40. 43. Trademark Law Protects Colors Court Rules <ul><li>PRODUCT COMPANY OUTCOME </li></ul><ul><li>- Fiber glass Owens-Corning Won </li></ul><ul><li>insulation Fiberglass </li></ul><ul><li>- Prestone II First Brands Lost </li></ul><ul><li>antifreeze in </li></ul><ul><li>yellow jugs </li></ul><ul><li>- Blue packets of NutraSweet Lost </li></ul><ul><li>artificial sweetener </li></ul><ul><li>- Pepto Bismol Procter & Gamble Lost </li></ul>
    41. 44. Any Questions?
    42. 45. USPTO Trademark Applications/Certificates  United States Patent and Trademark Office- “Performance and Accountability Report (2005)”, p. 134 & 136.
    43. 46. Trademark Applications By Residents Of State  Rank State # in 2005 1 California 56,167 2 New York 28,164 3 Florida 17,285 4 Texas 13,609 5 Illinois 11,782
    44. 47. Chocoladefabriken Lindt & Sprungli Trademark Case <ul><li>Lindt acquired a trademark in Europe in 2001 on its gold-foil-wrapped chocolate bunny </li></ul><ul><li>In 2003 Lindt sued, another chocolate company, Hauswirth, for a trademark violation for selling a chocolate bunny that looked very similar to the one Lindt had trademarked </li></ul><ul><ul><li>Hauswirth countersued </li></ul></ul>Applied Marketing
    45. 48. The Chocolate Bunnies This is the Lindt bunny, notice the gold foil, stance, ear positioning, red ribbon, and bell attached to the ribbon Although similar in many ways, the Hauswirth bunny lacks the bell of the Lindt bunny This rabbit, produced by Riegelein in Germany, avoided a lawsuit from Lindt by painting the bow on as opposed to acctually having a bow around the rabbits neck
    46. 49. Hauswirth’s Case <ul><li>The company had been making chocolate bunnies for a long time </li></ul><ul><li>Claimed Lindt had acted in “bad faith” by registering a trademark that had been used long before </li></ul><ul><li>Argued that most chocolate bunnies are shaped the same way because of manufacturing limitations </li></ul>
    47. 50. Difficulty of the Situation <ul><li>Trademark laws do not allow a three-dimensional shape to be trademarked if it serves a functional purpose </li></ul><ul><ul><li>Trademark specialists struggle over requirements that shapes be “distinctive” but not functional </li></ul></ul><ul><ul><li>Proctor & Gamble Co. failed to trademark a bar of soap whose sides are convex instead of the usual concaved sides </li></ul></ul>Status: Case pending June 09
    48. 51. Drug Makers See ‘Branded Generics’ Eating Into Profits Altered Copies Outmaneuver Patents in Legal Battles, Boosting Market Pressures Source: WSJ, Spring 2003 Applied Marketing
    49. 52. Battle of the Brands Traditional Branded Drugs- manufacturers risk money on R&D and then charge high prices to recoup investment (1.7 bil in 01-02) Traditional Generics -Contain the active ingredient of the branded drug and act in the body in an identical way the branded drug does. – Traditional Generics face much risk in marketplace competition “ Branded Generics” -Contain the active ingredient of the branded drug, however, through aggressive litigation, they prove to act differently in the body. Strategy: - Spend money on litigation, little on R&D, charge prices slightly lower than Branded Drugs, but higher than traditional Generics WSJ, Spring 2003 Altered Copies Outmaneuver Patents in Legal Battles
    50. 53. <ul><li>Key issue: generic drugs do not have to pass rigorous tests of the FDA, if they share the active ingredient of branded drugs </li></ul><ul><li>lawyers argue that their drug contains different ingredients and acts differently than the patented drug to avoid challenging a patent </li></ul>Generic Drug Maker in India Outmaneuvers U.S. pharmaceutical market <ul><li>Dr. Reddy’s Laboratories Ltd. won a breakout (2002) court case in New Jersey through a legal loophole </li></ul>
    51. 54. Rx Rivals Annual percentage change in prescriptions dispensed in the U.S.
    52. 55. A Numbers Game <ul><li>“ It’s a numbers game,” - The average profit over the life of a generic drug can be more than 10 times the court costs of successful litigation. </li></ul><ul><li>As a result, generic drug companies are thriving with low R&D and marketing costs. The average profit margin for top generic products was 16% compared to 20% for branded products. </li></ul>
    53. 56. Philips Electronics NV <ul><li>Philips Electronics NV is Europe’s biggest consumer-electronics company but, they have losses for the past 15 years in America </li></ul><ul><li>North America makes up about 26% of Philips consumer-electronics sales </li></ul>Philips Tries to Zap Clunky Image in U.S. Applied Marketing
    54. 57. Philips Electronics NV <ul><li>At mass retail outlets, the name will change from “Philips-Magnavox” to “Magnavox” for low price TVs and Stereos </li></ul><ul><li>They will “save” the brand name “Philips” for higher-end digital gear </li></ul>