Branding in International Marketing Chapter I

The Brands Position and Dimensions

1. The Importance of the Brand

1.

The Components of the Brand

2.

The Legal Protection of Brands

4. The Relevance of Corporate Identity when Considering the Brand

The Brand s Position and Dimensions In the era of globalization the world people live in becomes more and more complex, so that the individuals need to find easier ways to guide them through this world. These days, from the point of view of the consumers, they choose the most trustworthy symbols they encounter on their way, most of the times, in order to save time. The trend that we are facing today determined marketing specialists to conceive customer-oriented strategies. Business practices focus a lot upon the satisfaction of customers. The most important means of communication between the producer and the consumer, the main type of connection for the two sides, is the brand.

1. The Importance of the Brand Surveys were made in the UK, which showed that most of the times people trust brand names more than the Police or the legal system. So, one can say that the relationship between consumers and successful brands is extremely relevant. A successful brand is a well-known product, service, person or place presented on the market in such a way that the user or buyer finds it to be relevant or unique. Brands are used both for products and services and can even be associated with people such as actors, singers or places, for example the marketing used for building up tourism attractions. Brands may belong also to the non-profit organizations, most frequently in the cases of the international ones such as the Red Cross or the Greenpeace. The success of a brand depends mostly on the clearness of its statement of intent. A clear-targeted social group and the achievement of the main purpose which is to satisfy and exceed the consumers needs are the main things which stand at the basis of the success of a brand. Just like a person, a brand has a character, values and a look that make it truly unique and different from others. Its that point of difference that provides the customers of a company with a reason to choose their brand over the alternatives; and its the strength of the brand that will then determine the length of that relationship.

Consumers have needs both at the rational and the emotional level, needs which are covered by the benefits delivered by brands. Successful brands are those which have the correct balance in terms of their ability to satisfy the rational and emotional needs. As an example, the consumers of ice-cream have a variety of rational needs such as the taste, the quality, the packaging or the price. Besides these rational needs, they also seek to satisfy emotional needs such as, in the case of the icecream, the childhood nostalgia of a summer afternoon walking with their grandfather on the beach. According to all these sorts of needs, marketers must find ways in which their brand satisfies their rational and emotional needs and then develop marketing programs accordingly1 .
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Therefore, the brand is the one which creates awareness of the product or service and which differentiates it from the other competitors. It uses names, labels, signs, symbols, designs and colors in order to identify the goods or the services of one seller and to differentiate them from those of the others players on the market. Coca Colas red-and-white bottles, Disneys familiar script and the golden arches of McDonalds are all elements of these popular brands, that also give them a distinctive identity. Different companies have different approaches to brands. Some focus on building a single brand- American Express or Amazon.com- while others divide their efforts between the parent company brand and the individual products2. As a process, branding is a very complex one. It stands for the creation and the development of a specific identity of a company, product, commodity, group or person. Branding is the creation and development of the identity of a product and it is the result of the work of different professionals who most of the times belong to the following categories- advertising , marketing, and public relations. Advertising helps the product to become well- known to its targeted public and the look and the attitude which are used help the defining of the brand in the publics mind.Marketing helps to create the entity that the brand will become and public relations helps solidify the public opinion of the brand and defines it.

Advertising
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Levine, M. (2003), A Branded World: Adventures in Public Relations and the Creation of Superbrands, New York: Wiley, p. 25. Chernatony, L. and McDonald M. (2003), Creating Powerful Brands, Heinemann, p. 22-26.

Even the most successful brands need to advertise in todays business climate. Although it has very high sales, Mc Donalds still promotes its products through well known advertising campaigns all over the world. Nike is even a better example of spending large amounts of money for advertising. The company is always spending millions on the appearance of celebrities in its commercials which are considered to be legendary. A good advertising account executive is always involved in the birth of a brand, along with the other specialists. The way a television or print ad look is extremely important. For example the sound will change with the kind of brand being presented- loud music may work for a soft drink ad, but it wont be good for a detergent ad. Besides these aspects, the programs during which the ad can be seen, makes a statement about the personality of the product, as do the choice of publications in which print ads will run. When the brand is new it is important that the target audience is able to identify easily the brand and identify with the brand, very quickly. Advertising does not create the identity, but it chooses how to present the identity. Marketing is the one which establishes what the image of a product should be like. Based on the targeted audience of the product, marketing will determine which aspects one segment of the population will find appealing. For example, a few years ago, Apple Computer experienced some sales difficulties. A new product was to be released- the imam Computer. The personality of the product had to be very importantloyal Apple users had to be reminded why they liked the computer in the beginning and new users had to be convinced to try something that would look different fro what that they had tried before. What the company did was to analyze the strong points of Apple and the imam. It marketed that Apple was something new, something fun, very appropriate for the younger users. Marketing executives made sure that the Imax was something innovative, smart and easy to use. Television commercials emphasized the look of the computer and the ease with which it could be installed and connected to the Internet. The new product looked different than all the other ones on the marketvery colorful, a real change from the beige boxes in all the computer industry. As a result, Apple increased its market share and sold millions of iMacs . The iMac campaign was successful with consumers because the market executives involved had correctly defined its demographic target. People believe that the iMac was innovative marketing choices made were the correct ones. and exciting because the

Marketing determines how the product is perceived by the public and it is best and the easiest done when the product is being marketed is of high quality.The success is due to market research; through focus groups, surveys and other tools market research determines what people want. Marketing is more the art of taking what already exists and making it more attractive to the public through branding techniques. The public relations in branding has a more subtle role than the previous activities mentioned. Once marketing executives decide on the identity of the product, and once the advertising team has created a message to deliver it directly to the public, PR managers are responsible for the messages the public gets through different channels of communication. For example, in the case of iMac, Apple made sure that school systems around the country had iMac computers as soon as they were available. Quite often they made donations to the schools. This helped familiarize very young computer users with Apples product first. This brilliant public relations showed that Apple had strong interests in education and in helping children, positive messages transmitted to the consumer. Before bringing the brand into the newspapers, the radio programs and television programs, the public relations professionals have to analyze the brand identity. The characteristics found by the marketing team the target, especially- will help also the public relations specialists in order to guide the message transmitted3. In conclusion, PR is the art of telling the story of a unique selling proposition, emphasizing its positive aspects; it helps create a brand, establish it and develop it. A successful brand has both a strong personality and friendliness; it seems to come along effortlessly, when in fact it is the product of endless market research studies, work and dedication.

2. The Components of the Brand

Levine, M. (2003), A Branded World: Adventures in Public Relations and the Creation of Superbrands, New York: Wiley, p.30-34.

The value of the brand is directly related to all the concepts involved in the structure of the brand, expressing the brands personality. The message a brand drives must be a concentrated, succinct and powerful one, so that the impact while communicating the essence of the brand through different media channels remains positive. Revitalizing the elements of a brand once in a while helps a repositioning in the marketplace and conquering a new level of brand development. Brand Components: Brand Personality Brand Theme Brand Narrative Brand Experience Brand Name

The brand personality is the characteristic of a brand that best communicates the proposition of the brand to the chosen target of audience. The emphasis is laid not on the personality of the target audience, but on the type of personality that is most likely to draw their attention and encourage them to take initiative and buy the brand. One brand personality will appeal to a different target of audience from the other, but all of them are based on the same principles of brand proposition. The brand personality turns the brand into a character or a person, as this is the best way for the consumers to be reached at. The most frequently met vast type of experience that people have is that dealing with human relationships. This makes possible the ability of people to notice between subtle differences in brand personalities and build up loyal or non-loyal relationships with them. Most of the times brand personalities are characterized in relationship with other people, services or objects: If brand X were a car, what kind of car would it be?, If brand Y were a person, what set of clothes would they wear? What would they drink? Where would they go on holiday?. This role-play is a very helpful exercise for brand managers in order for them to understand how their brand will behave after releasing it and what is the kind of relationships it will establish with

different kinds of consumer groups. This type of mental model is very useful when thinking about possible crisis along the life of a brand. The model offers a set of physical, emotional and intellectual dimensions which all help to make decisions about the health and the direction of the brand. Once a brand manager is able to achieve this level of knowing the brand , it is possible to define how the brand will grow, react to negative and positive changes on the market and protect it against tactical brand attacks from competition. The Brand Theme A brand theme is the concept that unifies all the elements of the brand that can be connected. Successful brands can develop all types of dimensions inside the same brand theme. The whisky Glenfissich developed a strong brand personality whose theme is the Highlands of Scotland. This theme is very rich to build the brand personality on it, because the Scottish theme has a large variety of cultural elements that can be used. One of the themes with great impact would be the natural beauty of the Highlands- the bright colors of forests in autumn, the majesty of the snow- covered mountains in the winter, or the fresh mountain air and water that can almost be tasted and felt. Another appropriate theme is that of the craftsmen. They are involved in whisky making through a narrative of hand-made fishing flies and shooting gear; by this they show attention to detail and the patience of the maker.

The Brand Narrative The personality of a successful brand enriches in time; even if there remains a central constant brand proposition, its expression may change in time in order to remain competitive in the business environment. The brand narrative is the story that a brand personality follows until the end of its existence. Some brands rely on the narrative of their founder such as Bill Gates of Microsoft. Other brands choose fictious families or characters.

This technique helps to have a forward or backward perspective- backward with a nostalgic feeling and forward with an optimistic feeling. Through this process the consumer arrives at the point where he or she associates specific events in their lives with the expressions of the brand of that time, creating the sense of loyalty to the brand. Brand Experience The perfect way to generate a successful brand personality is when all its elements combine to create a total brand experience. The interaction of time and space in creating this memory is very important, because it places the consumer at the center of the event, in a specific time and in a specific place, so that they have all the chances to remember this experience for a long time. This experience represents a moment that only one brand can provide or fulfill. The secret to defining successful brand experiences is to create a story that will satisfy the consumers desires in his/ her every day life. The Brand Name The most visible element of the brand is its name; it should crystallize the experience of the brand in a single word or phrase. It should be so powerful so that it protects the product from its competitors and offers a clear position of the business in the minds of the consumers. While all the other elements of the brand change over time, the name does not. It does change only in times of mergers or of acquisitions. Because in many cases the brand name of the company values even more than its assets, the name should be chosen with great care. The brand name has several functions. First of all it identifies the company or the product as being unique to the consumer. Then, it should be easy to pronounce, spell and it should be usable all around the world. It should be protected and used to create a legal barrier to counterfeiting; and it should be traded, regardless of the tangible company assets. The brand name should also take into account the long term objectives of the brand and all the aspects of its personality.

An important first step when naming a business, product or service is to figure out just what it is that the new name should be doing for the business. The most common decision is that a name should explain to the world what business the company is in or what your product does. Intuition brings out that this will save you the time and money of explanation, which actually turns out not to be true, according to some authors4. When Jeff Bezos founded Amazon, it was billed as an "online bookstore" just like all of the above, and since it was one of the first such companies, there was even more reason to go with a descriptive name, so that everybody knows what the business is about. Jeff Bezos knew that someday his company might want to sell more than just books, and that someday it might even have an offline, not just online presence. The notion of describing your business in the name assumes that the name will exist at some point without contextual support, which, when you think about it, is impossible. The name will appear on a website, a storefront, in a news article or press release, on a business card, on the product itself, in advertisements, or, at its most naked, in a conversation. Having a descriptive name is actually a counterproductive marketing move which requires an enormous amount of effort to overcome. A descriptive naming strategy doesnt take into consideration the fact that sometimes, the whole point of marketing is to separate the product from the pack. It actually works against you, causing you to fade into the background, indistinguishable from the bulk of your competitors. A naming project must take reference of the context of a clear positioning platform, a thorough competitive analysis, and an profound understanding of how names work and what they can do. If not considering all these elements, some of the names below could not have ever seen the light of the day5. Virgin Airlines

Says "we're new at this" Public wants airlines to be experienced, safe and professional Investors wont take us seriously

Elwood, I. (2002), The Essential Brand Book, Kogan Page Ltd., p. 136-143.
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Manning, S. (2004), Article Naming of a Brand, www.allaboutbranding.com.

Religious people will be offended Yahoo!! It's Mountain Dew! Yahoo! Its a chocolate drink in a can! Nobody will take stock quotes and world news seriously from a bunch of "Yahoos"

Yahoo!

Oracle Unreliable Only foretold death and destruction Only fools put their faith in an Oracle The Gap

Means something is missing The Generation Gap is a bad thing - wanting to sell clothes to all generations In need of repair Incomplete Negative

Packaging By packaging one doesnt mean the box, bag or the container in which a product is sold, but it is the presentation of the product or service that represents the brand. It includes the brand logo, the name of the brand, the type of lettering on the box, the material from which the package is made and any visual image that represents the brand in the consumers mind. Packaging is the visual representation of the brand. It must be consistent with the brand identity and it may evolve over time as the brand is expanded or extended. When first created, logos represent conceptual ideas and exist as business cards; letterhead, and symbols on proposal covers. As they begin to evolve, they can grow into the sum of the corporate vision and symbolize the value proposition, company values, characteristics, and attributes that are associated with a positive emotion - that identifies a logo as a service offering in the mind of the

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consumer. A strong and communicative logo eliminates obstacles in the consumers mind and simplifies the way a consumer thinks of the brand.Very few companies in our times choose the recipe for gaining success by constantly changing the logo of their products or services. The most well-known example is the logo of MTV. Immediately recognizable, the symbol of Music television was almost impossible to avoid during the eighties and nineties. There has never been one official design for the MTV emblem. The shape of the MTV logo the huge outlined M with the small TV in the lower right corner- remains over the time the same, but its design, color and even print font can change from moment to moment. In fact the distinctive thing about the MTV logo is that it is always different.

Figure 1 The MTV Logo Source: www.mtv.co.uk

This is another example of transforming the laws of branding in according to what the branding team feels its best for the company, even if this means turning the other way around all the rules. The other thing MTVs changing logo did was to define the attitude and the brand identity that MTV would offer its consumers. In conclusion, the MTV logo has never been the same twice. This logo is a distinct and clear statement of the brand identity. Such as the MTV brand, it proves that it isnt necessary to follow the rules to succeed; it is only necessary to be true to your brand. The most immediately striking visual element of the packaging is the color. It is the first thing that registers in the consumers mind and first impressions are the most important ones in branding. The IBM logo is often referred to as the Big Blue- big is a reference to IBMs enormous success in its marketplace, while blue refers strictly to design elements, mainly the company logo. The color in IBMs case symbolizes the stable , dependable technology, that is IBM. The Apple computer logo is made up of horizontal stripes of rainbow colors. This example is very much similar to the previous one, but theres no one to address the company Apple with The big rainbow. In the case of Apple, the colors are less important as a design element than the colors of IBM . Apple doesnt always use the rainbow colors, instead using the logos immediately recognizable shape to symbolize the company in many print and television advertisements and on packaging. Color is a very important element of packaging as it relates to

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Branding. Besides drawing the eye to the product or the logo, color is another means of defining the brand identity. Would IBM convey the same message with a hot pink rendering of its name? Probably not. Would Apple Computer or Ben & Jerrys command the same kind of consumer loyalty with plain gray renderings of corporate logos? Blue, gray, green and brown are considered cool colors, akin to a silvery, metallic feel. They communicate confidence, competence, and a stability. Red, yellow, orange, pink and other hot colors are used in packaging to convey a feeling of unpredictability, strong emotion, friendliness, and warmth6. Deciding on the proper color is a job for the design consultant and marketing executives. Public relations gets involved in introducing packaging or changing them, and at that point the logo or packaging should be well considered and aimed specifically at expressing the brand identity in no words or less. The design would be palpable, almost three-dimensional, so that the consumer would feel the possibility of reaching out and touching the sign logo. 3. The Legal Protection of Brands

History of the Trade Mark To understand the current position of the trade mark and its value to a brand identity we can trace it is growing importance in commerce. From the earliest Roman times, makers have marked their goods with a signature mark or brand to distinguish accurately the maker of the goods. This became particularly important when the goods were traded over large distances throughout Europe and the Middle East. It served as a guarantee of ownership in the event of piracy, confirmed that the goods were genuine, and ensured that they were easily identifiable by the largely illiterate population. During medieval times, another form of brand emerged that reflected the nature of commerce at that time; these were the guild marks. Guilds were associations of craftsmen for a specific type of manufacture, like carpentry, pottery, brass work and silversmithing. Only members of a guild were allowed to practice, and the guild set the standards of quality, price and protocols for the workmanship. This created a monopoly on skills for each type of goods and often in each region, through the easily identifiable guild mark or logo. Although there was a provincial connection
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Levine, M. (2003), A Branded World: Adventures in Public Relations and the Creation of Superbrands, New York: Wiley, p. 79-84.

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between producer and consumer, unlike the Roman example, the guild mark did allow the manipulation of local markets in favor of local goods and against external competition. In both cases the primary task of the brand mark was to maintain and confirm the quality of the goods to the consumer, by directly linking it with a specific, named producer. It was during the Industrial Revolution that the trademark became an effective asset of a company. With economic expansion, and the increase in availability of goods, a link between producer and consumer was needed to help to identify products. The reliance on local stores to package and distribute goods was reduced as companies began to make and distribute their products nationally. The need to package individual portions of produce emerged, and its corollary of product identification. The trademark was guarantee between the producer and consumer that the goods were genuine and of a specific quality. This invested the brand mark with the quality of goodwill between the then distant producer and consumer. During this period the value of the trade mark shifted from what Pickering (1998) has described as a signal to a symbol- from a simple message to the consumer from the producer, to a powerful symbol capable of multiple meanings to the consumer. This is important because it marks a change from the expression of the brand residing with the producer, to one where the power of the brand image resides with the consumer. Consumers are the ones that build the brand identity from the mass of communication materials, products, packaging and advertising messages into a single coherent brand personality. The Creation of Goodwill This concept of goodwill emphasizes the pre-purchase value of a trademark in the mind of consumers, allowing them to ask for a specific product by name. This has now become the basis of brands equity, or the identification of a separate asset value of a trade mark. The character of this goodwill was often embodied in the producers name, like Kelloggs cornflakes or Watermans fountain pen. Other trade marks have abstract names, but they have embodied a set of values that the consumer can recognize and use to help choose between variety of goods. The maintenance of this goodwill is crucial to the long-term goals of a business. This clearly indicates that brand building is a strategic tool for profitability, and investment decisions need to reflect that. It also highlights the role of brand management in relation to the function of trade marks and other intellectual property rights. The formal trade mark is the protected sign of a brand, and as such 13

the core of an identity or personality. The elements surrounding the trade mark that make visible the expression of that personality are the task of brand management. These often include visual metaphors, advertising campaigns, slogans and other communication devices used to stimulate consumer demand. The brand is therefore the accumulation of all these activities, the product, the packaging and the trade mark. This change in emphasis from the generic product- often loose, dry goods, for example- to the name or brand of a specific producers goods created the role of advertising and marketing communications. Not only did the brand mark become a symbol of goodwill, but also it changed what were universal commodities into identifiable products and brands. This is clearly the case today where the proliferation of goods is so created that there are hundreds of functionally identical types, separated only by their brand marks and associated personalities. The computer chip manufacturer Intel has achieved this spectacularly, considering the chips it produces are never seen, look identical to other chips and are not generally understood by consumers. It has changes what was a commodity into a very identifiable brand that consumers will demand is inside their computer. There is rarely a rational basis for this demand, except the power of advertising to identify and persuade consumers that this commodity is important. This in return forces computer makers to ask for Intel chips in place of other manufacturers chips, creating for Intel an ideal type of commercial monopoly. It is an excellent example of a company that has maximized its trade mark potential through using advertising and protection. Intel insists on displaying its trade mark on the outside of computers for consumers to see. It has also been careful to protect its trade mark against counterfeiting. Functions of a trade mark There are two clear functions that trade mark can help achieve: a guarantee of consistency to the consumer, and advertising and informing the consumer of a specific product. The guarantees function is vital as it links the consumer with the producer and acts as a brand promise that the quality of the goods is consistent. This is turn enables the consumer to buy the goods without risk, as the quality is a known quantity. It also encourages new customers to try the product, as the quality of the trade mark similarly deduces the risk of the first purchase. Obviously, this is vital in all branding to enable brand switching to take place, and brand owners should maximize this benefit in the eyes of the customer.

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The advertising function, in its broadest sense, simply tells customers what the product is and what they can expect in terms of brand experience and quality. The use of a brand personality to express these qualities is crucial to differentiate one brand from a competitor. The informing nature of the trade mark increases consumer awareness of a specific brand, and this evidence helps to protect the brand during any legal proceedings. Trade Dress A trade mark is expressed through the trade dress elements that build up the total protected trade mark. As we have seen, these can consist of aesthetic to represent the name, logos, sounds and even smells; and even packaging shape. The critical factor in all these elements is that they must be distinctive if they are to be registrable for protection. There is a great synergy of effort here for the brand manager, since the most important expression of the brand is its unique selling proposition. The more distinctive the trade dress, the more successful the brand will be in terms of consumer identification and protection afforded in law. The key element of trade dress is usually the packaging design, which often incorporates distinctive design elements that have been protected. This brand component is the essential element of differentiation in branding, so it pays to develop a distinctive pack. The provision in both UK and US law is still that the pack shape cannot be based solely on the function of the goods, which would limit other manufacturers. However, Pickering (1998) suggests that the Toilet Duck pack for disinfectant probably would receive protection, since it is highly distinctive and yet not simple material to the carriage of liquid. Other examples include Coca-Colas distinctive bottle shape, since it is clearly part of the total trade dress of a brand. Consistency of the brand and trade dress will also help to build recognition and increase the chances of successful protection. The trade dress is a retailers brand, like The Gap clothing store, may be the combination of several elements that build up its distinctive identity: the typeface and logo of The Gap, the graphic elements of the ticketing and displays and the style of advertising. The Gaps coherency and distinctiveness are successful elements in identifying its brand proposition and have led to a strong, protected brand. The distinguishing factor is whether the original brand has secured, through brand building and advertising, associations with a secondary meaning. The Financial Times newspaper might be said to have secured the association of a specific pink color in the publics min. The distinctive

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copper and black stripes around Duracell batteries have been applied consistently, creating a secondary meaning associated only with Duracell. The Direct Line insurance company consistently uses a red telephone in wheels with a jingle tune to advertise its brand, and this would represent its trade dress in the mind of the consumer. The brand manager needs to formulate and maintain the trade dress, if it is to be distinctive in the market and enjoy strong legal protection. Legal Definitions Intellectual property has many rights of protection under the law, and we will try to examine the one most relevant to brand managers, the trade mark laws, although later there will also be a brief look at patents and copyright where these affect brand identity. Historically, where has been little clear protection for the trade mark, and it is still the case the onus is on the plaintiff( in this legal owner) to provide evidence against the defendant ( the counterfeiter). In the UK and USA, it is not actually necessary to register trade marks to be protected under civil or common law. However, this protection is limited, and it if the trade mark is registered it can be protected under criminal law, using the police as agents. Furthermore, the clarity that trade mark registration brings to a case makes it far easier to prosecute in either civil or criminal law. Trade marks can refer to products as well as services, and offer equal protection to both. The expression of trade mark registration is also powerful deterrent for would-be counterfeiters and those attempting passing off actions. Trade mark ownership should be clearly claimed and expressed to competitors by the use of one of the following symbols: Indicates that the work is a trade mark but that it is unregistered Indicates that the work is a trade mark and has been registered. 2002 Indicates that the work is copyrighted, and should always be suffixed by the date. Patented works should be marked either patent pending (2002) or patent registered (2002) depending on the point of product introduction. Despite recent attempts at harmonization with the Treaty of Madrid, and the Trade Mark Treaty, there is little cross-border protection; it is therefore vital to register trade marks in every country of distribution. This needs to be done by a trade mark professional who can efficiently search and check databases and advise on any specific legal issues.

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Features of Trade Mark Directives and Trade Mark Law The draft directive on enforcement of Intellectual Property Rights (IPR) is mainly driven by the will to fight counterfeiting and piracy. In recent years, European customs authorities have been confronted with increasing numbers of counterfeited and pirated consumer products meant to be protected by IPR. Those sectors most affected include clothes, food, CDs, toys, audiovisual, software and now even pharmaceutical industries. According to European customs authorities, figures of pirated CDs for instance have risen by a stunning 15,300 per cent since 1999 while counterfeited food products have risen by 75 per cent between 2000 and 2001. The Commission proposal aimed primarily at tackling this phenomenon. Moreover, by creating identical conditions for rights-holders across the EU, the Commission hopes to lift unnecessary barriers to investment and innovation in the internal market and give new impetus to European competitiveness. The IPR enforcement directive also seeks to bring together all the different pieces of EU legislation currently applicable to intellectual property and other related rights. Up until now, the EU has had a thematic approach to the protection of IPR. This resulted in a fragmented body of legislation covering a variety of issues (copyrights, trade marks, authors' rights, designs, counterfeiting and piracy, computer programs, etc.). If adopted, the IPR directive will bring all these areas under one set of standardized rules, thereby creating more predictability for European businesses. Community Trade Marks (CTM) The introduction of the CTM has made it easier to gain protection across the whole of the European Union ( EU) through a single application and registration process. This covers the United Kingdom, Austria, Belgium, Denmark, Finland, France, Germany, Greece, the Republic of Ireland, Italy , Luxembourg, the Netherlands, Portugal, Spain and Sweden. The scope of registrable marks is the same as in the previous national registrations covered above. Therefore any current national registrations can be allowed to lapse once a CTM is granted. A CTM protects a mark for a period of 10 years from the date of filling and can be extended every 10 years indefinitely. The grounds for challenging a CTM are the same as for a national registration, generally the lack of distinctive visual elements or its closeness to existing trade marks. Because the CTM covers all countries of the EU it

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is more likely to be opposed or attacked because of the increased difficulty of creating conflict-free, distinctive marks that do not already exist. Prohibition of a Trade Mark Registration The parameters for prohibition include the following: The trade mark must not be representative of the relevant trade, process, kind of good or service, geographical or other origin The trade mark shape cannot be that which is based on the nature of the goods or used to achieve the technical production of a product. The trade mark may not run contrary to public decency and morality. The trade mark must not be deceptive or an infringement of an earlier trade mark Trade mark registration must be for currently commercial activities, and not for future opportunities ( this prevents the stockpiling of trade marks as a purely preventive tactic) Some colors have been deemed as unacceptable for trade mark registration since they create an unfair monopoly owing to the limited number of colors available , although the 1994 Act has allowed some colors to be registered: the green color of the BP oil company, for example. In the United States the case is similar, where some colors have been refused registration, and a few distinctive colors that have obtained registration. Time limit of trade mark registration. Once the application has been completed and accepted, the trade mark is valid indefinitely, provided the necessary fees are paid and it does not become invalid for any other reason. A trade mark can become invalid because of any of the points covered above and in two other important cases. The first is if the trade mark becomes the generic title of a process or category through the actions of the owner rather than simply general usage. The second case for loss of registration is if the product falls into commercial disuse.

Likelihood of Confusion

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The principle of the likelihood of confusion in the mind of the consumer is the basis of most court judgments in trade mark cases. This is different from counterfeiting, sometimes called piracy, where there is a deliberate attempt to copy goods as though they were official. Kohli and Thakor (1997) have indicated that the likelihood of confusion can be broken down into the following seven categories: The degree of similarity between the marks in appearance and suggestion The similarity of the products The area and manner of use The degrees of care likely to be exercised The strength of the plaintiffs remark Actual confusion

These are guidelines, as each case must be assessed on its own merit in its commercial context. They do suggest several ways in which trade marks can be improved to increase the protection available; the distinctiveness of the trade mark is crucial, especially the name or logo. A trade mark for Sun dishwasher powder is less distinctive than it might be because it might be confused with Sun computers, although in this case the difference of product category is sufficient. In contrast , the washing powder Persil is unlikely to be confused with another product because its trade mark is unique. The choice of brand name is therefore crucial to its ability to be protected in the marketplace, and should not be left as a minor activity. Copyright Protection Copyright registration is used to protect works of originality that are embodied in a tangible medium, from unauthorized copying or use. It is typically used for the protection of written work, audio and video works, melodies and arrangements or other compositions. The amount of originality is the determined factor for copyright registration, although in many cases this does not have to be significant. Copyright is best used to protect compositions, which are naturally lengthy pieces, rather than short words or phrases, which are best protected with trade mark registration. As with trade mark protection, the copyright work cannot be a functional item; it must be aesthetic or decorative in nature. In the United Kingdom, copyright protection only lasts for the lifetime of the originator and a subsequent term of 70 years for the originators estate7.
7

Elwood, I. (2002), The Essential Brand Book, Kogan Page Ltd., p.182-191.

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3. The Relevance of Corporate Identity When Considering the Brand

The internal staff attitude can play a large role in the development and expression of a brand. Employee motivation can drive brand alignment, especially in the service sectors where brand delivery is people-based. This means that success may involve careful planning of employee reward and incentive schemes. It will also mean that staff will have to be properly trained to exclude the brand in their every action. Brand mission Every brand has a guiding mission statement that summarizes its intent to internal and external customers. The brand name symbolizes these shared values in a single word. Consistency of message is crucial in large corporations as they do no react quickly; any message from the top takes a while to become practice at the front of the business. If that message is constantly changing, then the internal and external customers can easily become confused and almost certainly unmotivated. There is a strong reluctance internally to commit to a brand mission if there is an expectation that it will change soon anyway. Typical brand missions are: Hewlett Packard (HP): concerns, trust and respect IBM: customer service to Disney: family entertainment Starbucks: quality and service.

There are several proven methods and media for delivering corporate missions to all employees. These range from the direct top-down approach of a video of the CEO, which is shown to all employees as part of their ongoing training. This often takes the form of an annual address to review the previous years results and share with everyone the new targets and direction for the future. When strong change is required, corporate days are organized around a program of internal change criteria. In its troubled years, Philips of the Netherlands undertook a customer day in January each year, one day when almost all employees worldwide would pause together to examine best practices, and hear from the CEO, Jan Timmer, about the new task s for the year, focusing on customer

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benefits. Smaller versions of these can be held at a regional or local level; they also bring together and consolidate the brand culture of an organization. Internal brand culture This brand mission is expressed and developed through the internal culture of the business: the behavior and practices of internal customers generates an approach to business and a specific viewpoint on the world. These are the shared values of a brand and they have a strong impact on the performance of the brand in the external world. The culture of business can be explained through its constituent components: language, behavior, attitudes and beliefs, rituals and conventions, organizational structures. The choice of language- directive, requesting or inspirational- and tone of voice of a business culture are an important illustration of the way that a culture behaves. The language both reflects the cultural status, and shapes and structures the thinking and behavior of those in the culture. Beliefs and attitudes are the underlying assumptions that an organization has about the world. It is a collective consciousness that shapes decision making and internal relationships between departments and internal customers. Rituals and conventions are the symbolic expression of the culture through events and iconic protocols; they are mostly intangible structuring processes. These can be as simple as buying a cake on a birthday or the deference shown to experienced internal customers. Organizational structures are the tangible structuring processes of an organization that have been formalized. These might include the management hierarchy, the method of rewards and benefits, the quality systems and associated internal structures such as development process or TQM ( Total Quality Management). These are the basic rules that define the business and its separate elements; they locate the internal customer within that structure. Behavior is the action take by internal customers that reflects the beliefs of the brand and are expressed through their activity within the organizational structures. Peters and Waterman, in In Search of Excellence (1985), have crystallized these issues into a matrix that has become known as the McKinsey seven-S framework. This highlights the seven facets of a business that create a collective value system: 1. Strategy- market/brand maturity, differentiation, mass or niche approaches 2. Structure- a marketing led organization, tactile approaches and portfolio management issues

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3. Systems-customer database management, customer intelligence networks; investment and market effectiveness measurement tools. 4. Style-competitive stance , brand management style, multiple brand personalities or a single personality around the globe including the tone of voice of the brand 5. Skills-adding value to brand proposition, training to develop the internal language of the brand 6. Staff- motivated and brand aware internal customers. The combination of these creates an organization with 7. Shared values- a branded culture, which drives business performance and innovation, bringing the brand to life Each of the elements has a separate role to play in the building of a corporate brand culture and each must be assessed independently and collectively when corporate change is needed. Their collective impact on an organization is vital if significant and sustainable change is to be achieved8. The value of the internal culture of brand to a business must be clearly understood as a strategic tool and equity; it requires long term management techniques and not short term tactics. The aura or promise that a brand represents to consumers can be updated over time, but its consistency of core benefit that consumers will buy into and remain loyal to. The sufficient trust with the consumer is everywhere. In this age of merger and acquisition , it will be hard to maintain customer loyalty through consistency of message. The recent spate of bank mergers in the United Kingdom has exposed their weakness, and allowed other, non traditional banks to take their market share. The challenge, as with any merger, is to integrate successfully the best of both brand cultures, while eliminating the worst of the previous brand cultures. From the moment an employee picks up the phone to the time they deliver the final invoice, the company has the opportunity to reinforce and clarify its brands positive position. The people who work for the company are therefore as important to the organization as your customers. Strong brands provide the differentiation that helps attract and retain talented employees who then become the true advocates for the business through their understanding of and belief in your vision - and then their delivery to that promise.

Elwood, I. (2002), The Essential Brand Book, Kogan Page Ltd., p.238-241, p.266-271.

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Bibliography:

Chernatony, L. and McDonald M. (2003), Creating Powerful Brands, Heinemann. Elwood, I. (2002), The Essential Brand Book, Kogan Page Ltd. Levine, M. (2003), A Branded World: Adventures in Public Relations and the Creation of Superbrands, New York: Wiley. Manning, S. (2004), Article Naming of a Brand, www.allaboutbranding.com.

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Chapter II

The Influence of the Brand upon the Consumer

1.Brand Awareness of the Consumer 1.1. Awareness, a Quantitative tool for Evaluating the Brand 1.2. Different Brand Awareness Levels

2.Brand Loyalty 2.1 Establishing and Maintaining Brand Loyalty 2.2 Repeated Buying

3.Rational and Emotional Dimensions of the Brand with high impact on Consumers 3.1 The Cognitive Brand Dimensions 3.2 The Emotional Brand Dimensions

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The Influence of the Brand upon the Consumer The second chapter of the paper refers to the impact of brands upon the consumers. Managers can quantify the success of their businesses by using instruments for capturing the feedback from the consumers. The marketing team should conclude after studying the market where is their product located in the consumers mind and in his/her buying behavior. The superior levels of brand awareness develop it time what is called brand loyalty- buying one or several brands becomes a habit for a longer period of time. Consumers are obviously touched and influenced in their buying habits by the specificity of each brand. That is why the last part of this chapter proposes an analysis of the two main coordinates of the brand structure- the rational and the emotional dimensions of a brand. 1.Brand Awareness 1.1.Awareness, a quantitative tool for evaluating the brand Awareness is a multifunctional tool for the company that chooses to make licensing or form joint ventures, processes that would be a whole lot easier- the partner company will benefit from the brand awareness. The well known brand evokes durability and reliability. A familiar part of the everyday environment, the brand becomes a point of reference for people, contributing to the development of their preferences(by limiting the range of other possible choices). Awareness is very useful as it shortens and over-simplifies the choice process and buyers appreciate this, as it helps them to make buying easier. This is one of the reasons why communication policies often mainly aim to increase or maintain brand awareness. The theory of memory has shown that the elements referring to the brand are indeed stored. The diversity of this information, as well as the strength as well as the links between its different aspects,

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correspond to associations which are linked in memory to a brand and could only be remembered if the brand has reached a high enough awareness level. Brand awareness, which is difficult to establish , needs to be maintained and supported in light of the influence of other brands and their market positions. In fact, the brand hits a memory saturation threshold because a strong brand limits the memorization of others. The psychological phenomenon of memory saturation leads to powerful entrance barriers, the most well-known brand having a great advantage. So a brands striking characteristics can inhibit the memorization of other brands. 1.2 Different brand awareness levels Brand or company awareness can be defined as an individuals level of knowledge of the company or brand in question. This is a key concept, since it is through knowledge of the brand name that a customer asks for one brand or another. The different levels of awareness have been identified: Well-Known Brand-Maximum level of Awareness Known Brand- Brand Recall Recognized Brand-Brand Recognition Unknown Brand-Zero Level of Awareness Figure 1 Levels Of Brand Awareness - The maximum awareness level is reached when the brand is present in the mind of the buyer ( or of any other buying center number) who refers to it even outside of the purchase of the products or services concerned. The highest degree of brand recall is top of mind , corresponding to the brand mentioned first by the buying center member questioned. This awareness level often corresponds to the case where the brand evaluated is already a company supplier, and where, therefore, thanks to acquired experience, it is better known: quality of services, product reliability, available range. As soon as interest in the supplier brand increases, the information level of the customer company

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increases. A company that is already a customer is hungry for information about the supplier brand, even more so than a potential customer. -The second awareness level is when the brand is known. The corresponding measure is brand recall. When the customer is questioned about a product category he spontaneously refers to the brand , but among other competing brands. This type of awareness corresponds again to a relatively high level of knowledge of a product. -The third level is when the brand is recognized. The customer when questioned, does not refer directly to the brand, but if he/she is reminded, he/she is capable of describing the product categories concerned. The corresponding measure is brand recognition. Brand recall and recognition are always linked, but in a non-linear, variable way, depending on the product. Brand recognition corresponds to often limited knowledge of the brand or the company. This knowledge has different sources from information picked up at trade shows to the ones from business publications or information passed on by friends or colleagues. At this stage, there is not enough information to incite a customer to buy a product or service. However, the brand can still evoke certain images and suggest certain values- country of origin, activity field, etc. -Finally, there is the case when the brand is not known by its potential customers, which corresponds to a zero level of awareness. The brand does not benefit from any awareness and doesnt evoke anything for potential customers9.

Klein, Naomi (2003), No Logo, Flamingo, p.87-89.

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2. Brand Loyalty 2.1 Establishing and maintaining brand loyalty In mature markets, differentiated, competing brands will tend to assume relatively stable market shares as consumers tend to purchase the same brand ( or patronize the same store) time after time. This pattern of buying the same preferred brand each time a product is purchased is called brand loyalty. Consumers develop repeat buying patterns because they learn that particular brands are especially satisfying or they come to form personal attachments to the brands. This may be because the brand uniquely provides the benefits they seek, fits well into their lifestyle, or its personality himself or herself. Consumers may form strong personal attachments to brands, as Coca-Cola found when the firm sought to replace Old Coke with New Coke. Sometimes, however, consumers repeatedly buy a brand out of habit or routine problem solving in order to save time and effort. This repeat buying pattern may appear to be true loyalty, but instead represents indifference on the part of many consumers. Repeat buying, whether true loyalty implying a positive emotional or affective reaction to the brand or simple thoughtless habit, reduces consumer risk and helps guarantees standards of product performances for consumers. Brand loyalty is highly valued because it facilitates segmentation based on usage and because it is cheaper to sell a product to loyal consumers than to attract non-loyalists to your brand. The consumer franchise, the core loyalists, represents a key target segment for most firms that they should devote maximum effort to satisfying. Consequently, the subject of brand loyalty and its complement, brand switching, which occurs when consumers buy different brands, have long attracted the attention of marketers and consumer researchers. Unfortunately, the construct of brand loyalty has proved to be difficult to define precisely and measure reliably. It is obvious that virtually no consumers buy the same brand every time they purchase, but brand selection is not completely stochastic either. Thus brand loyalty is a matter of degree- how often or what proportion of purchases are allocated to s single brand. This issue has (image) matches that of the consumer. Brand loyalty can also stem from the emotional impact the brand has on the consumer or the way the brand makes the consumer fell about

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proved so troublesome that one source details over fifty separate attempts to define and measure brand loyalty, many of which fail to yield similar results on the same objective purchase data. Part of the reason this issue is so complicated is that the tendency to be loyal to a brand differs from one consumer to the next. Moreover, consumers in general are more loyal to brands in some product classes than in others. Products that provide strong social, symbolic, or emotional benefits such as cigarettes, or provide specific hedonic tastes such as coffee, seem to attract more loyalty from consumers than do commodity- like products such as aluminum foils or garbage bags. Brand loyalty may also vary by purchase situation as consumers tend to prefer certain brands for specific occasions that they would not use at other times. The fact that many consumer goods are purchased for use by different household members also makes brand loyalty difficult to define and detect. This problem of conceptualizing and measuring brand loyalty is central to marketers concern for their target markets and how to retain their loyal consumers. Short History of the Brand Loyalty in the USA There was some concern in the 1970s that American consumers were becoming less brand loyal than before, especially as generic products sold strictly for their lower price appeared in stores. In 1975 a survey by Needham, Harper and Steers advertising agency found that 80 per cent of men and 72 per cent of women agreed: I try to stick with will known brand names. In 1980however, these figures had fallen to 64 and 56 percent, respectively. Further studies, however, published figures suggesting that brand loyalty for many consumers goods held steady or actually increased a little from 1975 to 1983. Concern is again growing that store and brand loyalty are eroding, that images and reputations will decay in the face of price discounting by major retail chains who have come to dominate the distribution and merchandising of many consumer goods. This specter of the brand as commodity frightens many manufactures of branded merchandise. Even more frightening is the growth of the private label, own label or store brand of product, heavily discounted but supported by the ubiquity and reputation of the mass market distributor, which eats into the margins of the name brand product. Such challenges will surely stimulate marketers to find new ways to build loyalty to their brands. One recent tactic for loyalty building has been termed frequency marketing: to identify, maintain, and increase the yield from best Customers, through long-term , interactive, valued added relationships. FM stands for an interconnected set of programs designed to link customers with 29

brands by engaging them into clubs entitling members to special discounts, newsletters, tie-in purchases, credit cards, promotions, and other privileges. The Burger King Kids Club, for example, features characters such as Snaps, Jaws, IQ, Boomer, Wheels and Paws. Free club membership entitles members to a secret code name, a subscription to Adventure newsletter, and discounts with partner airlines. Kids Club Meals at Burger King restaurants offer premiums like Lickety Splits ( toys that are shaped like French fries and burgers) Teenage Mutant Ninja Turtles and Beetlejuice Figurines10. 2.2 Repeated Buying The concepts of market segmentations and product positioning we have presented imply that the overall market will consist of relatively homogeneous segments to which marketers position brands using their marketing strategies. Although objectively there may be few differences among these brands, they will have unique images that consumers perceive and research measure. This is the idea of product differentiation and brand loyalty, that consumers form positive attachments to particular brands and limit most of their purchases in a product field to a single or a very few brands. The topic of repeat buying is important because, without some level of repeat buying, a new brand will not survive the maturity phase of the product life cycle. Most descriptions of brand loyalty and switching imply that consumers are loyal to a single brand loyalty and switching imply that consumers are loyal to a single brand in a product field and remain so unless competitive marketing efforts lure them to another brand. Advertising and sales promotion are emphasized as the means to persuade consumers to switch brands or stores. The picture of the market provided by aggregate purchasing data appears to show the success of these efforts as large percentages of buyers fail to purchase the same brand at each purchase. In this leaky bucket theory of other-brand users to switch. Many contemporary observers stress the effects of sustained promotions on eroding brand loyalty, leading consumers to become more price conscious and place less emphasis on the image of the brand itself. In this leaky bucket theory of consumption, marketers must constantly use advertising, promotion, and other marketing mix variables to replenish the loss of these old buyers with new buyers. In the light of the difficulties observed in reliably and validly defining and
10

Randall, G. (2000), Branding. A Practical Guide to Planning your Strategy, Kogan Page Ltd, p. 39-45.

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measuring brand loyalty ( Jacoby and chestnut 1978 ), another perspective may be more useful to managers seeking to understand repeat buying behavior11. An alternative view of repeat buying is presented by Ehrenberg (1988). In a large and methodical body of research, he argues that repeat buying behavior is more stable than this and can be described by a mathematical model. For many frequently purchased products, it appears that consumers form a stable propensity to purchase a brand or brands in a given product field much as a habit is developed. That is, consumers form relatively stable buying habits after a new product is introduced into the market or their need for an old product makes it new to them. They cease to give a great deal of thought and energy to evaluating brands in the field, and marketing efforts that cause them to switch loyalty can only achieve short run success; as they strategy ceases, consumers go back to their old buying patterns12. 3. Rational and Emotional Dimensions of the Band that Influence the Consumer Consumers have both cognitive and emotional expectations from brands in order to satisfy their cognitive and emotional needs. Research is used in these two cases too with the purpose to determine these needs of consumers, using significant target consumer groups. It is important to evaluate the rational or cognitive and emotional components of brands in order to understand to what consumer needs they respond to. 3.1 Cognitive Brand Dimensions Consumers of brands use cognitive filters in order to make the proper decision about choosing a certain brand. The cognitive value of the brand is present in the case of all successful brands; it is one of the aspects that creates and retains customers. The cognitive dimension is the pure need of the consumer, without being influenced by marketing speak. This idea has been reflected in the quote of Phillipe Starck, a French avant garde designer, which says: The world wants water not taps, the world wants warmth, not a heater. There are many brands which missed
11

Randall, G. (2000), Branding. A Practical Guide to Planning your Strategy, Kogan Page Ltd, p. 45-48
12

Ehrenberg, A.S.C. (1998), Repeated Buying, Charles Griffin, p. 211-216.

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their cognitive value by expressing assumptions about their consumers or about the market, rather than being driven by consumer needs and desires. To categorize these needs they must be analyzed to separate the first-order needs from the higher emotional needs. This can be achieved by making an insight in the consumers mind or by studying human life in order to observe human needs in order to observe the latent needs that the consumer was unaware of. Ethnographic and video observation techniques can often provide these kinds of insights to problems that consumers have adapted to or learned to cope with. The studies might discover that there may be an excellent new brand opportunity that the consumer has been waiting for. The Dove brand of soap introduced the cognitive benefit of moisturizing plus soap cleaning as a new product brand . The company understood that consumers wanted clear skin that resulted from soap. If the company hadnt understood that, it might have simply created a new soap brand with a different fragrance or ph value. Brand managers need to recognize first of all the purpose of their business; in order to do this they should try to list the possible needs the consumer might have surrounding the product category. Taking airlines as an example the answer would be that the main purpose is to fly people, but the consumer may understand what they provide as: the vacation business the meeting business the taxi business the once-in a lifetime experience the glamour business

Most of these are true for many consumers and it is important to identify which are the most significant to be used in building the brand proposition. Once the brand manager understands in what business he is in, it is easier to express the cognitive added value through the brand personality. There is a series of tools that makes more noticeable the difference between the secondary values of the brand and the main cognitive values of a brand. Without these values the brand personality would be blurred and confusing for the consumer. There are four cognitive dimensions that develop brands along different routes to success: Brand weight- the dominance of a brand in a market, e.g. Microsoft.

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Brand length- the ability of a brand to diversify across business categories, e.g. Disney, Virgin. Brand power- the loyalty of the consumer group, e.g. Apple. Brand breadth- the appeal of the brand across consumer groups, e.g. Coca-Cola.

Brand Weight This type of brand goal relates to the dominance of a brand within its chosen market; it is often referred to as simply the market share, but is more than this. It can also be the total dominance that a brand exerts over the mind of consumer, trade and media. Dominance in a market can be developed through maintaining a rigorous innovation program that keeps the brand at the forefront of the consumers mind. Kelloggs is continually developing new technologies to enhance the taste of its products in order to deliver improvements to the core cognitive need of a great-tasting cereal. This may be a new toasting process to add crispness to its rice, or a new type of paper for the cereal bag to retain freshness. Everything it does is focused on enhancing the taste experience of eating Kelloggs Cornflakes, Rice Krispies, Coco Pops .It never forgets that it is in the taste business, not the rice business, or the packaging business or the breakfast business. Of course all of these things are important and add value to the brand in a crowded competitive market; but they cannot be used to build the brand. Traditionally, high brand weight has always been a core goal for business, especially if market share exceeds 40 per cent. Many Japanese companies followed this route during the 1980s, managing their business as large-volume, low-margin operations. This often resulted in high brand weight, which could then be used to manage markets as well as their brand, exerting influence over smaller competitors. Once a high brand weight is achieved, it is possible to increase R&D spend and innovation, while slowly increasing prices and margins to accompany this growth. It can also cause complacency in a business, as the market looks secure. Often it is new entrants that quickly reduce the brand weight of a brand that does not continuously invest. Many marketing directors still specify a number one or two market share position as a critical measure of a brands performance.

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Brand length Achieving brand length focuses on increasing the flexibility of a brand across market categories and segments. Brands achieve this by displaying a power of expertise, not in technology but in their understanding of the consumers mind. The Disney brand expresses family entertainment in all its film productions, theme parks, T-shirts, books, games and toys. The central cognitive need is clearly upheld in all these items, even though they represent very different business categories that other suppliers would not dare to cross. Each item also has a series of added value brand dimensions, but they succeed because the core brand proposition remains clear and fulfils the basic need for a large proportion of the consumer population. Brands that achieve significant brand length do so by marking out a specific territory in the mind of the consumer and retaining that position across all their activities. They operate a basic brand promise that can be applied to a variety of categories via a franchise with the consumer. They are the ultimate lifestyle brands that people are attracted to because they fit their needs and desires in one category, but, once satisfied, continue to purchase the brand in other categories, often unrelated in the traditional sense. The thing that relates the in mind of the consumer is that they deliver the same cognitive brand promise in all their guises. Whether this is a Disney baseball cap, a Disney soft drink , a Disney holiday or a Disney movie, the core benefit is reinforced by the Disney brand promise and itself reinforces the Disney-ness of the product brand expression. In the UK, the traditional world of banking has seen supermarket entrants Tesco and department store Marks&Spencer vying for the consumers financial capital. Large-scale free Internet service providers have also come from the unlikely sources of NTL, Dixons the high street retailer and the Virgin group. Some of these have taken advantage of several consumers reports that highlight the fact that more people trust Sainsburys and Tesco than the government, the police or the high street banks. This is a clear indication of the power of a brand identity to convey messages to consumers and retain their trust, perhaps as a result of a mass faith in liberal market economics. Alternatively, it could emphasize the continuing mediation of identities and the reliance of consumers on those mediated identities to make choices about their lives, family and finances. The message for governments and institutions is that they must at least match these high levels of seductive media if they are to re-establish their standing and authority with the consumer.

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When a brand tries to encompass a wide range of business categories it may fail to achieve significant profitability because at one point the brand promise will not stretch far enough. As this occurs, the dilution effect on the core brand and product combinations will also reduce the validity of the brand offer. Each new brand extensions, like any stretch, must be carefully planned and executed impeccably if it is to succeed. The bond of trust with the consumer is the critical dimension to any brand proposition; once broken it is difficult or impossible to retrieve. If you only say one thing with a brand message, it must be to convey the trust that the consumer needs to have in a product or service to buy in the first place. If there is insufficient trust projected by the brand, the consumer may never know just how good the product or service is. Brand power Brand power is the strength of an individual or business to influence others, in this case the consumer. These companies have attained a brand fortress for themselves where they can heavily influence a usually intensely loyal customer base. The old adage about football can be rephrased here for power brands: Branding is not a matter of life and death, it is much more important than that. Typically, consumers of power brands are acolytes and can be relied on to generate a formidable word-of-mouth campaign for the power brand. Brand power is often described as customer loyalty, but it goes beyond that with a quasi-religious connection between the consumer and the brand. It forms a dialogue that reflects a strong commitment from both sides to developing an enduring relationship. Young start-up businesses often have this type of brand dimension, but many quickly lose it as they become out of touch with their core consumer benefit. Once the corporate regulation and processes take over in a business, it becomes more difficult to retain the human characteristics that first attracted a large number of consumers. Brands like Apple, Nike and the BBC all retain the strong brand power that connects the business closely with consumer in a symbiotic relationship. Obviously, fashion-oriented brands are more likely to receive this kind of attention, but successful companies from Ben & Jerrys ice cream to The Body Shop cosmetics chain strong brand power is the depth of emotional attachment that a brand creates with consumer. This goes beyond the implicit cognitive benefits to provide an explicit emotional benefit that can be highly distinctive for particular brands.

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Brand breadth Another strategic dimension for a brand is to develop a consumer franchise that spans the widest possible range of consumer groups. This may seem ideal, since it maximizes the selling opportunity to as many people as possible, but it is difficult to achieve, especially when the age, sex, class and other socio-economic dimensions create a huge diversity of needs and expectations. There are not many brands that are clever enough to satisfy across these target group without diluting their brand is perceived to be a appropriate for one target group, rather than inclusive for other groups. The problem is that try to attract as many people as possible the message must be inclusive and this often results in a bland message. The result is a brand that is inoffensive to most people, but fails actually to attract anyone. Clearly, large businesses in consumer electronics, retailing and service industries need huge consumer to be viable, but in a c competitive environment they also need to retain distinctiveness for their proposition. A brand that has successfully generated powerful propositions as well as wide consumer franchise is Coca-Cola, the worlds most recognized brand name, drunk by small children in developing countries and CEOs in the worlds capitals. McDonalds, Kodak, Visa and Microsoft have also achieved this kind of brand breadth. Their success is due to retaining a distinctive propositions compared with their competitors, while offering an inclusive attitude towards all consumer groups. Strategic cognitive filters To help understand what kind of unmet core need the business fulfils, it is worth understanding some of the filters that brands express to consumers. These include financial, gender and age filters. By examining the core unmet need through these cognitive filters, it is possible to clarify the brand proposition. There are many more filters that can be used, depending on the nature of the market, your brand and the consumer target group; these are simply examples. The cognitive financial filter In the westernized world it is not surprising that one of the most basic brand dimensions is a financial filter. Free market economies encourage and enable brands to be successful based on the

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price that the consumer is willing to pay for the brand (a price above any notional commodity price). This is the fundamental advantage of a strong band: an ability to generate extra revenue above that of competitors and the production/ distribution costs. The chosen price should therefore best represent that enhanced proposition, or risk being undervalued in the marketplace. For consumers, the financial filter is not fixed over time but only at a single moment in time, the point of purchase ; when economic capital (cash) is exchanged for brand capital (identity). The market can always be sub divided into many financial segments, whether coverage is across the whole market or simply a small niche. The brand may be a bargain own label, or a mid-priced value pack, or a premium top of the line product or service. This structuring of the market helps consumers to filter out the choices that are unavailable or undesirable for them. They use prices as a key guide to which part of the market they fit into, and it acts as a starting point for a brand manager who is trying to reposition the brand. This structuring usually takes place as bands of prices that follow each other up the financial scale, sometimes overlapping. Brands at the bottom of the band may be considered to offer similar benefits but at a slightly lower price and therefore better value. Brands at the top of the band may be considered to offer better quality but at an inflated price. The brand manager needs to know which competitors fall above and below them in order to make tactical use of the brand proposition. Most brands use sub-brands or brand extensions to increase the bandwidth of their business revenues. The Giorgio Armani brand occupies the luxury end of the clothing market and it carefully uses a financial filter to define its target consumers. There is also the Emporio Armani brand, which tailors itself to a lower financial target. Still lower on the financial scale are the Armani Exchange and Armani Jeans brands that cater to the mass market. Brand managers can use the financial filter to decrease or increase the bandwidth pf potential consumers, because that bandwidth increases as the price decreases, and vice versa. The Cognitive Gender Filter An important question to be answered is : What gender is the brand proposition? It could be masculine, feminine or universal. The result of choosing one of these categories will dictate a large proportion of the attracted consumer group. It can also be used to reflect a known majority market , or reposition a brand into a new market. The gender filter of a brand is often associated with the

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gender-related nature of the goods or services, but many brands can have a brand gender unrelated to these. The car company Renault and the company Nescafe have a feminine bias that can be used to filter target consumers. The gender filter helps consumers to structure their choices when they come to purchase these goods. The use of trans-gender branding has been obvious for the past years, where CK One led the field of fashion brands to propose dual-use fragrances. The Cognitive Age Filter Many brands want to target specific age groups and this will require appropriate brand personalities. The latest tendencies show that using grey targets instead of white and black ones is more and more common. There are many examples of brands that have deliberately tried to filter consumers on the basis of age, after that finding out that their true consumer is typically from a different age category. The Renault Twingo was targeted at young people, but it was bought by different types of users of varying ages. They were all attracted by its interesting styling. My First Sony, the sub-brand of Sony is the quintessential baby brand and it has encouraged many brands such as Gap Kids. The My First Sony uses sophisticated images to sell both to the young themselves and to their parents. The products have a youthful design and the quality is identical to the products for adults. By this means Sony draws a significant advantage because it captures the consumer early, promising a lifetime of loyalty. By using a high degree of quality Sony creates a powerful barrier against inferior brands. As a consequence, young consumers treat the Sony quality as the first standard by which all other products are judged, because if the brand lets consumers down they might never use that product again.

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Maslows Hierarchy of Needs Abraham Maslow, the behaviorist, developed a useful framework for understanding the needs of the human needs in terms of cognitive and emotional requirements. The simplicity of the pyramid generates an immediate understanding of the needs of the consumers, from the core psychological needs to the higher needs of self actualization.

Self Actualized

Preference Relativity Stability Basic Elements

Figure 2 Maslows Hierarchy of Need The lowest layer contains psychological needs: shelter, food, water, etc. The second layer contains the safety needs: the need for financial security, family stability, trust and predictability. The third layer contains group needs: the need for love, group belonging, family relationships. The highest layer contains the self-actualization needs: the need to be who we can be, the need to be as good as we can be. The first two layers represent cognitive needs, while the remaining three are largely emotional needs. Maslow suggested that people tend to fulfill their needs systematically, starting with the basic physiological needs and then progressing up the hierarchy towards the highest layer. It means that the branding team needs to be aware of the different stages of development of distinct markets and consumer groups in those markets13.

3.2 The Emotional Brand Dimensions

13

Elwood, I. (2002), The Essential Brand Book, Kogan Page Ltd., p.148-159

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It is difficult to analyze quantitatively the emotional dimension of a brand, but they could be revealed through qualitative research approaches. Analysts have found a matrix of four emotional elements of a brand. These are ideological pleasure, psychological pleasure, sociological pleasure and cultural pleasure. The Pleasure Dimension This approach to emotive satisfiers focuses directly on consumer needs. It considers the need of consumers to hold different values at different times and in different contexts. The pleasure approach of branding seeks to maximize the benefits and expresses the consumer satisfaction of a brand. It is also important to think that brands can also be a potential displeasure or source of dissatisfaction to consumers. The branding team should avoid communicating displeasure to target audiences. For example if a brand disappoints consumers, the branding team should act so as to retain somehow consumer loyalty. Identification of potential brand displeasure characteristics is a useful weapon in the context of competitive analysis of brands. The four pleasures or four satisfiers of branding are: Ideological pleasures, belief systems. Psychological pleasure, task achievement. Sociological pleasure Cultural pleasure, iconic satisfaction.

ideological

psychological

Figure3 Emotional Dimensions

sociological
Cultural

These four pleasures form the framework to understand the characteristics of emotional attractions for consumers. The branding team needs to define the focus of a brands personality.

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Ideological brand pleasure Brand ideology refers to the highest level of consumers values. They are the most difficult to change because they represent beliefs that the consumer may have held for a long time on the basis of their education. This category could be an advantage to a business and help to build a significant segment of loyal customers. In the context of brands, the ideological pleasure relates directly to the meaning that a brand has and the idea that it embodies. The most common ideological pleasures are: -religion, patriotism, morality, aesthetics, ecology; while the most known ideological displeasures for the common consumer are: immorality, ugliness, fears, racism. 3.2.1 Ideological pleasures as surprised in the car and cosmetics industries Patriotism The country of origin of a brand may have deep connotations for the consumer. These can be ideological brand satisfiers when they align with the consumers ideology. German automobile companies such as Mercedes- Benz, BMW and Volkswagen-Audi they all used their national heritage in the in their company brand identities. Consumers can recognize German characteristics such as precision, quality and reliability; these characteristics are projected over the cars produced by the German factories. This connection between national values and certain brands have proven itself very successful so far. Automobile manufacturers in Italy are expected to join in their cars the style, the energy and flair that characterize the Italians. However the consumers must also accept that the Italian heritage has a connotation of being temperamental and also unreliable. In the end consumers think which of these brand dimension are more appropriate to their needs, so decision is made very often based on an impression of a nationality rather than any specific facts about the brand they are interested in. Brands do not always need to come from a specific country to benefit from a connotation associated with that country. The brand name and its visual promotional materials can suggest a particular origin. Haagen-Dazs is a prime example of the use of borrowed heritage. It is a company set up by two American companies that produce luxury ice cream. They used this brand name in order to

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suggest a Scandinavian or Nordic atmosphere. Using this name implies the idea of tradition, which the American firm actually owns; it is very experienced and has a lot of knowledge about the freezing process. Ecology The environment and the ecology are significant contemporary issues and therefore they can be used as important brand personality trait for certain brands. Using the environmental issue as a central dimension of a brands personality can attract consumers who have similar beliefs. The Body Shop is an excellent example of a brand that has differentiated itself by its environmental beliefs; it uses specific techniques to express this side of the brand. It promotes recycling the containers and it does not test its products on animals. The company helps the development of small businesses of farmers in some developing countries. Branding executions are often in natural materials and colors. Using simple shaped jars for creams emphasizes utility over hedonism. Environmental concern can be equally a brand dissatisfier for the target group for the target group for luxurious products. These consumers pamper themselves without a guilty conscience. Companies that have a strong environmental position may appear too boring or politically correct for some consumers. There is a resistance to eco brands because they often seem quite aggressive and may even alienate certain consumers. They rarely wish to be lectured in a moral or ethical tone by companies to which they have paid money. 3.2.2. Psychological brand pleasure Psychological brand pleasure refers to the personal achievement gained from a brand personality. This is related directly to the performance image of a brand because it could have a satisfying effect due to its sense of triumph or victory. On the other hand psychological brand displeasure can involve a sense of boredom, failure or defeat. Brands that maximize the psychological benefits are more often found in domains such as personal care or the home environment.

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Psychological brand pleasure can be changed more easily than the ideological beliefs and often changes as the consumer develops knowledge of that category. Potential psychological pleasures are: personal satisfaction; achievement; performance; mental stimulation. Psychological displeasures may be: boredom; failure; lack of enjoyment; low interest; low success. a .Examples from man personal care and the home environment domain Gillettes campaigns for attracting customers has always associated the brand with the ultimate performance. The headline The best a man can get is difficult to ignore, as it addresses customers on a level of psychological brand pleasure. The customers must decide whether they need or desire the best for themselves and suggests that the only way to achieve this is with Gillette. Branding on performance has been a key weapon in many categories, especially when targeting male customers. The use of power, technology and performance , it all engages with the male psychological need for aggression and competition. Gillettes use of ultimate performance challenges other producers to generate a more powerful superlative for their own brand, but in a certain moment it is possible that the consumers will feel almost, if not even bored with this series of superlatives. In the case of an overstatement of what a brand stands for, consumers may no longer believe or accept the claims of the brand. Brands often use forms of endorsement to confirm their performance and superiority.. Authority can be claimed through accreditation by a professional or by an institutional organization. All these could provide independent evaluation that can be separated from the manufacturers own claims of performance. Consumers often appreciate this kind of independent advice as a method of distinguishing between brands. These statements of quality are often present as approval stamps or signatures of accreditation on the packaging or on the promotional material. They may also be presented in advertisements with actual professionals such as doctors, scientists, or they may simply use connotations of professionalism such as actors wearing a white laboratory coat to connote scientific or research knowledge. Everybody has seen at least once the TV commercials in which a dentist was advising the viewers to use Colgate or the doctor recommending Anitra for keeping the hygiene of the bathroom. A different route to endorsements is using a common image of two companies recognized as experts in their fields. This often occurs between hardware and software manufacturers, as both gain the

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benefit from cost saving on marketing campaigns. They do not have to worry about cannibalizing each other s market share as they are complementary products. For example soft powder companies often collaborate with a particular washing machine manufacturer in order to get mutual sustaining. The psychological benefit gained by the consumer that a particular detergent was made for a particular washing machine is very convincing. b. Enjoyment of the five senses Psychological brand pleasure can be gained by offering the consumer a feeling of total enjoyment. This can be achieved by stimulating the five senses and is very helpful when talking about services. Using the appeal to all the human senses helps to creating a unforgettable brand experience. People have a very strong sense recognition and recall different types of sensations most of the times; campaigns try to exploit this kind of human potential. Engineers working in the Honda campaign have invested in the leather smell that reinforces consumer perception of quality. Consumer electronic companies have also started adding subtle fragrances to their plastic moldings, trying to develop a company-specific brand fragrance that the consumer will recognize and appreciate. In the car industry sound has always been associated with the perception of performance. It is known that the Mazda MX-5 engineers listened to classic English sports cars before tuning their new engine. Sound, which is created and defined, must be distinguished from noise, which is not a wanted accessory for a product. Schweppes has built its brand personality around the refreshing fizz of opening a bottle of its carbonated drink. It has literally defined itself as the fizz company; all other drinks companies are then usually defined against this in consumer perceptions. Visual images are usually the starting point for branding: color in particular can have an enormous impact on consumer perceptions. Color psychology can be at times effectively used to revitalize the traits of a brand personality. When the measures taken match very well the consumer expectations the post purchase satisfaction is the highest. Language and text can also play an important role in developing and fulfilling consumer expectations. The tone of the language is as crucial as the message it is transmitted.

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Taste is used naturally mainly in food and drink branding. Developing a distinctive McDonalds essence to all its food and drinks is a priority in markets that have strong competition of apparently identical products. Companies producing cola beverages made blind taste tests which very often lead to unclear conclusions. It is a real challenge for cola companies to brand tastes. There is also little consumer awareness of a definitive and usable scale to classify different tastes. However, once a consumer finds a brand taste that he or she enjoys, the consumer loyalty develops on solid ground. The physical evidence of a brand can also help define its personality. The thickness and texture of a corporate brochure suggests quality most of the times. The physical design of a branded product can have a significant impact on consumer perceptions of the contents, performance and reliability of a product and the brand. 3.2.3. Sociological Brand Pleasure Sociological brand pleasure is derived from the satisfaction that customers get from group association and recognition, as it is part of human nature to form groups and sub-groups. The use of brands has particularly helped groups to define membership and their social territory. Branded clothes, for instance, are clearly used to include yourself in a specific social group, or else, they can exclude you from that group. What your clothes say about one person has been transformed into the philosophy you are what you wear; the group members interact with each other on the basis that they have something in common. Wearing visibly branded clothes offers a recognizable statement of values that can be understood easily by others. However sociological brand pleasure changes as it depends on fashion and trends which change quite often. This type of brand pleasure is based on understanding a groups identity and has the purpose of satisfying the need of socialization. It is extremely shallow to suggest that a badge can define ones character, but many research studies have shown that most people relate to such symbolism. Sociological brand pleasure is very important for consumers as an expression of status. Consumers can communicate real or identities to which they aspire towards the members of their group. Sociological brand displeasure relates to the exclusion of people from a specific group because of the brands they use or do not use.

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Potential sociological pleasures: friendship; group identity forming; belonging; love. The potential sociological displeasures are: loneliness; isolation; fear; anonymity. Examples from the fashion and car industries Fashion brands generally rely on group identity characteristics and therefore offer sociological brand pleasure. The Ralph Lauren Polo brand has been particularly successful in defining a specific niche group of customers, offering a brand experience that is casual , yet classic. It has developed a total brand experience implying equally the product, retail, customer service and advertising materials.

Figure 4 The Polo Logo Source: www.polo.com The Polo brand draws on themes that imply feelings of nostalgia most of the times. They also suggest a form of upper class lifestyle intended to be very inspiring. The Polo name and logo suggest a leisure activity of the upper classes, but it is presented as being available to a wider audience. Using such explicit branding as a logo on the outside of a polo shirt indicates its strong social function in forming brand personality. The brand logo is there to be recognized by fellow consumers or friends. It is a badge of membership to Ralph Laurens aristocratic club. This form of membership has increasingly been used in the fashion industry to capture and retain target groups. Consumers wearing heavily branded clothes are publicly affirming their commitment to that brand. Members can easily recognize each other on the street and accept that they are more likely to have similar values than those not wearing the same brand. The sociological value gained from belonging to a chosen group is strong, so branded clothes have become a distinctive device for consumer groups. Equally, the sociological discomfort from being visibly excluded from a group is strong. For example, not having the correct brand of training shoe can be embarrassing for teenagers and adults alike. While this is not necessarily a good thing, evidently it generates a huge aspirational market for such brands.

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The danger for sociological pleasure brands is that they may become not trendy. When they are trendy they can enjoy huge sales and success; when they have become old or established they can be easily overtaken by newer, trendier brands. Many companies in the fashion industry try to avoid this by developing diffusion ranges This allows the same company to sell almost the same clothes under a different brand that is fresher than the previous one. For example, you can buy blue jeans from Ralph Lauren Polo Brand, Chaps Brand, Double RL brand and the Polo Jeans co brand, All are parts of the Ralph Lauren company, but offer small distinctive differences in the consumers perceptions. The car industry also uses forms of sociological branding to develop distinctive brand personalities. Owing a Mercedes or Porsche, for example, says more about who you are than how you drive. They are classic status symbols that gain most of their value in the public context. The development of the sociological brand pleasure that owners gain is crucial to their success. The car brand Lexus has similar performance, feature or qualities to the Mercedes. But it cannot achieve the public or sociological status the Mercedes enjoys. Lexus still positions the brand personality based on the psychological gratification of actual driving and value. This underestimates the need for exclusivity and status as a visible and tangible benefit, as derived by Mercedes owners. The Skoda brand of car suffered from the sociological brand displeasure associated with its car brand, at least in the UK.

Figure 5 The Skoda Logo Source: www.skoda-auto.com Customers were reluctant to buy and be seen in a car with such a negative social brand personality. However, in a recent J D power car survey the Skoda has performed brilliantly in cognitive tests. It is a ell-built, well-featured and good-value car. But the biggest task for the brand was to develop its sociological personality, not its psychological personality. Only then would customer acceptance be high enough for new customers to try out the Skoda experience and be proud to be seen in its cars. 3.2.4.Cultural brand pleasure

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Cultural brand pleasure works on the holistic ambience and position of a brand. Brands that maximize the use of cultural value are often the spiritual leaders in a business category; their brand name has become the category name. Examples of these are Hoover, the Post-it note and Aspirin. These brands have become a verb or a noun in common usage, e.g. To Hoover the room, or I need an aspirin Consumers talk about these brands in place of a specific brand that they actually own or desire. Brands that can achieve this kind of cult status enjoy the rewards of a formidable world of mouth marketing campaign. Potential cultural pleasures and displeasures: Pleasure: -icons -intellectual category leaders -spiritual category leaders -cult identity status Displeasure: - lack of charisma - followers - spectators - ambiguity Idea in practice, including examples from the television and airline industries Cultural brand pleasure is often highest among the founders of a product or service category. They have often invented the technology or have been crucial in implementing it in a new form in marketplace. The 3 M company, for example, invented and developed the Post it note. Competitors have since introduced similar versions but everyone still asks for and refers to simply Post-it notes, as a generic term. Cultural pleasure brands are often the spiritual or intellectual category leaders. For example, Rolex did not invent the wristwatch, but it has become an icon for the ultimate watch. Its use of higher cultural values such as associations with the 007 James Bond identity and the use of space age technology help establish the brand personality.

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The Barbour jacket has achieved a high form of cultural brand pleasure in its brand identity, Customers ask for a Barbour weatherproof , event actually buy an alternative brand. In this sense Barbour has become the icon for the category. When customers do buy the cultural pleasure brand, the depth of loyalty for the brand is likely to be highest. Brands can also become the intellectual leader of a category by developing the cultural pleasure of their brand identity. To gain cultural leadership brands need to define their position as the most innovative in developing the category as whole. This requires more than any single product improvement, and can best be achieved over time. The chain of continuous improvement helps establish the brand as the one that has all the ideas. The consumer translates this as a brand interested in the long term future of him or her as consumer and the category itself. Tesco has continuously shown the lead in developing the highly competitive supermarket business. It was the early provider of loyalty cards for customers, at a time when most retailers thought they would be just a passing fad. Tesco has built up a strong loyalty system that gathers information and reorganizes product rangers based on that information.. It has also introduced clothing ranges to its stores and is the process of developing in-store takeaway convenience food outlets for pizzas and curries. It is the combination of high equality service and the process of continuos innovation that leads consumers to respect Tesco as the category leader, rather than any specific price or food offers. The UK football team Manchester United has successfully become a cultural brand personality. The teams football performance is excellent, but it is Manchester Uniteds ability to develop as a brand business that is particularly significant. It was one the first football clubs to float on the stock market, and has been the most financially successfully while many others have failed. Manchester United has a strong merchandising approach that covers a large range of goods. It has decided to take its broadcasting future into its own hands by launching its own TV channel, MUTV, which coincides with the pay-per-view digital era. The TV channel helps build up a total brand experience by matching the games with merchandising interviews and in-depth analysis. It is also the first help to build the brand personality of Manchester united as one of the cultural brands of the past 10 years. Brands that develop the category as Manchester united has will always be seen as strong because they offer cultural pleasure to the consumer through their leadership. Brands may express cultural displeasure and are more open to risks of customers change than those with a strong cultural dimension. These brands can be seen as followers, as they usually lack ideas or innovation. These brands must concentrate on offering superior prices or service to overcome the

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glow of the culturally appealing brands. For example, Pepsi Cola has always struggled to compete wit Coca Cola in the soft drinks market, even though in taste test Pepsi Cola is at least as popular as Coca-Cola. This is because Pepsi Cola lacks the essential cultural pleasure that drinkers perceive when they buy and drink the real thing, Coca-Cola14. This form of intelligent leadership requires an organization to be agile and confident. Brands that are slow or uncertain of their own future are unlikely to offer customers strong cultural value. In todays increasingly competitive global markets that agility is being tested to the limits. Brands that can offer the customers a strong leadership value are more likely to remain competitive.

Ehrenberg, A.S.C. (1998), Repeated Buying, Charles Griffin.

Bibliography:

Elwood, I. (2002), The Essential Brand Book, Kogan Page Ltd. Kapferer, J.N. (1992), Strategic and Brand Management, Kogan Page Ltd.

14

Elwood, I. (2002), The Essential Brand Book, Kogan Page Ltd., p. 174-189.

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Klein, Naomi (2003), No Logo, Flamingo. Randall, G. (2000), Branding. A Practical Guide to Planning your Strategy, Kogan Page Ltd. www.ralphlauren.com www.skoda-auto.com

Chapter III Managing the International Brand

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1. Brand Planning 2. Levels of Branding Decision and Branding Strategies 3. Brand Consolidation

3.1. Brand Planning Corporate Strategy and Brands Strong brands are already central to the survival of some companies and are becoming so for others whether they realize it or not. Branding must be at the center of the boards corporate strategy. Observation suggests that this is true for only a few companies, not many of them seeing branding as a board- level concern. There are still too many short- sighted decisions being made that weaken brands. 52

The top management must agree : The branding model they are using The brand architecture for the company The definition of brand essence for each brand

The model must be defined and communicated throughout the company as a basic standard, otherwise there is no chance of widespread common understanding The architecture is the framework in which each brand fits. Decisions at corporate level include: Company brand: the role of the company in the branding process. The most large firms have a corporate identity , with associated design of logo and house styles Umbrella and pillar brands: for companies operating on a global or regional scale and having many brands, these structures make good sense. If promoting individual brands the success may appear later on and companies will find it very hard to support these kind of brands. Global, regional, international and local brands: the board must decide which brands can succeed at global level, as only the board can guarantee the support and commitment that this requires.
After stating clearly these directions, the board must be sure that they are communicated to the whole organization. Every staff member whose work makes any contribution to the delivery of the brand must understand the message from the board as good as possible.

Planning a brand involves first of all a market analysis and then a brand analysis of the future or the already existing brand15.

Market Analysis Brand Planning Brand Analysis Figure 1 The structure of brand planning a. The Market Analysis

15

Randall, G. (2000), Branding. A Practical Guide to Planning your Strategy, Kogan Page Ltd., p. 135-137.

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Market Definition This is the first phase of the brand planning process. In brand planning the manager needs to look at everything from the consumers point of view, including the definition of the market. One way of defining the market is by asking consumers to state, for each brand bought, what they used it for and when. The other aspect to consider is the brands served market. The measurement of brand share and the identification of competitors are both affected by the definition . The served market may be wider than the initial market as well as narrower. Honda has achieved world domination in small combustion engines by defining its market as all applications using such motors- from lawnmowers to generators. The brand strength can carry across these various applications. Morgan , on the other hand, is not competing in the whole car market. Buyers and users The marketing management needs to know everything they can about their customers. Basic questions such as: who, what, why, when and where? The focus should be on the product in use; too much brand research concentrates on attributes that are important to the manufacturer, but not necessarily to the user of the product or service. A profound understanding of how people use the brand, where it fits into their lives, what problems are they using it to solve and what other products or services is related to, is crucial to brand planning. Such understanding may be based at least partly on qualitative data, and should always be founded on personal experience. Even the most senior managers ought to be exposed to real consumers regularly. Segments What segments exist, if any? In mature or maturing markets, a sensitive grasp of the segments that either exist already or can be created is fundamental to successful branding. More difficult-but more important- is to foresee how the segmentation will develop over the years, and what new segments may be emerging. The ability to spot the growth of a segment is very important.

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Renault saw the emergence of a niche for a new sort of family car, partly influenced by new laws across several countries on child safety- Renault Espace lead for a long time its segment in Europe. Competitors Marketers today need both a focus on the consumers, but on competitors, too. Predicting the future moves of your competitor is vital, as is identifying possible new competitors; in the increasingly business international world, new competitors are certainly intending to enter many markets. An important Western player will always be preoccupied to know what the Japanese, the Koreans or the Chinese are planning. After analyzing the market outputs of the analysis should be emphasized in order to begin a draft for planning the brand. The outputs are both qualitative and quantitative- market competition and a deep understanding of buyers and users. b .Brand Analysis In the case of a new brand or for a reappraisal of an existing one, this process must involve market research as well as internal discussion. Quantitative research can measure certain aspects of a brand and in some cases even all the aspects regarding the brand. On the other hand, market research can be over-used. Another perspective point shows that relying on consumer research means reacting quite modestly, this process not assuming necessarily leading the market. In the market research area, all the competitors use the same methods and come up with the same results. The danger is that they design all similar brands. Creativity and innovation will produce the real difference between brands. The purpose of the research at this stage is introducing a reality check to see how consumers respond to a concept, or how they really view an existing brand as opposed to how the producer would like the consumers to see the brand. Positioning size, trend,

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From its popularization in 1970s, positioning has been an influential idea in branding. Many companies use a positioning statement in their brand planning. The concept refers to placing a brand in the mind of the consumer by the company, relative to competitor brands, in a way that points out key differences. O course it is preferable that the brand has an important position on the international market. Volvo has always positioned itself as the car that is above all, safe; BMW is the car not only with status, but also sporting characteristics. The Brand Planning The brand plan should bring together all the elements emphasized in a brand analysis and in the market analysis into a coherent, focused whole. The main question should imply the mix of products, their right flavors, their right size in according with the needs of the target market. The demands of operational efficiency, the channel of distribution considerations and competition must be planned carefully and be very balanced. Name The goal is to find a name that expresses the brand essence and is memorable and represents an advantage for the product. A further challenge is to find a name that is narrow enough to be meaningful without limiting later extension. Packaging For some brands the package is a crucial part of a brands identity. Apart from the well known CocaCola and Marlboro, there are Perrier, Lynx, Heinz and many others, whose design gives instant recognition. In services, the coherence imposed by American Express on its diverse output it is highly appreciated. Price

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Inside the brand planning process, pricing is a strategic decision. It is a signal to the market of the quality and value of the brand and as such it cannot be changed easily. Procter and Gamble have adopted a strategy of everyday low price to their customers , cutting out expensive promotions that can disrupt production flows and confuse consumers. This initiative, like many others will certainly be copied by many others. International pricing is also an issue, although many brand plans will be confined to a single market. When the brand is sold in many markets, its price in each country should reflect the overall pricing strategy, but be adapted to its local positioning. This provides opportunities to make higher margins in some countries, where competition is less stiff or the general price level is higher. Variations in the retail price of cars in Europe have received considerable publicity, with Britain always seeming to be the most expensive-it is said to be known as Treasure Island among car manufacturers. Sensible brand owners will try to balance the desire to increase margins with the need to offer their consumers value for money. A too great discrepancy in pricing will only encourage parallel importers to source the brand from cheap countries to supply high-price markets. This causes problems with distributors in the target country and the situation may be also complicated by national or supranational laws or regulations as in the case of pharmaceuticals. Such situations can be dealt with only by offering individual solutions in accordance with each specific situation. Advertising and Promotion Solid advertising support is essential for successful brands, as many examples have shown. Even retailers may have to use advertising in order to change consumers perceptions or reposition themselves. Promotion needs to be integrated into the total brand strategy. If it is well used it can introduce excitement and keep the brand in the news, otherwise it can ruin the brands image. Competitors The brand plan should explicitly state what competitive actions and reactions are expected and what the firm will do about them. Many plan omit this and managers sometimes seem surprised by competitors reactions. They must be thought about and carefully planned in advance.

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Control and Evaluation The last phase of the brand planning should contain control measures so that timely the feedback received after implementing certain measures will signal if results are the expected ones. The control measures should reflect the objectives the plan aims to achieve, such as sales , market share, new brand launches , increase in brand preference scores or level customer approval ratings to be achieved. These must be easily measured , and the costs of doing so built into the budget 16.Brands need a planning process, not necessarily a very complex one, as long as it covers the main directions of the brand and it coordinates the main processes that sustain its evolution on local and international markets.

3.2.Branding Levels and Branding Strategies

There are four levels of branding decisions: (1)branding versus no brand strategy; (2)private brand versus manufacturers brand ; (3) single brand versus multiple brands and (4) global brands versus local brands. The next figure shows an outline of the decision-making process in branding. Generic (brandless) product

16

Randall, G. (2000), Branding. A Practical Guide to Planning your Strategy, Kogan Page Ltd., p. 137.

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Branding Decisions

Private Label

Single brand Multiple brand Branded product Single market

Manufacturers own brand

Multiple market

Global b Decision Branding versus No brand

Local b

Figure 2 Levels Of Branding

Most products are branded, but that does not mean that every kind of product should be branded. Branding is not a cost-free measure due to the added costs associated with marking, labeling, packaging and legal procedures. These costs are especially relevant in the case of commodities (e.g. salt, cement , diamonds and other products). Commodities are unbranded or undifferentiated products which are sold by grade and not by brand. As such, there is no uniqueness,

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other than grade differential, that may be used to distinguish the offerings of one supplier with those of another. Probably branding is undesirable because brand promotion is ineffective in a practical sense and adds unnecessary expenses to operations costs. The value of a diamond, for example, is determined by the so- called the four Cs- cut, color, clarity and carat weight, and not by brand. From a positive point of view, the no brand product allows flexibility in quality and quantity control, resulting in lower production costs along with lower marketing and legal costs. The basic problem with the commodity or unbranded product is that its demand is strictly a function of price. The unbranded product is thus vulnerable to any price movement or price cutting. Branding, when applied transforms a commodity into a product (Chiquita Bananas; Dole Pineapples). A product is a value-added commodity , the value added being given by the certain product attributes- physical, psychological or real or imaginary, as perceived by the consumers. Branding makes premium pricing possible because of better identification, awareness, promotion, differentiation, consumer confidence and brand loyalty. Although branding provides the manufacturer with some insulation from price competition, a firm must still find out whether it is worthwhile to brand the product. In general, the following prerequisites should be met: Quality and quantity consistency, not necessarily the best quality or the greatest quantity. As an example, Nikes unique designs allowed the company to differentiate its brand from others and to become the top-rated brand among serious joggers. Private Brand versus Manufacturers Brand Branding used to promote sales or move products needs a further branding decision: whether the manufacturer should use its own brand or a distributors brand on its product. Distributors in the world of international business include trading companies , importers and retailers among others; their brands on products made by US companies, as evidenced by Matsushitas purchases of major appliances from White. Even though it may seem logical for a distributor to carry the manufacturers well-known brand, many distributors often insist on their own private brands for several reasons. First, a distributor may be able to create a unique product by bundling or unbundling product attributes and then adjusting the price to reflect the proper value.

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Carrefour, a French retail giant, sells some 3000 in-house products at prices about 15 percent lower than national brands. Here in Romania, Carrefour started since 2004 introducing this kind of practice in its stores in Bucharest and Brasov. In the UK, the retailer J. Sainsbury PLC has a private brand that is able to win 30 percent of the detergent market, moving it ahead of Unilevers Persil and just behind Procter and Gambles Ariel which is the market leader. It is believed that private-label products now account for one third of supermarket sales in the United Kingdom and a quarter in France. Distributors can convert fixed production costs into variable costs by buying products made by others. Perhaps the most important reason for a distributors insistence on a private brand is due to brand loyalty, bargaining power and price. In spite of the lower prices paid by the distributor and ultimately by its customers, the distributor is still able to command a higher gross margin and than what a manufacturers brand usually offers. The lower price may also be attributed to the distributors refusal to pay for manufacturers variable costs , but not all. If a firm has any problem with the supplier, it has the flexibility of switching to another supplier to make the identical product, but maintaining brand loyalty and bargaining power without any adverse effect on sales. There are a number of reasons why the strategy of private branding is not necessarily bad for the manufacturer. First, the ease in gaining market entry and dealers acceptance may allow a larger market share overall while contributing to offset fixed costs. Second, there are no promotional expenses associated with private branding, thus making a strategy suitable for a unknown brand. Suzuki cars are sold in the USA under the GM Sprint brand name. Ricohs facsimile machines are sold under AT&Ts well-known name. Third, a manufacturer may judge that the sales of its own product are going to suffer to a greater or lesser degree by various private brands. In that case, the manufacturer may as well be cannibalized by one of those private brands made by the manufacturer. There are also reasons why private branding is not good for the manufacturer. By using a private brand, the manufacturers product becomes a commodity, at least to the distributor. To remain in business and retain sales to the distributor, the manufacturer must compete on the basis of price, since the distributor can always switch suppliers.

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By not having its own identity, the manufacturer can be easily be bypassed. Furthermore, it loses control over how its products should be promoted- this fact may become crucial if the distributor does not do a good job in promoting the product. The manufacturers dilemma is best illustrated by Heinzs experience in the United Kingdom, where consumer recognition for its brand is greater than in any other country in the world. Whereas Campbell Soup and Nestle s Crosse and Blackwell make some products under private labels, Heinz makes products only under its own brand because, as the largest supplier of canned foods there , it has the most to lose . To preserve its long-term market leadership at the expense of short-term earnings , Heinz has held down prices, introduced new products, launched big capital spending programs and increased advertising. Heinz does make private-label merchandise in the USA, where private brands account for 10 percent of US sales. Its logic is that the slow growth of US private labeling does not pose a serious threat as it does in the United Kingdom. Clearly, the manufacturer has two basic alternatives- its brand or a private brand. Its choice depends in part on its bargaining power. If the distributor is prominent and the manufacturer itself is unknown and anxious to penetrate a market, then the latter may have to use the former s brand on the product. But if the manufacturer has superior strength, it can afford to put its own brand on the product and insist that the distributor accept that brand as part of the product. Private branding and manufacturers branding is not necessarily an either/or proposition : a compromise may often be reached to ensure mutual coexistence. If desired, both options can be employed together. Michelin, for instance, is world renowned for its own brand, but most people do not realize that Michelin also produces tires for Sears and Venture. The popularity of private brands varies from country to country . In the UK , the key factors that have contributed to the evolution of retail brands within British grocery retailing, are changing the basis and use of retail powering the distribution channel, centralization of the management activities, and appreciation of what constitutes retail image. British grocery retailers have successfully managed these factors. As a result, their retail brands are regarded by consumers as being as good as, if not better than the established manufactured brands. Some branding and manufacturing strategies illustrate the potential benefits and problems of private branding. By putting their brands on the products made by outside suppliers, the brand owners are able to take care of the gap in their product lines quickly and economically while solving their inventory problems.

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However, this strategy will make product differentiation more difficult. Well informed customers may not find a good reason to pay extra for these brands. Single Brands vs. Multiple Brands When a single brand is marketed by the manufacturer, the brand is assured of receiving full attention for maximum impact. However, a company may choose to market several brands within a single market based on the assumption that the market is heterogeneous and thus it must be segmented. Consequently, a specific brand is designed for a specific market segment. The watch industry provides a good illustration for the practice of using multiple brands in a single market, for different market segments. Citizen, in its attempt to capture the new youth and multiplewatch owners market, traded down to include a new brand called Vega. Likewise, Hattori Seiko is well known for its Seiko brand , which is sold at the upper-medium price range in better stores; to appeal to a more affluent segment, the company traded up with the Lassale name. Seiko strategy is to deliberately divorce names, once used together in the public mind, with the gold plated Lassale line and the karat-gold Jean Lassale line. Lassale watches have Seiko mechanisms, but they are produced in the USA and the Western Europe and they are sold only through jewelers and department stores. Swatch Group Ltd. has more than 50% of the Swiss watch industry. Swatch owns a number of well-known brands that include Omega, Longines, Tissot and Calvin Klein. Multiple brands are suitable when a company wants to trade either up or down because both moves have a tendency to hurt the companys main business. If a company has a reputation for quality, trading down without creating a new brand will hurt the prestige of the existing brand. By the same assumption, if a company is known for its low-priced, mass-produced products, trading up without creating a new brand is hampered by the image of the existing products. Casio is perceived as a manufacturer of low-priced watches and calculators and its name affects its attempt to trade up to personal computers and electronic musical instruments. There are four recognized branding strategies. The following three kinds of branding strategies are created in order to be suitable for multiple brands.

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Corporate umbrella branding is used by firms such as Heinz, Kelloggs and Cadburys. The corporate name is used as the lead name for all their products, for example Kelloggs Healthwise, Kelloggs Frosties, Kelloggs Corn Flakes. Family umbrella names are used to cover a range of products in a variety of markets. For example Marks and Spencer use their St. Michael brand for clothing, food and household goods. Range branding is used for a range of products with a particular link in a specific market such as Lean Cuisine for low-calorie foods. The second category represents another type of branding strategy and it is the individual brand name strategy. Individual brand names are used with individual products in a particular market, with different weights, colors, flavors and pack sizes. Procter & Gamble and Unilever use individual brand names such as Daz, Ariel and Omo, using no reference to the corporate name. Local Brands vs. Global Brands When the manufacturer decides to put its own name on the product, the problem does not end there if the manufacturer is an international marketer. The possibility of having to modify the trademark cannot be dismissed. The international marketer must then consider whether to use only one brand name worldwide, or different brands for different markets or countries. A single worldwide brand is also known as an universal or global brand. A Euro-brand is a slight modification of this approach, since it is a single product, for a single market, with an emphasis on the search for intermarket similarities rather than differences. For a brand to be global or worldwide it must, by definition, have a commonly understood set of characteristics and benefits in all of the markets where it is promoted. Coca Cola is a global brand in the sense that it has been successful in maintaining similar perceptions across countries and cultures. However, most other brands do not enjoy this kind of consistency, making debatable whether a global brand is a practical solution. A worldwide brand has several advantages. First, it tends to be associated with status and prestige. Second, it achieves maximum market impact overall, while reducing advertising costs because only one brand is promoted. Bata Ltd., a Canadian marketer and shoe retailer in ninety-three countries, Romania including, found out in its research that its consumers generally believed Bata to be a local brand. The company decided after that study, to become the official sponsor of World Cup soccer in

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order to enhance Batas international stature. For Bata and others it is easier to achieve worldwide exposure for one brand than it is for multiple local brands. Third, a worldwide brand provides a convenient identification and international travelers can easily recognize the product. There would be no sense in creating multiple brands for such international products as American Express credit card, Shell gasoline, Time magazine and so on. Finally, a worldwide brand is a good approach when a product has a good reputation or is known for quality. In such cases, a company would be wise to extend the brand name to other products in the product line Global Consumer Culture Positioning (GCCP) is a tool that suggests one pathway through which a brand may be perceived by consumers as global. GCCP is an instrument that associates a brand with a widely understood and recognized set of symbols which constitute an emerging global consumer culture. ACNielsen s Global Mega Brand Franchises report uses a number of criteria to identify mega brands. A mega brand must be available in at least fifteen out of fifty countries that account for 95% of the global economic output. It must be marketed under the same name in at least three different product categories in three or more regions. Based on these criteria, the mega brands are dominated by the highly extendable personal care and cosmetics manufacturers and by food and drinks manufacturers. The queen of mega brands is Nivea, a brand owned by the German consumer products group Beiersdorf. This skin-care brand is a huge success and the brand has been extended to at least nineteen product categories-shampoos, after-shave, wrinkle lotion and bath foam. In contrast, Coca Cola does not have this power of extendability. The use of multiple brands is a very common practice. In the case of Unilever, its fabric softener is sold in ten European countries under seven names. Due to decentralization, the multinational firm allows country managers to choose names, packages and formulas that will appeal to local tastes. More recently, the company, while keeping local brand names, has been gradually standardizing packaging and product formulas. There are several reasons for using local brands. First, developing countries resent international brands because the brands goodwill is created by an advertising budget that is much greater that research and development costs , resulting in no benefit derived from research and development for local economies. In addition, local consumers are forced to pay higher prices for advertising, not helping the development of local competitive capacity. Such resentment may

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explain why Indias ministries, responding to domestic soft drink producers pressures, rejected Pepsis 35% Pepsi-owned joint venture. Second, when the manufacturer is unable to ensure uniform product quality across countries, it should consider local brands. Third, when an existing brand is difficult to pronounce, a new brand may be desirable. Sometimes, consumers avoid buying a certain brand when it is difficult to pronounce, because they want to avoid the embarrassment of a wrong pronunciation. Then, a local brand is more easily understood and more meaningful for local consumers. By considering foreign tastes and preferences, a company achieves a better marketing impact. Grey, an international advertising agency, worked with Playtex to create different appropriate names for Playtexs brassieres in different languages. The result was Wow in England and Traumbugel ( dream of wire) in Germany. Translation may also make a brand more meaningful. This approach is sometimes mistaken for a single-brand approach when in fact a new brand is created. Close up ( toothpaste) was translated as Klai-Chid ( literally meaning very close) in Thailand; the translation retained the meaning and the logo of the brand as well as the package design. Fifth, a local brand can avoid a negative connotation. Pepsi introduced a non-cola under the Patio name in America but under the Mirinda elsewhere due to the unpleasant connotation of patio in Spanish. Sixth, some MNCs acquire local brands for quick market penetration in order to save time, not to mention money, which otherwise would be needed to build the recognition for a new, unknown brand in local markets. Renault would have been foolish to abandon the AMC (American Motors) name after a costly acquisition. Thus Renault 9, for example, became AMC Alliance in the USA. Chrysler subsequently bought AMC from Renault, one reason being AMCs coveted Jeep trademark. Seventh, multiple brands may have to be used, not by designed but by necessity, due to legal complications. One problem is the restrictions placed on the usage of certain words. Diet Coke in countries that restrict the use of the word diet becomes Coke Light. Antitrust problems can also dictate this strategy. Gillette, after acquiring Braun A.G, a German firm, had to sign a consent decree not to use the name in the US market until 1985. The decree forced Braun to create the Eltron brand, which had little success. The eight and perhaps most compelling reason for creating new local brands is because local firms may have already used the names that multinational firms have been using elsewhere. In such

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a case, to buy the right to use the name from a local business can prove expensive. Unilever markets Sure antiperspirant in the United Kingdom but had to test market the product under the Trust name in the USA, where Sure is Procter Gambles deodorant trademark. In an interesting case, Anheuser-Busch bought the American rights to the Budweiser name and recipe from the brewer of Budweiser in Czechoslovakia; Budejovicky Budvar Narodni Podnik, the Czech brewer, holds the rights in Europe. Operating from the town of Ceske Budejovice, known as Budweis before World War I, this brewer claims exclusive rights to the Budweiser name in the United Kingdom, France and several European countries. Courts have ruled that both companies have the right to sell in the United Kingdom, but Anheuser-Busch has to use the Busch name in France and the corporate name in other parts of Europe. Ninth, a local brand may have to be introduced due to price control. This problem is especially acute in countries with inflationary pressures. Price control is also one reason for the growth of the so-called gray marketers, as the phenomenon contributes to price variations among countries for the same product. Thus, instead of buying a locally produced product or one from an authorized distributor/importer, a local retailer can buy exactly the same brand from wholesalers in countries where prices are significantly lower. A manufacturer will have a hard time prohibiting importation of gray market goods, especially in EU countries where products are supposed to be able to move freely. Parallel trading can be minimized by having different national brands rather than only a worldwide brand. As mentioned above, a brand standardization is a common strategy. Companies tend to brand globally but advertise locally. Interestingly, although the McDonalds logo is one of the most recognizable in the world, McDonalds has changed its advertising logo for Quebec, perhaps the only market in the world which receives this special treatment, The most well-known logo in Quebec is JM. This is a play on jaime which means I love in French. The strategy of using a worldwide brand is thus not superior ( or inferior) to using multiple local brands, Each strategy has its merits and serves its own useful functions, This is where managerial judgment comes in. Unilever, for example, considers consumer responses to a particular brand mix. It uses an international brand for such products as detergents and personal products because common factors among countries outweigh any differences. Food products, however, are another story. Food markets are much more complex due to the variations in needs and responses to different products. The southern half of Europe uses mainly oil for cooking rather than margarine,

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white fats, or butter. The French more than the Dutch consider butter to be an appropriate cooking medium. German home makers, when compared to British home makers, are more interested in health and diet products. Soup is lightweight precursor to the main dish in Great Britain but can almost be a meal by itself in Germany. Under such circumstances of preferential variations, the potential for local brands is greatly enhanced. When creating local brand names in the multilingual international market, companies have three translation methods to consider : phonetic ( i.e. by sound ), semantic ( i.e. by meaning), and phonosemantic ( i.e. by sound and meaning). The effectiveness of translation depends on the emphasis of the original English name and the translation method used previously for brand names within the same category. When the phonetic naming method is used, brand name evaluations are more favorable for names that emphasize an English word than for those names that emphasize a Chinese word17.

Arguments against globalization Those who oppose global branding base their arguments on fundamental marketing principles: it is the job of marketing people to be sensitive to their customers and consumers, and only they in the local country- really understand them. Markets are actually different Market shows different preferences, and even if some of this is due to past government action, it is an additional argument for treating each local market as unique. Pasta is seen as old17

Kapferer, J.N. (1992), Strategic and Brand Management, Kogan Page Ltd., p.210-224.

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fashioned in Italy, but rather trendy in many other countries. The biscuit market shows quite different patterns in different countries. Local markets have different histories and structures The development of particular product markets will have different histories in every country. They may be converging- usually because of the actions of the major multinationals- but their current situation may still vary widely. The brand share of even a leading global brand will vary across countries. There may, for example, be a very strong local competitor with an entrenched position. In such circumstances, goes the argument, a standardized strategy makes no sense. Brands designed internationally are the lowest common denominator. If a company tries to take all these differences into account, it will end up with a compromisesomething bland that offends no one but delights no one either. This seems a convincing argument, but it is not clear how many companies actually work that way. There must be some sensible compromise between taking all national preferences into account and ignoring them completely. Culture-bound and culture free Products are said to be the culture-bound if their use is intricately tied up with some aspect of the countrys culture. Examples of products that are free of such associations are consumer electronics: we use a VCR in the same way regardless of our nationality and background. Food, on the other hand, is thought to be intimately bound up with local culture, and indeed at first sight local markets for good products do vary hugely18.

18

Randall, G. (2000), Branding. A Practical Guide to Planning your Strategy, Kogan Page Ltd., p. 126-130.

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HIGH ECONOMIES OF SCALE LOW

VCR

FOOD

High

Low

Cultural grounding

Figure 3 Types of Brands Source:

Randall, G. (2000), Branding. A Practical Guide to Planning your Strategy, Kogan Page Ltd., p. 127.

If the culture variable is combined with the availability of economies of scale, as in figure 1, we see that food has low economies of scale and is culture-bound; it is however difficult to establish global food brands. VCRs, however, do enjoy economies of scale and are culture-free, so global brands are feasible. Yet, we must look at the evidence of Coca-Cola and McDonalds, both global brands. How it has gone in a particular case will need to be determined by analysis. What is more difficult is to predict the dynamics of change: how quickly will convergence happen, and what effect will the activities of global brand marketers have.

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Country of origin We have been talking of global brands as if they were stateless. Perhaps some are, but for others their country of origin is significant. For example, many famous global brands- Coke, McDonalds Levis, Marlboro- could only be American. Their American-ness is an essential part of their appeal, and consumers are buying into a small piece of the American way of life. Likewise, luxury brands from France, both haute couture and drinks such as cognac and champagne, have a unique cachet that comes from their origin. Italian fashion brands such as Gucci would be less powerful if they came from England. German cars and industrial engineering products gain an additional value from their origin, as do Japanese consumers products such as electronics and cameras. Some brands seem local, if they are known to b international. Many people in Britain will have thought of Ford, Vauxhall or Hoover as British, thought they are all American in origin or by takeover. This, say some, is the real challenge in the future for aspiring global brands; to have the authority of internationally acceptable brands while appearing local enough to be what we want here.

Arguments for a Global Strategy19 Going global is always going to be expensive and difficult, but seems a prize worth aiming for; the reasons are various. For many service firms whose clients are international- advertising agencies, accountants, consultants- a global network is becoming a necessity. Any firm that wants to serve the biggest
19

Randall, G. (2000), Branding. A Practical Guide to Planning your Strategy, Kogan Page Ltd., p. 124-126.

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clients has been forced to set up local offices around the world, or to develop alliances with other firms to provide global reach. Competition The fact that competitors are going global is undoubtedly a challenge. A firm may have to compete on a global scale, either to defend its domestic market against global competitors with scale advantages or to take advantage of new opportunities in new markets before competitors establish themselves. Profit opportunities If successful brands cannot be transferred rapidly to as many markets as possible, profit opportunities are foregone. Procter and Gamble found that, without central control, some successful brands were not introduced into major European markets for up to 12 years after their initial launch. The first mover advantage may also be lost, leaving the firm playing catch-up in too many important countries. Strategically, these are all very real pressures. Firms risk being left behind, caught in a cycle of increasing threats and decreasing opportunities, facing only decline. But going global is also risky. How do they know they will succeed?

Sustainable competitive advantage The firm must be absolutely clear that the brand has some differentiating advantage over the competition it is likely to meet in all its markets. Making this judgment demands a high degree of objectivity, and the commitment to maintain the advantage against imitation and attack. Economies of scale

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The production cost function is not always linear, that is, cost do not necessarily fall steadily at the same rate as volume increases. There are likely to be steps, where costs rise steeply in the short term as production is raised to a new level. It must be clear that when the planned- or desiredlevel of international sales is reached, costs will be at a level that allows the company to compete with rivals. As it was noted above, the segment does not have to be the same size everywhere, but it must be big enough to support the brand in enough markets. Going from a multi-country to a global operation is impossible without radical changes in the organization, often consistent ones. The First Steps There is of course no magic formula for developing a global brand, but evidence suggests that some approaches offer better chances of success than others do. There will always be counterexamples of successful brands that have followed different rules- and unfortunately failures that have apparently done everything Develop the brand strategy in one place The total shape of the strategy essence, values, identity, point of difference, positioning, target segments, mix- must be developed. The drivers may be technological or market led, but the total brand must be taught through. This needs to be done with a concrete set of consumers in mind, and it seems to work best if it is done in one specific place. This does not mean that consumers in the global market place should be ignored; they must be kept in mind, but the lowest-commondenominator danger must be avoided. Exactly where this should be will depend on the market. Frequently it is the companys home market, where it ought to have most knowledge and understanding. In a global, multiproduct firm, that may not apply to all product fields, and there are two other criteria. The first is the location of the expertise: some country teams are better than others in certain product fields, and it makes sense to use that to advantage.

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Check against all important target markets

The brand strategy must be checked for major negatives in the markets that will account for the majority of sales. The brand essence is the key; as we have seen, minor variations in the physical product need not detract from a consistent brand proposition. The only absolute barriers are those that cannot realistically be overcome in an acceptable time-scale, for example: Consumer taste that is likely to resist short-term change

Entrenched local opposition that will fight back strongly against the most determined attack Government regulation that cannot be altered Lack of existing suitable distribution channels Check elements of the marketing mix for major markets

All elements of the marketing mix should be checked, again in the major markets, against the need for unavoidable adaptations. Only the brand essence and expression are fundamental, though the advertising strategy- which should state how the brand essence is to be communicated to the target audience- is intimately bound up with that. Truly global brands such as Gillette Sensor have a global advertising platform- The best a man can get. On the argument rehearsed above, if one best strategy has been developed, adaptations should be accepted only on the most compelling evidence. Choose a suitable name

The name is central to many brands, but it is becoming ever more difficult to find suitable global names. If an ideal brand name is four letters long, then there are very few words left that are suitable, that is, that are: 1. Pronounceable in all languages 2. Have no negative connotations in any language 3. Are memorable 4. Are at least not inconsistent with the brand essence There are many examples of names that turn out to have unfortunate meanings in some other languages: the most printable is the Vauxhall/ Opel Nova, which means does not go in Spanish. The days when George Eastman could invent Kodak- a short, memorable, meaningless name- and take it all over the world, may be over. Words or even phrases that can be translated may be a better

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bet, though it is probably also worth trying an existing name even if at first sight it causes problems. Dove soap was launched in many countries, but the company was aware that the world in Italian means where- which seemed hardly appropriate. But local managers felt that this was not a barrier, and turned out not to be. Select countries for launch and roll-out

Either way, the cumulative effect should be greater than totally separate brand spending. For example, Unilever is using the Elida Institute as an umbrella for hair care brands and the Pond Institute for skin care. From the Elida Institute, like From Laboratories Garnier is a tag line in each brand advertisement that will gradually establish the pillar brand and its values- which can then be spread to other new sub-brands as they are launched. The other gain from such an exercise is clarifying the exact function and objective of each brand. Some, for example, may be destined to be global brands, other regional or local. Some will be aimed at the number on or two spot, some at niches, some perhaps as fighting brands- low cost, low price, positioned against the own label. Such clarity will help reduce unnecessary and wasteful overlap and should sharpen the focus of each brand.

3.3Brand consolidation

Frequently, it is either by accident or lack of coordination that multiple local brands result. Despite the advantages offered by the multiple-brand strategy, it may be desirable to consolidate multiple brands under one brand when the number of labels reaches the point of being cumbersome or confusing. National Bank Americard used to issue cards around the world twenty-two names

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before consolidating them all under the Visa umbrella. Unilever markets a vast array of beauty, home-care, and food products under numerous names. Some of the its well-known brands include: ice cream ( Breyers Good Humor), soap ( Dove, Caress, Lever 2000, Lifebuoy), hair care ( Suave, Thermasilk), oral care ( Close-Up, Pepsodent, Aim), fragrances ( Calvin Klein, Elizabeth Arden, Elizabeth Taylor ), and personal care ( Vaseline, Q-tips, Ponds). However, this portfolio of 1600 brands, although well recognized, has proven to be unmanageable. So,Unilever has decided to focus mainly on some 400 brands while eliminating up to 75 percent of its products20. Another way of consolidating the brand franchise is simply to drop weak brands. AssuaghSSIH weeded out all but its most prominent watch brands. Its Eterna brand, for example, was never marketed in the USA, and that brand was eventually sold to another company. Brand consolidation on a global scale is a strategy that has been debated. As in the case of Scott Paper Co, the company felt that the Scott name, just like Coca-Cola, should command respect all over the world. In addition, global branding would allow Scott to use common advertising messages internationally saving costs. So the company has been phasing out local brand names in its eighty national markets. Even Andrex, a top selling toiler tissue in England, will suffer the same fate, thus diluting or destroying the goodwill that has been earned. When a marketer wants to change brands or consolidate them under one brand in order to unify all marketing efforts, the process is complex and extremely costly on an international scale. Although a unified brand across frontiers provides cost savings by eliminating duplication of design and artwork, production, distribution, communications, and other related issues, such a change is fraught with pitfalls and, if not well planned and executed, can cause more problems that it solves, Nestle uses a gradual, evolutionary process in preparing its European brands fir 1992. Its packagedesign unification involves having the Nestle name appear along with the local brand. The Nestle name will be gradually enlarged over a period of four or five years until it replaces the local brand names entirely. Another kind of problem presents when a brand is well known but the corporate name is not, complicating communication for the company, In this situation, it is probably easier to change the

20

Levine, M. (2003), A Branded World: Adventures in Public Relations and the Creation of Superbrands, New York: Wiley, p. 169-171.

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corporate name to fit the better-known brand name, a strategy used by Sony, Aprica, Olympus and Amoco. Nissans name change, in comparison, was risky because it followed an opposite route. Nissans half-hearted entry into the US market led to the use of the Datsun name to avoid embarrassment in case the effort failed. However, the company was also unhappy that the proud corporate name was not as widely recognized as its Datsun brand, which enjoyed an 85 percent recognition rate in the USA ( compared to 10 to 15 percent for Nissan). The company decide to institute a worldwide brand by phasing out Datsun and phasing in Nissan. Some critics questioned the move because the change cost Nissan $ 150 million. Furthermore, years of good-will gained from the Datsun name would be lost. To minimize this problem, both Nissan and Datsun names appeared together at first. Its initial TV commercials and print advertisements emphasized that Datsun was a product of Nissan21. It is debatable whether the corporate name and the products name should even be he same. When the name is the same, a brand that performs poorly or gains notoriety through bad publicity hurts the corporate image as well, since the images of the corporation and the product are so intertwined. Firestone is a prime example of how a brand could damage the same corporate name due the accidents caused by its tires. The strategy is even riskier for fashion products because fashion comes and goes. Using the same name, however, is a relatively safe strategy and should work well if a firm has good quality control and the reputation of its nonfashion products has withstood the test of time. Brand consolidation is never an easy process, especially when well-known brands have to be replaced. Because of BPs acquisition of Amoco, BP Amoco has rebranded Amoco gas station to erase the Amoco name from all 9000 stations in the USA. The decades-old Amoco torch has been replaced by a new, lower-case BP logo and go eighteen-point green and yellow sun. The remodeling of all 19.000 BP stations worldwide is expected to cost up to $4.5 billion over four years. The 1725 recently acquired Arco stations are keeping the Arco name.

21

Elwood, I. (2002), The Essential Brand Book, Kogan Page Ltd, p.217-231.

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Bibliography:

Elwood, I. (2002), The Essential Brand Book, Kogan Page Ltd. Kapferer, J.N. (1992), Strategic and Brand Management, Kogan Page Ltd.

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Levine, M. (2003), A Branded World: Adventures in Public Relations and the Creation of Superbrands, New York: Wiley. Randall, G. (2000), Branding. A Practical Guide to Planning your Strategy, Kogan Page Ltd.

Chapter IV Vodafone. The Global Brand

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1. International Presence

2.The strategic context

3. The case for a single brand

4.1. International Presence Vodafone Group Plc provides an extensive range of mobile telecommunications services,

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including voice and data communications, and is the worlds largest mobile telecommunications company, with a significant presence in Continental Europe, the United Kingdom, the United States and the Far East through the Companys subsidiary undertakings, associated undertakings and investments. The Groups mobile subsidiaries operate under the brand name Vodafone. In the United States the Groups associated undertaking operates as Verizon Wireless. During the last two financial years, the Group has also entered into arrangements with network operators in countries where the Group does not hold an equity stake. Under the terms of these Partner Network Agreements, the Group and its partner networks co-operate in the development and marketing of global services under dual brand logos, as a first stage22. The companys ordinary shares are listed on the London Stock Exchange and the companys American Depositary Shares (ADSs) are listed on the New York Stock Exchange. The Company had a total market capitalization of approximately 93.7 billion at 12 November 2004. Based on ownership interests at 31 March 2005, the Company, through its subsidiary undertakings, associated undertakings and investments, had approximately 154.8 million registered customers calculated on a proportionate basis in accordance with the Companys percentage interest in its ventures. At 31 March 2005, there were approximately 431.8 million total venture customers In addition, the Company has Partner Networks in a further 14 countries23.

Summary of Group mobile telecommunications businesses at 31 March 2005 Country by

22

Percentage Venture

Venture Registered

Registered Names of

ownership customers customer proportionat prepaid

www.vodafone.com www.vodafone.com

23

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region
(1)

(3) (2)

growth
(4)

e customers (000s) 27,223 17,280 15,324

competitor
(5)

network operators
(6)

(000s)

(%) 9 6 9

(%)

Germany Italy UK

100.0 76.8 100.0

27,223 22,502 15,324

52 92 61

E-Plus, O2, T-Mobile TIM, Wind, 3 Orange, O2, T-Mobile, 3

Other EMEA Spain Albania Egypt Greece Hungary Ireland Malta 100.0 99.9 50.1 99.8 100.0 100.0 100.0 11,472 649 4,136 4,004 1,735 1,952 167 3,793 3,586 1,541 4,293 2,513 15,969 7,360 5,023 15,482 3,971 87,646 18 23 44 9 21 5 4 11 10 7 (1) 64 11 28 37 59 3 22 11,472 648 2,072 3,996 1,735 1,952 167 3,789 3,586 1,541 1,073 879 7,011 1,443 1,010 5,087 993 48,454 53 97 85 66 76 72 90 56 78 38 60 98 45 53 65 87 36 64 Amena, Telefnica Mviles AMC MobiNil Cosmote, Q-Telecom, TIM Pannon GSM, T-Mobile Meteor, O2, 3 Go Mobile KPN Mobile, Orange, TMobile, Telfort Optimus, TMN SpringMobil, Tele2, Telia, 3 BASE (KPN), Mobistar (Orange) Kencell(12) Bouygues, Orange Centertel, ERA Orange, Cosmorom, Zapp Cell C, MTN Orange, Sunrise, Tele2

Netherlands 99.9 Portugal Sweden Belgium Kenya France(7) Poland Romania South Africa(8) Total Americas United States(9) 44.4 100.0 100.0 25.0 35.0 43.9 19.6 99.1 35.0

Switzerland 25.0

45,452

17

20,173

National operators(10): Cingular Wireless,

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Nextel(11), Sprint PCS(11), TMobile Asia Pacific Japan Australia New Zealand Fiji China(13) Total Group Total 97.7 100.0 100.0 49.0 3.3 15,041 2,731 1,891 155 213,874 233,692 431,839 1 10 18 36 42 38 27 14,692 2,731 1,891 76 6,994 26,384 154,838 11 69 78 93 72 68 61 au,NTT DoCoMo, Tu-ka Optus, Orange, Telstra, 3 Telecom, TelstraClear China Netcom, China Telecom, China Unicom

Figure1 Summary of Group mobile telecommunications businesses at 31 March 2005 Sourcewww.vodafone.com (1) All controlled networks operate under the Vodafone brand. Networks in which the Company does not have a controlling interest operate under the following brands: Belgium Proximus; France SFR; Poland Plus GSM; Switzerland Swisscom Mobile; Romania Connex; United States Verizon Wireless; Fiji Vodafone; China China Mobile; South Africa Vodacom; Kenya Safaricom. (2) All ownership percentages are stated as at 31 March 2005 and exclude options, warrants or other rights or obligations of the Group to increase or decrease ownership in any venture as detailed in Operating and Financial Review and Prospects Liquidity and Capital Resources Option agreements and also exclude the conditional agreements to acquire controlling stakes in MobiFon and Oskar as detailed in Business Overview History and Development of the Company. Ownership interests have been rounded to the nearest tenth of one percent. (3) A mobile customer is defined as a subscriber identify module (SIM) or, in territories where

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SIMs do not exist, a unique mobile telephone number which has access to the network for any purpose (including data only usage) except telemetric applications. Telemetric applications include, but are not limited to, asset and equipment tracking and mobile payment / billing functionality (for example, vending machines and meter readings) and include voice enabled customers whose usage is limited to a central service operation(for example,emergency response applications in vehicles). (4) Venture customer growth is for the twelve month period to 31 March 2005 (5) Prepaid customer percentages are calculated on a venture basis. (6) Table excludes MVNOs and other competitors who do not operate a mobile telecommunications network. (7) At 31 March 2005, the Groups associate in France had subsidiaries in La Runion and La Mayotte. Customers in these subsidiaries have been included in the Groups customer figures since September 2004. Hence, customer growth in the financial year includes 515,000 venture customers which had previously been excluded from the Groups customer base. At 31 March 2005, the Groups proportionate customers included 226,000 customers in respect of these subsidiaries. (8) At 31 March 2005, the Groups associate in South Africa had subsidiaries in the Democratic Republic of the Congo, Lesotho, Mozambique and Tanzania. Customers in these subsidiaries have been included in the Groups customer figures since September 2004. Hence, customer growth in the financial year includes 2,645,000 venture customers which had previously been excluded from the Groups customer base. At 31 March 2005, the Groups proportionate customers included 594,000 customers in respect of these subsidiaries. (9) The Groups ownership interest in Verizon Wireless is 45.0%. However, the Groups proportionate customer base has been adjusted for Verizon Wirelesss proportionate ownership of its customer base across all its network interests of approximately 98.6% at 31 March 2005. In the absence of acquired interests, this proportionate ownership will vary slightly from period to period depending on the underlying mix of net additions across each of these networks. (10) This is not a full list of US network operators. In the United States, in addition to the national operators shown, there are several regional and numerous local operators.

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(11) On 15 December 2004, Sprint PCS and Nextel announced their intention to merge. This merger is subject to US regulatory approval. (12) The Kenyan Government has awarded a third license but the operator had not commenced service at 24 May 2005. (13) Customer growth in the financial year in China includes 26,831,000 venture customers from the acquisition of Chinese provincial network operators in the year.

4.2.The strategic context According to Arun Serin, the present Chief Executive of Vodafone: At Vodafone, everything we do furthers our desire to create mobile connections for individuals, businesses and communities. Our Vision is to be the worlds mobile communications leader and were delighted by the prospects for the future of our industry. Our commitment to this industry is underlined by our company values, which state that everything we do is driven by our passion for customers, our people, results and the world around us24. The success of Vodafones effort requires a commitment to deliver on their six strategic goals25: 1.Provide superior shareholder returns The continued strength in their financial performance enables them to increase returns to their shareholders on an ongoing basis. During 2004 they have done this through increasing their dividends and their share purchase programme. In the next 12 months, they intend to expand this share purchase programme further, buying back shares worth 3 billion and returning, through their dividends and their share purchases, more than 50% of the cash they have generated.
24 25

www.vodafone.com www.vodafone.com

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By delivering on their goals and conducting rigorous economic and financial analyses before making pricing, acquisition and scale decisions, they demonstrate the discipline to always act in the best interests of their shareholders.

2.Delight their customers Vodafone has rededicated themselves to delighting their customers because they believe this is the foundation for their continued success. They recognize that every customer interaction provides another opportunity to win loyalty and thats why they continue to raise standards on the quality of customer care in the call centers and their stores and the quality of the networks. Key to delighting the customers is the ability to deliver superior voice and data services according to differing customer needs. Throughout the past few years, Vodafone has done a great job of building brand awareness as they have moved towards a single global brand. Beyond brand awareness, they want people to understand that the Vodafone name represents great service, great value and great innovation. When Vodafone becomes synonymous with these attributes they will achieve brand preference and expect to see their market share climb as a result.

3.Leverage global scale and scope Another unique advantage for Vodafone is the expansive global footprint. Operating in 28 markets puts them in an enviable position to leverage their global scale and scope. They are using this advantage to deliver exceptional 3G-based services, where they are aiming to attract even higher market share. Another competitive advantage is their leadership position on cost and time to market. 4.Expand market boundaries Expanding the market boundaries is another priority for Vodafone. They continue to build productive strategic relationships in the mobile environment. In the productivity areas they are

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working with Microsoft and other IT companies. In the content areas, they have recently taken a big step forward in the music arena through the agreement with Sony Music. In their changing industry, opportunities to expand geographically will continue to present themselves and, if they make sense both strategically and financially, they intend to give them serious consideration.

5.Build the best global Vodafone team As the business expands and the environment around Vodafone evolves, it is crucial for them to develop, recruit and retain the people that will lead them into this new world. They are working hard to make sure their employees have the right skills and knowledge to anticipate their customers needs. 6. Be a responsible business As a large, multinational company Vodafone inevitably raises expectations amongst all their stakeholders. Being a responsible business is about the way they manage their impact on society, the environment and the economy. They are committed to the highest standards of business integrity and governance. Their businesses around the world are important to the infrastructure of the economies and societies they serve and they take our broader corporate responsibilities very seriously. In 1997 Vodafone was already established as the market leader in the UK and had some presence overseas, notably in Australia and some minority stakes in other markets. There were relationships with overseas cellular phone operators in order to provide access for Vodafones customers in those countries. However, in general the global market for mobile telephony was organized on largely national lines ( like the fixed-wire market). But there were signs that this was changing and the marketing team commissioned a strategic review to assess the international market26.

26

Gilmore, F. (2001), Warriors on the High Wire, Harper Colling Business, p. 139.

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From a technical standpoint, the spectrum, speed and capacity of the technical standards for the new generation services would satisfy the demand for the new generation services would be substituted for fixed line capacity for consumers. The new technical standards would also enable a whole range of new non-voice services for both businesses and the individual. This included the potential for making a reality of Internet access and other data services for wireless users. In addition, the process of international standardization, which had already occurred with global systems for mobile communication (GSM), would be extended with the third generation of mobile phone licenses so that the company could envisage world service provision with new applications and products, particularly in the data field, which would give advantage to the global player. This would extend the advantage of international roaming which was already available through GSM. These two capabilities when combined with a global presence, would enable a globally competent and capable operator to differentiate their services for the corporate user, which are generally the most profitable, as well as optimizing their position with the higher spending and increasingly internationally mobile consumer market. In Europe, it was clear that demand for mobile communications showed no signs of slowing and had made a breakthrough in popular culture. It had changed the way people conducted their lives and was a highly desired service. In some ways, this phenomenon was only happening in the US in 2004. The companys strategic analysis also showed that the major fixed-wire telecom companiesmany fairly recently privatized- were ambitious to grow beyond their national boundaries. The next generation mobile phone licenses were not far away and this would provide them and others with a potential means of entry. Although Vodafone did not know at that time that they would largely follow the UK model of an auction, it was known that such licenses would not be cheap. Vodafone sensed a changing marketplace in which there would be only a few really successful global players, who would require access to capital markets and strong on-going cash flow in order to be able to purchase the new licenses, invest in research and development, maintain their infrastructure and continue with appropriate investment in marketing, in order to maintain customer loyalty and to recruit new customers. The team identified significant synergies in this changed scenario, particularly in procurement and in research and development. In procurement, they were able to use their buying power to reduce the cost of equipment purchase and in R&D there was a huge amount of duplicated

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effort in developing and introducing new services. They identified some possible synergies in marketing, but recognized that this area would require much more detailed work before they could be accurately quantified. Vodafone therefore, embarked upon a three-way growth strategy. First, they aimed to become a global business so that they could optimize services to customers and differentiate themselves from regional and national players. Secondly, they decided to accelerate growth in their existing markets, through the active promotion of prepay products aimed at the customer, through investment both in their marketing capability with their own retail outlets and in non-specialist multiple retailers. They also consolidated and developed their brand identity in each of all their territories. Finally, they started working on non-voice services, which they knew would take time to develop and eventually provide sustained growth and enhance margins as Vodafone moved up the value chain. To achieve their ambition to become a global player, they evaluated a number of options. In some cases, their partners were not in cellular phones as a core business, but were hoping to enjoy a good investment return when they exited. This enabled Vodafone to gain control in places like Netherlands and Greece. They were also successful in bidding for new licenses in countries such as Egypt and in making individual country acquisitions such as in New Zealand27. However, to become a true global player there were needed major moves and this is the strategic context of the two large acquisitions undertaken by Vodafone in the period of less than a year. The first acquisition was AirTouch, a significant cellular phone operator on the West coast of the US with the added benefit of a number of stakes in mobile phone companies in Europe, including the Romanian player, Mobifon. This was an agreed deal, although there was stiff competition from Bell Atlantic and the wireless interests of GTE to create the leading operator in the US with over 23 million customers, a single digital technical standard and a presence in forty-nine out of the fifty markets. Soon after the completion of this transaction, Hutchinson Whampoa, the owner of Orange, a major UK competitor with some presence in other markets, sold its shareholders to Mannesmann, a German conglomerate, which interests in both fixed-wire and cellular phones. More importantly, Mannesmann had been a partner with AirTouch for some years and the two companies had shareholding in mobile phone companies elsewhere in Europe. They had to do something and not allow the European infrastructure to be taken over by a competitor, but more importantly their work
27

Gilmore, F. (2001), Warriors on the High Wire, Harper Colling Business.p-140.141

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on synergies gave them, and ultimately their shareholders, the confidence to move on with the first contested bid in German history28

The groundwork for a branding strategy As it was mentioned earlier, there was some initial work on the possible marketing synergies from the enlarged business, but still, Vodafone needed a more detailed appraisal. The enlarged group had subsidiaries in all the major countries in Europe, in the US and in a number of other markets. All had different names, different profiles, different product mixes and different histories. The battle for Mannesmann had left some bruised egos, particularly in Germany, where there were some concerns that the British-based company was about to endanger their brand heritage and positioning. Vodafone immediately approached brand consultants Springpoint, who have been invaluable in managing the brand repositioning project, to assist them in this work. They undertook a major research program in all Vodafones major markets to understand the existing brand franchise and positioning in each market. Usually, when multinational research is undertaken, every country management team is anxious to point out the unique features of their market of their business. Springpoint was helpful in focusing everyone on the similarities between countries, not the differences. In fact, these similarities were substantial and fundamental, primarily due to market structure. Across Europe, governments had allowed their own post office telecom (PT) to be either the first or joint first cellular phone company. This had led to a market structure where the old PT business was the safe, steady company and the Vodafone brand was seen as the challenger brand offering perceptions of modernity, freedom and innovation. This happened in Italy, where the old state-run PT was hugely inefficient, leading to high penetration of mobile phones and a very weak brand image for its own cellular phone brand. The company that Vodafone owned, Omnitel, had an outstanding brand image with a reputation of service and innovation. Most of Vodafones companies also had strong brand images, with a similar

28

Elwood, I. (2002), The Essential Brand Book, Kogan Page Ltd., p. 238-241.

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vocabulary, although less powerfully expressed. All the brands in Vodafones portfolio were number one or two in their respective markets, so there were no weak links. Vodafones home market, in the UK, had a very different structure since BT had only entered the market as a minority partner in a joint venture and Vodafone was seen by many as the safe, authoritative brand, with Orange and One-2-One, the more recent entrants, as the challenger brands. In part, this was for reasons of history and in part because Vodafone had deliberately built a strong franchise in the corporate segment of the market where they found, historically, greater brand loyalty and higher usage. It was also clear, that, because mobile telephony is a new young market, consumers expected change. They had seen massive innovation in terms of physical products, new services being introduced, new payment methods and new entrants. Many saw mergers, takeovers and alliances as part of everyday life. At the same time, it was also apparent that the mobile phone had become for most users an indispensable part of their everyday lifestyle: it was something that they could not do without. Some quotations surprised in any environment today bring this to life: I couldnt cope without it; I dont know how I ever managed before. This was a significant moment in the development of the brand. Vodafone needed to consider very carefully how to go forward. They explored attitudes of our management in each country as well as the consumer, since they would be responsible for implementing their strategy. Here again they found some degree of similarity. The bruises of the battle for Mannesman left some degree of suspicion of the corporate management and their intentions, as might be expected. They also saw change as a constant feature of their market, so a change of ownership was but another change they had to manage. Perhaps more importantly, our local management were fiercely proud of their local brands. In many cases they had been there from the beginning, joining a small risky venture in its early days and having consequently a feeling of parental responsibility for the baby they had nurtured. In a number of countries they described their battle with the established giant PT company as David versus Goliath. As one manager of Vodafone said: We changed the shape of this industrywe made a huge number of innovations in marketing, products, services, technology. We made it possible for everybody to buy a cell phone, which wasnt possible when the market was dominated by a state owned giant. And the people in the company are proud of that and proud of working for the company29.
29

Gilmore, F. (2001), Warriors on the High Wire, Harper Colling Business, p. 143-144.

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Vodafones managers could see the advantage for stronger links between the companies although preferably without making any change to the brand name. They saw enormous benefits coming from the new links with Vodafone: they immediately identified advantages from combined purchasing power, transfer of best practices, representation of regulatory authorities; the creation of global products and services and the development of their and their colleagues careers. And all the companies had a strong customer ethos and prided themselves on their dynamism, service, efficiency and innovation. There were some concerns that the entrepreneurial spirit and the vigor of the organization could be lost in a multinational giant. There was a perceived risk of losing customers and significant part of the personnel in the local teams. So Vodafone had a starting point for developing a European strategy at least, but without a clear consensus of where to go. 4.3.The case for a single brand

As one might expect from the attitudes of local managers expressed above, there was no overwhelming desire for local name changes. They had worked hard and invested money in developing a local brand equity and saw no point in throwing this away. All the other synergy benefits did not require common branding, so why not focus on achieving those and why risk the change? A part of managers understood this attitude, although they did not agree with it. Vodafone clearly had some very similar brand positioning around Europe and so they were not trying to unite totally different brand franchises. More importantly, they looked hard at the future development of the market and attitudes of consumers. It is clear that the core benefits of mobile phones are universal- the opportunity and freedom to communicate whenever and wherever you want. These benefits do not fundamentally differ from Milan to Malmo or Manchester to Malaga. Of course, there would be higher usage in countries with poor fixed line networks and a different product mix between business and consumer and between pay as you go and conventional billing, but the basic benefit is the same. The introduction of WAP technology began to change this: it would no longer be just voice communications for the majority and date communication for some business users, but it would

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provide totally mobile access to Internet content and to transactions on the Net. Thus, the emotional benefit, which it was believed that Vodafone could legitimately own, was the offer of a richer and more fulfilling life. One key factor in evaluating this was the attitude of consumers themselves to a single brand: most of the attitudes were positive- more innovation, new and better services- but there were some lingering concerns- would prices increase, would local services reduced to a lowest common denominator, would local customer service deteriorate? One critical factor was that users of mobile phones, and particularly heavy users, travel a great deal and see the current roaming capability as a highly desirable benefit. You only have to watch a business flight disembark at any airport to have vivid empirical evidence of this. However roaming as currently configured, is not ideal since not all features are available and sometimes they need different numbers for access. A key product advantage would be Vodafones ability to offer identical services with identical numbers anywhere in the world30. Vodafone had already taken the decision to form a joint venture with the giant French media company Vivendi for the entertainment content of their core Internet offer. They judged that the quality of this offer would be greatly enhanced by more resources and a larger customer base if Vodafone went ahead alone. For other input, notably their sport and business offer on the internet, they judged that greater local tailoring would be required and that it would have been better to provide this themselves. Vodafone therefore came to the conclusion that they could provide some real substation to the brand positioning which fitted their brand profile and their customers needs. They also judged that over time they would have the resources and imagination to develop new services for their customers to provide on-going justification for their claims. Vodafone itself was largely unknown except Germany, where the profile of the bid battle meant that everyone had heard about it. They also explored attitudes to the British/ English provenance of Vodafone. In northern Europe, British companies are seen as more likely to be sensitive to local culture than others might be, but are not considered to be as technically advanced as German companies. There is some feeling there that they are not good Europeans and will only speak English. By contrast in Southern Europe, Britishness implies reliability, trustworthiness, punctuality, flexibility and sensitivity to other cultures as well as more advanced technology. Overall there is an
30

Gilmore, F. (2001), Warriors on the High Wire, Harper Colling Business, p. 145-147.

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acceptance of the existence of multinational companies in the modern world and the feeling that mobile telecommunications was an industry in which one would expect multinationals to exist. There were a number of other important factors which questioned Vodafone s decision. Historically, international marketing was largely about shared advertising and certainly satellite television and the Net make this an important factor. On the other hand, it is a very limiting perspective on the modern marketing mix. Vodafone in the UK has invested heavily, and successfully, in sponsorship- initially of cricket and horseracing, but latterly with sponsorship of Manchester United, one of the most widely followed football clubs in the world. The company sees sponsorship as a means of both maintaining brand awareness through continuous media coverage or our corporate identity and building our relationship with our business customers and suppliers through high-quality corporate entertainment. Clearly, Vodafone do not expect the mass of the European customers to receive much coverage of the English cricket squad or even of the Derby. However, Vodafone s relationship with Manchester United has a global dimension and there may also be opportunities for major international sport sponsorship in the future. It is much easier to consider this with a single brand. The process of acquiring both AitTouch and Mannesman, had given Vodafone a huge profile in the investment community, amongst both professional and private investors. Vodafone has moved to being the largest company by capitalization in the UK and one of the top five in the world. As a result, Vodafone was a name on every investors lips. The company believes it is right that they seek to reinforce this by maintaining the link between the corporate brand and its key operating constituents. Finally, the competition authorities in Brussels imposed a condition for their approval of our acquisition of Mannesmann that Vodafone must divest its shareholding in Orange. While they initially considered a flotation, Vodafone eventually concluded that , if they could achieve the right price, a trade sale could deliver an advantage of speed and equivalent if not superior value. They eventually sold Orange to France Telecom for 31 billion pounds. In doing so, they recognized that they were creating a bigger competitor and that the enlarged entity would move forward rapidly with the Orange name. This meant that there was likely to be at least one international rival with the advantage of a single brand name and positioning. The chief executive back then, Chris Gent, felt that we would not risk compromise for Vodafone in the light of such competition.

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Implementing a single brand Vodafone therefore reached the conclusion that they should move forward with a single global brand. Further work on the potential synergies in marketing revealed that significant savings could be achieved. Even if these were not delivered completely, the sums involved were sufficiently large to prevent any serious discussion of maintaining the status quo. The company operates in an international, technology-based market and perceptions of technology brands are enhanced if they are believed to be multinational. Consumers have an instinctive grasp of the benefits of scale in technology. Vodafone consumers are highly mobile and use their products all over the world for both business and leisure purposes. There remained the challenging of how to transfer the equity from the local brands to the global brand. The decision was also made that the brand should be Vodafone. Inevitably, the act of compressing many months of work and a huge volume of market research might make this sound a clear-cut decision: while it was clearly my preference and that of my colleagues in corporate management we believed it wrong to impose it unilaterally. However, since Vodafone was well established in the UK and a number of other markets, accounting for over 20 percent of revenues, it seemed wasteful to invest in creating and promoting a new brand name in the absence of any significant negative elements and with some positive factors mentioned above31. In any event, Vodafone clearly had to advise a transition strategy since they could not build Rome/Vodafone in a day. Again they used Springpoint to assist them, particularly in developing the final brand positioning and the design architecture of the transitional approach. They set up a steering group with representatives from a number of different countries and the corporate center. They wanted to tap into the local entrepreneurial spirit and creativity. They were aiming for an organizational structure that would facilitate local execution within an agreed framework in a timely fashion- without the need for a costly central bureaucracy to control everything. At the same time they put in place structures and mechanisms to stimulate the realization of some of the benefits of the enlarged Group- cross-fertilization of ideas, exchange of best practice, generation of new products and services, career development and opportunities for other markets. As Vodafone brand positioning developed, they consciously sought to take some common values that exist across all the brands in out portfolio and some values that are salient only in some
31

Gilmore, F. (2001), Warriors on the High Wire, Harper Colling Business,p. 149.

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countries. In particular, although Vodafone is strongest in the UK and, of course the corporate headquarters is based there, they wanted to avoid falling into the trap of imposing a British brand based on our British values. Vodafone in the future must seen as a true global brand, with no home territory, yet clearly in touch with local cultures in the markets it operates. Vodafone have deliberately set up our headquarters of the European marketing operation in Dusseldorf, a continual reminder that they are building a global, not a British brand. The brand will need to capture the hearts and minds of their customers and our employees. They must not seen as an everyday commodity, but as a truly inspirational brand still has great growth potential and we plan to stay at the forefront of these developments32. Panafon -Vodafone, the leading provider of mobile telecommunications in Greece, announces it will change its brand name to Vodafone effective from today. The change in brand name to Vodafone signals a new era for the company which has played a leading role in every aspect of the development of mobile telecommunications services in Greece since the beginning of its operations. This change in brand name to Vodafone is taking place one year after the adoption of the double brand name, Panafon-Vodafone, from the original name Panafon. However the legal name for the time being still remains Panafon S.A and is the name under which Panafon shares will continue to be listed on the Stock Exchanges. The re-branding to Panafon-Vodafone gradually introduced the Vodafone brand into both the Greek market and consumers conscience, and is in line with Vodafone Groups world-wide strategy to bring controlled subsidiaries under the Vodafone brand umbrella. Vodafone Group aims to make Vodafone one of the worlds most recognizable brands. Surveys carried out indicate the recognition and acceptance of the Vodafone brand in Greece currently stands at more than 81%, a fact that has contributed to the re-branding of PanafonVodafone to Vodafone at this point in time. Vodafone Group has a presence in 28 countries and provides mobile services to more than 95.6 million customers. Vodafone Groups mission as a company is governed by its vision to be the worlds mobile communications leader - enriching customers lives, helping individuals, businesses and communities to be more connected in a mobile world.

32

Gilmore, F. (2001), Warriors on the High Wire, Harper Colling Business, p. 150-151.

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The Vodafone vision is augmented with four principles: passion for customers, passion for employees, passion for results and passion for the world around us. Panafon was Vodafone Groups first major investment outside the United Kingdom, Since the beginning of its operations, Panafon has participated actively in the formation of Vodafone Groups global strategy. Panafon-Vodafones customers have already benefited significantly from the participation in the Vodafone Group family from global products offering (Eurocall, VHS), as well as high quality of services, offered through the Vodafone shops. Speaking about the change in the brand name of Panafon-Vodafone to Vodafone, Mr. George Koronias, CEO of Vodafone (in Greece), said: This is the beginning of a new era for the company. Our active participation in a major global mobile telecommunications company provides Vodafone in Greece the opportunity to become even more competitive and to continue to play the leading role in developments within Greek mobile telecommunications market. The Greek mobile telecommunications market Mr. Koronias continued: As we move towards the new generation of technologies that connect mobile phones to the Internet, the presence of Vodafone in our country will be even more evident. The change of brand name to Vodafone taking place today constitutes a token of the unambiguous success of our strategic moves and choices so far and at the same time marks a new beginning for the business. I feel proud of the achievements to date and I am confident we will continue to lead mobile telecommunications in Greece33. The core positioning is that Vodafone enables people to get more out of life. They see this in two ways: As fulfilling- opening up more possibilities so you can do more that of what you want. As empowering- giving you control so you can live your life the way you want to and connect with the communities that are important to customers. Vodafone supports this with a number of important underlying core values34: Dependability Empathy
33

www.vodafone.hu www.vodafone.com

34

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Can-do attitude Innovation Joie de vivre There was a clear need for migration strategy in order to transfer the undoubted equity in the local brands to Vodafone in a timely and effective way. This will require an interim dual-branding phase with the local brand and Vodafone appearing together for anything from six months to two years. However we recognized that the brand identity itself is only one part of the equation: elements such as new product development and continuity of service as well as other internal and external communication will all be crucial to the transfer of equity. Somewhat unusually, Vodafone established the principle that, during the transition phase, the local brand will be dominant with Vodafone as a lower level endorsement, along with some local freedom to decide on the right framework for the presentation of the two brand identities. Now Vodafone has operations in twenty-eight countries, across five continents, serving 154.8 million customers. The company still has places in the world where it would like to be but they are confident about their capability to make Vodafone a powerful global consumer brand with high levels of awareness and strong emotional values in a short amount of tim

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