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GEA COLLEGE OF ENTREPRENEURSHIP

DIPLOMA PAPER

DANIELA MILOSHESKA

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GEA COLLEGE OF ENTREPRENEURSHIP

HOW THE BRAND AFFECTS THE VALUE OF THE PRODUCT diploma thesis

MENTOR: Andrej Pompe

AUTHOR: Daniela Milosheska

Ljubljana, April 2009

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Acknowledgment

“Sometimes our light goes out but is blown into flame by another human being. Each of us owes deepest thanks to those who have rekindled this light.”

By unknown author

Someone far cleverer than I am spoke these words a long time before. I use them now to show to all of those who have really rekindled this light that my gratitude goes far beyond these words.

I would like to show special thanks to those who have brought me to this stage, supporting each and every step along the way, no matter how wrong or right it might had been.

My parents, who had offered their help unconditionally and unselfishly whenever I found myself in the abyss, the same ones who have stood beside me each and every step along the way deserve more than my words of appreciation. Unfortunately these words are only thing I can offer, for now. Thank you for being there whenever I needed you.

My sister who is the most important thing in my life, for showing me such love and support that one could only dream of. I am lucky to have her. I want to thank you from the bottom of my heart, but for you my heart has no bottom.

Another thank you goes to Rinalda Klemencic, who was my mentor during the internship. Thank you for showing me the basics.

Finally, my special thanks go to my mentor Andrej Pompe, who has widely opened the doors of his company so that I can gain some experience. Not a lot of people are willing to do that. Thank you.

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SUMMARY/ABSTRACT

Brand… What does it mean? Some define it as the “f” word of marketing (Mark Di Soma, Audacity Group), some compare it to onion with its layers and core content (Edwin Artzt), while others consider it as a product of a thousand small gestures (Michael Eisner, CEO Disney). I define it as the very beginning and the very end of the golden era of corporations, the backbone of each and every flourishing company, the aorta of the heart of one successful organization and the engine of the exquisite machine for profitability in today’s competitive market.

Since its appearance from 1200 AD up until today its impact on society is immense. It has created a world where innovation and creativity are the basics for a successful performance and sustainable growth, a place where there are no boundaries, just simple relationships between the customers and companies. This tremendous impact is composed of loyalty, innovativeness, mutual relationship, emotional bonding and several different elements. This huge impact is also the reason behind the choice of my topic for thesis.

I’ve always been intrigued by the phenomenon of the brands and how they are managing to capture attention from its audience, but most important to how they determine the value of the product. In order to prove that the brand has a tremendous impact on the value of the product I will try to define the word brand, travel a bit throughout its history, establish the criteria for the choice of the brand elements, identify the marketing communication options that might help in strengthening the brand, etc.

In this thesis I will provide a lot of case studies and examples about world’s well known brand names so that I can prove my one and only objective which is THE BRAND AFFECTS THE VALUE OF THE PRODUCT. The main objective and purpose for doing this thesis is to analyze how the brands affect a particular product and why completely same products have different values on the market, even though they might contain the same ingredients, or have equivalent tastes, or even possess same odor. I am going to explore the reasons behind this phenomenon and provide facts for why is this happening, as well as the methods of its achievement. In order to demonstrate that this is right I will try to explain the complexity that the brand incorporates, by going deeper into the processes of creating and establishing, as well as maintaining the brand as strong as possible.

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Keywords: brand, brand equity, branding, strongest brands, brand perception

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POVEZETEK Blagovna znamka … Kaj ta izraz sploh pomeni? Nekateri blagovno znamko definirajo kot »besedo na f v marketingu« (Mark Di Soma, Audacity Group), nekateri pravijo, da je kot čebula, saj je jedro z vsebino obdano z mnogimi plastmi (Edwin Artzt), spet tretji jo označujejo kot izdelek s tisočerimi majhnimi potezami (Michael Eisner, CEO Disney). Sama jo definiram kot začetek in konec zlate dobe korporacij, hrbtenico čisto vsakega cvetočega podjetja, aorto do srca vsake uspešne organizacije in motor dovršenega stroja za doseganje donosnosti na sodobnih konkurenčnih trgih.

Vse od pojava znamk okoli leta 1200 je njihov vpliv na družbo ogromen. Tržne znamke so ustvarile svet, v katerem sta inovativnost in kreativnost osnovi za uspešno poslovanje in trajnostno rast, svet, v katerem ni mej, ampak le preprosti odnosi med potrošniki in podjetji. Ta izreden vpliv je skupek lojalnosti, inovativnosti, vzajemnih odnosov, čustvenih povezav in številnih drugih elementov. Prav ogromen vpliv blagovnih znamk je razlog, da sem si za diplomsko delo izbrala prav to temo.

Že dalj časa me navdihuje pojem blagovnih znamk in to, kako jim uspe pridobiti pozornost svojega občinstva in kako vplivajo na vrednost izdelka. Da bi dokazala, da ima blagovna znamka ogromen vpliv na vrednost izdelka, bom skušala opredeliti izraz tržna znamka, se nekoliko spustila v njeno preteklost, določila kriterije za izbiro elementov tržne znamke, prepoznala možnosti tržnega komuniciranja, ki lahko pomagajo pri krepitvi znamke itd.

V svoje delo bom vključila veliko študij primerov v svetu najbolj znanih blagovnih znamk, da bom s tem dokazala svojo edino tezo naloge, ki se glasi: TRŽNA ZNAMKA VPLIVA NA VREDNOST IZDELKA. Da bi dokazala pravilnost te trditve, bom skušala pojasniti kompleksnost blagovne znamke, in sicer s podrobnim raziskovanjem tako procesov ustvarjanja in uveljavljanja kot tudi ohranjanja blagovne znamke močne, kot se le da.

Čeprav so blagovne znamke stare že nekaj stoletij, pa je veda, ki jih preučuje, še razmeroma mlada. To je sicer lahko ovira, vendar je o tej temi na voljo vsak dan več informacij, tako v objavljenih publikacijah ter študijah primerov prihajajočih in uveljavljenih znamk, kot tudi na internetu. Druga možna ovira bi lahko bila moja neizkušenost na področju

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marketinga. Čeprav sem prebrala veliko število knjig na to temo, do sedaj še nisem delala za kakšno blagovno znamko ali sodelovala pri projektu znamčenja.

Kot sem že omenila, bo v diplomsko delo vključeno veliko število primerov in študij primerov. Za tak način namesto klasičnega, pri katerem bi raziskavo delala samo na primeru enega podjetja, sem se odločila, ker želim v raziskavo vključiti širši spekter podjetji, da bi lahko učinkoviteje izdelala dokaz svoje teze in dobila bolj trdne rezultate.

Glavni cilj in namen te diplomske naloge je analizirati, kako tržna znamka vpliva na določen izdelek in zakaj imajo enaki izdelki na tržišču različno ceno, čeprav lahko vsebujejo enake sestavine, imajo enake okuse ali celo enak vonj. V nalogi bom poiskala vzroke za tak pojav in navedla dejstva, zakaj se to dogaja, in seveda metode, po katerih sem to ugotovila.

Za predvidene raziskovalne metode sem izbrala iskanje po internetu s pomočjo iskalnikov ter raziskovanje bogate knjižnične literature in strokovnih del. Ker bom pisala o največjih svetovnih podjetjih, ki so ustvarili in ohranili močno tržno znamko, telefonski intervjuji v moji nalogi ne pridejo v poštev. S pregledom zgodovine teh podjetij bom skušala najti elemente, ki jim zagotavljajo vodilni položaj na trgu in jih razlikujejo od ostalih podjetij. Kot rečeno, bom to naredila predvsem s pomočjo informacij na spletnih straneh in v objavljenih publikacijah.

Ključne besede: blagovna znamka, vrednost blagovne znamke, znamčenje, najmočnejše znamke, percepcija blagovne znamke

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TABLE OF CONTENTS

1. INTRODUCTION………………………………………………….4

2. WHAT IS BRAND?

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2.2. Brand brief history………………………………………………9

2.3. Strongest brands……………………………………………… 15

2.1. Definition and different opinions………………………………

3. MAKING STRONG BRAND

3.1. Brand equity……………………………………………………22

3.2. Four steps of brand building……………………………………26

3.3. Benefits of a strong brand………………………………………31

4. BRAND ELEMENTS

4.1. Brand positioning………………………………………………32

4.2. Brand mantras and brand audits……………………………… 35

4.3. Brand elements which affect the human perception…………

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5. HOW BRAND AFFECTS THE VALUE OF THE PRODUCT

5.1. Product strategy………………………………………………

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5.2. Pricing strategy…………………………………………………41

5.3. Channel strategy……………………………………………… 43

5.4. Market communication options……………………………… 45

5.5. How do consumers perceive and choose brands……………… 49

6. CONCLUSION…………………………………………………….56

7. BIBLIOGRAPHY………………………………………………….58

8. APPENDIXES …………………………………………………… 61

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LIST OF TABLES

1. Table 1: Calculating the brand value (The 100 most powerful brands: BrandZ top100 brand ranking)……………………………………………………………28

2. Table 2: The 30 most powerful brands in 2008 according to their brand… 29

3. Table 3: Top 10 brands with highest brand contribution (The 100 most powerful brands: BrandZ top100 brand ranking)…………………………… 30

4. Table 4: Top 10 brands with highest brand momentum (The 100 most powerful brands: BrandZ top100 brand ranking)…………………………… 31

5. Table 5: Projective technique……………………………………………………84

LIST OF GRAPHS

1. Graph 1: “BLAKE PROJECT”……………………………………………….42

2. Graph 2: Keller’s customers’ based brand equity model…………………….45

3. Graph 3: Keller’s model for Calvin Klein’s brand…………………………….49

4. Graph 4: Brand positioning……………………………………………………

5. Graph 5: The basic perceptual map…………………………………………… 55

6. Graph 6: Porter’s value chain…………………………………………………

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1.

INTRODUCTION

Brand… What does it mean? Some define it as the “f” word of marketing (Mark Di Soma, Audacity Group), some compare it to onion with its layers and core content (Edwin Artzt), while others consider it as a product of a thousand small gestures (Michael Eisner, CEO Disney). I define it as the very beginning and the very end of the golden era of corporations, the backbone of each and every flourishing company, the aorta of the heart of one successful organization and the engine of the exquisite machine for profitability in today’s competitive market.

Since its appearance from 1200 AD up until today its impact on society is immense. It has created a world where innovation and creativity are the basics for a successful performance and sustainable growth, a place where there are no boundaries, just simple relationships between the customers and companies. This tremendous impact is composed of loyalty, innovativeness, mutual relationship, emotional bonding and several different elements. This huge impact is also the reason behind the choice of my topic for thesis.

I’ve always been intrigued by the phenomenon of the brands and how they are managing to capture attention from its audience, but most important to how they determine the value of the product. In order to prove that the brand has a tremendous impact on the value of the product I will try to define the word brand, travel a bit throughout its history, establish the criteria for the choice of the brand elements, identify the marketing communication options that might help in strengthening the brand, etc.

In this thesis I will provide a lot of case studies and examples about world’s well known brand names so that I can prove my one and only objective which is THE BRAND AFFECTS THE VALUE OF THE PRODUCT. The main objective and purpose for doing this thesis is to analyze how the brands affect a particular product and why completely same products have different values on the market, even though they might contain the same ingredients, or have equivalent tastes, or even possess same odor. I am going to explore the reasons behind this phenomenon and provide facts for why is this happening, as well as the methods of its achievement. In order to demonstrate that this is right I will try to explain the

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complexity that the brand incorporates, by going deeper into the processes of creating and establishing, as well as maintaining the brand as strong as possible. Keywords: brand, brand equity, branding, strongest brands, brand perception

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1. WHAT IS BRAND?

1.1.Definition and different opinions

Brand… Some define it as the “f” word of marketing (Mark Di Soma 2006), some compare it to the onion with its layers and core content (Edwin Artzt 2004), while others consider it as a product of a thousand small gestures (Michael Eisner, CEO Disney 2000). I define it as the very beginning and the very end of the golden era of corporations, the backbone of each and every flourishing company, the aorta of the heart of one successful organization and the engine of the exquisite machine for profitability in today’s competitive market.

“Any damn fool can put on a deal, but it takes genius, faith and perseverance to create a brand.”

Here is how David Ogilvy, a notable advertising executive, who has often been called, “The father of advertising” defined the term brand. It is clearly seen from the definition that to create a brand does not only require good product, but it also requires lethal skills to package it, skills that include faith and obstinacy.

“I don’t design clothes, I design dreams.”

A huge name in the fashion industry, Ralph Lauren defines the term brand by this sentence only. The truth about branding lies in those dreams and how one interprets them in the society, how they are shape to constitute the reality.

This definitions offer an insight to the overall perception of the word brand. But what about those definitions which are commonly known? What exactly represents the word branding and how this word is defined by the marketing associations around the globe?

I have found out how the American Marketing Association (AMA) and the European Marketing Confederation (EMC) perceive the world of brand.

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A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition.”

This definition actually explains the set of the, so called, elements of the brand, the same ones which are incorporated in the decisive process of the complexity infused in the consumers’ purchasing procedure. It clearly states that in order for one to run a successful business, great attention must be paid to the uniqueness of the products and services he or she offers. The emphasis here is put on that exceptional difference that distinguishes the products and services offered from the ones of the competition. This difference is of an extreme importance if one wishes to establish a strong brand and maintain it for a long period of time.

Even though I strongly agree with this definition, there is something that is lacking. This difference which is the essential is not just something that might contribute for the brand to become the next big thing, but it must be something which the people will actually need. For this reason, I think that brand is something that lives in the mind of each and every one who consumes it. As, Allen P. Adamson puts it “a brand is a promise that links a product or a service to a consumer, by creating words, or images, or emotions, or any combination of the three in order to provide mental associations that get stirred up when one thinks about a particular item, person or even a country.”

It basically says that in order for the brand to be a success story, it must capture not only the minds of the people who purchase it, but the hearts as well. Once that emotional bond is formed, there is nothing and no one strong enough to break it, except for lowered quality and unsuccessful deliverance of the promise that a brand creator makes.

This mental associations created in the minds of the people who purchase them can cause very significant bonds or pacts between the brand and the consumers. Those bonds within time can either strengthen or weaken due to the higher or lower quality of the product or service offered, as well as more or less engagement of the people’s needs and wants.

Above are just a few of the definitions for brand. There are a lot of opinions regarding this topic, since brand is more psychological item and therefore relies a lot on the people’s perception. This means that the idea of the definition of brand and branding can always change due to the subjectivity of the people.

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Another eminent question that cripples here is, how to distinguish between what’s a brand and what’s just a product. A simple answer would be provided by Geoffrey Randall, who in his book “Branding, a practical guide to planning your strategy” differs them in the following way:

A brand has an existence that is more than an actual product or service: it has a life of its own that feeds on the original product, but can also carry its values and identity into new product areas.”

For instance Coca Cola, as the oldest example of all, is a brand, but if you take out the packing and the design of its bottle, the magic of its success will vanish and will only stay the product itself, the beverage inside the bottle.

Having a well known established brand can help in the process of reducing the risk involved in the buying decisions (Roselius 1971,56-61). People’s perception dominates their decision for purchasing certain product or service, therefore the quality provided by a branded product or service positions it much higher and makes it safer for a lot of consumers. In today’s fast moving society, a guaranteed safety is a big plus for one product or service, since the consumers don’t have time to check all the options that they might find on the marketplace, instead they go with the one which name is familiar and clearly associated with quality. So, you see the brand is the king today, because it rules the world and helps people to make up their minds faster.

However, for better understanding of the word brand and the process branding, in this thesis, I will provide a brief journey throughout the centuries, so that it can be clear from where the term was derived and how long ago it was established.

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2.2 Brief history of the brand

PICTURE1: START OF BRANDING

2.2 Brief history of the brand PICTURE1: START OF BRANDING Source: http://experiencecurve.com/arch

Source:http://experiencecurve.com/archives/brief-history-of-branding, 28.03.2009.

This fairytale of innovation and creativity, infused with sparkles of faith and obstinacy started a long time ago, with the first trading among the nations. Some claim it to be way back in 3000 B.C., in Babylon, where the evidence of the first advertising was found. Even though it has a happy ending like almost every fairytale before it, somehow it has a very awkward start. That is what makes this story different from all the others, and the difference the very first root of the tale itself. Yes, I am talking about the king that rules the world, the one and only, THE BRAND.

As I said before the tale takes place in the Ancient times, in the Indus valley, the home of the Sumerians and Akkadians. The Indus Valley, or the so called Harappan civilization, was a place where the foundations of the first economy had been laid in the 2250BC. This same place was the cradle of the earliest example of branding, according to the UCLA Indianologist Stanley Wolpert. He believes that the magnificent seals of tigers, the Brahma bulls, elephants, and other Indian animals “were probably made from merchants who used them to ‘brand’ their wares”.

However a lot of textbooks, which primary topic is the theme of branding, promote a different story, probably due to the fact that there are no written records found that this Harappan society ever existed. Aside from a number of seals found from the excavation written in as yet encrypted script, and the clues provided by the overlap of the Indian and Sumerian artifacts, there is no other facts found that can testimony otherwise. I am thinking that this is the main reason why a lot of textbooks claim that the actual start of the brand was around 1300 B.C.

This is where the bad start initiates. It is commonly believed that the word “brand” comes from an Old Norse word “brandr” which means “to burn”. At these times there were no

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organizations such as “PETA” to protect the animal’s rights, so the Vikings took advantage of this fact and started to brand their animals in order to identify them. I wonder what “PETA” will think if this happens nowadays. Probably they would end up being slaughtered or crucified. Anyway, there were also other countries which started with this tradition. Countries such as ancient Greece, China, and Rome branded the porcelain, the pottery jars and goods such was the bread (P.Adamson 2006, 29).

On the other side not only animals were branded, but people as well. Yes, you’ve read correctly. All those criminals who were committing crimes were marked, as well as slaves in England back in the 1200s. I guess there is no limit to how far the people’s cruelty would go. For instance, in England the criminal would get S on his or her cheek and in France they would be “honored” with the fleur de lis on their shoulder.

Goldsmiths, silversmiths were up next. They were required to mark their goods with a signature or personal symbol and with the sign of the quality of the metal. They were even convicted if they used false marks and therefore harshly punished (Lane Keller 2008,43).

This tradition followed throughout the centuries, with no significant change, up until the sixteenth centaury when the brand names started to develop further, so that they appeared to be very familiar or some even the same as we know of them nowadays. It started by patenting the medicines and tobacco, followed by the whiskey producers. In the eighteenth centaury, the brand names were used to actually make the products easier to remember and put an emphasis on the differences that they posses.

By the nineteenth century, the brand names were commonly used to improve the perception of a product, increase sales volumes, as well as boost the actual performance of the product or the service offered in the market place (P. Adamson 2006,29).

The branding concept for promoting the product or service offered was brought in the United States of America by the Europeans. It started by patenting the medicines and the tobacco by promoting them in various ways. It is here where the process of promotion and publicity first appears. The packaging, the posters, the ads and a lot of other techniques developed and the new dawn, the dawn of advertising was born (P. Adamson 2006,30).

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With the railroads being the primary mode of transportation and distribution, the availability of the products advanced to the point of being reachable nationwide. This marked the beginning of the mass production, as well as the rise of the newspapers and magazines as communication channels, and the laying down of the foundations of advertising, creating again another concept of the media buyer (P. Adamson 2006,30).

The creativity and the innovation gave another side to the business. It showed that it can contribute to the successfulness and enhancement of the core business, by creating emotional bonding with customers and developing designs which can attract them and maintain them for longer period of time. Nowadays, it has reached the point to which the business can not exist without the assistance of the two. They are coexisting and together they make the competition more entertaining and fun to watch.

For instance, in 1970 the America Express developed a product which putted an emphasis on the emotions of their core target customers. They had based their product on simple promise which everybody needed to hear, the promise of security. They had used notable and respective person such was the actor Karl Malden who played a detective on a show called “The Streets of San Francisco”. He was used as a branding signal because he created powerful associations of security in people’s minds. Being the voice of authority he provided strong images in the consumer’s minds accentuating the idea of protection and security, the two most important pillars of the brand. He provided the American Express with an excellent communication tool of safety associated with carrying the American Express Travelers Cheques. The slogan which helped this idea being widely accepted was “Don’t leave home without it” (P. Adamson 2006,34).

PICTURE2: BASS & COMPANY LOGO

(P. Adamson 2006,34). PICTURE2: BASS & COMPANY LOGO SOURCE:http://www.sportingcollect

SOURCE:http://www.sportingcollectibles.com/adagdt/ad9924bass.jpg ,28.03.2008.

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Among the first trademarks in the world was one named Bass & company, the British brewery which claims that their red triangle brand, was actually the first trademark in the history of branding. A lot of other companies, among which the Campbell soups, the Coca Cola and Quaker Oats, followed the lead of the Bass and company, by investing into developing something that can testify and stand for the quality which they represent and the impeccable promise for infallibility they were and still are delivering.

Brands, such were Procter & Gamble, H.J. Heinz and Coca Cola, achieved their success through production innovations and spectacular promotions, as well as successful development of the distribution channel. As the mass production developed further so did these brands. They managed to do this through aggressive promotion, personal selling, specialized marketing techniques, enhanced design, advertising, as well as increased and improved legal protection.

PICTURE3: COCA COLA LOGO

and improved legal protection. PICTURE3: COCA COLA LOGO SOURCE:

SOURCE:http://weblogs.newsday.com/entertainment/tv/blog/coca-cola-logo.jpg

,28.03.2009.

From 1940s on manufacturer started recognizing just how big of an impact the consumers had in determining their volume sales. Therefore, the phrases “brand identity” and “brand personality” were introduced and more and more attention was put into their building. This was the beginning that marked the so called era of the new phrases. In 1960 once the emotional bonding was created and together with it similar brands were perceived as different due to the emotions attached to their image. Pepsi and Coca Cola for instance.

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PICTURE4: PEPSI LOGO

PICTURE4: PEPSI LOGO SOURCE: http://blog.fleka.me/wp-conten t/uploads/2008/12/pepsilogos.jpg , 28.03.2008. In 1980s focus

SOURCE:http://blog.fleka.me/wp-content/uploads/2008/12/pepsilogos.jpg, 28.03.2008.

In 1980s focus was directed upon the trend of buying the brand instead of the product.

Phrases, such were brand value and brand equity were established and elaborated. As a consequence the corporation standing behind the brand became the brand. The fact the Philip

Morris purchased Kraft for six times what the company was worth on paper in 1988, point to one thing only and that was just how much the word “brand” started to contribute to the business value. This tremendous impact started to take a huge swing and all the companies should do was learn how to differentiate and maintain that difference by shaping their products or services according to people’s needs and wants.

A decade later during the 1990s the brand is stronger than the physical dimension of

the product. This period was an important milestone in the following history of the brand and the branding process. Everything has changed and so did the creativity. It evolved in a way that it became the only thing that mattered in establishing the brand, besides the creating of the emotional bond. PICTURE5: PHILIPS LOGO

the creating of the emotional bond. PICTURE5: PHILIPS LOGO SOURCE: http://cln.natureterch.com/produc

SOURCE: http://cln.natureterch.com/products/phone/philips/philips_logo.jpg, 29.03.2008.

This emotional relationship led to consumers overtaking the ownerships of the brands. The products and services offered at that time started to take another side. They were tailor made and designed to satisfy the customers’ needs and wants. Anything that was designed out

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of this pattern was doomed to failure. Example for this was the Philips flat screen TV with a special light source that projected various colors of ambient light onto the wall behind the TV to add depth to a specific scene (Allen P. Adamson 2006, 6). However, although this was cool, Philips failed to see that the people don’t actually need this TV. What was most important was that Philips failed to recognize the huge power that the customers began to hold in the decision making process of purchasing something, that will be exactly what they want and deliver exactly the same expectation they had.

PICTURE6: McDONALDS LOGO

the same expectation they had. PICTURE6: McDONALDS LOGO SOURCE:

SOURCE:http://www.scrapetv.com/News/News%20Pages/Business/images/mcdonalds%20lo

go.jpg ,0l. 04.2009.

Having a loyal customer base means to have established a great relationship and find a way to satisfy the needs and wants, by capturing their attention with quality. Once established this base all one has to do is maintain it and nurture it. These loyal customers buy more than products; they buy trust, friendship, reliability and any number of other intangibles which have value. And those are some of the core components that built brand.

PICTURE7: PLAYBOY LOGO

the core components that built brand. PICTURE7: PLAYBOY LOGO SOURCE:http://www.transport.polymtl.

SOURCE:http://www.transport.polymtl.ca/civ1120/etud_h08/EL_KAOUSSI/playboy_logo_s

ex.jpg ,02.04.2009.

However this difference was not the only thing that the companies should focus on in order to be successful. There was still one thing more that they should develop. In order to have the kind of deep bonding with their loyal customers the only thing that was lacking was

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the creating and developing of some phrase which will be instantly recognizable. This was where the highest level of achievement in the world of branding was established.

Soon afterwards signs such were “the swoosh” (Nike), “the golden arches” (McDonalds), “the bunny” began to emboss in people’s minds, creating associations and linkages which strengthened the perception constituted towards the product or services. This creation of signs and names or even phrases continues to capture the attention of hundreds of people who are searching for the best offer in the marketplace. The idea behind each and every one of them was to find a way how to communicate the right branding signals and with their help to develop competitive advantage, by creating awareness in the human mind, not burdening the consumers with facts and figures. In this time the only most important thing was to learn how to emboss a personality in what one sells, in the simplest way possible which was focusing on the simplicity of the brand idea and thus bringing it into effectiveness.

We all know the phrase “Diamonds are forever”. It was invented in the 1948, when the De Beers Group wanted to add more emotion and symbolic meaning to the purchase of the diamond jewelry. This slogan was so powerful that it soon became one of the most recognized slogans in advertising and helped the further development of the diamond industry, generating more than $25 billion per year in the United States only (Kevin Lane Keller 2008, 12). This slogan remains one of the most successful and the most used one in the history of branding. It is the most suitable example that provides an insight of the tremendous impact that the phrases or words have on their customers.

PICTURE8: DeBEERS LOGO

or words have on their customers. PICTURE8: DeBEERS LOGO SOURCE: http://edevangelista.com /debeers/debeers_logo.jpg

SOURCE: http://edevangelista.com/debeers/debeers_logo.jpg ,01.04.2009.

Another example of successful slogans is Nike, with its tagline “Just do it”. The company Nike was established in 1964 in Santa Monica, California and was named after the Greek Goddess of victory. It’s a company that operates in the field of sportswear and sports equipment. Its famous tagline was created in 1988 for an ad campaign by Dan Wieden. This

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slogan was chosen to be one of the top five slogans in the 20 th century and helped Nike to expand in more countries by putting out more and more products. PICTURE9: NIKE LOGO

by putting out more and more products. PICTURE9: NIKE LOGO SOURCE: http://www.cellphonemessagesender.com/

SOURCE:http://www.cellphonemessagesender.com/blog/wp-content/uploads/2008/11/nike-

logo.gif ,02.04.2009.

Similar to this “Yes we can” phrase embroidered in the Obama’s speech became something that the people recognize and use daily. The hope and faith that Obama brought to the world, gave the people something to believe in, it made people optimistic in a time when everything seemed to fall. The timing, the speeches delivered, the promises made, infused in people something long forgotten, long gone, something that reminded them what faith really means. A lot of people identify with him, since his story is closer to mortals, than to the tales of political Gods. These mental associations that he created in the people’s minds made him the most powerful man in the world today. Because of him being different and unique, he was voted and according to researchers today his name is one of the best known brand names. (Erwin 2008)

PICTURE10: OBAMA AS BRAND

known brand names. (Erwin 2008) PICTURE10: OBAMA AS BRAND SOURCE: http://www.bizzia.com/brandc

SOURCE: http://www.bizzia.com/brandcurve/files/2007/07/logos.jpg ,03.04.2009.

But what happens to those brands which can not deliver the promise they had made? Do they simply fail in the attempt to bring more customers to the table and are doomed forever, or can they actually find their way back to the top? The answer is simple. Once broken, the emotional pack cannot be rebind. The disappointment incurred is just too much to

23

bear, so the customers move on with the new hottest promise on the market, hoping that this time their feeling will not be hurt.

This happened with the Country Time lemonade. The promise which they delivered was that this lemonade had a taste of an old fashioned one, bringing back the memories once tasted. They developed an ad campaign that featured a white-haired grandfather, sitting on a porch on a summer day with ice-cold lemonade in hands. This campaign formed strong relationships with the customers. Everything was going smooth up until the moment when new lemonade emerged with a shocking statistics. The Minute Maid lemonade campaign was an ad which stated that the Minute Maid was made from the juice of twenty lemons, Wyler’s was made from the juice of two lemons and Country Time was made from the juice of no lemons. This statement ruined the relationship between the customers and the company which produced the lemonade. The trust was broken and the people felt that they had been betrayed. This marked the end of the production of the old-fashioned lemonade (P. Adamson

2006,42).

The previously elaborated brief history of branding emphasizes the needs from which the branding originated. Whether they are to identify the source or ownership, to insure honesty, to provide quality assurance, to hold producers responsible, to differentiate, or to create emotional bonding, each and every one contributes equally to the complicated process of branding. Each and every one of them is eligible for creating on added value to the core product or service. 2.3.Strongest brands

PICTURE11: STRONGEST BRANDS

service. 2.3.Strongest brands PICTURE11: STRONGEST BRANDS SOURCE: http://www.bizzia.com/br

SOURCE: http://www.bizzia.com/brandcurve/files/2007/07/logos.jpg ,02.04.2009.

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They say dreaming can get you nowhere, yet there are so many outstanding examples which prove just about the opposite. Starting with Martin Luther King and ending with Bill Gates, the conclusion is quite different of what people claim to be. They had a dream, a vision that made them the most powerful and well-known people in the history of the world. So I couldn’t help but wonder what do all the celebrities, best brands, and successful companies have in common?

The answer is lying hidden under the layers of their own success, which are different in each case. However what they do have in common is the core they all share, the pillar of their own existence and triumph, something that made them so powerful. Yes, the vision and the dream in various forms infused in the heart of the one who builds their system of added values and core competences. Something which is same for everyone and yet different to the extent that makes them unique and lifts them on the pedestal as winners.

It all starts with developing the vision, by creating images that will capture the costumers’ attention, by bringing back the lovable memories, by creating something that can relate to the values, hopes, fears and the different emotions clouding the people’s minds. In that way the creators of the brands are developing something more than a product. They are developing a dream, a fantasy world in which every human wants to take part. They create magical place in which the consumers are active participants. They create pieces of art which are not only beautiful but can relate to the needs and wants of the purchasers.

By adding emotions in the mix it makes it extremely seductive and addictive, so the buyers will develop loyalty and will never want to leave or relinquish, because the emotional bonding is too strong and won’t let them. If this becomes permanent practice than the brand developer has a winner. And these, according to me are the components which are contributing to the constitution of a strong brand.

The strong brands are unique and always stand behind the promises which they make. They are authentic, and have embedded integrity, which means that they are internally and externally consistent. These brands offer the customers benefits of great magnitude, benefits such as functionality, emotionality, experience, and self expressiveness. Their existence is merely based on deeply fulfilling the human needs in unique and superior ways (VanAuken

2006).

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An example of strong brand is the Heinz Ketchup. Its ingredients for success include the sweet tasting product, a carefully monitored price gap with competitors and aggressive packaging, product development and promotional efforts. 1

The strength of the brand is valued upon two things: consumer sentiment and the company’s ability to translate that sentiment into shareholder value (Seddon 2008, 1).

According to this, BrandZ which is the largest repository of brand equity data has done a research of the top 100 most powerful brands in 2008. They have been evaluated according to their brand value, brand contribution and brand momentum.

The brand contribution is the degree to which brand equity plays a role in generating earnings. It is measured on a scale from 1 to 5, 5 being the strongest brand contribution.

The brand momentum represents the expected growth of the brand in short term period. It’s an index from 1 to 10 where 10 indicate the brands with the highest short term growth potential.

The brand value represents the financial value of the brand, defined as the sum of all earnings that a brand is expected to generate. Its calculation is shown in Table1.

1 www.heinzketchup.com

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Table 1: Calculating the brand value (The 100 most powerful brands: BrandZ top100 brand ranking)

100 most powerful brands: BrandZ top100 brand ranking) SOURCE : Brown 2009. In the following table,

SOURCE: Brown 2009. In the following table, there are the results of the research of the first thirty

27

Table 2: The 30 most powerful brands in 2008 according to their brand

The 30 most powerful brands in 2008 according to their brand SOURCE: Brown 2009. Since the

SOURCE: Brown 2009.

Since the research was done according to three components. I will also include the table which positions the brands regarding their brand contribution and brand momentum.

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Table 3: Top 10 brands with highest brand contribution (The 100 most powerful brands: BrandZ top100 brand ranking)

(The 100 most powerful brands: BrandZ top100 brand ranking) SOURCE: Brown 2009. This table shows the

SOURCE: Brown 2009.

This table shows the rankings according to the brand contribution, the degree to which the equity plays a role in generating earnings. The first place belongs to Louis Vuitton, a French brand operating on the fashion market. This means that Louis Vuitton’s outcomes of its marketing effects are very high. The marketing team knows exactly how to portrait an image of the products they have and attach to it a dose of emotions to make it immortal in people’s minds. This applies to all of the other brands listed in the table.

My personal favorite is Chanel, which is number 7, but with the same brand contribution as Louis Vuitton. Although they are both a part of the fashion industry, still my preferences are directed towards Chanel. The fact that I love this fashion brand is due to the design of their clothes and a great part to their commercials. There is something within it that makes it so special in my eyes. They don’t just make clothes, but they create pieces of art which are worth every single euro spent on them.

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Table 4: Top 10 brands with highest brand momentum (The 100 most powerful brands:

BrandZ top100 brand ranking)

(The 100 most powerful brands: BrandZ top100 brand ranking) SOURCE: Brown 2009. As presented in the

SOURCE: Brown 2009.

As presented in the table above, a lot of brands that have great expected growth of the brand in short term are a part of the fashion industry. It seems like the people’s awareness of the fashion has increased significantly throughout the years. Clothes are not only seen as things which are covering you body, but a way of expression of the personality which one holds. These great brand names know this and thus use it as their incentive to keep making dreams, which will not only bring them higher revenues and profit margins, but will enhance their personal satisfaction and the overall happiness and fulfillment of their customers, simply due to the fact that they deliver the promises made. In this way they are not just designing items of clothing, but they are fulfilling one’s dream of contentment.

Another interesting brand division is that of the division among the 10 country brands:

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PICTURE12: AUSTRALIA AS A BRAND

PICTURE12: AUSTRALIA AS A BRAND SOURCE: http://adage.com/globalnew s/article?article_id=132398 ,02.04.2009. 1. Australia

SOURCE: http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.

1. Australia "Australia has strong branding. Tourists can access a wide range of offerings:

adventure, relaxation, pure scenery and mouthwatering gastronomy."

PICTURE13: CANADA AS A BRAND

mouthwatering gastronomy." PICTURE13: CANADA AS A BRAND SOURCE: http://adage.com/globalnew

SOURCE: http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.

2.Canada

"Canada is an exceptional country and has all of the assets to be a great brand:

natural and urban beauty, quality of life, diversity, culture, entertainment, gastronomy, business infrastructure, stability and openness."

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PICTURE14: USA AS A BRAND

PICTURE14: USA AS A BRAND SOURCE: http://adage.com/globalnew s/article?article_id=132398 ,02.04.2009. 3. USA "The US

SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.

3. USA

"The US continues to be a tourist magnet for its fun spirit and because it is the giant of entertainment and business, delivering a large variety of rich and diverse experiences."

PICTURE15: ITALY AS A BRAND

and diverse experiences." PICTURE15: ITALY AS A BRAND SOURCE: http://adage.com/globalnew

SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.

4. Italy

"Italy is a country that markets the best of itself: the cradle of gourmet cuisine and art, the romance of Venice, the history of Rome and even the beauty of its men and women."

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PICTURE16: SWITZERLAND AS A BRAND

PICTURE16: SWITZERLAND AS A BRAND SOURCE: http://adage.com/globalnew s/article?article_id=132398 ,02.04.2009. 5.

SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.

5. Switzerland

"Switzerland is established, has successfully developed a clear attractive profile and is consistent in its brand promise and delivery."

PICTURE17: FRANCE AS A BRAND

promise and delivery." PICTURE17: FRANCE AS A BRAND SOURCE: http://adage.com/globalnew

SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.

6. France

"France has a strong local identity (wine, music, fashion, language, tradition and culture) and the ability to load its brand with emotion: beauty, quality of life, romance."

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PICTURE18: NEW ZEALAND AS A BRAND

PICTURE18: NEW ZEALAND AS A BRAND SOURCE: http://adage.com/globalnew s/article?article_id=132398 ,02.04.2009. 7. New

SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.

7. New Zealand

“New Zealand delivers what it promises. Its destination branding has used strong emotional effects: quality, well-being, safe operation, cultural interaction and pristine and pure scenery.”

PICTURE19: UK AS A BRAND

and pristine and pure scenery.” PICTURE19: UK AS A BRAND SOURCE: http://adage.com/globalnew

SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.

8.UK

“The UK is a well thought out and executed brand that effectively utilizes all of the natural and cultural resources of the country.”

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PICTURE20: JAPAN AS A BRAND

PICTURE20: JAPAN AS A BRAND SOURCE: http://adage.com/globalnew s/article?article_id=132398 ,02.04.2009. 9. Japan

SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009.

9. Japan

"Japan already has a high brand profile, but we've found that traveller expectations are always exceeded by the country. The diversity, culture and quirkiness of Japan — and the lower yen — are a powerful combination."

PICTURE21: SWEDEN AS A BRAND

a powerful combination." PICTURE21: SWEDEN AS A BRAND SOURCE: http://adage.com/globalnew

SOURCE:http://adage.com/globalnews/article?article_id=132398 ,02.04.2009. 10. Sweden

"Sweden has the charm of Europe but an intriguing sense of mystery and otherness about it. It offers the traveler a variety of adventures and is proving to be a strong destination."

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3. MAKING STRONG BRAND

3.1. Brand Equity

The “brand equity” as a concept arose in 1980s, and ever since than it has become one of the most popular and paramount conceptions in marketing. However simple it may seems to be it still represents enigma for most of the observers, mostly due to the fact that there are a lot of different opinions surrounding the concept. Here is how the opinions vary and even though all of them agree about the definition of the “brand equity” yet they disagree when it comes to its measurement.

Brand equity refers to the marketing effects or outcomes that accrue to a product with its brand name compared with those that would accrue if the same product did not have the brand name.”

“A brand is a name or symbol used to identify the source of a product. When developing a new product, branding is an important decision. The brand can add significant value when it is well recognized and has positive associations in the mind of the consumer. This concept is referred to as brand equity.”

“Brand equity is an intangible asset that depends on associations made by the consumer.”

“The term Brand equity is used to describe both the value of the brand and the brand's component values.”

“Brand Equity is the accumulated value of the brand image or identity in the consumer's mind.”

All of the definitions above are providing different aspects of the term “brand equity”. What they all have in common is the fact that this concept is composed of marketing effects. Each of these marketing effects contributes something to the brand. As a conclusion to the previously said, the “brand equity” is a kind of an explanation for why different outcomes

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result from marketing a branded product or service compared to those products and services which are not branded (Lane Keller 2008).

Another attempt has been done by Aaker, who tried to define the brand equity as “a set of assets and liabilities linked to a brand, its name and symbol that add value or subtract from the value provided by a product or service to that firm’s customers.” (Aaeker 1991, 51) According to his opinion this set is grouped under five categories which include brand loyalty, name awareness, perceived quality, brand associations to perceived quality and other proprietary brand assets such as patents, trademarks, channel relationships etc. There is still one issue that remains up until today. There’s absolutely no evidence that these categories are related systematically to the brand equity.

A series of unsuccessful attempts have been made, yet helpful. In 1998 Ambler and Barwise defined the brand equity as “the marketing asset that exists in the customer’s mind and is of continuing value to the brand owner because it influences future purchases by the buyer and the buyer’s social network through word of mouth”. This definition is helpful because it puts an emphasis on the key aspects of consumers, future purchasing and profits. However it can be also used as a definition for brand, since it doesn’t contain any measure for the brand equity.

Nowadays, brands are considered to add value to the products and services, therefore emphasizing the difference between the variety of similar products and services that appear on the marketplace. This cognizance enables the products and services to command the higher prices on the market, thus generating significant amounts of profits for those who make them. This measurement of the added value spawned for the observers represents the equity of the brand.

There is still no common viewpoint to how to measure this added value that the brands give to an ordinary product or services. Some have developed measurements such was the Millward Brown measure. The “brand voltage” as it was called was actually a measure used to detect the ability to convert the customer awareness into bonding and loyalty. The research was done among 400 British adult grocery buyers and was intended for the examination of the top 9 U.K. supermarkets and grocery stores. This measure was based upon five indicators:

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Admiration for a brand

Affinity to a brand

Perceptions of the brand innovation

Popularity

Price

A result of 3.0 was considered strong and therefore regarded as an indicator of future behavior. Among the ones who had this kind of result and even bigger were Tesco and Sainsbury. 2

Others say that the brand equity is measured according to the level it operates on. According to this claim there are three levels and those are the firm level, the product level and the consumer level. 3

The firm level is measuring the brand regarding the financial aspect. This aspect measures the brand equity regarding how much the brand is worth as an intangible asset.

VALUE OF THE FIRM (by the market capitalization) – TANGIBLE ASSETS AND “MEASURABLE” INTANGIBLE ASSETS

=

RESIDUAL VALUE OF THE FIRM

(BRAND EQUITY)

According to this calculation one private company measures its brand equity by discounting the projected profits to a present value. The discounted rate is a subjective rate determined by the Wall Street journal equity specialists. It reflects the risk profile, market leadership, stability and the global reach of the brand.

The product level consists of comparing the price of a no name or private label product to an “equivalent” branded product, taking the “ceteris paribus” into consideration.

PRICE OF NO NAME PRODUCT – PRICE OF THE BRANDED PRODUCT (equivalent)

=

2 The article regarding this you will find attached in the appendix

3 http://en.wikipedia.org/wiki/Brand_equity

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BRAND EQUITY

The consumer level is measured by mapping the mind of consumers to find out what associations are created with the brand. It measures the BRAND AWARENESS and the BRAND IMAGE.

The BRAND AWARNESS is the realization by a consumer of the existence and availability of a particular product. It is consisted out of to parts: the brand recognition which is the consumers' ability to recognize and make associations with a firm's brand image, and the brand recall which is the simple, immediate recognition and memory of a brand.

Among the brands which have established this kind of level of brand equity are Coca Cola, Corona beer, Starbucks, Harley Davidson, Chanel, Disney. When one thinks about drinks, coffee, motorbikes, high fashion, or entertainment, they always pop up in the minds. All of these have discovered a way to make their name more appealing and therefore always recognizable.

PICTURE22: CORONA LOGO

and therefore always recognizable. PICTURE22: CORONA LOGO SOURCE:

SOURCE: http://www.stirnyc.com/images/beers/corona_20logo.jpg ,03.04.2009.

Let’s take as an example the Corona beer. In the 1980s, this beer was one of the cheapest beers to be found in Mexico. During this time the idea of riotous spring-break vacations was developed around the colleges in the U.S. and all the time aired in the media. This vacations were major gatherings which usually tended to grow into excesses such were the 24/7 drinking, wet T-shirt contests, dirty dancing, as well as sexual escapades. The striking point for the Corona Beer was its cheapest price due to which it was the most appealing for the students. It was also noticeable because of the distinctive package design and also somewhere along the way someone thought of a mix with a lime. The popularity of the beer increased when the students returned to the colleges. The stories told usually included

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the mentioning of the Corona as well. Their success story was delivered completely by the word of mouth. Distributions followed the students as they entered into their professional lives and soon the Corona Beer wasn’t just a beverage that was associated with students’ holidays, but it became the drink of choice among young professionals as well (Holt 2004).

This was one story where a strong brand recognition and brand recall were created. Although later on the Corona producers had some difficulties due to their lack of advertising and promotion, still the fact remains that they had established huge brand recognition and brand recall in very short period of time, and it was only thanks to the students with whom a strong emotional bond was made (Holt 2004,16).

Another measurement is the so called “Blake project”. According to it the consumers’ attention is directed towards five components (awareness, relevant differentiation, value, accessibility and emotional connection) which are working with joined forces in order to create that added value within the brand, all with one goal in mind: TO ENHANCE THE INTENSITY IN THE CONSUMERS’ DECISION. 4 In continuation there is a picture of the “Blake project” graph

Graph 1: “BLAKE PROJECT”

the “Blake project” graph Graph 1: “BLAKE PROJECT” SOURCE:http://www.brandingstrategyinsider.com/2007/02/e

SOURCE:http://www.brandingstrategyinsider.com/2007/02/exploring_brand.html,

03.04.2009.

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The other brand source is the creation of the brand image. The brand image represents the sum of all the unique associations constructed in the minds of the consumers. Whether the perception of the brand is superior or just average depends on how strong these linkages are. These linkages can be developed in number of ways. Except for the marketing activities they can also be formed as a result of prior experience, word of mouth (which tends to work the best), as well as the assumptions consumers make when looking at the logo, the slogan, the country of production, the people involved in the company, and a lot of other different things that can contribute significantly to the establishment of positive or negative thoughts surrounding the brand image (Keller 2008).

These were the elements which the brand equity is composed of. However, there still remains one question that hasn’t been answered up until now and that is whether there is such thing as negative equity. The answer is not that simple as it may seem, because in this case is both yes and no.

We all know that a positive brand is a result of effective marketing through advertising, public relations and promotion.

On the other side, if we take as an example the “Democrat” brand in the politics, to a Republican this brand will be always associated with negativity and therefore generate negative brand equity. Or let’s take peanuts for example. For someone who loves peanuts, they will always generate strong, constructive associations. However, for someone who is allergic to them a brand specialized for peanuts will always produce depressing memories and emotions.

Ever since the appearance of this phenomenon people whose domain was in the branding field started to develop the concept of the brand equity. Some used “hard” measures such were the market share and the relative price and others used “soft” measures such as liking and perceived quality. Still the fact remains that there is such thing which creates value for a given product or service. All these people have failed in the attempt to explain this term and find a suitable measurement formula which will incorporate all of the necessary elements. However the experts stay optimist thinking that all of this systematic collections and analysis may at the end bring enlightenment. Well, good luck with that one is all I can add.

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3.2. The four steps of brand building

A significant step forward in the building and measuring of the brand equity is the

Keller model. It was made by Kevin Keller in 1993 and ever since than has been used as a trustworthy and highly appreciated concept in the branding theory mainly due to its power to define and structure the steps for achieving elevated position for the brand within a company.

What Kevin Keller did was create and develop a model which determined what exactly makes a brand strong and how one should build it. The model is called THE CUSTOMER BASED BRAND EQUITY MODEL (CBBE), because it approaches the brand equity from the customer’s perspective. According to him the CBBE occurs when the consumer has a high level of awareness and familiarity with the brand and holds some strong, favorable and unique brand associations in his/her memory (Keller 2003,67).

In continuation you will find enclosed the pyramid for the customers’ based brand

equity model.

Graph 2: Keller’s customers’ based brand equity model

Graph 2: Keller’s customers’ based brand equity model SOURCE : http://buildingstr

SOURCE: http://buildingstrongbrands.com/14121980/images/006/004.jpg, 05.04.2009.

If one takes the “rational route” than the steps leading the brand creator towards the

peak will be:

Brand identity

Brand meaning

Brand response

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Brand relationships

Starting with these steps, marketers need to convince consumers that there are differences between brands and thus create brand equity. Consequently, this model represents a “branding ladder” with each step dependent on achieving the previous one (Keller 2001).

These four steps consist of six brand building blocks and in order for the brand to be highly successful it needs to reach the pinnacle of the pyramid where the relationships with the customers are already built with mutual respect and common language.

The first step is answering the question “Who are you”, which is the most basic in determining and identifying the brand and the associations made with a specific product or service class or need (Keller, 2003). This step is called the brand salience due to the fact that its pillars are founded on the basis of the outstanding elements that are distinguishing one brand from another. The key elements on which this step is build upon are the category identification and which needs are satisfied.

Let’s take as an example the brand Disney. People know this brand very well because of the fact that they have established a perfect, unmistakable category identification (entertainment park) and recognition of which needs are satisfied (the need for having fun, enjoyment, relaxation). Its name is the first that pops up in the minds of the people who seek this kind of amusement and all of those who want to find a place where the level of entertainment is derived to maximum.

By creating, developing and nurturing the brand depth (influences the likelihood that a brand comes to mind) and brand breadth (describes the different types of situations in which the brand might come to mind) the brand creators find a successful way to establish a highly salient brand. Although the salience of the brand is the essential rule for creating the successfulness of the brand still it isn’t sufficient.

That’s why the second step is created which answers the question “What are you”. In order for this question to be answered the “brand meaning” must be established by creating strong linkages of brand associations with certain properties (Keller, 2001). In this section there are two brand building blocks, the brand performance and the brand imagery.

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The brand performance basically points out that the product itself is in the heart of the brand equity. It describes how well the product or the service meets the customers’ more functional needs, as well as putting an emphasis on the extent of the brand which satisfies utilitarian, aesthetic and economic customer needs and wants in the product or service category. It creates dimensions which inflict prominent difference to the brand, by making it something that stands out in the human minds. These dimensions are the actual attributes and benefits which contribute to the significance of the brand, as well as increasing the strength of the product or service offered (Keller 2008,67).

The brand imagery refers to the way people think about a brand abstractly, making the scenery more appealing and concentrated towards the intangible aspects of the brand such as the user profiles, the purchase and usage situations, the personality and values and the history, heritage and experiences. According to this the brand imagery reflects the extrinsic properties of the product or service.

Disney has established perfect brand performance and brand imagery. It satisfies the customers’ functional needs for relaxing by offering variety of amusing ways to increase the level of their enjoyment and entertainment, and thus evoke personal satisfaction. As far as the brand imagery goes, Disney has managed to create suitable history enriched by the customers’ personal experiences all of these wrapped in a package that says entertainment only, with a ribbon which conveys a message that screams out loud about leaving all the worries outside the park.

The third step emphasizes the proper customer responses to the brand identification and meaning (Keller, 2003). This step is the result of the people’s opinion, to be more precise it states the responses which are coming from the customers’ identification with a certain brand. It is divided among two dimensions: the brand judgment and the brand feelings.

The brand judgment is the sum of all the customer’s personal opinions and evaluations derived from the symbiosis of different brand performances and imagery associations. The types of judgment made by the consumers are dependent on the brand quality, credibility, consideration, as well as superiority (Keller, 2008).

The other component which inflicts the responses of the people is the brand feeling, derived from the strength of the brand as well as the relationships incorporated in its essential

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being. The brand feelings evoked can be mild or tense and positive or negative. Whenever there are negative feelings generated, the brand creators always work on changing them into positive ones. This is done through the transformational advertising which is designed to change consumers’ perceptions of the actual usage experience with the product. At the end all that matters is how positive the brands are (Keller , 2008).

The forth step in the CBBE is asking the question “What about you and me”. Here the relationships formed with the consumers are all that is relevant. The focus is the level of identification that the customer has with the brand and the extent to which the relationships are evolved. Here brand resonance is all that matters. This term illuminates the type of relationships formed, and the extent to which they had been developed. In order for it to be established it requires strong personal attachment, as well as fierce intensity (the depth of the psychological bond) and high level of activity engendered by the loyalty (the repeat purchase rates).

There are four categories all of which are extremely important for the establishment of this step. The first one is the behavioral loyalty which clarifies questions such as how often the customers are making their purchase and how much do they often purchase. The creating of a deeper attitudinal attachment through marketing programs can contribute to the actual enhancement of the brand loyalty. The second one is the attitudinal attachment which is the customer’ going beyond viewing the brand as something special, thus making statements such as “love” or “little pleasure”. The third category is the sense of community. A stronger sense of community among loyal users can engender favorable brand attitudes and intentions.

The forth one is the active engagement where the strongest affirmation of the brand is established. Here relationships between the customers themselves are formed, so they can act as brand evangelist and ambassadors. Examples of this category are joining clubs which focus is the brand itself, receiving updates, visiting brand-related web sites, taking participations in chat rooms etc. (Keller, 2008). When combined together these categories are shaping the intensity (measures the strength of the attitudinal attachment and sense of community) and the activity of the brand (behavioral loyalty and active engagement).

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Graph 3: Keller’s model for Calvin Klein’s brand

Graph 3: Keller’s model for Calvin Klein’s brand SOURCE: www.pvh.com ,05.04.2009. In conclusion, the ultimate value

SOURCE: www.pvh.com ,05.04.2009.

In conclusion, the ultimate value of the brand depends on the customers decisions only. Even though the marketers are often seen as the ones who are responsible for the value still they have to oblige the terms imposed by the customers under which they create the power of the brand. After all they shaped the marketing activities accordingly to what people need and want, even though usually they create an illusion where the customer often thinks that he needs something, rather than he wants that something. Therefore it is usually said that the length of time to build a brand is directly proportional to the amount of time it takes to create sufficient awareness and understanding. Thus it may not come as a surprise that firmly held and felt beliefs and attitudes about a certain brand are the foundation to brand equity. Strong brands have clarity which is derived from both the head and the mind, which means that the loyalty and the resonance are build on the foundation of the “emotional route” and “rational route” of the CBBE pyramid. Accordingly, rational concerns can only satisfy what one calls utilitarian needs, but the question is whether they can satisfy the emotional or psychological needs as well. The answer is that they can not, so emotional concerns are developed in order to fulfill these needs.

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3.3. The benefits of a strong brand

There are a lot of advantages that can arise from having and maintaining a strong brand. The fruits from the harvest amount to:

Those creating a financial value for the company (both for the growth and for profitability performance of the company)

Less vulnerability to competitive marketing activities

Creating greater customer loyalty

Enhanced the effectiveness of the marketing communications

Greater licensing opportunities, which bring with them higher profit and greater legal protection, as well as improvement in the image and awareness of the brand

Increased number of new customers

Contribute to the increase of the brand equity of the company

All of these above contain equal importance in expanding of the company and the brand. These benefits are essentials not just for creating stronger brand but for the overall performance of the company as a whole. So the advantages provided by strengthening the brand are not only ordinary things that can contribute to the company’s performance, but they are complex things which make the world an interesting place to operate in. The loyalty developed towards the brand enhances the likelihood for the increased demand for the company’s products or services, at the same time making it difficult for new companies to penetrate the market

It’s funny how a little bit of innovation can create a world in which everything is possible, and people want to believe in those created myths, because deep inside they know that they make them better persons, as well as ease the decisions making processes they are faced with every single day, knowing that having something to rely on is extremely helpful in the ever moving fast society. That’s why they rely on the experiences of their friends and they believe in the power of the brand, simply to make their lives a little bit less stressful.

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4. BRAND ELEMENTS

PICTURE23: BRAND AS ICEBERG

4. BRAND ELEMENTS PICTURE23: BRAND AS ICEBERG SOURCE: qualisysindia.com/images/srs1.gif, 05.04.2009. Long time ago, the

SOURCE: qualisysindia.com/images/srs1.gif, 05.04.2009.

Long time ago, the brand was perceived as and compared to the iceberg, since it has components which are extremely important, but somehow hidden and not seen by the wider audience. As presented in the picture above, the components beneath the surface are the ones who actually build the foundation of the brand. These components determine whether the brand will establish positive associations or negative ones. The brand loyalty, likeability, and brand confidence are beneath the surface, and above it are elements such as size, communication, uniqueness, vividness, content, and appeal.

This metaphor is still alive today, ensuring that the meaning of the brand and brand building concept is properly understood and enforced. It makes the companies to try and think before they react. It makes them understand that building a strong brand is of great importance when trying to gain power and increase the volume of the sales.

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4.1. Brand positioning

“Brand positioning is the heart of marketing strategy. It is the act of designing the company’s offer and image so that it occupies a distinct and valued place in the target customer’s minds”

Kim R. Robertson

The brand positioning is the essential issue which arises when creating a strong and recognizable brand. The position that each brand takes will depend on the knowledge gathered by the marketers on four most important topics, the first being the determinacy of the target customers, which leads to the next issue of establishing the core competitors, to describing the similarity of the brand with those of the competitors and last, the most important step, creating and describing the difference which makes the brand a unique item worthy of possession.

Graph 4: brand positioning

item worthy of possession. Graph 4: brand positioning SOURCE : http://www.gfk.si/eng/2_3_brand_pos.php

SOURCE: http://www.gfk.si/eng/2_3_brand_pos.php ,05.04.2009.

According to the graph shown above the brands are positioned due to whether the customers have heard of them or not. There are two types of brand: the ones which are recognized by the consumer and the ones that are not, that is the ones that have established brand unawareness and those that have established brand awareness. The ones that have failed to create any kind of associations in the consumers mind are doomed to collapse. On the other

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hand the ones that have managed to develop certain images in the consumers’ minds are divided further on recalled brands and recognized brands. Among both of the groups there are three sub-groups, the accepted brands, which are brands commonly used and widely accepted from the consumption crowd, than neutral brand which are known but don’t have any importance whatsoever in the consumers’ daily life decisions and there are the rejected ones, which are the ones who failed to develop a relationship with the customers and therefore are claimed to be irrelevant and not taken into consideration while making the consumption decision (http://www.gfk.si/eng/2_3_brand_pos.php ,05.04.2009 ).

There is another interesting division of the brand positioning. According to me it’s a very amusing one. It divides the brands according to the quality they possess and the prices they have. In this way the brands are compared to the competing ones on a perceptual map.

GRAPH 5: THE BASIC PERCEPTUAL MAP

ones on a perceptual map. GRAPH 5: THE BASIC PERCEPTUAL MAP SOURCE : http://tutor2u.net/business

SOURCE: http://tutor2u.net/business/images/perceptual%20map.gif ,05.04.2009.

The map shows the types of brands created when dividing them among their price and quality. Let’s start with the basic ones which have both low quality and low price, they are called the economy brands. Than there are the ones with the low quality and high price, followed by the bargain brands which have high quality and low price, and at the end there are the premium brands with both high quality and high price.

The fashion brands, like Chanel, Gucci, Prada, Dolce&Gabanna, Louis Vuitton are considered to be premium brands. Bershka and Zara are considered to be bargain brands.

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4.2. Brand mantras and audits

DNA
DNA

SOURCE: Formitas BBDO Pleon 2008.

The brand

mantra

The brand

audit 1

The brand

audit 2

The word “mantra” originates from a Sanskrit word, which means a chant in a form of

a tip that would lead to the fulfillment of what is desired. In marketing terms this word is

defined as “an articulation of the ‘heart and soul’ of the brand, a short three to five phrase

that captures the irrefutable essence or spirit of the brand positioning.”

As it is can be seen in the picture above the pillar of the brand is the brand mantra. It is

the promise made by those who nurture the very beginning of the simple product, as well as

the later stages of its development. It is the core for the essence of the brand. Consequently,

this part should never change. Since it is extremely important, one should not try to alter it.

Once made, the promise can not be broken, otherwise there are unlikable outcomes to be

faced, and for some of them the price to be paid is just too costly. Disappointment of the

customers is one of the outcomes, and believe it or not it’s the one which is avoided by all

means.

The general purpose of the phrase is to provide the employees, as well as external

partners, with a crystal clear picture of what the essential meaning of the brand is. It is

consisted of three dimensions: the brand function, the emotional modifier and the descriptive

modifier. The brand function describes the purpose of the brand. For instance, for Nike the

purpose of the brand is the performance. The descriptive modifier clarifies the purpose of the

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brand. For Nike that is athletic. And the third is the emotional modifier which puts an emphasis on the benefits provided by the brand. For Nike, that is authentic (Keller 2008).

These phrases are important because they are targeting the benefits provided by the brands and the uniqueness derived from the performance of the brand. They are established so that they can create a clarity and deeper knowledge of what the brand is all about. Therefore, they are extremely helpful in constructing vivid pictures in the minds of the employees so that they can continue the legacy of the company and enhance the performance.

However, the core is nothing without its attributes. Whether it is the design, the package, a successful marketing tool and strategy, or a high level of perceived quality, it makes no difference. When the foundation is firmly set, meaning when the mantra (the promise) of the brand is determined than the marketers can elaborate the brand attributes, which can develop further and strengthen the brand image, as well as create and educe positive associations in the humans’ minds. This is achieved through the brand audits. They can be altered based on the preferences of the consumers.

The brand audit represents a comprehensive examination of a brand to discover its sources of brand equity.

The brand audit is a customer based practice which contributes to the increase of the health of the brand, elaborates the sources of brand equity, as well as improves the equity. It is created so that both the company and the consumer understand the sources of the brand equity.

It is consisted out of two parts the brand inventory and the brand exploratory. The brand inventory provides an insight of how the products and the services sold are marketed and branded. This segment is very important because it summarizes all the essential and significant marketing activities as well as clearly develops the unique approaches towards establishing a strong and different brand from ones already developed on the market. The other part focuses on the results of the research done in order to better understand the consumers’ sentiment and their thoughts regarding the performance, as well as the quality and pricing. This part is called the brand exploratory (Keller 2008).

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4.4. Brand elements which affect the human perceptions

According to Kevin Keller, there are six criteria for brand elements which are divided among two dimensions. The first dimension is composed out of the first three memorability, meaningfulness and likeability. Each of these three is representing the marketer’s offensive strategy and brand equity and puts essential emphasis on the brand awareness and salience. The second dimension focuses on the defensive strategy of the marketers for leveraging and maintaining brand equity. It is consisted out of transferability, adaptability and protectability which are significant determinants of the brand image and positioning.

The memorability incorporates elements that are extremely helpful in establishing clarity and attracting attention. An easy recognizable brand name, slogan, jingle, controversial ad, poster or even a mascot can aid in the process of creating the memorability in the minds of the consumers. For instance the “Code Red” name for one of the Pepsi drinks contributed a lot to its recognition and recall. It became so recognizable and easy to remember that even a computer virus that infected more than 700 000 computers was named after it.

PICTURE24: CHANEL LOGO

700 000 computers was named after it. PICTURE24: CHANEL LOGO SOURCE: http://1.bp.blogspot.com/_KF833Bz_

SOURCE:http://1.bp.blogspot.com/_KF833Bz_TNk/ScME2GV_QRI/AAAAAAAAAGA/bx

Wzqad3-Tg/s320/chanel-logo.jpg ,07.04.2009.

The meaningfulness must contain elements such as descriptive and persuasive. Therefore, it must contain something that incorporates the general information about the product category as well as its content and specific information about the attributes and the benefits it brings to the table. Let’s say the fashion luxury brand Chanel, named after the designer Coco Chanel is a name which bristles with perfection due to the fashion icon’s persuasive and impeccable image.

The last category in this first dimension is the likeability. This category inflicts the brand to be fun and interesting, with well developed visual and verbal imagery and all of this

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wrapped with aesthetically pleased design. The likability helps each and every time when the possible benefits of the future are a little bit blurred, so the creativity must take its place instead. Whenever in this situation, the brand creators must concentrate on developing the intangible characteristics of the brand so that they can increase the awareness and improve the overall performance of the brand.

PICTURE25: HALLMARK LOGO

overall performance of the brand. PICTURE25: HALLMARK LOGO SOURCE: http://www.nbcf.org.au/conten

SOURCE:http://www.nbcf.org.au/content/upload/images/corp/partners/hallmark/Hallmark-

plum-and-gold-logo.jpg ,07.04.2009.

The other set of brand elements as Keller explained are relevant when the company is facing with competitors, so they are extremely helpful when dealing with the maintenance of the brand equity. The first one is the transferability which measures the extent to which the brand elements add to the brand equity of new products for the brand. The term transferability relates to brand extensions as well as enlarging the brand on global level. The vaguer the name is the more transferable it is on foreign markets. Let’s say Hallmark for instance, or Amazon brand. These names don’t put boundaries for the companies, so that they can enlarge in every category they want. There are a lot of funny examples of transferability mistakes. For instance, when Coors translated its slogan “Turn it loose” into Spanish it sounded like “Suffer from diarrhea”. Pretty funny, isn’t it? Another example of such hilarious brand mishap is when Pepsi translated its slogan in Chinese market “Pepsi Brings Back To Life”. It meant “Pepsi Bring Your Ancestors Back from the Grave”. And my personal favorite is when a hair product company, Clariol introduced the “Mist Stick” a curling hair iron in Germany. The word mist was a German slang for manure. Now, imagine putting that on your hair.

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PICTURE26: AMAZON LOGO

PICTURE26: AMAZON LOGO SOURCE: http://www.watsonwyatt.com/images/dat abase_uploads/13027/f igure1_porters.gif ,08.04.2009.

SOURCE:http://www.watsonwyatt.com/images/database_uploads/13027/figure1_porters.gif

,08.04.2009.

The adaptability targets the issues that arise regarding the flexibility over time as well as the updating process. The logos and the characters on the posters, or ads are usually updated so that they can relate to the current times with a little flick that reminds of the old times as well, bringing back the memories, endured in those times when the company started to operate.

The third component of the second dimension is the protectability, which is one of the most important segments when building and maintaining strong brand equity. It refers to the legally protected brand elements on an international level, registering them with the appropriate legal bodies and defending them against any competitive intruders. Accordingly, the name, the package, or any other attribute of the brand should be developed so that it can not be easily copied, because than the uniqueness which the brand possesses will vanish completely. Let’s take for example the Louis Vuitton brand. Its purses are copied everywhere in the world and sold for insignificant price, a value which doesn’t correspond to the perfection they are creating. Although it might sound as an easy solution to the problems connected to creating counterfeits, it is becoming more and more difficult because it has taken a great swing and strives for globalization.

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5.

HOW THE BRAND AFFECTS THE VALUE OF THE PRODUCT?

This chapter is the most important, since here I will prove my thesis by examining different brand strategies which have great effects on the value of the product. After that I will show how the customers perceive and choose brands. As the core of my thesis this part will be filled with creative solutions which all bring with them a dose of value to the products and services.

5.1. Product strategy

As the Bible says and first there was God, in marketing terms the God is the product. It is the very core of the brand, its heart and its impulse. What makes the brand successful is the product, which stands as a pillar for the value. Therefore, in order for a brand to be victorious, the product must at least meet the customers’ expectations and if the brand tends to develop strength further on than it must surpass those expectations.

From the customers perspective the perceived quality and value of the product are what shape their opinion about the brand. According to the consumers the perceived quality is how they see the brand regarding the quality and superiority surrounding it. The improvements through the years made on certain products have made it difficult to surpass the customers’ expectations. There are few segments which help in the enhancement of the perceived quality and value. If the performance of the product is increased, the features are better shaped, the conformance quality is improved, the reliability, the durability and serviceability are all upgraded, and if the style and the design are enhanced than one can brag about its brand having high perceived quality and value.

However, the performance level of the product doesn’t necessarily always depend only on the product quality. It has other dimensions as well, such as the speed, accuracy, the promptness etc. Thus, by improving the functional benefits, the process benefits and the relationship benefits, a brand can easily find its way one step higher on the latter of success.

In order for a value of a brand to be established, consumers usually combine the quality performance with the cost perception, which doesn’t necessarily refer to monetary cost but also include opportunity costs such as time and energy spent. Therefore, Michael Porter developed a model called the value chain according to which the level of the customers’

56

perceived value depends on the primary value creating activities (inbound logistics, operations, outbound logistics, marketing and sales, and services) , as well as on the four support activities which occur through the primary activities (firm infrastructure, human resources management, technology development, and procurement). If the costs are reduced and the performance improved in any of these activities, than the brand has created a substantial value.

Graph 6: Porter’s value chain

a substantial value. Graph 6: Porter’s value chain SOURCE: http://www.watsonwyatt.com/images/datab

SOURCE:http://www.watsonwyatt.com/images/database_uploads/13027/figure1_porters.gif

,08.04.2009.

PICTURE27: HARLEY DAVIDSON LOGO

,08.04.2009. PICTURE27: HARLEY DAVIDSON LOGO SOURCE:

SOURCE:http://www.jacksonmshog.com/chapter2496/Images/HarleyDavidsonLogo.gif

,10.04.2009.

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From the marketers’ point of view creating relationship marketing is what creates the value. It is based on the premise that current customers are the key to log term success. One of the segments here is the mass customization which is based on the customers’ preferences assembled in a product. These preferences nurture the dreams that customers’ have and according to that it increases the level of the perceived quality of the brand. An instance of this mass customization is that of Dell Company which is creating built-to-order computers. Another example is that of Harley Davidson which customizes its motorcycles according to its customers’ wants.

Customization addresses the need for individuality” By an unknown analyst

Creating this process the customers can clearly distinguish themselves from others. According to this they can add to the product they purchase their personality and this is what they are appreciating the most. To them it feels like they are treated specially.

All of this being said, it is natural for one to think that the concept is applied to products only. However, the concept can be applied to services as well, usually in the banks or travel agencies. They can tailor their services accordingly to what people want.

The “second moment of truth” as it is called the result from the actual experience is the most powerful and strongest association that a brand can make with its customers. The after-marketing activities are just as important as the marketing activities. They are reminding the businesses of the importance of building relationships with customers and points out to the crucial need to balance the advertising activities. Among some of these after- marketing activities are the conducted customer surveys, formulating and managing communication programs, and hosting special customer events or programs.

Loyalty programs reduce defection rates and increase retention. You can win more of a customer’s purchasing rate.”

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PICTURE28: VICTORIA’S SECRET LOGO

PICTURE28: VICTORIA’S SECRET LOGO SOURCE: http://callitout.com/quotes/wp-content/ uploads/2008/03/victor

SOURCE:http://callitout.com/quotes/wp-content/uploads/2008/03/victorias-secret-logo.gif

,10.04.2009.

Another segment which relates to the marketers is the creating of the loyalty or frequency programs. These programs are often created through the establishment of different mixture of newsletters, discounts. They are obliged to change the performances, since they can not stay static. They must listen to their loyal customers’ suggestions and complaints, as well as engage people in the programs. For instance Victoria’s secret offers discounts to each customer that has made a prior purchase on a regular basis. It also gives a card which enables the customer to purchase more and more, due to the fact that the customer is the member of the club.

5.2. Pricing strategy

These strategies relate to the price perception of the people regarding the value of the product and the different pricing strategies which might be used to create brand equity.

The customer is smart. They recognize a really good value when they see one and the really appreciate transparent prices.”

By one GM executive

The range of the acceptable prices is called the price bands. The perceptions of the consumers are shaped according to the price of the brand. If the brand is tagged with a price label that says expensive, than the people’s perception of it is that the brand conveys a massage which says that it contains a great quality. Another thing which affects the value is how frequently the brand is discounted. In order for consumers to buy the offered product or service the performances and advantages attached must exceed their expectations. That being said, it is only natural that the consumers’ perception of value must exceed the cost of the company of making and selling the product, so that it can operate with a profit. For both terms to be satisfied, marketers must find a way to learn about the consumers’ perceptions regarding

59

the price, so that the companies can establish a certain price level, and for the market leaders to even establish price premiums (Keller 2008).

The most important determinants while setting the price of the product are the costs derived from making and selling them, as well as the prices verified by the competitors. Accordingly, there are two pricing strategies which are the most relevant to this issue. The first one is the value pricing. Its objectives refer to establishing the right mix of product excellence, product costs and the product prices so that the customers’ needs and wants are put on the first place, as well as the profit goals of the company are being met. As a conclusion, the strong brands can command price premiums, but if they go too far than they may loose the loyalty developed with their customers, and may find a pretty damaging consequence as a result. If they underestimate the power of the customers, there is a price to be paid at the end. This kind of consequence experienced the gigantic company Philip Morris with its cigarette brand, Marlboro.

PICTURE29: TACO BELL LOGO

its cigarette brand, Marlboro. PICTURE29: TACO BELL LOGO SOURCE:http://statenislandnyhomes.com

SOURCE:http://statenislandnyhomes.com/Taco_Bell_logo2%5B1%5D.gif, 10.04.2009.

The price strategy may also be enforced as a result of the reduced operating costs, in order to gain competitive advantage. The chain of Mexican restaurants “Taco Bell” did this so that it can lower prices for many items which appeared on their menu to under $1. So in order for the companies to make profits they must make the right product in the right way and sell it at a right price.

PICTURE30: NIVEA LOGO

way and sell it at a right price. PICTURE30: NIVEA LOGO SOURCE: http://www.cosmetico.ro/images/800px-Nivea_logo.png

SOURCE: http://www.cosmetico.ro/images/800px-Nivea_logo.png ,10.04.2009.

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This strategy incorporates in it the product design and the product delivery segment, as

well as product costs and product prices. Accordingly, the consumers are willing to pay premium prices when they are a hundred percent sure that they really are worth it. The worth

is due to the added value which the product must possess so that it can conduct the price on

the marketplace. An example of this can be Nivea. The company always strives for introducing new or improved added value products, so it is only natural that it increases the prices, since the products are fresh. This enables the people to be more comfortable with the higher prices, having in mind that they pay for something which is fresh and advanced cosmetically.

The other part of the value-pricing strategy is the lowering of the costs as much as possible, in order for the companies to manage to generate higher profits. However this reduction cannot be on the basis of lower quality, effectiveness or efficiency, since they are the only things for which the customer is ready to pay more.

The last key to successful performance of the value pricing strategy is to understand

how much value consumers perceive in the brand and to what extent they will pay a premium.

A great starting point in determining the price is to estimate the perceived value adjusted by

cost and competitive prices. This can be done by directly asking the customers to propose their insight in the determination of the prices (Keller 2008).

As a conclusion, the perceptions of the consumers are shaped according to the benefits offered by the promoted product. As said before, the consumers are very cunning people and

if there is something wrong with a certain product it doesn’t take them much so that they can

exchange it with other. It’s that easy for them, just like they turn off the light in their homes they can also turn off the light future of the product. That is why this is the most important part for the marketers when launching a product.

5.3. Channel strategy

“Marketing strategy is the sets of interdependent organizations involved in the process of making a product or service available for use or consumption”

By Kotler and Keller in Marketing Management

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Accordingly, the channel strategies have embedded in themselves the design and the management of the intermediaries, which help to conduct a business. There are two most important channel strategies: the direct channels and the indirect channels.

The

indirect

channels

are

consisted

out

of

a

number

of

different

types

of

intermediaries. However, the most used form is the retail form, since they have established the most direct contact with the potential customers and existing ones. In this way they have greater chance in affecting the value of the brand equity. There are many types of indirect channels and here are some of them.

The first one is the push and pull strategy. The push strategy refers to pushing the product through the distribution channel due to the fact that the manufacturer wants to reach the customer. The pull strategy on the other hand is employed by the manufacturers who are obliged by the customers’ demand or preferences towards some brand.

The other one is the retail segmentation. Here the greatest part is played by the branded variants which are items created by the manufacturers for entering changes in color, design, style, features etc. (Keller 2008). Examples of this are Sony, Panasonic, and on the other side Acer and Hewlet Packard. They all make the same product with small alterations which can be of great importance.

The third part is the cooperative advertising. Here a portion of the advertising is paid by the manufacturer due to the retailers’ efforts for promotion. However, as almost everywhere, there is a disadvantage. The image intended to be shown may alter and at the end the result may be completely opposite to the one wanted to be achieved. The creators of the brand may run on thin ice, due to the fact that the store might get more attention than the brand itself.

The direct channels offer variety of selling alternatives, but all of them have the personal contacts as their core. They are conducted either by mail, e mail, phone, in person visits, but what remains unaltered is the fact that they are selling directly from the company to the prospective customers. The companies are usually using these options of personal selling when dealing with either high information need or high product customatization.

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PICTURE31: DISNEY STORE

PICTURE31: DISNEY STORE SOURCE: http://www.passporter.com/articles/Hilton/HiltonDisneyStore.jpg ,22.04.2009. As for the

SOURCE:http://www.passporter.com/articles/Hilton/HiltonDisneyStore.jpg ,22.04.2009.

As for the indirect channels here too the possibility of various mutant forms exists. The first one is creating company owned stores. For instance Victoria’s secret company owns each and every one of its shops, as well as Hallmark and Nike. The primary reason behind these shops is to emphasize the depth and the breadth of the brand. However there are still limitations and consequences surrounding this form. One of them is that the retailers lack skills, as well as resources and contacts so that they can effectively and efficiently operate as “intermediaries”. As was the case with Disney shops when they struggled to find the right retail formula, so at the end their shops were sold to The Children’s Place. From another point of view another issue may arise, such as the potential conflict with existing retail channels and distributors (Keller 2008).

PICTURE32: HALLMARK STORE

and distributors (Keller 2008). PICTURE32: HALLMARK STORE SOURCE: http://media.merchantcircl

SOURCE:http://media.merchantcircle.com/28039404/20logo_medium.jpeg ,22.04.2009.

The second way of enforcing this direct channel strategy is by creating shops within major department stores. The advantage lays in the dual benefits provided by gaining brand loyalty due to the retailer’s well known brand image and at the same time the company has a control over the design and implementation of the product presentation.

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PICTURE33: ORIFLAME LOGO

PICTURE33: ORIFLAME LOGO SOURCE: http://logotypes.designer.am/t/oriflame.png ,22.04.2009. The final way is the channel

SOURCE: http://logotypes.designer.am/t/oriflame.png ,22.04.2009.

The final way is the channel option which arises from the necessity to create greater and more efficient bond with the customers by nurturing their needs to feel special and by incorporating vigorous emotions in their products. This is done by selling the products through catalogs, videos, or physical sites in order for the customers to feel appreciated and closer to the company’s agenda of creating an excellence and perfection. There are companies which are conducting their business for years in this way. Some of the examples are Oriflame and Avon.

PICTURE34: AVON LOGO

of the examples are Oriflame and Avon. PICTURE34: AVON LOGO SOURCE: http://media.merchantcircle.

SOURCE:http://media.merchantcircle.com/28039404/avon%20logo_medium.jpeg

,22.04.2009.

Faced with the age of the Internet, the web strategies of selling the goods are becoming more and more attractive for all the people around the world. First of all they are practical and less time consuming that the actual physical purchase in the stores. Due to the fact that we live in a world where no one has time for anything, anymore, the people need something that will lessen the burden of the spent time in the stores searching for the right and perfect merchandise. Therefore the number of consumers buying online is drastically increasing. That’s why the companies have found how to make the customers unleashed from that burden by offering to sell and ship their goods wherever they are required. Such companies are Amazon.Com, as well as Victoria Secret and Women’s Secret and in the past few years their number is constantly increasing.

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PICTURE35: WOMEN’S SECRET LOGO

PICTURE35: WOMEN’S SECRET LOGO SOURCE: http://www.larocavillage.com/common/graphics/logos/Womensecret.gif ,23.04.2009.

SOURCE:http://www.larocavillage.com/common/graphics/logos/Womensecret.gif

,23.04.2009.

Companies do not limit themselves to only one channel. They often enforce some kind of mixture of the previously elaborated channel strategies. However, there is often a risk involved in this mixture, due to the fact that having too many channels can lead to conflict between the channel members, and than again having too few can result with missing the market opportunities. Therefore, retailers must be careful when mixing the strategies, to avoid facing a chaos.

5.4. Marketing communication options

In this craft like any other craft there are artistic strategies which dazzle the customers by completely changing the views of a particular brand, with just one look at the TV, or one eavesdrop to the radio, or by just one glance on a billboard. This is a powerful tool which helps marketers to play a little bit with the customers’ minds.

There are many communication options, among which is my personal favorite, the advertising. This is the venue where the magic of the business is conducted. It represents the creative way of conducting a business based on customers’ preferences and tastes in certain category.

“Advertising is the art of convincing people to spend money they don't have for something they don't need.”

By William Rogers

The essence of the advertising is exactly this maneuvering the people. It plays with their heads by projecting beautiful promises, painted by the most skillful people in the industry and wrapped up with a dose of reality. That’s why they say that “Advertising is the art of making whole lies out of half truths”.

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Various researches have shown that the advertising boosts the sales of a company. (How to turn junk mail into goldmine – or perhaps not; The economist; 1995) Their finding claim that advertising does not just boost the sales, but it helps facing the difficult economic times, as well. Examples of this boosting are the advertising done in the period of 1989-1991 recession, for the brands such were Bud Light beer and L’Oreal. With the help of the advertising the volume of the sales has increased, thus making the companies more profitable. Since, it is all about grasping the thoughts of the human mind and the mysticism surrounding it, is quite difficult to establish some detailed managerial guidelines. There are several options where advertising as a process can be conducted. Among them are the television, the radio, the print media, place advertising, and the interactive advertising.

Ever since the TV was invented the advertising began. So, I can say that the pioneer in the advertising industry is the television set. Consequently, the TV advertising has a tremendous impact on the brand equity, due to the fact that it vividly demonstrates the ingredients of the product and emphasizes their consumers’ benefits, as well as enhancing the brand awareness. However, as everything in life, the TV advertising has its downsides as well. If the ad is something which is not connected to the product, than the consumers will have trouble with grasping the concept of the ad. The other issue arising is the proliferation of new TV channels, which enables them to switch the program, whenever there is some commercial. On the other hand, the cost of TV ads is very high. For instance a 30-second spot on a popular television show, during the 2007-2008 cost as much as $400 000 for shows such as Gossip Girl, and Desperate Housewives. In Slovenia, however, these rates are significantly lower and they vary from 3 500 € to 4500 € for 30-second spot during a hit Slovenian show or during the news (24ur) on Pop TV, the most popular television, from 19 until 22, which is the prime time (Formitas BBDO Pleon 2008).

PICTURE36: ABSOLUTE AD

22, which is the prime time (Formitas BBDO Pleon 2008). PICTURE36: ABSOLUTE AD SOURCE: www.absolute.com ,24.04.2009.

SOURCE: www.absolute.com ,24.04.2009.

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The challenge in the advertising is arriving at the best creative strategy, by figuring out how to break the clutter to attract the attention of the consumers and at the same time deliver the wanted message. (Keller, 2008)

PICTURE37: THE MOST FAMOUS ABSOLUTE AD

(Keller, 2008) PICTURE37: THE MOST FAMOUS ABSOLUTE AD SOURCE: www.absolute.com ,24.04.2009. Even though there

SOURCE: www.absolute.com ,24.04.2009.

Even though there are disadvantages to this concept, still the fact remains that well designed and well executed TV ads can affect sales and profits. As was the case with the Chanel No.5 2005 perfume ad with Nicole Kidman, the “1984” Apple commercial and the Catherine Zeta Jones’ Visa commercial 5 . The sales for this two brand skyrocketed when they were shown. 6 The art within them just bristles out and captures the consumers’ attention, as well as it transfers the intended message. 7

The print medium is a marketing communication option which provides more passive approach. The two main print media are the newspapers and the magazines. As shown on the left side the most famous print ad is the Absolute’s print campaign.

In order for a brand to have a successful print ad it is necessary for it to create a clarity, consistency and branding. This means that if the print is not packaged in this way than the ad will not be noticed at all, since the consumers only glance through the ad.

Web sites are seen as low cost marketing options. Despite that they offer high range of customization, they also don’t are not molesting the customers with unnecessary information. Designing a web site is not as easy as it seems. There must be information relevant to customers’ needs and wants, and all of the information must be presented in a eye-

5 http://www.youtube.com/watch?v=rFs7j5X1Ljs (VISA TV ad)

6 http://www.youtube.com/watch?v=yTO4FHf8MBs (Chanel TV ad)

7 www.absolute.com

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catching pages with suitable colors, fonts and effective deliverance of the corporate message. This is the challenge they must overcome in order for the consumers to visit the page. An excellent example of how to create a successful webpage is the Victoriasecret.com.

PICTURE38: THE WEBPAGE OF VICTORIA’S SECRET

PICTURE38: THE WEBPAGE OF VICTORIA’S SECRET SOURCE: http://1.bp.blogspot.com/_-

SOURCE:http://1.bp.blogspot.com/_-

rsjhJ_kZsI/R1SxdBAWOTI/AAAAAAAACe8/0Ddebm7cI4Y/s1600-R/VS.jpg (24.04.2009)

The last, but not least category of advertising is the so called place advertising, which is defined as advertising outside the traditional media. This category focuses on targeting the people in the places where they shop, eat, play, and work. That’s why there are some options according to which this category is conducted, such as billboards and media, movies, airlines, restaurants and shopping centers. The purpose of each and every one of them is to capture the consumers’ attention in the most unexpected ways and on the most unexpected places. Billboards are all over the places, and nowadays they even appear to be on busses, airlines, subways and trains. To make this whole situations a little bit more bizarre, advertisers can buy spots on garbage cans, gasoline pumps, elevators. The fact that this category is enlarging is due to the common belief of the advertisers that creating such ads in unconventional places can better meet the consumers’ expectation. The picture is representing a billboard for the Gillette razors campaign. 8

8 More funny and creative billboards, you will find enclosed in the appendix. www.gilette.com

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PICTURE39: GILLETE BILLBOARD

PICTURE39: GILLETE BILLBOARD SOURCE: www.gillette.com ,24.04.2009. A recent common practice has emerged and ch anged

SOURCE: www.gillette.com ,24.04.2009.

A recent common practice has emerged and changed completely the movie industry. This practice is called the product placements. Here the companies pay in order for their brands to be used by the people in the movie. An example of such effective product placement is the BMW in the James Bond film “Goldeneye”. This however is not limited only to the big companies, but to the small ones as well, at least those ones who can pay the enormous amount of the product placement. This kind of approach helped them significantly to increase the sales, thus profits as well, and enhance the brand awareness. With other words those who were not known after revealed in successful shows such as Sex and the City, Gossip Girl and Prison Break soon became well known brands, and achieved overnight success.

PICTURE40: APPLE COMPUTER

and achieved overnight success. PICTURE40: APPLE COMPUTER SOURCE: http://www.butterboom.com/wp-cont

SOURCE: http://www.butterboom.com/wp-content/uploads/jul08/mikimoto2.jpg, 24.4.2009.

As shown above, nowadays ads can be present everywhere, and this increases the effect that they have among the people. The fact that the people have little time to notice them contributes to the notion that the marketers must convey certain messages in simple and direct way. Consequently, this outdoor advertising is also called “15 – second sell”. The point of all this is that there will always be ways for creative presenting of the brands in front of the consumers.

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The other successful marketing option is the sale promotions. It differs from the advertising in a way that it offers incentive to buy, rather than a reason. Carefully designed promotions can help in increasing the brand equity, by providing more information, as well as product experience in that way creating unique and constructive associations. However, these promotions can also decrease the brand equity, by deducting from the brand loyalty and quality perceptions. Therefore for achieving success in the brand building the promotion strategy must reflect the attitudes and behaviors of the consumers. Another form of promotion is the trade promotion, which gives discounts to retailers, distributors and other members included in the sale process.

PICTURE41: NASCAR COMPETITION

included in the sale process. PICTURE41: NASCAR COMPETITION SOURCE:

SOURCE:http://www.biggameexperiences.com/nascar/images/nascar2.jpg ,25.04.2009.

Next is the event marketing and sponsorship. The event marketing represents public sponsorship of events or activities related to sports, art, entertainment, or social causes. It has become one of the most used forms of marketing. The industries which are the most involved in the sponsorship are cigarette producers, beer industry, and auto companies, even though nowadays there are companies from different backgrounds. This particular marketing option has become one of the most attractive ones due to the fact that marketers want to identify with the particular target market and lifestyle, as well as to increase the awareness of the company or product name, improve the corporate image, establish experiences and evoke feelings, etc. As for every single option above, this too has its disadvantages which are ranging from the unpredictability of the event to the fact that this unpredictability can not be under the sponsor’s control. On the picture there is shown an example of sponsorship. The floor is painted with the American Airlines logo, which is the sponsor of the NBA league. The other

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picture is showing a NASCAR competition where all the cars are painted with the sponsor’s logo.

PICTURE42: NBA COMPETITION

with the sponsor’s logo. PICTURE42: NBA COMPETITION SOURCE:

SOURCE:https://www.ibmilw.com/images/items/AVTSN13896_1_1.JPG ,25.04.2009.

Public relations and publicity had gained a lot of attention during the 1983 when the Johnson & Johnson’s product has been successfully handled, after losing most of the brand loyalty, due to the lethal consequences. 9 The publicity represents a non personal communications such as press releases, media interviews, press conferences, feature articles, newsletters, photographs, films and tapes, whereas the public relations except for these things may also include annual reports, fund-raising, and membership drives, lobbying, special event management and public affairs. The public relations are the essential part of every enforced brand strategy. Although they are especially handy in times of crises, still in order to contribute to the successfulness they need to be performed on daily basis.

PICTURE43: CHEERIOS LOGO

to be performed on daily basis. PICTURE43: CHEERIOS LOGO SOURCE: http://www.babiestravellite.com/mm5/g

SOURCE:http://www.babiestravellite.com/mm5/graphics/00000001/Cheerios-Cup-large.jpg

,25.04.2009.

9 Brand Focus 11, Strategic brand management by Kevin Lane Keller

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These were the marketing options which can contribute to increased and improved overall performance not just to the brand, but to the company’s health as well. A lot of companies enforce them and not just one, but a mixture of all of them. They are a valuable asset to the enterprise and the brand as well, since the advantages they offer are of great magnitude and carry with them a lot of success and power. That’s why giant companies such as Coca Cola, Cheerios, Pepsi, Ford, Philip Morris and others are creating their strategies on the principles of these options.

This is how the created brand can affect the value of the product. By successfully understanding the customers’ needs and tailoring the products based on them, the value of the product can and will be effectively increased. On the other hand, once you get that competitive advantage of having a successfully established brand name, than you have to work hard on maintaining the loyalty and the image. The most helpful tools in the process are these marketing options, and not just when it is established but for creating of the brand name, as well.

5.5. How do consumers perceive and choose brands

The truth is that there is no common applicable formula to how the consumers perceive and form opinions about certain brands. Being as mystical as it could be, the human mind is a complex place where confusion is always present. Each one of us is an individual with their own thoughts and feelings. Therefore there is no generality when talking about the reflections which are coming out of the human’s mind. However, more and more companies are convinced in the contrary. They believe that they can influence the people’s behavior by understanding how they make the decisions.

There still remain some commonly believed facts regarding this issues which can be summarized as follows (Randall 1997).

First of all the people perceive the brand as a whole, which means that every single segment is being analyzed, so that consumers can make their final decision. This means that aspects such as quality, design, price, promotional efforts are all taken into consideration.

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The second thing is that the perception is based upon selection, which is determined by information filtered through experiences, beliefs an attitudes formed.

The third segment is that no mater how illogical and stupid based upon no rationality whatsoever, the consumers’ perception might seem, it is meaningless to argue with it. Usually the reasons for consumers’ perception are not correspondent to suppliers’ expectations.

The forth one, and the most true, according to me is the claim that processes may not be conscious. The fact that the consumers can produce rational explanations of their thinking does not assure that these justifications can accurately reflect reality. A common example is the research done by De Chernatony and McDonald in 1992 based on beers’ labels (DeChernatony, McDonald 1993). When the labels were removed from the bottle, the consumers’ could not tell which beer they were drinking. However, when the labels were putted back to the bottles the same people that could not tell apart the beers, at this point bragged about the differences that each beer had in taste. As said in the study, when brands showed, the people used the brand names to recall brand images, as well as their perspectives about how the brands tastes.

The last one is that the brand has a personality. This means that the consumers can actually associate the brand with the characteristics which they can describe.

As I said before, there are no valid models for calculation of how the consumers will react to given marketing actions such as particular campaign. Although, most of the marketing experts will say that the conducted researches show a lot about the consumers’ perceptions, there are allot which will tell you that the researches will force answers, but those generated answers may or may not represent consumer’s reality. And here is the catch, there is no way of telling whether they are or they are not. This conducted techniques, can also bring with them issues, one among which is that we as a people believe the results, just because we don’t understand them. We believe in them because they look impressive.

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“One wonders how many marketing pipe dreams and wasted resources are generated each year on the basis of such endorsements as, ‘It was gangbusters in the focused group sessions.’”

PICTURE44: VIRGIN LOGO

in the focused group sessions.’” PICTURE44: VIRGIN LOGO By Weilbacher, 1993 SOURCE:

By Weilbacher, 1993

SOURCE:http://www.virginlifecare.co.za/assets/images/AboutVirginLogo.jpg ,24.04.2009.

This being said, the market research is reactive, meaning that it only measures past responses and what is hypothetically asked from the respondents. Consequently, some entrepreneurs with power of great magnitude don’t believe in doing market research, but instead rely completely on their instincts and gut feelings. One of them is Richard Branson, the CEO of the Virgin Records and the 236 th richest man in the world, according to Forbes magazine. These feelings are what make people like him so successful and powerful.

There are still some techniques which might help in determining how the people respond and they are based on psychological practices. The first one is the conducting of the qualitative research which explores how consumers talk about the product field, what concepts and words they use and how they feel about certain product. This is usually done in Japan where the companies are sending their senior executives with a local consultant to spend couple of hours in consumer’s homes in order to ask questions and observe the responses. This kind of research offers a variety of results embellished with suggestions which can help a lot in forming the branding process of the company.

Another really helpful technique is the projective technique in which there are exercises that project the consumers’ unconscious feelings about products and brands (Randall 1997). In continuation there are several examples to how they are conducted.

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TABLE 5: PROJECTIVE TECHNIQUE

You are at a party, and the brands come through the door. Describe the person each brand would be. If the brand were an animal, what would it be? If this brand were a car, what would it be? Draw a picture (or tell a story) about the brand

SOURCE: Randall, 1997.

The third technique which might be helpful is the preparatory grid where people are asked to sort the brand into groups and explain what characteristic sets them apart (Randall

1997).

After the qualitative research is done the quantitative follows so that one can be confident about what the target market thinks and feels about the brand. Accordingly, marketers can influence the penetration and the frequency of the brand, by persuading the people to buy the product more often than the other competitive products. Therefore the distinguishing brand attributes should be established amongst the core buyers and not the whole market.

As an example of these researches is the analysis of car brand perception on Slovene market in 2004, conducted by the advertising agency Formitas BBDO Pleon. They have performed a small sample quality research with determining a clear and accurately defined target group, which covered ten drivers of nine chosen brands plus ten other drivers. It lasted 21 days, with 105 correspondents out of 200. The brands were chosen on the basis of reached market shares in period from 2002 to 2004. There were nine brands, as following, Citroen, Fiat, Ford, Opel, Toyota, Skoda, Peugeot, Volkswagen, and Renault. The perception of these brands is divided among three segments, the first one being the distinctive attributes, the second one represents different values, and the third one portraying the drivers with their pictures accompanied.

The test subjects were asked to unite the attributes, values and drivers with suitable car brand. The results should have included the positioning of the brand and individual brand

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perception. They have shown that when it comes to the ascribed attributes and values the brands Peugeot, Renault and Toyota were the ones which elicit the most positive associations. This means that the brands are strong and stable. Those that tend to generate negative associations are Ford, Opel, Skoda and Fiat.

According to the analysis made for the car brand perception, each one of the brands had its profile done, based on their attributes, values and which drivers generation tends to purchase them. As an example I will only mention four of them.

PICTURE45: FIAT LOGO

I will only mention four of them. PICTURE45: FIAT LOGO SOURCES: http://www.uniquebuilders. in/images/fiat-logo.jpg

SOURCES: http://www.uniquebuilders.in/images/fiat-logo.jpg ,24.04.2009.

The first one is the Fiat brand. This brand has the worst reputation among all of them. Negative feeling have been generated by the attributes connected to this brand, attributes such as outthrust, out fashioned design, high fuel consumption, high frequency of troubles, as well as weak technological combination. The driver image 10 sums to younger population which have limited income abilities, therefore limited choices when picking the brand of the car. As a result of these negative generated connections to the brand, Fiat has no perspective, therefore no bright future on the Slovene market.

PICTURE46: FORD LOGO

no bright future on the Slovene market. PICTURE46: FORD LOGO SOURCE: http://ceoworld.biz/ceo/wp-content/u

SOURCE:http://ceoworld.biz/ceo/wp-content/uploads/2009/02/ford-logo-big.jpg ,24.04.2009.

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The second one is the Ford brand. Here the rule of the “bad reputation follows” is applied. This brand has a bad image, due to the perception that it is mainly man car, and more convenient for older people than younger ones. The attributes such as high fuel consumption, not enough developed dealers’ network, old, and traditional contribute only more to the fact that this brand must work on its brand image, if it wants to be successful on the Slovene market. The drivers’ imagery is one proof more that they need to do something n order to reach the younger population.

PICTURE47: VOLKSWAGEN LOGO

to reach the younger population. PICTURE47: VOLKSWAGEN LOGO SOURCE: http://www.blogcdn.com/www.autoblog.c

SOURCE:http://www.blogcdn.com/www.autoblog.com/media/2007/08/vw-logo-jpeg.jpg

,24.04.2009.

The third one is the Volkswagen brand. Strong attributes have been generated by the brand. Durability, reliability, safety, stability and excellence are just a few of them. However, judging by the drivers’ imagery they are mostly preferred by the men and older people. Comparing to the previous years this brand had lost in perception due to its high price and traditionalism, as well as expensive car maintenance. The only positive attribute which have been improved throughout the years was the low fuel consumption. However, the fact still remains that VW is strong and recognizable brand on the Slovene market.

PICTURE48: CITROEN LOGO

brand on the Slovene market. PICTURE48: CITROEN LOGO SOURCE: http://www.geocities.com/Mo

SOURCE:http://www.geocities.com/MotorCity/5866/citroen_logo3.gif ,24.04.2009.

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The last one is the Citroen brand. This brand is perceived to be mainly a female brand, due to attributes such as comfortable, fun, romantic, sympathetic and young. The perception of the car refers to its comfort and frolic, appropriate price, frequent brand recall, and good advertising.

In continuation, in the research there are perception maps which are based on different criteria, such as attributes, values, and personality. The first map is the perception map of attributes. It divides the car brands among four different segments. Ford and Opel are considered to be out of date, VW and Toyota are considered to be technologically advanced, Skoda and Fiat are considered to be cheap, and Renault, Citroen and Peugeot are considered to have great shape.

According to the perception map of values, the VW and Toyota are the strongest positioned ones, followed by Opel and Ford. According to this, Citroen is and I quote above all pleasant, youth, good looking and comfortable, likable, gentle, and cute car.

As far as the perception of personality goes, Citroen is more family brand, since it can offer variety of designs targeting the youth people raging from 18 – 40 young, educated, and active people, which is the most stable part of population. This is the reason for the wide recognition and recall of the brand, as well as its strong brand image and awareness on the Slovene market.

In theory these practices work, however, in reality things are a little bit shabbier. For instance, you’ll never know whether the responses you get by people will tell you everything you need to know about the potential market. Similarly, as putted by one department store pioneer, John Wanamaker “Half of my advertising budget is wasted. Trouble is, I don’t know which half”. This testifies for the fact that the human brain is a mystery to the marketers.

One of the most advanced and largest neuromarketing (referred to as a marriage between neuroscience and marketing) studies ever made is that by Martin Lindstrom, a Danish advertiser and researcher. He started doing the research concentrated on the people’s “buyology”. It was conducted among 2000 volunteers from five countries, USA, UK, Germany, Japan, and China, all of which were smokers.

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The research was based upon the neuromarketing, which is symbiosis of science and marketing, a research discipline which is still in its infancy. For the purposes of conducting brain, scan technique such as fMRI was used, the most advanced brain-scanning technique, nowadays. It represents a functional magnetic resonance imaging, a machine worth around $4million. During the fMRI, the portion of the brain being used lights up like a red-hot flash. By tracking this, the neuroscientists can determine which areas are working at a given point of time. Accordingly, this study helps find out how our unconscious minds control our behavior, by revealing the hidden truths behind our purchasing habits, branding and advertising (Lindstrom, 2008).

As putted in his book, Martin Lindstrom putted an emphasis on just how insignificant the warnings on the cigarettes are. He says, and I quote “cigarettes companies seem to come up with innovative ways to kill us” , as he offers the example of the Marlboro intense cigarettes, which are small, high tar cigarettes, which can be consumed during brief moments between meetings, presentations and phone calls. Further on, each one of the participants were asked several questions, regarding whether or not the warning labels putted on the cigarettes have effect on them. Majority of the answers were not surprising, the people who were surveyed answered confirming this statement, and yet the results of the research were pretty shocking as they reveled the truth hidden in the subconscious level of the human mind. The results showed that not only the warnings failed to have any affect whatsoever on smokers, but instead they activated the “craving spot” which persuaded the smokers to light up. And that is how the lethal marketing skills began to develop in the world of the cigarettes’ corporations.

Before this study was conducted, there have been similar ones from the previous years. One of them was performed in 2003, by revising the famous “sip” test for Coca Cola and Pepsi. The “sip” test was a study performed in the 1975, by the name “the Pepsi Challenge”. The people were trying the both beverages and were asked for their preferences. More than 50% of them claimed that they liked the taste of Pepsi better. According to this, Pepsi should have been the market leader in the industry, yet Coca Cola was still keeping the throne. What the study of 2003 showed was the reason for this divergence (Lindstrom 2008).

The first part of the study was the simple question “What do you prefer Coke, Pepsi or no preferences?” The results were the same as the one in 1975, with no deviations whatsoever.

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The second part was to let the test subjects know whether they were sampling Pepsi or Coke before they taste it. The results were 75% of the subjects claimed to prefer Coke.

The reason for this was that during the study two areas of the brain were engaged in a fight between the rational thinking and the emotional one. The strong, positive associations connected to the Coke brand made it to overrule the Pepsi brand, and eventually claim triumph. As Lindstrom put it “Emotions are the way in which our brains encode things of value, and a brand that engages us emotionally will win every single time”.

There were other studies conducted as well, based on this technique, however they were also based on one particular brand too. The study performed by Martin Lindstrom differentiated from the previous ones due to the unlimited range of brands, in order to grasp the meaning of the brand in consumers’ minds. As every successful researcher before him, Lindstrom had too troubles with the financial part. He had to find 8 multinational corporations and 2081 volunteers which will support his project, and the article “Orwellian” in the New York Times Magazine, was not of any substantial help, since it compared the technique with “kind of super mind reading device” that messes up with the citizens’ privacy and “mental freedom”. 11 Although it was very hard and exhausting process, still he managed to find them and conduct the research at the end.

Among some of the shocking results found were that the product placement doesn’t work, there is a mirror neuron, which says “I’ll have what he/she has” , the subliminal massaging is still taking place today, even though it was banned in the 1957. In continuation, many of the rituals habitually performed are actually manufactured by companies and marketers to attract the consumers to purchase their brands and products. Than, faith and religion have enormous impact on the purchasing decision making process, as well as the smell, the sight, the touch, the taste and the sight. Another disturbing common myth dragged through years was seriously shaken with the findings, and that is that sex doesn’t sell. Yes you’ve read correctly it DOESN”T (Lindstrom, 2008).

So the question remains, what is next helpful tool for marketing? The answer, according to Lindstrom is pretty clear, as he thinks that by the end of 2012, the marketers will

11 The article is concluded in the appendix

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completely abandon the quantitative and qualitative research and concentrate on the fMRI instead. All I can add to that is that we’ll see how it plays out.

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6.

COCLUSION

As I said before, people want to use the sentence “Dreaming can get you nowhere”, but somehow in the branding world is the vision that can take you places, you’ve never been before, and you can achieve heights that are only within the Gods range. Having a well established and simple vision is something which builds the core of the brand and something which stands out in the crowd, screaming on the top of the lungs.

In this blurred world of values and principles, there’s no one to rely on, so that you can feel safe, and not robbed and deprived from the necessities which you eagerly must have.

Nowadays, the security which one lacks can be provided by the simple deliverance of a promise made by product or service, which strives for endless perfection and enhanced satisfaction.

The recognition and recall of that promise gives immortality to that product or service, infusing power that can convince the customers to believe in those values. Whether these strong associations are made based on merits, marketing activities or strategies, the fact still remains that the successfulness of their execution is what makes them special and at the same time is what shapes the value of the simple brand.

Leading you through the centuries, I have created a clear mosaic of history, embezzled with the brilliance and unique entities of a product or service, enriched with marketing activities. I have provided a clear image of how the value and the fate of the product depend on the excellence of the brand. From exploring the consumers’ minds, through determining variety of strategies, all the way to establishing tools for achieving increased value of the product, this thesis captures the essence of the brand and its importance for the future performance of a company.

As I said before, people are in love with the promise of security and safety. They adore avoiding the risk involved in the decision making process at all costs, and that’s why they make their purchase based on the confirmation from other people, recommendation from experts, as well as the perceived quality incorporated in the core of the brand.

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In this thesis I have provided fresh and new information. The revolutionary part was the fMRI technique, which shattered the way we feel about brands, and how our subconscious minds are far more important in the process of deciding what and why we buy.

All of these segments give the product and service power to elicit suitable associations, recall appropriate images, as well as create emotional bonding with their customers. This is the reason why the branding process infuses added values in the product, thus making it more desirable and preferable than an ordinary product with no labels attached.

The various evidences provided in my thesis are