CREATING AND

MAINTAINING
POWERFUL
BRANDS

BY: ABRAHAM REDI

 CERATING AND MAINTING POWERFUL BRANDS

ABSTRACT

Branding has become one of the most important aspects of business strategy. Yet it is
also one of the most misunderstood. Branding is sometimes considered to be merely an
advertising function. And many managers and business writers hold the view that
branding is about the management of product image, a supplementary task that can be
isolated from the main business of product management. This paper provides an
alternative perspective, arguing that:

1 Branding is a strategic point of view, not a select set of activities.

2 Branding is central to creating customer value, not just images.
3 Branding is a key tool for creating and maintaining competitive advantage.
4 Brands are cultures that circulate in society as conventional stories.

This paper develops a set of concepts and frameworks to guide the design of brand
strategies.

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TABLE OF CONTENTS
1. What is Branding?.......................................................................................................4

2. Branding Strategy: building strong brands..................................................................5

2.1 Brand Equity.........................................................................................................5

2.2 Brand Positioning.................................................................................................6

2.3 Brand Name Selection.........................................................................................8

2.4 Brand Sponsor......................................................................................................9

2.5 Brand Development..............................................................................................9

3 Why Brands Fail?......................................................................................................10

4 Brand Myths:.............................................................................................................11

5 Winning the Brands Battle:.......................................................................................12

6 Branding and Ethics:.................................................................................................13

7 Evaluating Brands:....................................................................................................14

7.1 Behaviors............................................................................................................14

7.2 Attitudes..............................................................................................................14

7.3 Relationships......................................................................................................15

7.4 Equity..................................................................................................................15

8. References:...............................................................................................................16

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1. What is Branding?

A brand is a name, term, sign, symbol, design or a combination of these, that identifies
the maker or seller of the product or service. Consumers view a brand as an important
part of a product, and branding can add value to a product.

Branding has become so strong that today hardly anything goes unbranded. Salt is
packaged in branded containers, even fruit and vegetables are branded

Some products, however, carry no brands. ‘Generic’ products are unbranded, plainly
packaged, less expensive versions of common products ranging from such items as
spaghetti to paper towel, whose prices as much as 40 per cent lower than those of main
brands. The lower price is made possible by lower-quality ingredients, lower-cost
packaging and lower advertising costs.

Despite the limited popularity of generics, the issue of whether or not to brand is very
much alive today. This situation highlights some key questions: Why have branding in
the first place? Who benefits? How do they benefit? At what cost?

Branding helps buyers in many ways:

 Brand names tell the buyer something about product quality

 Brand names also increase the shopper’s efficiency. Imagine a buyer going into
a supermarket and finding thousands of generic products.
 Brand names help call consumers’ attention to new products that might benefit
them.

Branding also gives the supplier several advantages:

 The brand name makes it easier for the supplier to process order
 The supplier’s brand name and trademark provide legal protection for unique
production features that otherwise might be copied by competitors.
 Branding enables the supplier to attract a loyal and profitable set of customers.
 Branding helps the supplier to segment markets.

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In addition, branding adds value to consumers and society:

 Those who favor branding suggest that it leads to higher and more consistent
product quality.
 Branding also increases innovation by giving producers an incentive to look for
new features that can be protected against imitating competitors.

Thus, building and managing brands represents one of the most important marketing
tasks.

2. Branding Strategy: building strong brands

Brands are viewed as the major enduring asset of a company, outlasting the company’s
specific products and facilities. John Stewart, co-founder of Quaker Oats, once said ‘If
these businesses were split up, I would give you the land and bricks and mortar, and I
would keep the brands and trademarks, and I would fare better than you’. The brand is
more valuable than the totality of all these assets!

Thus, brands are powerful assets that must be carefully developed and managed. In
this section, we examine the key strategies for building and managing brands.

2.1 Brand Equity

Brand equity is the positive differential effect that knowing the brand name has on
customer response to the product or service. Brands have higher brand equity to the
extent that they have higher brand loyalty, name awareness, perceived quality, strong
brand associations and other assets such as patents, trademarks and channel
relationships. A measure of the brand’s equity is the extent to which customers are
willing to pay more for the brand. One study found that 72 per cent of customers would
pay a 20 per cent premium for their brand of choice relative to the closest competing
brand; 40 per cent said they would pay a 50 per cent premium.

A brand with strong brand equity is a valuable asset. Companies have sought to put a
value on their brands. Brand valuation is the process of estimating the total financial

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value of a brand. Measuring the actual equity of a brand name is difficult.21 However,
according to one estimate, the brand value of Coca-Cola is $69 billion, that of Microsoft
is $65 billion, and IBM’s is $53 billion.

High brand equity provides a company with many competitive advantages. A powerful
brand enjoys a high level of consumer brand awareness and loyalty, and the company
will incur lower marketing costs relative to revenues. Because consumers expect stores
to carry the brand, the company has more leverage in bargaining with retailers.
Because the brand name carries high credibility, the company can more easily launch
line and brand extensions.

Marketers need to manage their brands carefully to preserve brand equity. In order to
maintain or improve brand awareness, perceived brand quality and usefulness, and
positive brand associations over time, they need to work with R&D to provide a constant
flow of improved and innovative products to satisfy customers’ changing needs.

Yet, behind every powerful brand stands a set of loyal customers. Therefore, the basic
asset underlying brand equity is customer equity – the value of the consumer
relationships that the brand creates. This suggests that the proper focus of marketing
planning is that of extending loyal customer lifetime value, with brand management
serving as an essential marketing tool.

2.2 Brand Positioning

Marketers need to position their brands clearly in target customers’ minds. Branding has
become one of the most important aspects of business strategy. Yet it is also one of the
most misunderstood. Branding is sometimes considered to be merely an advertising
function. But a brand is a complex symbol that can convey several levels of meaning:
1. Attributes. A brand first brings to mind certain product attributes. For example,
Mercedes suggests such attributes as ‘well engineered’, ‘well built’, ‘durable’,
‘high prestige’, ‘fast’, ‘expensive’ and ‘high resale value’. The company may use
one or more of these attributes in its advertising for the car. For years, Mercedes
advertised ‘Engineered like no other car in the world’. This provided a positioning
platform for other attributes of the car.

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2. Benefits. Customers do not buy attributes, they buy benefits. Therefore,

attributes must be translated into functional and emotional benefits. For example,
the attribute ‘durable’ could translate into the functional benefit ‘I won’t have to
buy a new car every few years.’ The attribute ‘expensive’ might translate into the
emotional benefit ‘The car makes me feel important and admired.’ The attribute
‘well built’ might translate into the functional and emotional benefit ‘I am safe in
the event of an accident.’
3. Values. A brand also says something about the buyers’ values. Thus Mercedes
buyers value high performance, safety and prestige.
4. Culture. A brand also represents a certain culture. Consider a new product that
has just been introduced by a new company. While the product has a name and
a trademarked logo, and perhaps other unique design features—all aspects that
we intuitively think of as “the brand”—in fact the brand does not yet exist because
the product does not yet have a history, these markers are “empty.” They are
devoid of meaning. Now think of famous brands. What is different is that these
markers have been filled with customer experiences, with advertisements, with
films and sporting events, with magazines and newspaper articles that evaluate
the brand, with conversations with friends and colleagues that mention the brand.
Over time, ideas about the product accumulate and “fill up” the brand markers
with meaning. A brand culture is formed. The Mercedes represents ‘German
culture’: high performance, efficient, high quality.
5. Personality. A brand also projects a personality. Motivation researchers
sometimes ask ‘If this brand were a person, what kind of person would it be?’.
Consumers might visualize a Mercedes automobile as being a wealthy, middle-
aged business executive. The brand will attract people whose actual or desired
self-images match the brand’s image.

All this suggests that a brand is a complex symbol. If a company treats a brand only as
a name, it misses the point of branding. Promoting the brand on one or more of its
benefits can be risky. Suppose Mercedes touts its main benefit as ‘high performance’. If
several competing brands emerge with as high or higher performance, or if car buyers

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begin placing less importance on performance as compared to other benefits, Mercedes

will need the freedom to move into a new benefit positioning

The most lasting and sustainable meanings of a brand are its core values and
personality. They define the brand’s essence. The company must build its brand
strategy around creating and protecting these values and personality .e.g. Marketing
less expensive models might dilute the personality that Mercedes has built up over the
decades.

When positioning a brand, the marketer should establish a mission for the brand and a
vision of what the brand must be and do. A brand is the company’s promise to deliver a
specific set of features, benefits, services and experiences consistently to the buyers. It
can be thought of as a contract to the customer regarding how the product or service
will deliver value and satisfaction.

2.3 Brand Name Selection

Selecting the right name is a crucial part of the marketing process. A good name can
add greatly to a product’s success. However, finding the best brand name is a difficult
task. It begins with a careful review of the product and its benefits, the target market and
proposed marketing strategies.

Desirable qualities for a brand name include the following:

1. It should suggest something about the product’s benefits and qualities. Examples
are Oasis (a refreshing fruit drink), and TimeOut (a chocolate biscuit to go with
coffee or tea breaks).
2. It should be easy to pronounce, recognize and remember. Short names help.
Example Dove (soap). But longer ones are sometimes effective, such as ‘I Can’t
Believe It’s Not Butter’ margarine.
3. The brand name should be distinctive. Examples are Shell, Kodak and Virgin.
4. The name should translate easily (and meaningfully) into foreign languages. For
example, in Chinese Ferrari is pronounced as ‘fa li li’, the Chinese symbols for
which mean ‘magic. On the other hand, Toyota’s Fiera car proved controversial

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in Puerto Rico, where ‘fiera’ translates to ‘ugly old woman’. Ford didn’t have the
reception they expected in Brazil when their ‘Pinto’ car flopped. Then they
discovered that in Brazilian Portuguese slang, ‘pinto’ means ‘small penis’

Many companies stick with the same marketing campaign and brand message in
every country. However, this occasionally creates difficulties. For instance, in
Taiwan Pepsi’s advertising slogan ‘Come alive with the Pepsi generation’ was
translated as ‘Pepsi will bring your ancestors back from the dead.’

2.4 Brand Sponsor

A manufacturer has four sponsorship options. The product may be launched as a

manufacturer’s brand (or national brand), as when Nestlé and IBM sell their output
under their own manufacturer’s brand names. Or the manufacturer may sell to
intermediaries that give it a private brand (also called retailer brand, distributor brand or
store brand). Although most manufacturers create their own brand names, others
market licensed brands. For example, some clothing and fashion accessory sellers pay
large fees to put the names or initials of fashion innovators such as Calvin Klein and
Gucci on their products. Finally, companies can join forces and co-brand a product: The
practice of using the established brand names of two different companies on the same
product.

2.5 Brand Development

A company has four choices when it comes to developing brands. It can introduce line
extensions (existing brand names extended to new forms, sizes and flavors of an
existing product category), brand extensions (existing brand names extended to new
product categories), multi brands (new brand names introduced in the same product
category) or new brands (new brand names in new product categories).

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Product Category

Existing New
Existin
g Line extension Brand extension
Brand name

New Multi brands New Brands

3 Why Brands Fail?

According to Matt Haig’s book brand failures, “…products were responsible for the fate
of a company. When a company noticed that its sales were flagging (declining), it would
come to one conclusion: its product was starting to fail. Now things have changed.
Companies don’t blame the product, they blame the brand.”

This is not always the fault of the company, as some things really are beyond their
immediate control (global recession, technological advances, international disasters
etc). However, more often than not, when brands struggle or fail it is usually due to a
distorted perception of the brand. This altered view is a result of one of the following
seven deadly sins of branding:

1. Brand amnesia. For old brands, as for old people, memory becomes an increasing
issue. When a brand forgets what it is supposed to stand for, it runs into trouble. The
most obvious case of brand amnesia occurs when a venerable, long-standing brand
tries to create a radical new identity, such as when Coca-Cola tried to replace its
original formula with New Coke. The results were disastrous
2. Brand ego. Brands sometimes develop a tendency for over-estimating their own
importance, and their own capability. This is evident when a brand believes it can
support a market single-handedly, as Polaroid did with the instant photography
market.
3. Brand megalomania. Egotism can lead to megalomania. When this happens, brands
want to take over the world by expanding into every product category imaginable.
Some, such as Virgin, get away with it, lesser brands, however, do not.

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4. Brand deception. ‘Human kind cannot bear very much reality,’ wrote T S Eliot.
Neither can brands. Indeed, some brands see the whole marketing process as an
act of covering up the reality of their product. In extreme cases, the trend towards
brand fiction can lead to downright lies.
5. Brand fatigue. Some companies get bored with their own brands. You can see this
happening to products which have been on the shelves for many years, collecting
dust. When brand fatigue sets in creativity suffers, and so do sales.
6. Brand paranoia. This is the opposite of brand ego and is most likely to occur when a
brand faces increased competition. Typical symptoms include: a tendency to file
lawsuits against rival companies, a willingness to reinvent the brand every six
months, and a longing to imitate competitors.
7. Brand irrelevance. When a market radically evolves, the brands associated with it
risk becoming irrelevant and obsolete. Brand managers must strive to maintain
relevance by staying ahead of the category, as Kodak is trying to do with digital
photography.

4 Brand Myths:

When their brands fail companies are always taken by surprise. This is because they
have had faith in their brand from the start, otherwise it would never have been
launched in the first place. However, this brand faith often stems from an obscured
attitude towards branding, based around one or a combination of the following brand
myths:

1. If a product is good, it will succeed. This is blatantly untrue. In fact, good products
are as likely to fail as bad products. Betamax, for instance, had better picture and
audio quality than VHS video recorders. But it failed disastrously.
2. Brands are more likely to succeed than fail. Wrong. Brands fail every single day.
According to some estimates, 80 per cent of all new products fail upon
introduction, and a further 10 per cent die within five years. By launching a
product you are taking a one in ten chance of long-term success. As Robert
McMath, a former Procter & Gamble marketing executive, once put it: ‘it’s easier

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for a product to fail than it is to survive.’

3. Big companies will always have brand success. This myth can be dismantled
with two words: New Coke. Big companies have managed to have at least as
much failure as success. No company is big enough to be immune to brand
disaster. \ main paradoxes of branding – namely, that as brands get bigger and
more successful, they also become more vulnerable and exposed.
4. Strong brands are built on advertising. Advertising can support brands, but it
can’t build them from scratch. Many of the world’s biggest brand failures
accompanied extremely expensive advertising campaigns.
5. If it’s something new, it’s going to sell. There may be a gap in the market, but it
doesn’t mean it has to be filled. This lesson was learnt the hard way for RJR
Nabisco Holdings when they decided to launch a ‘smokeless’ cigarette. ‘It took
them a while to figure out that smokers actually like the smoke part of smoking,’
one commentator said at the time.
6. Strong brands protect products. This may have once been the case, but now the
situation is reversed. Strong products now help to protect brands. As the cases
show, the product has become the ambassador of the brand and even the
slightest decrease in quality or a hint of trouble will affect the brand identity as a
whole. The consumer can cause the most elaborate brand strategy to end in
failure.

5 Winning the Brands Battle:

Brand building and retention involves planning to ensure consistent brand values over
time, adopting a holistic perspective. Competitive positioning needs to be understood to
sustain brands against competitors.

There are two broad types of brand competitive advantage, cost driven or value-added,
and value chain analysis can help to identify the sources of competitive advantage.
Strategies for developing different brands in relation to the competition are reviewed.
Winning brands have certain characteristics and a structured approach to brand
extensions is outlined. Through the analysis of environmental opportunities and threats,

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and the nature of the brand’s competitive advantage, marketers are able to develop
strategies which position their brands. The lifespan of brands will depend on the
sustainability of competitive advantage.

The broad competitive advantages inherent in successful brands are based on either
delivering similar benefits more cheaply than competitors, i.e., cost driven brands,
and/or delivering superior benefits than competitors at a price premium, i.e., value-
added brands. A useful device for identifying the competitive advantages of particular
brands is the framework of Porter’s value chain. Porter’s generic strategies matrix
identifies two dimensions of competition – cost and differentiation. In a commodity
market a company can lead only on lowest cost. In a differentiated market, achieving
low relative cost gives the company market advantage and a high relative cost demands
a niche marketing strategy.

A more advanced method developed for brand strategy is to consider the type of
competitive advantage inherent in the brand and the competitive scope of the market it
will be targeting. The profitability of a brand will come from a long-term brand
investment program based on the factors that drive brand success and profitability.

6 Branding and Ethics:

Branding is one of the most powerful tools in the marketing arsenal. So brandishing this
tool comes with a responsibility to use it ethically. Recently, branding has come under
significant criticism, particularly in Naomi Klein’s popular book No Logo (Picador, 2001).
Klein argues that firms use branding in an imperialist manner, feeding on consumers’
base desires while ignoring issues of social welfare. Such critiques have a long history
across the globe. Beneath such criticism is the question of power. Branding is a form of
rhetoric—an instrument to persuade people to think differently. Branding can create
considerable value. But it can also be used in an exploitative manner. For branding to
be a benevolent activity, four conditions need to hold:

1. Firms and consumers are equipped with equal information about the product.
2. Firms and consumers have equivalent sophistication in understanding how

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branding works.

When these conditions do not hold, there is potential for abuse. For example:

• Branding products with information asymmetries

• Stealth branding
• Branding to populations lacking rhetorical literacy, such as children

In such conditions, managers must vigilantly watch over the ethics of their branding
policies, assuring the activities create value rather than take advantage of customer
weaknesses.

7 Evaluating Brands:

How do managers know if their brand strategies are working? Managers use four
primary measures to “read” the brand’s health and evaluate marketing effectiveness.

7.1 Behaviors
When the brand increases in value, one expects—all other factors being
unchanged—that customers will purchase the brand more regularly and will be
less likely to switch away from the brand. Thus, one way to measure the strength
of a brand is to measure behavioral loyalty. Measurements of loyalty behaviors
alone can be misleading, though, because so many factors influence purchase
behavior. So marketers commonly look at additional indicators.

7.2 Attitudes
Valued brands tend to share certain consumer attitudes: they are well known
among the relevant customers for delivering particular benefits, they are
associated with influential users, and they are personally relevant. Attitudinal
measures are gathered from traditional market research as well as other informal
feedback mechanisms (Web sites, customer centers, retailers) to make
benchmarked comparisons on attitudinal strength.

7.3 Relationships

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When brand value is high, customers tend to rely heavily on the brand in their
daily life and, so, develop deep relationships with the brand. Like a personal
relationship, people come to depend on the brand and exhibit strong emotions
and feelings about the brand. Hence, measures of relationship strength can
provide accurate indicators of brand value.

7.4 Equity
The ultimate measure of brand value is the brand’s reservation price (the price at
which consumers are indifferent between the brand and competitive offerings). If
the demand curve shifts outward, all other factors being equal, the brand is more
valued by customers. Successful branding allows firms to charge more for their
products or to sell more at the existing price, or some combination thereof. The
future stream of earnings produced by this shifting of the demand curve attributed
to branding is called brand equity. For many companies, branding has a
tremendous impact on profits. Thus, brands are some of the most important
assets owned by the corporation.

And finally

According to Leslie, de C. & Malcom, H.. M., (2003). “Successful brand building helps
profitability by adding value that entices customers to buy…And last but not least, they
help transform organizations from being faceless bureaucracies to ones that are
attractive to work for and deal with.”

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8. References:

1. Daglous b.Holt, Brands and Branding, Available at: www.bookza.com

2. Des Dearlove, 2007. Business the Richard Branson Way- 10 secrets of the
World’s Greatesr brand builder Third., Available at: www.wileyeurope.com.

3. Haig, M., Brand Failures- The Truth about 100 Biggest Brand Failures,

4. Kotler, P. et al., 2005. Principles of Marketing Fourth Eur., Available at:

www.pearsoned.co.uk/kotler.

5. Leslie, de C. & Malcom, H.. M., 2003. Creating Powerful Brands Third edit.,
Available at: www.biddles.co.uk.

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