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A. Issue: Holding Brand Position
“Biggest Brands,” PR Week, August 9, 2002, p. 11.
“U.S. Brands Hit the Mark for Global Success in 2002 - How Top Brands Communicate
with Customers
Running PR for even the biggest and best-known brands has been a tough challenge in the past
year. The dismal financial performance of scores of companies has increased the need for
communications. But as Interbrand’s annual survey and ranking of the world’s biggest brands
is published, it is clear that those brands that have done best have followed a particular
strategy.
The enduring lesson for marketers during economic decline has always been to ensure the
quality and consistency of customers’ experience of the brand and its values over time. As
Interbrand director Andy Milligan says: “Customers demand greater value from their
experience of a brand.”
Using publicly available financial data only, Interbrand has calculated the value of—and
ranked—the world’s leading brands based on the net present value of the earnings that a brand
is expected to generate and secure in the future. In other words, using indicators such as share
price, the consultancy has estimated how each brand will affect sales and earnings, how likely
it is this will be delivered, and then given those future earnings a value today.
Within these parameters, consumer brands, such as McDonald’s (ranked at No. 8) and
Budweiser (ranked at No. 24)—i.e., those that are close to everyday patterns of consumption
and are therefore fairly recession-proof—have fared best.
But outside the top 75, a number have progressed using stealth through brand extensions, most
notably Caterpillar, which made a strong debut at No. 79 and Nivea and No. 91, which via its
move into men’s grooming and improved skin protection ranges, increased its brand value in
2001 by 16 percent to more than $2 billion.
“They are both interesting cases, as despite its new lines, Nivea has kept its positioning as the
staple of skincare and related products, not promising miracles, while Caterpillar’s expansion
from its main earth-moving equipment into licensed clothing tells you how far you can take
brand extensions if you do it properly,” says Interbrand global MD of brand valuation Jan
Lindemann.
However, it is in the beleaguered sectors of telecoms, consumer electronics, and
semi-conductors that the issue of brand becomes truly imperative. While AT&T’s (17) brand
value fell 30 percent and Ericsson (71) lost an astonishing 49 percent (forcing it out of the top
ten), Nokia (6) kept its losses to 14 percent.
Nokia’s position looks relatively rosy when compared to AT&T and Ericsson’s business
troubles, but Lindemann adds: “With Ericsson cutting its market spending and pulling out of
the market a bit, it’s not as clear what its brand actually stands for.” Nokia itself, however,
attributes its market leader status to the trust its brand engenders among its various audiences.
“We’re very transparent with the press and on investor relations, and we accept competitors,”
says Nokia head of corporate communications (UK and Ireland) Mark Squires.
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An example of this is the new Nokia 7650 digital-camera-in-a-phone that uses the Symbian
operating system, a joint venture between various organizations, allowing users to
communicate with non-Nokia devices, such as PCs. “We don’t dictate to the market and we are
constantly working with other manufacturers, as consumer trust is vital. You can’t trick people
into buying a product that then doesn’t deliver,” Squires adds.
However, the real star of the telecoms and consumer electronics sector is Korea’s Samsung
(34), which turned in a remarkable 30 percent growth, increasing in brand value to $8.3 billion
from $6.4 billion in 2001. In the teeth of the decline in the telco industry, Samsung excelled at
delivering superior product design and communicated this to customers through various
channels, notably by using strategic PR.
“Through focusing the PR on a select number of high-end aspirational consumer products in
the Samsung portfolio that strongly support the core brand values, we have been able to talk to
a wider and deeper breadth of media over the past 18 months, including the consumer lifestyle
media,” says Ginni Arnold, head of Samsung’s UK PR account at Cohn & Wolfe Digital.
Similarly, tech brand Dell (31) stands out in Interbrand’s ranked list. While Compaq (27) lost
21 percent off its brand value—despite its obvious attractions to Hewlett-Packard—Dell made
a 12 percent increase.
Much of this success is attributable to Dell’s low inventory manufacturing process and its
direct sales model, both complicated concepts to explain to customers. “PR has been absolutely
crucial, especially at the front end of moving into a new market,” says Rob Shimmin, global
corporate practice MD for Dell’s retained agency Ogilvy PR Worldwide.
“Strong product-led advertising has been able to promote the direct-sell proposition, but PR
has been the powerful driver for explaining the benefits and giving that buzz that says it really
works,” he adds.
However the Interbrand study also identifies a number of brands that appear to have lost their
way, including Ford (11) and Merrill Lynch (25), which dropped 32 percent and 25 percent,
respectively.
precious corporate asset.
TOP 75 WORLD BRANDS 2002
Rank-2002 Brand Value in US dollars (m)
from 2001
% change
1 Coca-Cola 69,637 1
2 Microsoft 64,091 -2
3 IBM 51,188 -3
4 GE 41,311 -3
5 Intel 30,861 -11
6 Nokia 29,970 -14
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7 Disney 29,256 -10
8 McDonald’s 26,375 4
9 Marlboro 24,151 10
10 Mercedes 21,010 -3
11 Ford 20,403 -32
12 Toyota 19,448 5
13 Citibank 18,066 -5
14 Hewlett-Packard 16,776 -7
15 American Express 16,287 -4
16 Cisco 16,222 -6
17 AT&T 16,059 -30
18 Honda 15,064 3
19 Gillette 14,959 -2
20 BMW 14,425 4
21 Sony 13,899 -7
22 Nescafe 12,843 -3
23 Oracle 11,510 -6
24 Budweiser 11,349 5
25 Merrill Lynch 11,230 -25
26 Morgan Stanley 11,205 —
27 Compaq 9,803 -21
28 Pfizer 9,770 9
29 JPMorgan 9,693 - —
30 Kodak 9,671 -10
31 Dell 9,237 12
32 Nintendo 9,219 -3
33 Merck 9,138 -6
34 Samsung 8,310 30
35 Nike 7,724 2
36 Gap 7,406 -15
37 Heinz 7,347 4
38 Volkswagen 7,209 -2
39 Goldman Sachs 7,194 -9
40 Kellogg’s 7,191 3
41 Louis Vuitton 7,054 —
42 SAP 6,775 7
43 Canon 6,721 2
44 IKEA 6,545 9
45 Pepsi 6,394 3
46 Harley-Davidson 6,266 13
47 MTV 6,078 -8
48 Pizza Hut 6,046 1
49 KFC 5,346 2
50 Apple 5,316 -3
51 Xerox 5,308 -12
52 Gucci 5,304 -1
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53 Accenture 5,182 —
54 L’Oreal 5,079- —
55 Kleenex 5,039 -1
56 Sun 4,773 -7
57 Wrigley’s 4,747 5
58 Reuters 4,611 -12
59 Colgate 4,602 1
60 Philips 4,561 -7
61 Nestle 4,430 —
62 Avon 4,399 1
63 AOL 4,326 -4
64 Chanel 4,272 —
65 Kraft 4,079 1
66 Danone 4,054 —
67 Yahoo! 3,855 -12
68 Adidas 3,690 1
69 Rolex 3,686 —
70 Time 3,682 -1
71 Ericsson 3,589 -49
72 Tiffany 3,482 —
73 Levi’s 3,454 -8
74 Motorola 3,416 -9
75 Duracell 3,409 -18
Source: Interbrand
B. Issue: Brand Loyalty
Marketing Management, July/August 2002, p 10.
Introductory Themes
“Since the only way a business can retain customer and employee loyalty is by
delivering superior value, high loyalty is a certain sign of solid value
creation.”
your employees.”
It’s hard to tell who’s talking about customer loyalty and who’s talking
about brand management. The customer loyalty gurus and the brand gurus are
starting to sound alike! This really shouldn’t come as a surprise if we take a
brief look back at the evolution of the two fields.
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From Customer Satisfaction to Customer Commitment
reasons that customers might defect?”
As more and more companies gained experience measuring customer satisfaction, research
indicated that customer satisfaction simply wasn’t enough to compete successfully. The results
of applied and basic research indicated that customer satisfaction was only mildly predictive of
customer retention in competitive markets. In the 1980s, after realizing the limits of
both customers and non-customers.
The problem is these measures are mainly concerned with how customers feel about the
company and its products and services. Ultimately, to affect the bottom line, we need to
influence how customers actually behave toward the company. This moved the field to the
concept of loyalty, an extremely complex and dynamic system.
From Commodity Busting to Brand Commitment
In the second half of the nineteenth century, goods began to be manufactured in factories, and
the market was flooded with uniform mass-produced products that were virtually
indistinguishable from one another. Competitive branding became a necessity of the industrial
age. The first task of branding was to name previously generic goods and to create a familiar
goods.
The next step was for the entire corporation itself to embody a meaning of its own. So by the
end of the 1940s, a brand wasn’t just a catchy phrase or a picture printed on the label of a
company’s product. The company as a whole could have a brand identity.
The defining moment that confirmed the true value of a strong brand arrived in 1988 when
brand’s commercial success or failure. These underlying reasons are the things that create
brand commitment in the marketplace. Understanding brand commitment improves marketing
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positioning, and specific marketing mix strategies.
The Common Destination Customer Relationships
The two fields now have great overlap and appear to be converging because they both have the
same destination—building long-term, profitable customer relationships. This evolution and
convergence has been driven, in part, by companies’ continuing efforts to make their
moving to managing customer relationships as an alternative to focusing on transactions. Firms
choosing a service perspective as their strategic approach almost inevitably have to focus on
relationships with their customers and other stakeholders.
Many consumer goods manufacturers differentiated their products by creating a brand image
getting them to make that next purchase.
When a strong brand/customer relationship emerges, not only will the company enjoy repeat
sales, but profits per customer will increase with customer longevity. This is because the longer
customers are with a company the more willing they are to pay premium prices. An analysis of
Market Research Corporation of America (MRCA) panel data found that loyal packaged-goods
relationships.
Common Themes
Whether you call it loyalty management, brand management, or relationship management, the
success of your strategy will depend on a number of things. First, it’s important to understand
the drivers of customer behaviors and attitudes. You also must be able to build a company,
them one and the same.
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II. Case
Autobytel.com
HBS Case: 5-500-076 TN: 500-076
Teaching Perspectives
month by mid-1999.
The company is now struggling to accelerate revenue growth. It can do this in either one of two
ways. The first is by adding new dealers to the Autobytel network. Currently, most of the
company’s revenues (89 percent) derive from dealer subscription fees. The second alternative
is to focus on new products and services. The company has recently launched
reconsider its marketing mix.
In short, while the Autobytel case provides an example of how a company can use the Internet
to transform traditional markets, the case also forces students to recognize that even a
fast-moving Internet company like Autobytel faces some classic marketing issues.
This case is best used to illustrate the following:
whether it is possible for Autobytel to avoid alienating one of these two groups
as it searches for ways to grow.
The case also illustrates the difficulty of maintaining market leadership in a
dynamic environment, particularly when the core service you are providing is
based on (non-proprietary) information.
whether Autobytel is “missing the boat.”
The Internet Changes Traditional Channel Structures
The Autobytel case provides an opportunity to discuss how the Internet changes traditional
channel structures. Typically, the Internet is regarded as facilitating disintermediation, in which
a producer uses control over information to displace traditional channel members. A good
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Manufacturer
In the process, Autobytel has transformed the way consumers purchase cars. As the case notes,
the traditional car buying process is rather complex (see TN Exhibit 3). Not only do consumers
have to research and select a car (step 1), they must also endure an arduous negotiation process
in order to settle on a price (step 2). They must then obtain financing and insurance (step 3)
by reselling the car (step 6).
The Car Buying and Ownership Cycle
Currently, the bulk of Autobytel’s business comes from intervening in Steps 1 and 2 in the
buying and ownership diagram (see case). The case notes that Autobytel provides consumers
with copious amounts of information, including vehicle reviews, manufacturer brochures,
Autobytel-certified dealer (step 2).
Questions:
1. What is Autobytel’s value proposition for consumers? For dealers? Are there any
perspective?
2. What course of action should Autobytel take to accelerate revenue growth?
3. How should Autobytel differentiate itself from the competition?
4. Come up with a new positioning statement for Autobytel. What kind of marketing mix
positioning?
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