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Chapter 11
Designing and Implementing Branding Strategies
Chapter Objectives
1. Dene the key components of brand architecture.
2. Outline the guidelines for developing a good brand portfolio.
3. Assemble a basic brand hierarchy for a brand.
4. Describe how a corporate brand is di!erent from a product brand.
5. Explain the rationale behind cause marketing and green marketing.
Overview
Firms have a variety of options available to them with respect to
branding strategy, which refers to the nature and number of common
and distinctive branding elements that can be applied to the products
and services sold. Branding strategy is important as a means of
enabling consumers to understand and connect with the brand, since it
can help consumers organize a company’s products and services in
their minds. This chapter introduces the concepts of brand architecture
and brand hierarchy, two tools that can help a company make
decisions regarding branding strategy.
The brand architecture denes both brand boundaries and brand
complexity. The brand-product matrix is a graphical representation of
all the products sold by a rm. Each row of the matrix is labeled with a
brand name, while each column represents a product. Thus, the rows
of the matrix correspond to brand lines (all the products sold under a
particular brand name) while the columns correspond to product lines,
a.k.a. brand portfolios, (all the brands marketed in particular product
categories). A rm’s branding strategy can be characterized according
to its breadth, which refers to the number and nature of products that
bear the same brand name, and its depth, which refers to the number
and nature of brands in the same product category. Marketers can use
the brand-product matrix to determine whether and where to make
connections across products and brands.
A brand hierarchy visually illustrates the possible relationships that can
be formed among the rm’s products through the selection of common
and distinctive brand elements. The levels of the hierarchy might
include the corporate or company brand at the top, followed by a
family brand used in more than one product category, an individual
brand that typically is restricted to one product category, and a
modier that designates a specic item or model. Because a
company’s marketing activity may result in di!erent types of
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
associations becoming linked to the brand names at various levels of
the hierarchy, each name has the potential to impact the equity of
brands at levels above and below it.
The choice of branding strategy depends upon a number of di!erent
factors, including corporate objectives and capabilities, consumer
behavior, and competitive approaches. Consequently, strategies di!er
signicantly between rms and even across products within rms. In
addition to designating the optimal hierarchy, a company must also
design marketing support programs that create the desired awareness
and associations at each level. In general, associations for a
higher-level brand should be relevant to as many brands below it as
possible, while brands at the same level should be as di!erentiated as
possible.
The chapter concludes by discussing how corporate or family brands
can establish a number of valuable associations to di!erentiate the
brand. The chapter also gives an insight to brand architecture
guidelines toward the end.
Brand Focus 11.0 covers a discussion on the use of cause marketing to
build brand equity. This section covers the advantages of cause
marketing, cause marketing programs’ design, and green marketing.
Science of Branding
THE SCIENCE OF BRANDING 11-1
THE BRAND-PRODUCT MIX
The brand-product mix is a graphical representation of all the brands
and products sold by the rm. The rows of the matrix represent
brand-product relationships. They capture the rm’s brand-extension
strategy in terms of the number and nature of products sold under its
di!erent brands. A brand line consists of all products sold under a
particular brand. The columns of the matrix represent product-brand
relationships. They capture the brand portfolio strategy in terms of the
number and nature of brands to be marketed in each category. The
brand portfolio is the set of all brands and brand lines that a particular
rm o!ers for sale to buyers in a particular category.
A rm’s brand architecture strategy is characterized according to its
breadth (in terms of brand-product relationships and brand extension
strategy) and its depth (in terms of product-brand relationships and the
brand portfolio or mix).
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
A product line is a group of products within a product category that are
closely related because they function in a similar manner, are sold to
the same customer groups, are marketed through the same type of
outlets, or fall within given price ranges. A product mix (or product
assortment) is the set of all product lines and items that a particular
seller makes available to buyers. A brand mix (or brand assortment) is
the set of all brand lines that a particular seller makes available to
buyers.
THE SCIENCE OF BRANDING 11-2
CAPITALIZING ON BRAND POTENTIAL
A brand’s long-term brand value depends on how well a rm
understands and recognizes its potential and capitalizes on it in the
marketplace.
Processes Aecting Long-Term Brand Value
Brand Vision—Brand vision requires dening the potential of a brand.
Inherent brand potential is the value that can be extracted from a
brand via optimally designed marketing strategies, programs, and
activities.
Brand Actualization—Brand actualization means achieving the brand’s
inherent potential. Firms vary in their ability to formulate a vision of
what brand potential is and then capitalize on it to activate the brand’s
inherent brand potential.
Components of Long-Term Brand Value
Brand actualization (or potential actualization) depends on how
successfully a rm can translate brand potential into the two key
components of long-term brand value: brand persistence and brand
growth.
Brand Persistence—Brand persistence re8ects the extent to which the
current customer franchise and their spending levels can be sustained
over time. The endurance of a brand’s position and equity depends
primarily on three factors:
1. The strength, favorableness, and uniqueness of key brand
associations;
2. The likelihood that these characteristics will continue into the future;
and
3. The rm’s skill in developing and implementing marketing programs
and activities that help preserve them over time.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
Some brand associations are more enduring than others. Perhaps the
biggest challenge to brand persistence, however, is the ability of the
brand to sustain di!erentiation.
Brand Growth—Brand growth re8ects the extent to which current
customers actually increase their spending and new customers are
attracted to the brand, with either existing or new products.
Factors In&uencing Brand Persistence and Growth
Brand persistence and growth depend on the risks evident in the
marketing environment, the brand’s vulnerability to those risks, and
what the rm does to handle them.
Risks in the Marketing Environment—The marketing environment
consists of seven components: competitive, demographic, economic,
physical, technological, political-legal, and social-cultural. Long-term
brand value is more predictable. It rises when rms are less vulnerable
to competition and other environmental changes and are therefore
better able to capitalize on their inherent brand potential. Brand
persistence and growth also depend on how e!ectively competitors
operate. A key question is how equipped a company is to anticipate,
withstand, and capitalize on changes and shifts that occur in the
marketplace.
Firm Behaviors—First, the rm must be motivated and committed to
take advantage of the brand and its potential. The ability to maximize
brand potential will depend in large part on the skills of the rm to
recognize and dene the brand’s potential to begin with. Finally, a rm
must have the opportunity to formulate and activate the brand
potential.
A Key Implication
Achieving the brand’s long-term value is a function of recognizing and
realizing its potential through brand vision and brand actualization
activities. One important implication is that a brand has di!erent
growth prospects depending on which rm owns it.
THE SCIENCE OF BRANDING 11-3
CORPORATE BRAND PERSONALITY
Corporate brand personality can be dened as “a form of brand
personality specic to a corporate brand” and “the human
characteristics or traits that can be attributed to a corporate brand.”
Since corporate brands are designed to encompass a wider range of
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
associations than the product brands that might fall under them, the
dimensions are not necessarily the same.
A successful twenty-rst century corporation’s brand personality must
re8ect three core dimensions: the “heart,” the “mind,” and the “body.”
The heart of a company re8ects two traits: it is passionate and
compassionate. The mind of a company is creative and disciplined. The
body of a company is agile and collaborative. These three core
dimensions of corporate personality have a multiplicative, not merely
an additive, e!ect. These dimensions of corporate personality traits are
important to build in a brand, because the corporation competing in
the twenty-rst century will be dened “as much by who it is as what it
does.” If all employees act with a “heart,” “mind,” and “body,” then
the company will be better positioned to achieve success in the
twenty-rst-century business environment.
Branding Briefs
BRANDING BRIEF 11-1
EXPANDING THE MARRIOTT BRAND
The Marriotts added hot food to their root beer stand and renamed
their business the Hot Shoppe. As the number of Hot Shoppes in the
Southeast grew, Marriott expanded into in-8ight catering by serving
food on Eastern, American, and Capital Airlines. Hot Shoppes began its
food service management business when it opened a cafeteria in the
U.S. Treasury building. The company expanded into another hospitality
sector when Hot Shoppes opened its rst hotel in Arlington, Virginia.
Hot Shoppes, which was renamed Marriott Corporation in 1967, grew
nationally and internationally by making strategic acquisitions and
entering new service categories.
Marriott continued to diversify its business. Its acquisition of Host
International made it the top U.S. operator of airport food and
beverage facilities. Marriott added 1,000 food service accounts by
purchasing three food service companies: Gladieux, Service Systems,
and Saga Corporation. The company initiated a segmented marketing
strategy for its hotels by introducing the moderately priced Courtyard
by Marriott brand. Courtyard hotels were designed to o!er travelers
greater convenience and amenities, such as balconies and patios, large
desks and sofas, and pools and spas.
In 1984, the company entered the vacation timesharing business by
acquiring American Resorts Group. The following year, it purchased
Howard Johnson Company, selling the hotels and retaining the
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
restaurants and rest stops. In 1987, Marriott added three new market
segments: Marriott Suites, full-service suite accommodations;
Residence Inn, extended-stay rooms for business travelers; and
Faireld Inn, an economy hotel brand.
In 1993, Marriott Corporation split in two, forming Host Marriott to own
the hotel properties, and Marriott International to manage them and
franchise its brands. It expanded again in 1997 by acquiring the
Renaissance Hotel Group and introducing TownePlace Suites, Faireld
Suites, and Marriott Executive Residences. Marriott added a new hotel
brand in 1998 with the introduction of SpringHill Suites. The following
year, the company acquired corporate housing specialist ExecuStay
Corporation and formed ExecuStay by Marriott, now a franchise
business.
The launch in 2007 of stylish EDITION hotels put Marriott in the luxury
boutique market. The Autograph Collection was also introduced in
2011, a diverse collection of high-personality, upper-upscale
independent hotels. AC Hotels by Marriott was another lifestyle hotel
entry in 2011.
The last Hot Shoppe restaurant, located in a shopping mall in
Washington, D.C., closed on December 2, 1999. Today, Marriott
International is one of the leading hospitality companies in the world,
with 3,700 properties in 72 countries and territories worldwide that
brought in almost $12 billion in global revenues in 2010. In 2012, after
extensive consumer research, Marriott International developed a
formal brand architecture that it shared with prospective guests on its
Websites to aid them in their lodging decisions.
BRANDING BRIEF 11-2
NETFLIX BRANDING STUMBLES
Founded in 1997, Net8ix pioneered the DVD-by-mail category,
successfully challenging traditional video stores and driving industry
leader Blockbuster into bankruptcy in the process. Net8ix’s bold
formula for success included 8awless service delivery combined with a
state-of-the-art movie recommendation engine for users.
Hard-charging and constantly seeking to innovate, Net8ix dove in
head-rst as streaming technology evolved online and quickly found a
receptive audience ready to instantaneously download and view video.
That’s also where the trouble began.
Customers were told on July 12, 2011, that they would begin to be
charged $7.99 for each form of rental instead of $9.99 for both forms,
in e!ect a 60 percent price increase for the 24 million subscribers who
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
wanted to use both physical discs and streaming. In an unfortunate
coincidence, at roughly the same time, cable channel Starz very
publicly ended negotiations with Net8ix to renew a key online deal to
supply movies and TV shows. Perceiving that they would be paying
more for less, customers were decidedly unhappy. Over 600,000
terminated their accounts in the following months, catching Net8ix o!
guard. Many existing customers, however, accustomed to years of the
three-at-a-time DVD rental service, viewed the online service as a free
add-on to their DVD rentals, not the other way around.
Hastings announced that the company’s movies-by-mail service would
be rebranded Qwikster and would add video games to its catalog, while
the Net8ix brand would be devoted to streaming video only. Once
again, consumer response was emphatically negative. After several
weeks of negative criticism and publicity, another Hastings post
announced that the company would no longer split its services in two.
Net8ix’s brand architecture problems clearly slowed down the
momentum the company had achieved in the marketplace and left
many consumers unhappy or confused.
BRANDING BRIEF 11-3
CORPORATE REPUTATIONS: THE MOST ADMIRED U.S.
COMPANIES
Every year, Fortune magazine conducts a comprehensive survey of
business perceptions of the companies with the best corporate
reputations. The 2010 survey included the 1,400 largest U.S. and
non-U.S. companies in 64 industry groups. To create industry lists,
respondents rated companies in their industry on nine criteria: (1)
quality of management; (2) quality of products or services; (3)
innovativeness; (4) long-term investment value; (5) nancial
soundness; (6) ability to attract, develop, and keep talented people; (7)
responsibility to the community and the environment; (8) wise use of
corporate assets; and (9) global competitiveness. Many of the same
companies make the list year after year. Apple was number one from
2007 to 2010, and Procter & Gamble was in the top ten from 2005 to
2010.
Another informative survey, the RQ 2010 study of corporate
reputations, conducted each year since 1999 by Harris Interactive and
the Reputation Institute, demonstrated both the enduring character of
corporate reputations but their ability to change quickly at the same
time. Researchers determine which companies should be rated on the
basis of a preliminary sampling of over 30,000 members of the U.S.
general public, utilizing the proprietary Harris Poll online panel.
Respondents are asked rst to identify the 60 most visible companies
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
and then to rate them on 20 di!erent attributes that make up the
Reputation Quotient (RQ) instrument. The attributes are then grouped
into six di!erent reputation dimensions: Emotional Appeal, Products &
Services, Social Responsibility, Vision & Leadership, Workplace
Environment, and Financial Performance.
BRANDING BRIEF 11-4
CORPORATE INNOVATION AT 3M
3M has fostered a culture of innovation and improvisation from its very
beginnings. 3M makes more than 50,000 products, including
adhesives, contact lenses, and optical lms. Each year, 3M launches
scores of new products, and the company generates signicant
revenues from those introduced within the past ve years. It regularly
ranks among the top 10 U.S. companies each year in patents received.
The rm is able to consistently produce innovations in part because it
promotes a corporate environment that facilitates new discoveries:
3M encourages everyone, not just engineers, to become “product
champions.”
Each promising new idea is assigned to a multidisciplinary
venture team headed by an “executive champion.”
3M expects some failures and uses them as opportunities to
learn how to make products that work.
3M has introduced social networks into its innovation process,
inviting 75,000 global employees and over 1,200 other people to
participate in its annual Markets of the Future brainstorming
session.
Some of the innovations that emerged from 3M in 2010 include
Cubitron II industrial abrasives, which are revolutionizing how grinding
and abrading are done; new low-cost, maintenance-free respirators’
and a new line of micro projectors for cars, classrooms, and
recreational use.
Brand Focus
BRAND FOCUS 11.0
CAUSE MARKETING
Cause-related (or cause) marketing has been dened as “the process
of formulating and implementing marketing activities that are
characterized by an o!er from the rm to contribute a specied
amount to a designated cause when customers engage in
revenue-providing exchanges that satisfy organizational and individual
objectives.”
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
Advantages of Cause Marketing
One reason for the rise in cause marketing is the positive response it
elicits from consumers. Cause or corporate societal marketing (CSM)
programs o!er many potential benets to a rm:
Building brand awareness—Because of the nature of the brand
exposure, CSM programs can be a means of improving
recognition for a brand, although not necessarily recall.
Enhancing brand image—Two types of abstract or
imagery-related associations to a brand can be linked via CSM:
user proles; and personality and values.
Establishing brand credibility—CSM could a!ect all three
dimensions of credibility, because consumers may think of a rm
willing to invest in CSM as caring more about customers and
being more dependable than other rms, as well as being likable
for “doing the right things.”
Evoking brand feelings—CSM may help consumers justify their
self-worth to others or to themselves.
Creating a sense of brand community—CSM and a well-chosen
cause can serve as a rallying point for brand users and a means
for them to connect to or share experiences with other
consumers or employees of the company itself.
Eliciting brand engagement—Participating in a cause-related
activity as part of a CSM program for a brand is certainly one
means of eliciting active engagement.
Perhaps the most important benet of cause-related marketing is that
by humanizing the rm, it may help consumers develop a strong,
unique bond with the rm that transcends normal marketplace
transactions.
Designing Cause-Marketing Programs
Cause marketing comes in many forms related to education, health,
the environment, the arts, and so on. Some rms have used cause
marketing very strategically to gain a marketing advantage. A danger
is that the promotional e!orts behind a cause-marketing program
could backre if cynical consumers question the link between the
product and the cause and see the rm as self-serving and exploitive,
as a result. The hope is that cause marketing strikes a chord with
consumers and employees, improving the image of the company and
energizing these constituents to act. Two highly successful cause
programs are associated with breast cancer: The Avon Breast Cancer
Crusade and Yoplait Save Lids to Save Lives.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
Green Marketing
A special case of cause marketing is green marketing. Although
environmental issues have long a!ected marketing practices,
especially in Europe, companies are increasingly recognizing that the
environment is an important issue to their customers and shareholders
and, therefore, to their bottom lines. One survey revealed that
two-thirds of leaders of major brands believe sustainability initiatives
were critical to stay competitive. On the corporate side, a host of
marketing initiatives have been undertaken by a wide variety of rms
with environmental overtones. The auto industry is responding to the
dual motivators of concerned consumers and rising oil prices by
introducing gas-saving and emission-reducing hybrid models.
McDonald’s has introduced a number of well-publicized environmental
initiatives through the years. From a branding perspective, however,
green marketing programs have not always been entirely successful.
Overexposure and Lack of Credibility—So many companies have made
environmental claims that the public has sometimes become skeptical
of their validity. Government investigations into some “green” claims,
like the degradability of trash bags, and media reports of the spotty
environmental track records behind others have only increased
consumers’ doubts. This backlash has led many consumers to consider
environmental claims to be marketing gimmicks. E!orts to provide
consumers with more information have sometimes only complicated
the situation. The challenge is that producing and consuming products
always requires trade-o!s—all products, regardless of how “green”
they appear or claim to be, a!ect the environment in some way. And
the results of “green” actions are not always obvious. Deciphering
environmental claims is very tricky. To help provide some clarity, the
U.S. government has stepped in and demanded that companies be
more specic and substantiate environmental claims.
Consumer Behavior—Several studies help put consumer attitudes
toward the environment in perspective. Although consumers often
assert that they would like to support environmentally friendly
products, their behavior doesn’t always match their intentions. In most
segments, they appear unwilling to give up the benets of other
options to choose green products.
Poor Implementation—In jumping on the green marketing bandwagon,
many rms initially did a poor job. Products were poorly designed,
overpriced, and inappropriately promoted. Once product quality
improved, advertising sometimes still missed the mark, being overly
aggressive or not compelling.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
Possible Solutions—In Europe, many of Procter & Gamble’s basic
household items, including cleaners and detergents, are available in
rells that come in throw-away pouches. P&G says U.S. customers
probably would not take to the pouches. In the United States, rms
continue to strive to meet the wishes of consumers concerning the
environmental benets of their products, while maintaining necessary
protability.
Discussion questions
1. Pick a company. As completely as possible, characterize its brand
portfolio and brand hierarchy. How would you improve the
company’s branding strategies?
2. Do you think the Dow Chemical corporate image campaign
described in this chapter will be successful? Why or why not? What
do you see as key success factors for a corporate image campaign?
3. Contrast the branding strategies and brand portfolios of market
leaders in two di#erent industries. For example, contrast the
approach by Anheuser Busch and its Budweiser brand with that of
Kellogg’s in the ready-to eat cereal category.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
4. What are some of the product strategies and communication
strategies that General Motors could use to further enhance the
level of perceived di#erentiation between its divisions?
5. Consider the companies listed in Branding Brief 11-3 as having
strong corporate reputations. By examining their Websites, can you
determine why they have such strong corporate reputations?
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
Exercises and assignments
1. Have students select a brand with a multiple-level brand hierarchy
and analyze the supporting marketing communications program to
determine how the upper- and lower-level names are linked and
di!erentiated.
2. Assign students the task of identifying pairs of competing brands
with di!erent branding strategies (for example, Kraft salad dressing
and Wishbone, Arm & Hammer deodorant and Dry Idea, Hershey’s
chocolate bar and Baby Ruth). What conclusions, if any, can be
drawn from comparing and contrasting the types of associations
consumers have for each brand in the pair?
3. Have the class divided into groups and assign a brand to each
group. Have the groups characterize the brand architecture strategy
for their brands using the brand-product matrix. This activity will
provide the students a better view and understanding of brand line,
brand portfolio, product line, product mix, and brand mix.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
4. Have the class divided into groups and have them assess the
corporate branding for a brand of their choice. The students may
then suggest changes that can be brought about to improve the
corporate branding e!ect for the brands.
Key take-away points
1. The rm’s brand architecture strategy helps marketers determine
which products and services to introduce, and which brand names,
logos, symbols, and so forth to apply to new and existing products.
2. Branding strategy is important as a means of enabling consumers to
understand and connect with the brand, since it can help consumers
organize a company’s products and services in their minds.
3. A brand hierarchy is a useful means of graphically portraying a
rm’s branding strategy by displaying the number and nature of
common and distinctive brand elements across the rm’s products,
revealing their explicit ordering.
4. Designing a brand strategy involves decisions regarding the number
of levels to use, how brand elements at di!erent levels will be
combined for a given product, and how brand elements will be
linked to multiple products.
5. Each successive level in a brand hierarchy allows the rm to
communicate additional, specic information about products.
6. In general, associations for a higher-level brand should be relevant
to as many brands below it as possible, while brands at the same
level should be as di!erentiated as possible.
7. A brand portfolio includes all brands sold by a company in a product
category.
8. A corporate brand is distinct from a product brand in that it can
encompass a much wider range of associations which can have an
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
important e!ect on the brand equity and market performance of
individual products.
© 2013 Pearson Education, Inc. publishing as Prentice Hall.
