978-0132664257 Chapter 11 Solution Manual

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Chapter 11

Designing and Implementing Branding Strategies

Chapter Objectives

1. Dene 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 denes 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

modier that designates a specic item or model. Because a

company’s marketing activity may result in di!erent types of

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

signicantly 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).

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 Aecting Long-Term Brand Value

Brand Vision—Brand vision requires dening 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.

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 dene 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 dened as “a form of brand

personality specic 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

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 dened “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

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

Faireld 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, Faireld

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

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

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 signicant

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 dened as “the process

of formulating and implementing marketing activities that are

characterized by an o!er from the rm to contribute a specied

amount to a designated cause when customers engage in

revenue-providing exchanges that satisfy organizational and individual

objectives.”

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 benets 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 proles; 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 benet 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 backre 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.

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 specic 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 benets 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.

Possible Solutions—In Europe, many of Procter & Gamble’s basic

household items, including cleaners and detergents, are available in

rells 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 benets of their products, while maintaining necessary

protability.

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.

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?

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.

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, specic 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

important e!ect on the brand equity and market performance of

individual products.