978-0132664257 Chapter 13 Solution Manual

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Chapter 13

Managing Brands Over Time

Chapter Objectives

1. Understand the important considerations in brand reinforcement.

2. Describe the range of brand revitalization options to a company.

3. Outline the various strategies to improve brand awareness and

brand image.

4. De ne the key steps in managing a brand crisis.

Overview

The health and well-being of a brand can be signi cantly a$ected by

both external forces (related to consumer behavior, channel structure

and power, competitive intensity and strategy, government regulation,

and other facets of the marketing environment) and internal forces

(related to a company’s commitment to and stewardship of a brand).

This chapter examines how best to manage equity over time in the

face of external and internal pressures on a brand.

The keystones to successful brand management are reinforcement of

brand meaning and identi cation of new sources of equity. Two

important factors in reinforcing brand meaning are consistency in the

amount and nature of marketing support given to a brand, and a

commitment to preserving and protecting existing sources of equity.

When identifying potential new sources of equity, it is necessary for a

company to recognize the inherent tradeo$s between marketing

activities that fortify brand equity and those that leverage it in pursuit

of growth and nancial gains.

If a brand loses its luster, a revitalization strategy may be required to

return it to prominence. This entails either taking a brand back to its

roots to recapture lost sources of equity, or identifying and establishing

new sources of equity. Sometimes a brand’s misfortunes arise from a

lack of breadth in consumer awareness levels, caused by a tendency of

consumers to think of it in very narrow ways. In such cases, marketers

can identify ways to use the brand more frequently, use more of the

brand when it is consumed, or use the brand in more ways.

When the problem is one of image, not awareness, a new marketing

campaign may be required to improve the strength, favorability, and

uniqueness of a brand’s associations. This can involve neutralizing

negative associations, shoring up or creating positive associations. A

company may want to reposition a brand by establishing new

points-of-parity or points-of-di$erence.

Companies with more than one brand in a product line should develop

migration strategies that rationalize the movement of consumers

across franchises as their needs and wants change, or as the features

and positions of the brands change. If a brand fails to maintain or build

equity over time, a milking strategy to extract maximum pro ts before

“retirement” may be in order.

Brand Focus 13.0 discusses the concept of responding to a brand crisis

by throwing light on how Tylenol’s product tampering crisis was

handled, followed by discussing crisis marketing guidelines.

Science of Branding

THE SCIENCE OF BRANDING 13-1

BRAND FLASHBACKS

Dubbed “retro-branding” or “retro-advertising” by some marketing

pundits, the tactic is a means to tie in with past advertising that was,

and perhaps could still be, a key source of brand equity. Retro-branding

can activate and strengthen brand associations that would be virtually

impossible to recreate with new advertising today. Heritage can be a

powerful point-of-di$erence—at least as long as it conveys expertise,

longevity, and experience and not just age!

Anniversaries and milestones of longevity can be excellent

opportunities to launch a campaign to celebrate. Marketers should

focus as much on the future of the brand as on its past, of course,

perhaps emphasizing how all that the brand has gone through will

bene t its customers in the future. L.L. Bean’s 100th anniversary

celebration in 2012 was intended to do just that. The main thrust of the

campaign was to celebrate exploring the outdoors. Nostalgia can play

a valuable role for many brands. Oreo cookies and Keds tennis shoes

have run nostalgia-focused campaigns targeting adults who

presumably stopped using the product long ago. Research shows that

nostalgic advertising can positively in>uence consumers. One empirical

study con rmed that intentionally nostalgic advertisements yielded

favorable attitudes toward the advertisement and the brand. Another

study identi ed a potential source of nostalgic purchase behavior,

called “intergenerational in>uence,” or the in>uence of a parent’s

purchase behavior and brand attitudes on a child’s behavior and

attitudes.

Some brands attempt to make the case that their enduring appeal is

still relevant for lapsed users today. Heritage appeals do not

necessarily have to use advertising though.

Branding Briefs

BRANDING BRIEF 13-1

RAZOR-SHARP BRANDING AT GILLETTE

Gillette is one of the strongest brands in the world, with roughly

two-thirds of the U.S. blade and razor market and even more in Europe

and Latin America. Fundamentally, Gillette continually innovates to

produce a demonstrably superior product. Gillette’s credo is to

“increase spending in R&D, plant and equipment, and advertising”.

Gillette backs its products with strong advertising and promotional

support. Skillful marketing thus creates both strong performance and

imagery associations.

When it launched the Mach3 in 1998, Gillette considered it to be the

most important new product in its history and invested more than $750

million in research and development and manufacturing expenses,

securing 35 patents in the process. As successful as Mach3 was,

Gillette’s women’s version of the product was perhaps an even more

impressive achievement. Gillette spent $300 million on research and

development for Venus, its rst razor designed solely for women.

Based on extensive consumer research and market testing, Venus was

a marked departure from previous women’s razor designs, which had

essentially been colored or repackaged versions of men’s razors. In

2004, it upgraded the Mach3 by introducing the M3 Power, the rst

disposable razor to feature a battery-powered vibration option, which

allowed for a closer shave. A Venus version, called Venus Vibrance,

soon followed. In its next major launch in 2006, Gillette introduced the

six-bladed Fusion and Fusion Power razors. Gillette had spent $1.2

billion on R&D since introducing the Mach3 and then spent more than

$1 billion to market the product to the world’s 3.2 billion males. The

Fusion ProGlide, Gillette’s most expensive razor ever, followed a few

years later.

Much of Gillette’s success results from its having relentlessly innovated

and stayed relevant. The company has also carefully branded new

products. Major introductions receive totally new brand names (Sensor,

Mach3, and Fusion), while minor improvements are sub-branded

(Sensor Excel, Mach3 Turbo, and Fusion ProGlide).

BRANDING BRIEF 13-2

REMAKING BURBERRY’S IMAGE

Burberry, founded in 1856 by 21-year–old Thomas Burberry, was a

veritable “fashion disaster” in the mid-1990s. Yet within a span of

several years, with the help of contemporary designs and updated

marketing, the brand shrugged o$ its staid image and became

fashionable again. One of Burberry’s rst moves to freshen the brand

was to leverage its classic beige-check plaid in a series of accessories

that quickly became bestsellers, including handbags, scarves, and

headbands. Another was rejuvenating the check itself by using

di$erent colors, patterns, sizes, and materials. Burberry was careful to

maintain a balance between the contemporary and the traditional. It

also sought to leverage other iconic imagery, such as the trench coat

and the Prorsum horse insignia. Another key to Burberry’s turnaround

was refreshing its advertising. The ads were credited with bringing a

“rebellious, streetwise image to the brand.” The company gave its

retail stores a makeover as well in order to match the contemporary

feel of the new designs.

Together, these di$erent e$orts turned the company’s fortunes around.

After peaking in 2002 with a successful IPO, the brand began to su$er

from overexposure and a slew of counterfeit products. Following a

holiday sales slump in 2004, the company knew it had to set a di$erent

course. A number of marketing changes were implemented. The

trademark tan/black/white/red Burberry plaid was dialed down and

made more discreet. More emphasis was placed on high-margin

accessories—non-apparel accounts for one-third of revenue—and

high-end fashions.

Bene ting from vibrant emerging markets such as China, a constantly

updated new product pipeline, and one of the most advanced digital

strategies of any luxury brand, Burberry found itself in 2011 with

annual revenues over $2 billion, far exceeding nancial forecasts.

BRANDING BRIEF 13-3

HARLEY–DAVIDSON MOTOR COMPANY

Harley-Davidson has twice narrowly escaped bankruptcy and is today

one of the most recognized brands in the world. In recovering from its

nancial downfalls, Harley-Davidson realized its product needed to

better live up to the brand promise. Harley’s back-to-basics approach

to revitalization centered on improving factories and production

process to achieve higher levels of quality. The company also dialed up

marketing e$orts to better sell its products. Establishing a broader

access point with consumers to make the brand relevant to more

people, Harley was able to attract a diverse customer base that went

way beyond the traditional biker image. The company also changed

the way it went to market.

The company established an owners’ club, the Harley Owners Group

(HOG), which sponsors bike rallies, charity rides, and other motorcycle

events. Every Harley owner becomes a member for free by signing up

at the www.hog.com Web site. Harley-Davidson began a licensing

program to protect its trademarks and promote the brand. Early e$orts

primarily supported the riding experience with products like T-shirts,

jewelry, small leather goods, and other products appealing to riders.

Currently, the primary target for licensed products is existing

customers through the Harley dealer network. To attract new

customers, though, Harley-Davidson has licensed children’s clothing,

toys, games, and many other items aimed at children and sold beyond

the dealer network. As business grew, Harley-Davidson created

Harley-Davidson MotorClothes to produce traditional riding gear along

with men’s and women’s casual sportswear and accessories to reach

an ever-expanding and diverse customer base of riders and non-riders.

Harley-Davidson continues to promote its brand with grassroots

marketing e$orts. Many employees and executives at the company

own Harleys and often ride them with customers, making traditional

advertising almost unnecessary. For women and smaller riders, Harley

o$ers Sportster motorcycles that are built low to the ground with

narrower seats, softer clutches, and adjustable handlebars and

windshields. Several times a year Harley dealers hold garage parties

for women to help them learn about their bikes. Women now represent

about 12 percent of sales.

BRANDING BRIEF 13-4

A NEW MORNING FOR MOUNTAIN DEW

Mountain Dew hit its stride in the 1990s, experiencing phenomenal

double-digit growth. Mountain Dew was the fastest-growing major U.S.

soft drink for much of the decade. Growth was fueled by some edgy

advertising from PepsiCo’s long-time ad agency BBDO that was funny

and fast-paced. The tag line “Do the Dew,” was a strong call to action,

and the ads were a high-energy blast of adrenalin.

The next decade saw much product expansion, introduction of

nontraditional marketing, and a pioneering digital strategy. To better

connect with its core teen audience, Mountain Dew increased its

sponsorship of the Mix Tape street basketball tour and the Dew Action

Sports Tour. The company also launched the Dew U loyalty program, in

which drinkers exchanged codes printed under bottle caps for a variety

of goods available on the Dew U Internet site. In 2005, Mountain Dew

launched another brand extension, a highly ca$einated energy drink

called MDX aimed at the estimated 180 million video game players, by

introducing it as the oMcial soft drink of the E3 Electronics

Entertainment Expo.

All these actions helped Mountain Dew remain the number four

carbonated U.S. beverage in terms of sales throughout the decade. A

logo change on the packaging occurred in 2008, as the company chose

the simpler “Mtn Dew.” An even bigger change was a viral marketing

experiment in crowdsourcing that put customers into the actual

product development process. The initial “Dewmocracy” campaign

began in 2007 and included an online game in which players designed

a new drink.

The follow-up Dewmocracy campaign in 2009 raised the stakes.

Mountain Dew marketers put the bulk of their marketing budget online

to allow consumers to select three new >avors to be distributed

nationwide. Enormous buzz followed—much of it generated by the

actual product users, as intended.

Brand Focus

BRAND FOCUS 13.0

RESPONDING TO A BRAND CRISIS

Originally introduced by McNeil Laboratories as a liquid alternative to

aspirin for children, Tylenol achieved nonprescription status when

McNeil was bought by Johnson & Johnson (J&J) in 1959. J&J’s initial

marketing plan promoted a tablet form of the product for physicians to

prescribe as a substitute for aspirin when allergic reactions occurred.

Tylenol consists of acetaminophen, a drug as e$ective as aspirin in the

relief of pain and fever but without the stomach irritation that often

accompanies aspirin use. Backed by this selective physician push,

sales for the brand grew slowly but steadily over the course of the next

15 years. Advertising support for the brand was heavy.

The Tylenol Product Tampering Crisis

All this success came crashing to the ground in the rst week of

October 1982, with the news that seven people had died in the

Chicago area after taking Extra-Strength Tylenol capsules that turned

out to contain cyanide poison. Consumer con dence was severely

shaken. Most marketing experts believed the damage to the brand’s

reputation was irreparable and that Tylenol would never fully recover.

The Tylenol Product Tampering Recovery

Within the rst week of the crisis, J&J issued a worldwide alert to the

medical community, set up a 24-hour toll-free telephone number,

recalled and analyzed sample batches of the product, briefed the Food

and Drug Administration, and o$ered a $100,000 reward to apprehend

the culprit of the tampering. The company began a voluntary

withdrawal of the brand by repurchasing 31 million bottles with a retail

value of $100 million. It stopped advertising, and all communications

with the public were in the form of press releases. To monitor consumer

response to the crisis, J&J started to conduct weekly tracking surveys

with 1,000 consumer respondents. The company introduced a capsule

exchange o$er, promoted in half-page press announcements in 150

major markets across the country, that invited the public to mail in

bottles of capsules and receive tablets in exchange. Although well

intentioned, this o$er met with poor consumer response.

Later, J&J made its return to TV advertising with the goals of convincing

Tylenol users they could continue to trust the safety of Tylenol products

and encouraging the use of the tablet form until tamper-resistant

packaging was available. Six weeks after the poisonings and after

intense behind-the-scenes activity, the chairman of J&J held a live

teleconference with 600 news reporters throughout the United States

to announce the return of Tylenol capsules to the market in a new,

triple-sealed package that was regarded as virtually tamperproof. To

get consumers to try the new packaging, the company undertook the

largest program of couponing in commercial history.

Millions of coupons o$ering a free Tylenol product (valued up to $2.50)

were distributed in Sunday newspapers nationwide. J&J’s ad agency

developed three ad executions using the testimony of loyal Tylenol

users with the goal of convincing consumers that they could continue

to use Tylenol with con dence. By February 1983, sales for Tylenol had

almost fully returned to the lofty pretampering sales levels the brand

had enjoyed six months earlier.

Johnson & Johnson and McNeil Consumer Healthcare’s remarkable

recovery from the brink of disaster allowed the company to reap the

bene ts of market leadership. The tide began to turn in the 1990s,

however, as the possibility of liver damage and even death from taking

more than the recommended dosage of Tylenol was found.

Tylenol’s Quality Control Crises

Concerns about dosage were exacerbated by a series of disastrous

quality-control scandals and problems. These wounds were

self-in>icted, and although no deaths occurred, the care, comfort, and

con dence of Tylenol customers was at stake, making Johnson &

Johnson’s actions highly troubling. Cost-cutting and a change in

oversight procedures let several defective products fall through the

cracks, while errors in judgment after the fact only compounded the

problems.

J&J recalled several hundred batches of Tylenol, Motrin, Benadryl, and

St. Joseph’s Aspirin, 20 months after it reportedly rst began to receive

consumer complaints about moldy-smelling bottles that made some

people feel ill. The culprit was the breakdown of a chemical used to

treat wood pallets that transported and stored product packaging in a

Las Piedras, Puerto Rico facility. J&J also recalled millions of bottles of

Tylenol, Benadryl, Zyrtec, and Motrin because excessively high levels

of an active drug, metal specks, or ingredients that had failed testing

requirements led to possible safety violations.

These unprecedented quality-control miscues cost the company $1

billion in sales and, perhaps more importantly, the trust, respect, and

admiration of the public it had worked so hard to preserve back in

1982. After much criticism contrasting his handling of the quality

control problems with the product tampering crisis, CEO William

Weldon stepped down in April 2012.

Crisis Marketing Guidelines

Another brand sharply criticized for its crisis response was Exxon.

Although this company spent millions of dollars advertising its gasoline

and crafting its brand image over the years, it essentially ignored the

need to market its corporate identity and image. Brands as diverse as

Wendy’s restaurants, Firestone tires, Tyco diversi ed holdings, and

Vioxx painkiller have all experienced a potentially crippling brand

crisis. Marketing managers must assume that at some point in time, a

similar incident will occur. In general, the better they have established

brand equity and a strong corporate image—especially credibility and

trustworthiness—the more likely their rm can weather the storm.

Careful preparation and a well-managed crisis management program

are also critical, however. The two keys to e$ectively managing a crisis

are that the rm’s response should be swift and that it should be

sincere.

Swiftness—The longer it takes a rm to respond to a marketing crisis,

the more likely that customers will form negative impressions based on

unfavorable media coverage or word-of-mouth. Perhaps worse, they

may decide they do not really like the brand after all and permanently

switch to alternatives.

Sincerity—Swift actions must also come across as sincere. Public

acknowledgment of the severity of the impact on consumers and

willingness to take whatever steps are necessary and feasible to solve

the crisis reduce the chance that consumers will form negative

attributions for the rm’s behavior.

Brand crises are diMcult to manage because, despite a rm’s best

e$orts, these situations are hard to control. To some extent, the rm is

at the mercy of public sentiment and media coverage, which it can

attempt to direct and in>uence but which sometimes take on a life of

their own. Swift and sincere words and actions go a long way toward

defusing the situation.

Discussion Questions

1. Pick a brand. Assess its eorts to manage brand equity in the last

ve years. What actions has it taken to be innovative and relevant?

Can you suggest any changes to the company’s marketing

program?

2. Pick a product category. Examine the histories of the leading brands

over the last decade. How would you characterize the company’s

eorts to reinforce or revitalize brand equity?

3. Identify a fading brand. What suggestions can you oer to revitalize

its brand equity? Try to apply the dierent approaches suggested in

the chapter. Which strategies would seem to work best?

4. Try to think of additional examples of brands that adopted either a

back-to-basics or reinvention revitalization strategy. How well did

they work?

5. Choose a brand that has recently experienced a marketing crisis.

How would you evaluate the marketers’ response? What did they do

well? What did they not do well?

Exercises and assignments

1. Ask students to pick a classic Disney movie – Snow White,

Cinderella, Lady and the Tramp, 101 Dalmatians, etc. – and analyze

the company’s strategy for maintaining brand equity in the lm

over the years. Factors examined might include the theater

re-release schedule, limits on the number of video copies made

available, and the marketing communications campaign that

accompanies a re-release.

2. The growth of the video rental industry has shortened the “shelf

lives” of movies at theaters. New releases often are on marquees

for less than a month before being made available on video. Tell

students to pick a recent successful movie, analyze its marketplace

performance, and suggest ways the studio— a) could have

extended the lm’s theater run and b) can maximize rental sales.

3. Have students identify brands that have had long, robust lives,

analyze the reasons for their continued success, and suggest ways

their parent companies might leverage or capitalize on their equity.

Possible brands include Wrigley’s, Campbell’s, Crest, and Gillette.

4. Have groups of students pick out a real crisis faced by a brand. The

students may then discuss how the crisis could have been handled

di$erently.

Key take-away points

1. A brand’s health can be a*ected by changes in consumer

preferences, company commitment, competitive products

and programs, and channel support, among other factors.

2. Successful brand management requires reinforcing brand

meaning and identifying new sources of equity.

3. Brands on the comeback trail must make more

“revolutionary” than “evolutionary” changes to reinforce

brand meaning.

4. Building and maintaining customer-based equity requires

consistency in the amount and nature of marketing support

a brand receives.

5. E$ective brand management requires taking a long-term view of

marketing decisions.