Chapter 7 Lecture Notes
Branding and Positioning
Chapter 7: Branding and Positioning
Chapter Outline
I. Introduction
A. Beyond the Pages 7.1 discusses how Steinway’s branding strategy makes the
company’s pianos much more works of art than musical instruments.
B. A brand is a combination of name, symbol, term, or design that identifies a
specific product. Brands have two parts:
1. Brand name—the part of a brand that can be spoken, including words,
letters, and numbers.
2. Brand mark—symbols, figures, or a design that cannot be spoken.
C. To be truly effective, a brand should succinctly capture the total offering in a way
that answers a question in the customer’s mind.
D. Brands may have many different attributes that make up the way customers think
about them. [Exhibit 7.1]
II. Strategic Issues in Branding
A. Most firms consider their corporate brands to be equally as important as
individual product-related brands. In fact, product-related brands and corporate
brands are clearly intertwined.
1. Corporate branding activities are typically aimed at a variety of
stakeholders, including customers, shareholders, advocacy groups,
government regulators, and the public at large.
2. Corporate branding and reputation are critical to effective product-related
3. Negative coverage of a company’s problems can have quick, dramatic, and
long-lasting effects on its brand and reputation.
B. Basic Branding Decisions
1. Branding has many advantages: product identification, comparison
shopping, shopping efficiency, risk reduction, product acceptance,
enhanced self-image, and enhanced product loyalty.
2. Manufacturer versus Private-Label Brands [Exhibit 7.3]
a) Private-label brands, or store brands, are owned by the merchants
that sell them. They are typically more profitable for the merchant
than manufacturer brands.
b) Manufacturer brands are important in driving customer traffic.
They also give customers confidence that they are buying a widely
known brand from a respected company.
3. Individual versus Family Branding
a) A firm uses individual branding when it gives each of its product
offerings a different brand name.
b) Family branding occurs when a firm uses the same name or part of
the brand name on every product.
Chapter 7 Lecture Notes
Branding and Positioning
C. Strategic Brand Alliances
1. Cobranding is the use of two or more brands on one product to leverage
the image and reputation of multiple brands to create distinctive products
with distinctive differentiation.
2. Brand licensing involves a contractual agreement where a company
permits an organization to use its brand on non-competing products in
exchange for a licensing fee.
D. Brand Value
1. Brand Loyalty
a) Brand loyalty is a positive attitude toward a brand that causes
customers to have a consistent preference for that brand over all
other competing brands in a product category.
1) Brand recognition occurs when a customer knows about
the brand and is considering it as one of several alternatives
in the evoked set.
2) Brand preference is a stronger degree of brand loyalty
where a customer prefers one brand to competitive brands
and will usually purchase this brand if it is available.
3) Brand insistence occurs when customers will go out of
their way to find the brand and will accept no substitute.
b) Overall, brand loyalty is declining because of increasing
commoditization and the overuse of sales promotion activities.
2. Brand Equity
a) Brand equity is the value of the brand to the firm, or the marketing
and financial value associated with a brand’s position in the
marketplace.
b) Brand equity is hard to measure; however, it represents a key asset
for any firm. [Exhibit 7.4]
c) Firms will go to great lengths to protect their brand assets.
E. Packaging and Labeling
1. Packaging and labeling strategy go hand-in-hand with branding as both are
involved with developing a product, its benefits, its differentiation, and its
image.
2. Packaging serves a number of important functions, including protection,
storage, convenience, product modification, repositioning, and
cobranding.
3. Beyond the Pages 7.2 examines the problems faced by Tropicana when it
changed the packaging for its well-known line of orange juice products.
4. Product labels not only aid in product identification and promotion; but
they also contain a great deal of information to help customers make
proper product selections.
5. Product labeling is an important legal issue as several federal laws and
regulations specify the information that must be included on a product’s
packaging.
Chapter 7 Lecture Notes
Branding and Positioning
III. Differentiation and Positioning
A. Differentiation involves creating differences in the firm’s product offering that set
it apart from competing offerings. Differentiation typically has its basis in distinct
product features, additional services, or other characteristics.
B. Positioning refers to creating a mental image of the product offering and its
differentiating features in the minds of the target market. This mental image can
be based on real or perceived differences among competing offerings.
C. In differentiating and positioning the product offering, the principle task for the
firm is to develop and maintain a relative position for the product. This task is
typically addressed using tools such as perceptual mapping and the strategy
canvas. [Exhibits 7.5 and 7.6]
D. Bases for Differentiation
1. Customer perceptions of a brand are of utmost importance in
differentiation because differences among competing brands can be based
on real or psychological qualities.
2. The most important basis for differentiation is the brand.
3. Product Descriptors [Exhibit 7.7]
a) Product Features—factual descriptors of the product and its
characteristics.
b) Advantages—performance characteristics that communicate how
the features make the product behave, hopefully in a fashion that is
distinctive and appealing to customers.
c) Benefits—the positive outcomes or need satisfaction that
customers acquire from purchased products.
4. Customer Support Services
a) Providing good customer support services—both before and after
the sale—may be the only way to differentiate the firm’s products
and move them away from a price-driven commodity status.
b) Support services include anything the firm can provide in addition
to the main product that adds value to that product for the
customer.
E. Positioning Strategies
1. Strengthen the Current Position
a) The key to strengthening a product’s current position is to monitor
constantly what target customers want and the extent to which
customers perceive the product as satisfying those wants.
b) Strengthening a current position is all about continually raising the
bar of customer expectations and being perceived by customers as
the only firm capable of reaching this new height.
2. Repositioning
a) Repositioning may involve a fundamental change in any of the
marketing mix elements, or perhaps even all of them.
Chapter 7 Lecture Notes
Branding and Positioning
IV. Managing Brands over Time
A. The traditional product life cycle is a useful tool for addressing the management
of products, brands, and product strategy over time. [Exhibits 7.8 and 7.9]
B. Development Stage
1. A firm has no sales revenue during the development stage.
2. Expenses involved in product innovation and development usually cause
the firm to experience a net cash outflow.
3. The firm assumes a great deal of financial, market, and opportunity risk
due to the uncertainty involved in developing new products.
4. Over 80 percent of all new products fail. This high failure rate underscores
the need to correctly identify target customer needs before developing the
product strategy.
C. Introduction Stage
1. The introduction stage begins when development is complete and ends
when sales indicate that target customers widely accept the product.
2. Marketing strategy goals common to the introduction stage include:
a) attracting customers
b) inducing customers to try and buy the product
c) engaging in customer education activities
d) strengthening or expanding channel and supply chain relationships
e) building availability and visibility through trade promotion
f) setting pricing objectives that balance the firm’s need to recoup
investment with the competitive realities of the marketplace
D. Growth Stage
1. The length of the growth stage varies according to the nature of the
product and competitive reactions.
2. The firm has two main priorities during the growth stage:
a) establish a strong, defensible market position, and
b) achieve financial objectives that repay investment and earn enough
profit to justify a long-term commitment to the product.
3. During the growth stage, the overall strategy shifts from acquisition to
retention, from stimulating product trial to generating repeat purchases and
building brand loyalty.
4. Another major challenge during the growth stage is the increasing number
of competitors entering the market.
E. Maturity Stage
1. At the end of the growth stage, the strategic window of opportunity will all
but close for the market and it will enter the maturity stage.
2. In the typical life cycle, we expect maturity to be the longest stage.
3. A firm has four general goals during the maturity stage:
a) generate cash flow
b) hold market share
c) steal market share
d) increase share of customer
Chapter 7 Lecture Notes
Branding and Positioning
4. A firm has at least four general options for strategy selection throughout
the maturity stage:
a) develop a new product image
b) find and attract new users to the product
c) discover new applications and uses for the product
d) apply new technology to the product
5. Beyond the Pages 7.3 discusses how Nintendo used a rebranding strategy
to attract new users to its line of puzzle and skill-building games.
6. Stealing customers away from the competition involves creating
incentives for noncustomers to try the firm’s product.
F. Decline Stage
1. A product’s sales plateau will not last forever, and eventually a persistent
decline in revenue begins.
2. A firm has two basic options during the decline stage:
a) attempt to postpone the decline
b) accept the inevitability of decline
3. Firms that accept the inevitability of decline can either harvest profits or
take steps to divest the product.
a) Harvesting—a gradual reduction in marketing expenditures and
the use of a less resource-intensive marketing mix.
b) Divesting—withdraw all marketing support from the product and
continue to sell the product until it sustains losses, or arrange for
the product to be acquired by another firm.
4. Important strategic considerations during the decline stage:
a) Market Segment Potential—The firm might have loyal customer
segments that will continue to buy the product.
b) The Market Position of the Product—A product in a leading
market position with a solid image may continue to be profitable.
c) The Firm’s Price and Cost Structure—If the firm is a low cost
producer and can maintain its selling price, the product can remain
viable in a declining market.
d) The Rate of Market Deterioration—The faster the rate of market
deterioration, the sooner the firm should divest the product.
5. Products have life cycles only because markets and customers change.
Therefore, it is imperative that the firm stays focused on changes in the
market, not on the firm’s products.
Questions for Discussion
1. Consider the notion that a truly effective brand is one that succinctly captures the product
offering in a way that answers a question in the customer’s mind. Now, consider these
brands (or choose your own): Coca-Cola, Disney, Marlboro, American Express, and
Ford. What questions do these brands answer? Why are these effective brands?
Chapter 7 Lecture Notes
Branding and Positioning
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Student answers will vary greatly with respect to this question. One interesting angle is
the notion of brand preference or brand loyalty. Some students will argue that Coca-Cola
does not answer any question for them because they do not drink Coca-Cola. The
important point is not necessarily the question, but that each brand provides an answer.
2. Compare the corporate reputation scores in Exhibit 7.2 with the brand valuations in
Exhibit 7.4. Why does Apple sit at the top of both lists? How has the company used good
branding and positioning strategy to achieve this result? How is it that Wells Fargo can
have a very high brand valuation, but a very low corporate reputation score?
Students will argue that Apple sits at the top of both lists due to the incredible popularity
3. Look back at the Top 10 brands in Exhibit 7.4. What bases do these brands use for
differentiation? What strategies do they use to create a relative position in their respective
markets? Why do these brands hold so much value?
With some exceptions, most of these brands are considered to be the best in their
Exercises
1. Using the brand attribute framework in Exhibit 7.1, construct an overall branding
statement about yourself. How would others, especially potential employers, look at your
brand? What areas do you need to improve? Does your brand answer key questions or
create questions about your abilities?
Student responses will vary greatly on this question.
2. Do some background research the following markets: wireless phone service, DVD
players, and pizza. Which stage of the product life cycle is each of these markets in
currently? What market characteristics lead you to feel this way? Is there evidence that
Chapter 7 Lecture Notes
Branding and Positioning
any of these markets are on the verge of moving into the next stage of the life cycle?
Explain.
Wireless phone service is still in the growth stage, but is clearly approaching maturity.
3. Think about the last purchase you made in each of the following product categories.
What were the features, advantages, and benefits of the specific product or brand that you
selected? After completing the table, consider the positioning of the product or brand in
the market. Does its positioning match your responses in the table? Explain.
Features
Advantages
Benefits
Athletic Shoes
Brand ___________
Sit-Down Restaurant
Name or
Franchise __________
Airline
Brand ___________
Student responses will vary. Encourage the students to think about the specific reasons
why they purchased these brands.