Chapter 09
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LEARNING OBJECTIVES
LO 9-2 Learn the importance of brand equity in product strategy.
LO 9-4 Define the responsibility of warranties and service agreements in building consumer
confidence.
CHAPTER OUTLINE
I. BRAND: THE FUNDAMENTAL CHARACTER OF A
PRODUCT
i. Customer brand roles
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ii. Company Brand Roles
B. The Boundaries of Branding
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A. Defining Brand Equity
B. Benefits of Brand Equity
i. Perceived Quality
ii. Brand Connections
iii. Brand Loyalty
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B. National or Store Branding
C. Licensing
D. Co-Branding
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IV. PACKAGING AND LABELING: ESSENTIAL BRAND
ELEMENTS
A. Package Objectives
i. Protect
ii. Communicate
iii. Promote Usage
B. Effective Packaging
i. Aesthetics
C. Labeling
i. Legal requirements
ii. Consumer requirements
iii. Marketing requirements
V. WARRANTIES AND SERVICE AGREEMENTS:
BUILDING CUSTOMER CONFIDENCE
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A. Warranties help define the brand
i. Cost versus benefit
VI. SUMMARY
KEY TERMS
brand A name, term, sign, symbol, or design, or a combination of these elements, intended to
identify the goods or services of one seller or groups of sellers and to differentiate them from
those of competitors.
brand strategy The unique elements of a brand that define the products sold by a firm.
brand identity A summary of unique qualities attributed to a brand.
brand equity A set of assets and liabilities linked to a brand’s name and symbol that adds to or
subtracts from the value provided by a product or service to a firm or that firm’s customers.
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brand assets Other assets brands possess such as trademarks and patents that represent a
significant competitive advantage.
stand-alone brands Brands created to be separate from a company brand that can insulate the
company if there is a problem with the brand.
family branding The creation of brands that have synergy between them in terms of the overall
company brand.
category extension When a firm uses its brand to expand into new product categories.
APPLICATION QUESTIONS
1. You are the product manager for Ralph Lauren’s Polo shirts. What specific information are
you trying to convey in the brand’s iconic polo pony logo? For example, what does the Polo
brand say about quality, features, style relative to the Tommy Hilfiger or Lacoste brands?
The polo pony logo is meant to embody an aspirational lifestyle. According to Polo.com:
“Ralph Lauren has always stood for providing quality products, creating worlds and inviting
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“To me, the polo player has elegance and imagination. It embodies sophisticated luxury and
a timeless style. (Ralph Lauren)”
2
2. Johnson & Johnson has been able to establish strong brand equity for its line of baby
products. What benefits does J&J have because of its brand equity for these products?
Perceived Quality – All things being equal (value proposition, product features) the branded
product gives customers a reason to buy. First, the perception of J&J baby product’s quality
enables J&J to extend the product range. Second, the perception of quality can lead to a
price premium opportunity for J&J. Finally, the perception of quality is an excellent
differentiator in the market.
Brand Connections – First, customers process, store, and retrieve product information by
3. You have been asked by Coca-Cola’s product manager to present the arguments for and
against extending the Coke brand to a new cola drink. What would be the arguments for and
against extending the Coke brand to a new cola drink?
Stand-alone brands separate the company from the brand, which insulates the company if
there is a problem with the brand. At the same time, stand-alone brands are expensive to
4. SanDisk is introducing a new line of flash drives to complement its existing products, and
you are responsible for creating the package design. What key information and other
creative elements would you include on the package?
Here is information that should be used to inform their responses:
Package design encourages product use. It does this in several ways. First, packages
frequently show the product being used by a happy customer, which supports the overall
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marketing message (Exhibit 9.8). This connects the product to the target customer. Second,
in many cases, packages visually demonstrate a product. Third, marketers and package
designers make extensive use of blister packs (products encases in clear plastic) and other
package designs to visibly present and protect the product.
MANAGEMENT DECISION CASE
Virgin Group Brand Extensions—Lots of Hits and a Few Misses
The Virgin Group may be a less familiar brand to students in the U.S., but many will have heard
of Virgin Records and Virgin Airlines. The company’s experience in extending its brand
provides a good foundation for helping students discern the criteria that make a product a good
associated with lower failure rates and lower marketing costs.
In addition to extension failures covered in the case, it may be helpful to review some other
product extensions that were not successful. Some examples can be found here:
Questions for Consideration
9-10
1. When founder Richard Branson is no longer at the helm (and in the news), do you believe
Virgin will be able to continue its forays into radically different brand extensions? What
strategies can the Virgin Group employ to assure continued brand success after Branson is
out of the picture? Should those strategies be implemented now or after the founder’s
departure?
Having such a visible and charismatic leader is a mixed blessing for a company. Branson
has been the face of the brand and has served as both a celebrity spokesperson and a brand
“character” (like “Flo” of Progressive Insurance). As Branson ages, it will become more
challenging for him to do the promotional stunts that have been a big part of Virgin’s
2. In this chapter, you learned about Aaker’s five dimensions of brand equity. Assess the
Virgin brand on the basis of these dimensions. With these dimensions in mind, what steps
could the Virgin Group take to increase brand equity even further?
Some points re Aaker’s dimensions of brand equity:
• Brand Awareness—As noted in the case, Virgin has brand recognition of 99% in the
U.K., 96% in the U.S. and 97% in Australia and South Africa. A good point of discussion
would be the various levels of brand awareness: consumers could recognize the brand
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loyalty program is probably in place in Virgin’s airline businesses, but could be
employed in other businesses as well to strengthen this aspect of brand equity.
brands. Students should be able to notice several characteristics of the Virgin brand
which are likely transferred to customers’ thoughts about the brand: adventure, fun,
service, playful, excitement, and risk taking. A point of discussion could be which of
these associations are based on Richard Branson’s personality and promotional stunts
and which ones are based on other brand elements—product name and logo or
3. Is the Virgin experience with brand extensions an anomaly or are there lessons that could be
applied to any brand wanting to expand this way?
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is easy, but that the message of superior service and quality is one that is meaningful across
product classes. This is particularly true when existing industry players are perceived to
have lower quality (as in the airline business); customers may be so desperate for quality
service that they are willing to take a chance that a record company could do a better job
than the existing alternatives.
• The value of a strong spokesperson/character. Not many CEOs have a personality conducive
to this role. However, the brand character can be very useful. Students will be able to list
famous characters that have been used for many years: the Geico gecko, Flo from
Progressive insurance, and Mr. Clean.
• The reality of hits and misses. Despite consumer research and test marketing, some
extensions will not work. Branson is a kind of Babe Ruth of business—both the home run