SeekingGrowth Opportunities

Kevin Lane Keller

Tuck School of Business

Dartmouth College

CII Brand Conclave 2018Kolkata, India

Session Topics

Achieving Brand Potential

Brand Extension Successes and Failures

Embracing Cultural and Geographic Diversity

Brand Renewal Strategies

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Achieving Brand Potential

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Brand Architecture Defined

The brand architecture for a firm reflects the number and nature of common or distinctive brand elements (names, logos, etc.) applied to the different products sold

How many different brands should be sold?

How many different versions of brands should be sold?

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Role of Brand Architecture

Brand architecture involves defining both brand boundaries and brand relationships

Depth of brand strategy

Line extensions

Breadth of brand strategy

Category extensions

Brand architecture should facilitate brand equity development

Clarify and help brand awareness

Motivate and help brand image

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3 Key Architecture Issues

1. Defining brand potential

What is the brand vision?

What are the brand boundaries?

How should the brand be competitively positioned?

2. Identifying product & service opportunities

What products or services will help to achieve that potential?

3. Organizing brand offerings

How should products and services be branded so that they achieve their maximum sales and equity potential?

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Brand Architecture Decisions:1. Defining Brand Potential

Brand vision

What is the higher-order purpose and mission of the brand?

Brand boundaries

What products or services should it represent?

What benefits should it supply?

What needs should it satisfy?

Brand positioning

What points-of-differences should exist in the minds of consumers?

What points-of-parity are required?

What should the brand mantra or essence of the brand be?

BEFORE:How many crayons in your box?

AFTER:“Colorful Arts & Crafts For Kids”

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Multiple brands or sub-brands can improve market coverage

Target different market segments

Must be careful not to over-brand

Focus on fewer, stronger brands

Basic principle of brand portfolios … each target consumer must see clear differences

Maximize coverage

Minimize overlap

In updating brand portfolio, must preserve as much brand equity as possible

Brand Portfolios

P&G Laundry Detergent Portfolio

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Flagship:Cleaning

Flanker:Scent

Flanker:Color

Flanker:Tough Stains

Flanker:Gentle Care

Tide Master Brand

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Brand Architecture Decisions:2. Identifying Product Opportunities

What new products or services will help the brand achieve its potential

Must articulate brand vision in terms of new products and services

Must obtain brand preference and choice from consumers for any new products and services

But if 80-90% of new products are brand extensions … and 80-90% of new products fail … the vast majority of brand extensions fail!

“UNSUCCESSFUL” CATEGORY EXTENSIONS

CAMPBELL’S tomato sauce

LIFESAVERS chewing gumCRACKER JACK cerealHARLEY DAVIDSON wine coolersCOCA-COLA C2 colaHIDDEN VALLEY RANCH frozen entreesBIC perfumesBEN-GAY aspirinKLEENEX diapersCLOROX laundry detergentLEVI’S TAILORED CLASSICS suitsNAUTILUS athletic shoesDOMINO’S fruit-flavored bubble gumSMUCKER’S ketchupFRUIT OF THE LOOM laundry detergent

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Brand Extension Checklist

Does parent brand have strong equity?

Is there a strong basis of fit?

Will extension have necessary points-of-parity & points-of-difference?

How can marketing programs enhance extension equity?

What implications will the extension have on parent brand equity and profitability?

How should feedback effects best be managed?

BRAND EXTENDIBILITY SCORECARD

Allocate points according to how well the new product concept rates on the specific dimensions in the following areas:

Consumer Perspectives: Desirability10 pts. _____ Product category appeal (size, growth potential)10 pts. _____ Equity transfer (perceived brand fit)5 pts. _____ Perceived consumer target fit

Company Perspectives: Deliverability10 pts. _____ Asset leverage (product technology, organizational skills, marketing

effectiveness via channels & communications)10 pts. _____ Profit potential5 pts. _____ Launch feasibility

Competitive Perspectives: Differentiability10 pts. _____ Comparative appeal (many advantages; few disadvantages)10 pts. _____ Competitive response (likelihood; immunity or invulnerability from)5 pts. _____ Legal/regulatory/institutional barriers

Brand Perspectives: Equity Feedback10 pts. _____ Strengthens parent brand equity10 pts. _____ Facilitates additional brand extension opportunities5 pts. _____ Improves asset base

TOTAL _____ pts

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Brand Architecture Decisions:3. Organizing Brand Product Offerings

Ensure maximum clarity & understanding to consumers & customers

Recognize what they know & want

Appreciate how they will behave

Sub-brand appropriately Only with distinctive, complementary

benefit; otherwise, use a descriptor to designate product

Employ full range of brand elements Nomenclature, product form, shape,

graphics, color, versioning, etc.

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Brand Hierarchy Structure

Corporate Brand (e.g., Toyota)

Family Brand (e.g., Lexus)

Individual Brand (e.g., LS)

Individual Item or Model (e.g., Hybrid)

Master Brand

Sub-Brand

Brand Hierarchy Principles

Principle of growth: Investments in market penetration or expansion vs. product development should be made according to ROI opportunities

Principle of survival: Brand extensions must achieve brand equity in their categories

Principle of synergy: Brand extensions should enhance the equity of the parent brand

Principle of simplicity: Employ as few levels as possible Principle of clarity: Logic and relationship of all brand elements

employed must be obvious and transparent. Principle of relevance: Create global associations that are relevant

across as many individual items as possible Principle of differentiation: Differentiate individual items and brands Principle of prominence: The relative prominence of brand elements

affects perceptions of product distance and the type of image created for new products

Principle of commonality: The more common elements shared by products, the stronger the linkages

NIVEA BRAND HIERARCHY

Creme

Soft

Body

(Milk/

Lotion) Visage

Sun Bath &

Shower

For

Men

Deo Shampoo

Beauté

Vital

Personal CareSkin Care

Nivea Brand Strategy

Nivea generally combines their family brand with product descriptors as “sub-brands”

Allows them to leverage equity of caring and key associations of “mild,” “gentle,” and “protective.”

Nivea’s strongest sub-brand was Visage

Has more distinct identity as younger personality and more technologically sophisticated

Creates positive feedback along those lines to Nivea master brand

NIVEA “SUB-BRAND” POSITIONING

Body

Visage

Sun

Bath & Shower

For Men

Deodorant

Shampoo

Points-of-Parity

Pleasant Application

Pleasurable Moisturization

Intimacy

Youthful Beauty

Modern/Contemporary

Protection/Safety

Fun/Beach

Convenience/Cleansing

Sensual Image

Soothing

Efficacy

Cleansing

Appearance

Points-of-Difference

Mildness/Gentleness

Science with Confidence

Mildness/Gentleness

Mildness/Gentleness

Mildness/Gentleness

Mildness/Gentleness

Mildness/Gentleness

Brand Architecture in a Digital Area

Consumers are now accustomed to more “elastic” brands with product offerings in multiple categories

But in today’s highly charged social media climate and 24-7 news cycle, dilution from a negative halo from a product problem could be both rapid and severe

Adopting a “branded house” umbrella brand strategy requires much transparency and a need to establish credibility to help weather any possible brand crisis.

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Brand Architecture in a Digital Area

Corporate or umbrella brands spanning multiple categories are highly desirable But with the rapid diffusion of news and opinions online today,

firms must consider carefully their brand boundaries as well as their brand behaviors and consumer perceptions of their credibility

Online product feedback will kill undifferentiated brand extensions Marketers must ensure that they are offering consumers compelling

brand value and are delivering on the brand promise in each and every category the brand enters

Brand architecture and brand hierarchies must be as simple as possible Product comparisons proliferate online and will benefit from clarity

both within the brand family and in comparisons with other brands24

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Branding Toolkit

Define brand architecture strategy to guide brand growth and new product development and launches Apply 3-step development process and a forward-

looking, top-down perspective

Use brand extension scorecard or checklist to evaluate past and proposed extensions

Employ brand relationship spectrum and a bottom-up perspective to decide how to dial up and dial down brand elements

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Branding Toolkit

Conduct brand architecture audit to better understand brand and product portfolios Do all brands and sub-brands have well-defined

roles?

Do brands collectively maximize coverage & minimize overlap?

Is the brand overextended?

Does the brand have extension potential? Within category?

Outside the category?

Managing Strong Brands:

Over Time

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Understanding Brand Growth

Brands grow through “little steps”

Understand equity implications of each extension in terms of POP’s & POD’s

The key to long-term brand health is to continually innovate and stay relevant

Keep brand moving forward in the right direction

Preserve and build strong core brand values and equities

There are many means of differentiation to create unique customer experiences

Must always aspire to push boundaries and better achieve potential & the “ideal” product or service

Manage brand life cycle

Learn from mistakes

Make second phases stronger than first

Nike’s Growth

Over a roughly 15 year period, through steady inovation and relevance Nike went from selling …

Tennis, basketball and running shoes to mostly males aged 12-29 in the U.S.

To …

Shoes, clothing, and equipment in all kinds of sports to men and women of all ages in over 160 countries

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Levi’s Mistakes

Failed to innovate & stay relevant in the 1990s

Stuck with 501’ s despite counter fashion trends

Weak advertising & too much agency turnover

Failed to design an effective brand architecture

Did not respond to competition encountered from all sides

Did not align product & channel strategy

Market share dropped almost in half

Coke’s Misstep

Coca-Cola “Real” campaign is designed to reflect “genuine, authentic moments in life and the natural role the brand plays in them.” The campaign will vary from country to country to reflect the differences in reality.

Chris Lowe, CMO, January 2003

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What Happened to Coke?

“In one ad, actress Penelope Cruz guzzled a Coke and belched.”

“In another ad, a sweaty basketball player stuck a cold can of Coke in his armpit before offering it to his buddy.”

“Those spots, hallmarks of the doomed "Real" campaign were just the latest in a series of advertising mishaps at Coke.”

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Wall Street Journal, March 30, 2006

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Coca-Cola Positioning

Points-of-difference

Distinctive taste profile

Optimistic view of life

Classic, iconic symbolism & imagery

Points-of-parity

Contemporary, up-to-date

Refreshing flavor

Possible brand mantra

“Iconic Optimistic Refreshing”

Ad slogan

“Coke Side of Life” (Marc Mathieu)

“Open Happiness”

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Revitalizing a Fading Brand

Because of changes in the marketing environment, brand equity can be eroded over time.

Reversing a brands fortunes involves ...

Recapturing lost sources of brand equity

Go “back to basics” – don’t change strategy but improve marketing program execution (e.g., Harley-Davidson & VW)

Identifying and establishing new sources of brand equity

Define new strategy & marketing program (e.g., Mountain Dew & IBM)

More “revolutionary” changes than “evolutionary” changes – must result from brand audit

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The Brand Renewal Continuum

Go “back to basics” and tap into existing sources of brand equity (e.g., Harley-Davidson)

Create new sources of brand equity (e.g., Domino’s)

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Harley-Davidson

Harley went from near-bankruptcy to over-demand Improved product quality, design and innovation Strong aspirational image of freedom, excitement,

and a rebellious nature But with broad appeal (“Rolex Riders”)

Grew over 30% for two decades after going public in 1986

Customers literally brand themselves (#1 tattoo in U.S.)

90% say they would buy a Harley again

Harley creates a strong sense of community and loyalty

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Harley-Davidson

Many Harley Owner Groups (H.O.G.’s) events and activities 1,000,000 members

Strong dealer and employee support

Wide variety of lifestyle accessories

Domino’s: The Problem

In late 2009, Domino’s was a struggling business in a declining market

To address the problem, Domino’s decided to conduct a detailed brand audit with extensive qualitative and quantitative research The taste problem was severe – some consumers bluntly said that

Domino’s tasted more like the box than the pizza.

Research also revealed that consumers felt betrayed by a company they felt they no longer knew.

Consumers were skeptical of “new and improved” claims and felt companies never admitted they were wrong.

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Domino’s: The Solution

Based on these and other insights, Domino’s began its brand comeback.

Step one – new recipes for crust, sauce, and cheese that resulted in substantially better taste-test scores.

Next, Domino’s decided not to run from criticism and launched the “Oh Yes We Did” campaign. Using traditional TV and print media and extensive online components, the company made clear that it had listened and responded by creating a better pizza.

Documentary-type filming showed Domino’s CEO and executives observing the original consumer research and describing how they took it to heart.

Surprise visits were made to harsh critics from the focus groups, who tried the new pizza on camera and enthusiastically praised it

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Domino’s: The Results

Domino’s authentic, genuine tack paid off.

Consumer perceptions dramatically improvedand growth in sales far exceeded competitors.

Recent years have seen a focus on digital strategies and beyond

Half of orders are now placed through digital channels and half of those on mobile devices

Exploring artificial intelligence, drones, autonomous vehicles and voice technology

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Branding Toolkit

Apply the brand reinforcement test

At the end of every week, month, quarter, year, ask the question

“What have I done to innovate and stay relevant?”

Conduct a brand audit to guide brand renewal or revitalization

Determine proper balance between “back to basics” and “reinvention”

Managing Strong Brands:

Growing a Brand Culturally & Geographically

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Establishing a Global Brand

How valid is the positioning in the new market?

What is the existing level of awareness?

How valuable are the core brand associations?

What changes need to be made to the positioning?

Do any new associations need to be created?

Should any existing associations not be created?

Do existing associations need to be modified?

By what means should this updated positioning be created?

Can the same marketing activities still be employed?

What changes need to be made?

What new marketing activities are necessary?

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Building & Managing a Global Brand

Adopt a top-down approach: Craft a broadly relevant global positioning

Nike – “Authentic Athletic Performance”

Pampers – “Caring for Baby’s Development”

Maximize relevance & applicability in different markets

How does the brand mantra translate in different markets?

Understand specific competitive & consumer realities

May need to highlight a specific POP/POD for certain markets

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Ten Commandments of Global Branding

Understand similarities and differences in the branding landscape

Don’t take short-cuts in brand building

Establish marketing infrastructure

Embrace integrated marketing communications

Cultivate brand partnerships

Balance standardization & customization

Balance local and global control

Define operable guidelines

Implement a brand equity measurement system

Leverage brand elements

McDonald’s Global Menu Variations

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Country Noteworthy Menu Items

U.S. Big Mac, Chicken McNuggets, Filet-o-Fish, Egg McMuffin, Fries

India McVeggie, Chicken Maharaja-Mac, McSpicy Paneer

France Le McBaguette, Le Croque McDo, Le Royal Cheese

Egypt Beef N Pepper, McArabia (grilled kofta), McFalafel

Israel McKebab, McFalafel, Big New York and Big Texas (hamburgers)

Japan Ebi Filet-O, Mega Teriyaki Burger, Bacon Egg and Lettuce Wrap, Shaka Shaka Chicken

China Prosperity Burger, Taro Pie, McWings, McNuggets & Chili Garlic sauce

Brazil Banana Pie, McNífico Bacon, Cheddar McMelt, Big Tasty

Mexico Big Mac, McChicken, Fries, etc

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Branding Toolkit

Apply the Ten Commandments of Global Marketing across market segments

Where do weaknesses exist?

How can marketing activities be improved?

Where go growth opportunities exist?

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Final Thoughts

Good marketing is an art and a science

By being …

Analytical & systematic – applying key concepts

Creative & inspired – guided by a philosophy

ALL brands must aim for innovation and relevance, always moving forward, but moving forward in the right direction

Thanks for Listening and Good Luck!

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