BeFi Web Seminar for May 30, 2007
Building Strong Brands
© BeFi Forum 2007
by Sanjay Sood
University of California, Los Angeles
Building Strong Brands
79:
Percentage of Americans age 18 and older who
can identify Nike’s“Just Do It” slogan
47:
Percentage who can identify the right to life, liberty,
and the pursuit of happiness as set forth in the
Declaration of Independence
-- Southwest Airlines Spirit Magazine
Agenda

 Conceptualizing brand equity


 Understanding brand equity



 Branding ROI
I. Conceptualizing Brand Equity
What is Brand Equity?



Firm level
Product level
Customer level
Brand Equity: Firm level
Brand
2006 Value
($billions)
1. Coca-Cola
$67.0
2. Microsoft
$59.9
3. IBM
$56.2
4. GE
$48.9
5. Intel
$32.3
11. Citigroup
$21.4
Source: Interbrand/Business Week
Brand as part of capitalization
Source: Interbrand
Brand Equity: Product level
How much would you be willing to pay in fees to
invest in a mutual fund with the following features:
Morningstar 5 star rating
$2500 minimum investment
Large Cap growth fund
No check writing
Brand Equity: Customer level
Academic Research: Brands are knowledge
structures in memory
– Derived from psychological research on
associative network models of memory
– People learn about brands over time
– These well learned knowledge structures
reflect how customers perceive the brand
The Power of Brand Equity
Taste Test: Brand names not given
Bud Pabst
Lite Colt 45
Coors
Guinness
Consumer Perceptions:
On taste alone, brands are
very similar except Guinness
Source: Keller (1998) Strategic Brand Management
The Power of Brand Equity
Taste Test: Brand names given
Colt 45
Pabst
Guinness
Lite
Bud
Consumer Reality:
Brands create expectations
that help to shape the
experience
Source: Keller (1998) Strategic Brand Management
Brands go beyond the product
Product
Brand
Tangible
Can be copied
Can be outdated
Involves transactions
Intangible: lives in customer’s mind
Unique
Potentially timeless
Forms basis of connections
Determinants of Customer-Based
Brand Equity

Consumer is aware of the brand

Consumer holds some strong, favorable, and
unique brand associations in memory

Brands can be conceptualized as knowledge
structures in memory that reflect how
consumers think about the brand:
– attributes
– benefits
– image/experience
Analyzing the Brand - I

Brand Awareness
– Recall
• e.g., first brand that comes to mind for a category
– Recognition:
• e.g., rate your familiarity with each brand in category X

Brand Image
– Attributes
– Benefits
– Non-product associations: Image/Personality/Experience
Analyzing the Brand - II

Points of Parity
– Category
– Competitive

Points of Difference
– Strong
– Favorable
– Unique
Brand Knowledge Structures
Cola  POP
Bubbles
Thirst Quenching
Pepsi
Britney Spears
Next Generation POD
Does branding matter in financial
services?
Factors that favor brand impact


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Many products and services are similar
across companies
Consumers are not experts
So many choice options exist, consumers
must simplify decision process in some
way
Branding still evolving in financial
services



0 brands in the BW top 10
2 in the top 20 (Citi, AMEX)
Many brands compete on similar dimensions:
– Expertise
– Trust
– Experience
Major challenge


Managing points of parity vs. points of difference
What is the point of difference for your brand?
– Is it unique to your brand?
– Is it relevant?
– Is it consistently and clearly articulated in the marketing
programs?
– Does it capture the heart and mind?
Strong brand example:
Mastercard
Credit cards have created very strong brands with very
different positionings:



American Express positioned on status with a strong
heritage of celebrity usage and global reach
Visa combined convenience and luxury with the very
successful “It’s everywhere you want to be”
Mastercard’s research revealed a new positioining:
Focus on everyday items that make life special
“Priceless” has aired in 99 countries
in 46 languages
ME/A
Canada
U.S.
Latin America
Argentina
Bermuda
Bolivia
Brazil
Chile
Colombia
Costa Rica
Curasao
Dominican Republic
El Salvador
Ecuador
http://marketing
Guatemala
Haiti
Honduras
Jamaica
Mexico
Nicaragua
Panama
Peru
Puerto Rico
Uruguay
Venezuela
Algeria
Bahrain
Egypt
Jordan
Israel
Kuwait
Lebanon
Morocco
Mozambique
Palestine
Oman
Qatar
South Africa
Botswana
Swaziland
Mozambique
Zimbabwe
Zambia
Namibia
Malawi
Saudi Arabia
Tunisia
U.A.E.
Yemen
Europe
Albania
Latvia
Armenia
Lithuania
Austria
Macedonia
Azerbaijan
Moldova
Belgium
Netherlands
Bosnia
Norway
Bulgaria
Poland
Czech Rep.
Portugal
Croatia
Romania
Denmark
Russia
Estonia
Slovakia
France
Slovenia
Finland
Spain
Georgia
Switzerland
Germany
Turkey
Greece
UK
Hungary
Ukraine
Iceland
Yugoslavia
Ireland
Italy
Asia Pacific
Australia
Hong Kong
Indonesia
India
Japan
Malaysia
New Zealand
Singapore
Taiwan
South Korea
Philippines
Thailand
Creating the brand positioning

TV drives the strategy, but many elements complement

PR
Promotions
Sponsorships
Partner Co-Branding
Cause Related



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http://marketing
Promotion:
NY Restaurants
Sponsorship:
World Cup Soccer
JAPAN—World Cup Tactical print
Rickshaws in
United Kingdom
UK - Tactical print
“Swap” TVC
Global
Nakata Billboard
Japan
Airport Iconography
Japan/Korea
Partner Co-branding:
Blockbuster
Cause
Marketing
II. Understanding brand meaning
Steps in brand building
Brand Meaning
Knowledge
Structures
Brand Values
Brand Positioning
Identify POPs/PODs
Frames of Reference
Brand Mantra
Emotional modifier
Descriptive modifier
Brand Functions
Understanding Brand Meaning
Survey research + Projective Techniques

Develop a collage of pictures that
represents your thoughts and feelings
about these brands:
– Coke and Pepsi
– Nokia and Kyocera
Classic
American
Trendy
Young
III. Branding ROI
ROI proxy:
Growing customer and brand equity
Customer equity refers to the value of customers to
the brand
Not all customers are equally valuable
In fact, some customers should be fired!
Measuring customer equity
Lifetime Value of a Customer
M !c
LTV =
! AC
1! r + i
M = Margin per order
AC = Customer acquisition
c = Customer retention cost
r = Retention rate
Customer profitability over time
36Frederick Reichheld (1996), The Loyalty Effect, HBS Press.
Source:
What Drives Firm Value?
… creates % improvement in
firm value of
1% improvement in ...
Retention
Rate
4.9
Margin
1.1
Discount
Rate
0.9
Acquisition
Cost
0.1
0
2
4
6
Source: Gupta, Sunil, Don Lehmann and Jennifer Stuart (2004), “Valuing Customers,”
Journal of Marketing Research, February, 7-18.
37
Branding can help grow customer
equity
•Attracting the right customers
•Reducing acquisition costs
•Increasing retention rates
Brand Building Blocks
4. RELATIONSHIPS =
What about you & me?
RESONANCE
3. RESPONSE =
What about you?
JUDGMENTS
FEELINGS
2. MEANING =
PERFORMANCE
IMAGERY
What are you?
1. IDENTITY =
SALIENCE
Who are you?
Brand Value Chain
Marketing
Program
- Product
- Communications
- Trade
- Other
Customer
Mindset
- Awareness
- Associations
- Attitudes
- Attachment
- Activity
Product
Market
Performance
- Price premiums
- Price elasticities
- Cost savings
- Expansion success
- Market share
- Profitability
Shareholder
Value
- Stock price
- P/E ratio
- Enterprise value
- Market capitalization
Summary on Branding

Develop a great product or service
– provide superior delivery of desired benefits

Determine desired positioning and other meanings
– Create a brand identity and select positioning statement
– Develop the “added value” to a product

Communicate the brand identity to target customers
– Select brand elements
– Communicate brand associations with a consistent voice
through the marketing mix
– Leverage secondary associations
PRESENTED BY
Shlomo Benartzi
Co-Founder, BeFi
Associate Professor Co-chair of the
Behavioral Decision Making Group
The Anderson School at UCLA
Warren Cormier
© BeFi Forum 2007
Co-Founder, BeFi
President, Boston Research Group