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PESIT Bangalore South Campus
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Department of Master of Business Management
Answer key for INTERNAL ASSESSMENT TEST –3
Date
02/6/2015
Subject & Code : Strategic Brand Management – 12MBAMM416
Name of faculty: Ravi Urs
Max Marks: 50
Section
:A
Time
: 11.30 AM– 1.00 PM
Note: Answer all questions
1.
a
What is brand-product matrix? Explain with an example
3
Draw a matrix with Brands on Y-axis and Products on X-axis. Give an examples and
explain the elements of the matrix like Brand line, Brand portfolio, Product line and
product mix
b
What are the advantages of brand extension?
We can broadly categorize the advantages as:
1. Facilitate a new product acceptance
2. Provide feedback benefits to the parent brand or company as whole
 Facilitate a new product acceptance
1. Improve brand image
 One of the advantages of a well-known and well-liked brand is that consumers
form expectations of its performance over time
 With a brand extension. Consumers can make inferences and form expectations
about the likely composition and performance of a new product, based on what
they already know about the brand itself and the extent to which they feel this
information is relevant to the new product
These inferences may improve the strength, favorability and uniqueness of the
extension’s brand association
2. Reduce risk perceived by customers
 Extensions from well known corporate brands such as GE, HP, Tata or others may
communicate longevity and sustainability
 Although corporate brands can lack specific product associations because of the
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PESIT Bangalore South Campus
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Department of Master of Business Management
breadth of products attached to their name, their established reputation for
introducing high-quality products may be important risk-reducer for consumers
 Thus, perception of corporate credibility – in terms of expertise and
trustworthiness – can be valuable association in introducing brand extension
3. Increase the probability of gaining distribution and trial
 Because of potentially increased consumer demand for a new product
introduced as an extension, it may be easier to convince retailers to stock and
promote it
4. Increase efficiency of promotional expenditures
 One obvious advantage of introducing a new product as a brand extension is that
the introductory campaign does not have to create awareness of both the brand
and the product
 The campaign can only concentrate of new product itself
 It is easier to add a new link to a new product from a brand already existing in
memory than it is to first establish the brand in memory and then also link the
new product to it
 Successful brand extensions spend less on advertising than comparable newname entries
 The average advertising-to-sales ratio for brand extensions is 10 percent
compared with the 19 percent for new brands
5. Reduce cost of introductory and follow-up marketing programs
 A firm can save 40 percent to 80 percent of the cost for launch of a supermarket
product nationally in US
When a brand becomes associated with multiple products, advertising can be more costeffective for the family brand as a whole
6. Avoid cost of developing a new brand
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 Developing new brand elements is an art and a science
 To conduct the necessary consumer research and employ skilled personnel to
design high-quality brand names, logos, symbols, packages, characters and
slogans can be quite expensive, and there is no assurance of success
 As the number of available and appealing brand names keep shrinking, legal
conflicts are more likely to result
 To avoid such a conflict, a global trademark search is a must for any major new
brand launch and it can cost millions of dollars

E.g. PWC’s consulting group spinoff Monday paid $6.5 million to acquire
the worldwide rights to the public relations firm OneMonday’s
trademark and domain name
7. Allow for packaging and labeling efficiencies
Similar or virtually identical packages and labels for extensions can result in lower
production costs and more prominence in the retail store where they can create a
“billboard” effect
8. Permit consumer variety-seeking
 When brand variants are offered with a product category, it helps consumers
who want to switch to a different product type without leaving the brand family
 Line extensions can also encourage customers to use the brand to a greater
extent or in different ways
 It is necessary to have multiple items that together form a cohesive product line,
to compete successfully
2. Provide feedback benefits to the parent brand or company as whole
1. Clarify brand meaning
 Extensions can help to clarify the meaning of a brand to consumers and define
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the kinds of markets in which it competes
 Broader brand meaning often is necessary so that firms avoid “marketing
myopia” and do not mistakenly draw narrow boundaries around their brand
 This myopia can lead to missing market opportunities or becoming vulnerable to
well-planned competitive strategies

E.g. Railways are not just in “railway” business but also in the
“transportation” business
 Thinking more broadly about product meaning can easily inspire different
marketing programs and new product opportunities
 It is advantageous to establish a portfolio of related products that completely
satisfy consumer needs in a certain area
2. Enhance the parent brand image
 Successful brand extension may enhance the parent brand image by
strengthening an existing brand association, improving the favorability of an
existing brand or adding a new brand association
 Brand extension also clarifies the core brand values and associations of the
parent brand
 Brand extensions may improve consumer perceptions of the credibility of the
company behind the extension
 Successful brand extensions lead to improved perceptions of the expertise,
trustworthiness, and likeability of the company
2. Bring new customers into the brand franchise and increase market coverage
 Line extensions help in expanding market coverage by offering a product benefit
whose absence may have prevented consumers from trying the brand
Creating “news” and bringing attention to the parent brand may benefit the family brand
as a whole
3. Revitalize the brand
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 Brand extensions can be a means to renew interest in and liking for the brand

E.g. Old Spice had to wrestle with the problem of being seen by young
males as “your father’s aftershave.” To revitalize the brand, a new
campaign was launched with active, contemporary men. NASCAR
sponsorship was done and driver Tony Stewart endorsed the product
along with All-Pro Chicago Bear linebacker Brian Urlacher
4. Permit subsequent extensions
 A successful brand extension may serve as the basis for subsequent extensions
c
Explain the customer based brand equity pyramid with an example.
Brand salience
 Brand salience means achieving the right brand identity for the brand
 It is an important first step in building brand equity
 It measures the awareness of the brand
 Building brand awareness helps customers understand the product or service
category in which the brand competes and what products or services are sold
under the brand name
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Breadth and Depth of Awareness
Product category structure
Brand performance
 Product is at the heart of brand equity as it is the primary influence on what
consumers experience with a brand, what they hear about a brand from others,
and what the firm can tell consumers about the brand in their communications
 Designing and delivering a product that fully satisfies consumer needs and wants
is a prerequisite for successful marketing
 It is important that the product at least meet the expectations of the customers,
for creating of brand loyalty and resonance
 Brand performance describes:

How well the product or service meets customers’ more functional
needs?

How well does the brand rate on objective assessment of quality?

To what extent does the brand satisfy utilitarian, aesthetic and economic
customer needs and wants in the product or service category?
 Brand performance includes dimensions that differentiate the brand
Brand Imagery
 It is the way people think about a brand abstractly, rather than what they think
the brand actually does
 It depends on the extrinsic properties of the product or service, including the
way in which the brand attempts to meet customers’ psychological and social
needs
 It refers to the intangible aspects of the brand, and consumers can form imagery
associations directly from their own experience or indirectly through advertising
or by some other source of information, such as word of mouth
 The four main kinds of intangibles that can be linked to a brand are:
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1. User profiles
2. Purchase and usage situations
3. Personality and values
4. History, heritage and experiences
Brand Judgments
 They are customers’ personal opinions about and evaluation of the brand
 Theses are formed by the customers by putting together all the different brand
performance and imagery associations
 Though customers may make many types of judgments about a brand, the
following four types of judgments are most important:
1. Quality
2. Credibility
3. Consideration
4. Superiority
Brand Resonance
 It describes the nature of relationship between the customers and brand and the
extent to which customers feel that they are “in sync” with the brand

E.g. Harley Davidson, Apple and eBay have very good brand resonance
 Resonance is characterized by two dimensions:
1. In terms of intensity, or the depth of the psychological bond that customers have
with the brand
2. By the level of activity engendered by this loyalty, such as repeat purchase rates
and the extent to which customers seek out brand information, events, and
other loyal customers
 The above two dimensions of brand resonance can be broken down in to four
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categories:
1. Behavioral loyalty
2. Attitudinal attachment
3. Sense of community
4. Active engagement
2.
a
What is brand imitation?
3
 Brand Imitation Definition: By similar cues to believe that two brands are
interchangeable
 Dictionary meaning of imitation: To copy or be like
 Imitation is also classified as Counterfeit or Pass-off
 Imitation exists in various forms as copying can be 100% copying, or copying
with some changes or copying a part only
 Brand imitation means to copy the name, term, sign, symbol, or design or a
combination of them
b
Why geographical extension is becoming a necessity to the company who want to
compete in the market?
 A brand can only survive if the product is kept permanently on its toes
 A brand is an obligation for perpetual endeavor
 There is a constant need for brands to constantly match its competitors in terms
of techniques and performance

E.g. Ariel must adapt itself to new washing processes and incorporate
every latest chemical innovation into the modern day household
 Research and Development are therefore the mainstays of brand achievement
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 When an innovation seems promising, considerable financial investment is
required before it can reach the production stage
 Today, it is no longer possible to have a slow process of offering the innovation
to a few people initially and then going for a larger market
If the brand is to remain competitive, the innovation must be offered immediately to all
at the lowest possible price
 Increasing marginal cost, huge manpower requirement and low profit margin
makes it necessary to have a large number of customers
 The brand, with its awareness, provides access to a larger set of customers and
helps to gain economies of scale
 The economics of scale also provides an opportunity for competitive pricing

E.g. A car designed with the world market in mind provides a better
competitive advantage than the one designed for the local market
 The local company, even if it is positioned in a niche, has no other way of
overcoming the price handicap than to extend its outlets
 Globalization allows for overall savings and leaps in experience curve
 The same product cane be sold under different brand names in different markets

E.g. Ariel in Europe, Tide in USA and Cheer in Japan
 Thus geographical extension becomes essential in the race for survival
c
Discuss in detail the advantages of first movers and free riders.
First Mover Advantages
1. Image and reputation
 Pioneers benefit from important reputation advantages that derive from their
innovative products and early entry
 Pioneers bask in the warm glory of a positive image infused with innovativeness
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and progressiveness
 Late entrants are struck with copycat images, which tarnishes the appeal of their
products and hinders the firm’s performance
2. Brand loyalty
 Pioneers have an opportunity to create loyal customers for their innovative
products
 Consumers become familiar with and even form habits around the first product
they try
 If the innovative product is designed correctly and priced competitively, users
start using it
 Pioneering brand has the advantage to establish itself as the leading brand,
which leads to long term market share advanatage
3. An opportunity to pick the market position
 Pioneers have the first opportunity at product positioning
 If they understand the market correctly and can correctly predict which product
attributes will ultimately be the most important to consumer, they can preempt
the most favorable market position before the entry of other late entrants
 Late entrants will be forced to either position their product as a inferior product
or they can have the same positioning as the pioneer and in the process
becoming a “me-too” product
 Thus the late entrants will have an competitive disadvantage
4. Technical leadership
 Pioneer is likely to have a head start in technology
 Innovators can pursue the next technological generation, staying one step ahead
of lagging entrants
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5. An opportunity to set product standards
 Pioneers can define an emerging product category in terms of its own products
 They can set industry standards, which late entrants are forced to follow
 The first group of customers become familiar with the pioneers product
 As that established base of users grow, it becomes harder and harder for later
entrants to switch the market over its own proprietary standard
6. Access to distribution
 In many cases, there is room for only a limited number of brands in distribution
channels
 By virtue of being the first, the pioneer ensures that his products have access to
preferential distribution
Late entrants may find it difficult to get access to distribution networks
7. Experience effects
 Experience effects are the cost advantages that accrue to the firm that has
produced the largest accumulated volume
 Pioneer has the likely advantage of going through the experience curve faster
than other entrants
 This also gives the pioneer a price advantage that cannot be matched by later
entrants
 This can also lead to market share advantage over time
8. Patents as a barrier to entry
 Patents granted on innovative products can be used to lock out later entrants
9. Switching costs as a barrier to entry
 Pioneers can also raise barriers to entry by building mutually beneficial
relationships with their customers
MBA IV
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PESIT Bangalore South Campus
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 Long-term contracts, familiarity with the first supplier’s product, a lack of
incentive to switch serve to bind the buyer to the first seller
Free Rider Effects
 Critics contend that the benefits of pioneering have been grossly oversold
 While in theory first-mover advantage appear to be strong and immutable, in
practice they prove to be weak and vulnerable to the actions of crafty later
entrants
 Analysis based on historical profiles of actual competitive entries have proved
much more supportive of imitation and later entry, and much less supportive of
pioneering
 Numerous benefits have been proposed for later entrants
 Some of them are:
1. Avoiding products that have no potential
 Later entrants avoid spending time and money on products for which later there
turns out to be no demand
 Only when the market potential becomes clearly favorable will the late entrants
move in and gain a viable and often commanding lead
 That reduces their risks and lowers their costs considerably, although they may
have to spend heavily during the later stages of market development to
overcome their later start
2. Survivor bias
 Advocates who claim powerful and long lasting benefits for pioneering often fail
to consider the risk inherent in pioneering new and unproven markets
 They fall victim to sample bias
 Most studies of first mover advantage focus solely on markets that started small
and ended up large, they do not consider markets that started small and ended
up even smaller
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PESIT Bangalore South Campus
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Department of Master of Business Management
 As a result, these studies minimize the extent t which money and effort are
wasted on products for which there is no demand
 They eliminate much of the risk of pioneering from the analysis
 Those advocates inadvertently ignore the fact that many pioneers are not
around to study at a later date
3. Estimates of new product failure rates
 Many new products, especially radically new products, fail to generate much
interest among buyers
 Expectations for demand typically turn out to be much higher than actual sales
 The fact is, many pioneers introduce new products for which there is no demand
 There are actually two ways to measure product success and failure
 The first one is to assess the likelihood that a new product idea, once conceived,
will eventually make its way to the market
 The second way to assess the likelihood of success once the product is brought
to market will be to know if it is accepted or rejected
4. Lower R&D Expenditure
 Imitation is less expensive than innovation
 It avoids many of the costs that must be borne solely by the first entrants
 The innovator has to spend on research and development and also on educating
the consumers about the benefits of the new product
 This expense is justified by the assumption that innovators gain a long lead on
imitators
 But research has shown that imitation often occurs quickly
5. Relative costs of innovation versus copying
 Research has proved that imitation costs are 65 percent of the innovation costs
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PESIT Bangalore South Campus
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Department of Master of Business Management
 A imitator frequently can spend much less time and money on research than the
innovator because the product’s existence and characteristics provide the
imitator with great idea of information that the innovator had to obtain through
it own research
6. An opportunity to gain market share with heavy promotion
 Later entrants may also be able to make up for their slow start by spending
heavily on marketing
 Their savings in R&D can be used for additional promotion
 According to research, the strength of the marketing areas – market research,
advertising, promoting, sales force and distribution prowess – were far more
influential than expertise in the technology areas – engineering, R&D and
production to gain a dominant position
7. Lower costs of educating consumers
 Pioneers must spend heavily to inform and persuade consumers about the
merits of a new product
 This is especially so for radical innovations with which consumers are unfamiliar
 If the pioneer is forced to spend heavily to convince the public of the product’s
promise only to lose its early lead, than waiting may be a preferable strategy to
pioneering
8. Technological leapfrog
 Most of the time innovations are crudely formed devices, based on first
generation technologies that evolve with markets they seek to serve
 Typically, the innovator picks up the most modern technology available at the
time of first entry
 But that choice can quickly become outdated
9. Sticking the pioneers with an obsolete standard
 Though the proponents of pioneering argue that they pioneers have the
advantage of setting standards, forcing followers to imitate, the practice is often
MBA IV
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PESIT Bangalore South Campus
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Department of Master of Business Management
at odds with this theory
 Research finds that standards are not necessarily set by first-generation
technology
 Here also, there is an opportunity for the later entrants
10. An opportunity to benefit from market changes
 When products are first brought into the market, the markets may often be
poorly formed
 The kinds of consumers who purchase at the beginning often differ in their needs
from those who enter late in larger numbers
11. An opportunity to use shared experience
 Shared experience occurs when a firm has or does something closely related to
what the pioneer claims as new
 This helps the later entrant by providing an opportunity to leap ahead of the
pioneer
 The later entrant may sell products that are similar to the pioneer’s, may have
experience with similar production methods as the pioneer’s or may distribute
its product through similar channels
 In addition, the later entrant may possess the marketing skills to sell similar
products, which can be used to develop the market created by the pioneer
3.
Case Study: (Compulsory)
A company based in south India is planning to enter the market of leather handbags for
ladies. This is a well contested market with many international brands being available in
India. This company plans to sell its products at all major retail shops and malls. It also
has plans to open exclusive shops in many parts of India.
MBA IV
USN
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PESIT Bangalore South Campus
Hosur road, 1km before Electronic City, Bengaluru -100
Department of Master of Business Management
Questions:
a
Suggest a suitable brand position plan for the company.
3
b
Suggest a name and justify why it would help the company to build a better brand.
2
c
Design a logo for the brand.
2
d
Give a slogan for the brand.
1
e
Design a suitable packaging.
2
Students have to be very creative and answer these questions.
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