In late 1990s, for unknown reasons, the word `brand’ suddenly became a verb. Headlines such as A Brand New World, Brands Bite Back, Branding God, and Branding Tall were attracting marketers.
However, branding as a phenomenon started way back in the 18th century, when the English artisan Josiah Wedgwood [1730-95] built the first modern business brand1. Wedgwood was able to stimulate demand for his more profitable tablewares and command premium price over comparable tableware and other products. Post-industrialization corporate world felt the need of branding. Companies across industries were trying out the best possible ways to brand their products.
Irrespective of the theories of the origin of branding and its evolution, academicians and marketers unanimously agree that in the beginning the market was commodity driven. Everything offered in the market was the base commodity - rice, lentil, sugar, coffee, tea, steel, plastic and a host of other basic items - that served our daily life purpose. But the customers were not happy with the base commodities and they wanted something else with which they could associate as the best product available in the market. It is natural tendency for the people to desire for newer products and also seek the best. This latent desire of possessing the best in the world could be seen as the driving force behind branding. Procter & Gamble [P&G] is one of the first companies to identify the latent desire of customers and address it.
In 1931, Neil McElroy, P&G’s marketing manager, devised specialized marketing strategies for each brand. In May 1931, Neil presented a three-page internal memo and argued that P&G should shift to brand-based management. This is how P&G’s brand management system was born. He rose to head P&G in 1948, and his memo became the guiding rule for companies, including P&G, to manage brands. The case “P&G’s Brand Management System” discusses P&G’s brand management system, its evolution and growth.
Seven decades since Neil presented his famous memo, the corporate world still abides by it. With increasing competition, the importance of branding has increased over the years and companies across industries globally are consistently looking for innovative ways to brand their products and services.
Importance of branding in the last two decades has increased in the light of realization that brand drives nearly two-thirds of customer purchases and impacts nearly every functional area of the business.2 Branding has gained prominence in market with the evolution of increasingly complex new business models, challenging organizations to revisit the brand-customer relationship.
Basics of Branding
Branding, for years, played an important role in establishing the product’s [in few cases even firm's] reputation in the marketplace, among customers, retailers and other market players. Today, it has become extremely important for management to attract attention of supply chain partners, media, the stock market, venture capitalist, and other investors.
Though the dimensions of branding and strategy of developing a successful brand have changed in recent years, the basics of brand remain unchanged. A brand needs well-defined brand architecture. It defines and structures the relationship among brands, the corporate entities, and families of products and services. The key drivers that affect brand architecture are - the pace of technological change, the ever-increasing channels of communication, and the growing sophistication in the way companies view brand equity and manage their brand development.
The brand architecture of an organization at any given point is based on a legacy of past management decisions and the competitive realities it faces in the marketplace. Brand architecture is the way in which companies organize, manage and market their brands. It is often seen as the external face of business strategy and must align with, and support, business goals and objectives. The success of brand architecture is also based on well-established brand position, brand image, brand personality, brand loyalty, brand strategy, brand activation and brand valuation.
Brand Positioning
The basic approach of positioning is not to create something new and different, but to manipulate what’s already there in the mind of customers and to strengthen the connections that already exist. Positioning is an act of seeking, placing and optimizing something in relation to the competition in surrounding environment. For example, Volvo is synonymous with safety and Ivory Soap with purity.
The leader owns the high ground - the No.1 position in the prospective customer’s mind, the top rung of the product ladder. To move up the ladder, management must follow the rules of positioning. Basic qualities of brand positioning include: relevance, clarity, distinctiveness, coherence, commitment, patience, and courage3.
Relevance: Positioning of brand must focus on benefits that are important to people or reflect the character of the product.
Clarity: Brand should be positioned in such a way that it is easy to communicate and quick to comprehend.
Distinctiveness: In current market situation there are reasonably good number of players vying for a share in the market, forcing them to compete on the basis of price or promotion. To overcome such a situation, company needs to offer distinctiveness in its products or services.
Coherence: A brand should speak with one voice through all the elements of the marketing mix.
Commitment: Management should be committed to the position it has adopted. Once a position is adopted, it takes commitment to see it through.
Patience: Patience plays an important role in the success of brand as branding is not a one-day wonder - it takes years to position a brand in consumers’ mind.
Courage: Adopting a strong brand position requires courage as it is much easier to defend an appeal rather than generate sales pitch.
To achieve the benefits of brand positioning, it is necessary to identify the market position of the brand. Management must understand that not all brands, present in the market, are competitors. A consumer may be presented with a dozen brands and he may consider only three out of them as a purchasing choice.
Brand Identity
The journey of Malboro’s cowboy, the most valuable brand identity ever created, started years back with a name, logo and slogan, and developed trust and long-term brand equity. Brand identity is a unique set of associations that the brand strategist aspires to create or maintain. These associations represent what the brand should stand for and imply a potential promise to customers. It is marketers’ perspective of how to project brand publicly. Brand identity offers a point of differentiation. It is an attempt to make brand unique so that people readily identify what the brand stands for and what they are purchasing.
Brand Loyalty
Brand loyalty is a crucial goal and is a result of successful marketing programs, sales initiatives and product development efforts. Moreover, brand loyalty is the consumer’s conscious or unconscious decision, expressed through intention or behavior to repurchase a brand continually. It occurs because the consumer perceives that the brand offers the right product features, image, or level of quality at the right price. It is a strongly motivated and long standing decision to purchase a particular product or service.
Brand Extension
Brand extension is not a new phenomenon. It gained importance in the 1980s when more than half of the brands marketed were extensions of existing products that marketed under existing product names. The phenomenon of brand extension gained momentum with success of extensions like Diet Coke, Dove Haircare, Caterpillar Clothing & Footwear, Gillette Deodorant, and Mars Ice Cream. The 1990s were the heydays for brand extension. Eighty-one percent of new products [launched in market] were extensions.4 Brand extension is a strategy of using a successful brand name to launch a new or modified product in a new category.
Brand extension makes great sense to customers and companies. Firms use it as a tool to develop a positive association, and save promotional cost, while customers see it as delivery of the same emotional benefits in another category. For example, the famous soap brand, Dove, extended its presence to hair care. Lever Faberge launched a hair care variant of Dove in January 2002, supported by £ 35million campaign. At the end of three months period, it gained 10.3% share of shampoo market. The success of the Dove shampoo could be attributed to the fact that it piggybacked on the established brand Dove soap. By piggybacking on the Dove, Dove shampoo moved beyond the realm of functional product to the realm of values. Virgin started its journey as a music record shop and today it is a multi-product brand.
Brand Valuation
Nestlé took over Rowntree Macintosh by paying three times its market value. The purchase price was twenty-six times the earnings generated by Rowntree Macintosh. The reason behind such a deal was high brand valuation.
Brand value is closely associated with brand strength that is derived from brand identity, brand personality and brand image. Ford, for instance, paid Euro 6.2 billion for the Jaguar brand. The high brand value established by IBM, Nike, and GM can only be enjoyed by a company that enjoys brand identity and motivates consumers to accept a higher price, remain loyal to the brand, and recommend it to others. The case “Building Brand Equity in Wine Industry” discusses brand equity methods - dollarmetric approach, conjoint analysis and multiple regressions. It also explains entire process of branding in wine industry.
Total Brand Management
Brand in the new millennium is viewed as an asset, some of the Indian and global companies that take brand as an asset, viz., Kodak, BMW, Coca-Cola, and ICICI. Branding strategy in the new market structure has changed. Today, brand strategies may focus on three key dimensions: developing superior product through continuous innovation; creating, building, maintaining and delivering consumer values that cannot be matched by others; and emphasizing on strong positioning.
Branding in recent years has emerged as central to a company’s overall business strategy. It has taken the form of business systems and is no more proprietary to marketing managers. It has implications across functions and business processes and is central to a company’s overall business strategy. For companies to survive in the changed business scenario, total brand management is a must.
Total Brand Management can assume a variety of forms - brand extension beyond the actual product, well-crafted umbrella brand, and entire retail system as a brand. They also recommend that companies for success of total brand management must concentrate on three key activities:
Maximizing synergies across a coherent brand portfolio
Strengthening brand portfolio through innovation
Securing brand through close relationships with customers and trade.
Total brand management is a way to leverage success, expand marketshare, and drive down competition. Indeed, companies with established brands often penetrate markets or defend core markets.
Saturday, September 6, 2008
Business Finance-Oriented Brand Valuation Models
There are many finance-oriented-brand valuation approaches such as capital market oriented valuation approach, market-oriented valuation cost-oriented valuation, brand valuation based on the concept of enterprise value, earning capacity-oriented brand valuation, license-based brand valuation and customer-oriented brand valuation to name a few.
“The market value-oriented brand valuation” approach is the method in which, the value of a brand is established by referring to the fair market prices of comparable brands. The other approach “capital market-oriented brand valuation model” was pioneered by Simon and Sullivan. They defined brand equity as the present value of all future earnings attributable solely to branding. Thus, from a financial markets perspective, brand value can be calculated from a company’s stock market capitalization or market value. But, this valuation method can be useful only for stock exchange-listed companies as the model is based on the idea that the stock price of a company will perform to reflect the future potential, its brands provide.
In the case of a single-brand company, brand value will therefore consist the company’s capitalized or realized market value. Brand value of a company can be calculated by using simple formula:
Brand Value = (stock price x number of shares) – (tangible assets + all remaining intangible assets)
If a company has more than one brand, the calculation is done pro rata for each brand’s share of total revenues or profits.
Brand valuation can also be based on the idea of the net asset value approach that is frequently drawn upon in the field of corporate valuation, which is called “cost-oriented brand valuation”. In net asset value approach, depending on the time perspective chosen, the assets may be valued either at their historic cost or at replacement cost. Brand valuation with the replacement cost method is done on the principle—what it would cost today to build up an equivalent brand from scratch. Whereas historic cost assumes that brand is an asset-based on resources that have been invested in it. Not only net asset value but enterprise value is also seen as a base to value brand equity. It also involves the aggregation of marketing and R&D expenditure relating to a brand. This method is used by Cadbury Schweppers for brand valuation. Historic Cost method, involves the aggregation of marketing and R&D expenditure relating to a brand. The problem is the isolation of costs specific to the brand alone, which may require the capitalization of costs incurred decades ago. Sander, Crimmins and Herp have proposed models based on price premium. In price premium-oriented approaches, the brand is seen as generating an additional benefit for the customer, for which they are willing to pay a little more. Sander proposed “Hedonic brand valuation method”, which is based on hedonic price theory. It explains product prices in terms of various product characteristics, or rather the extent to which they are present. On the other hand, Crimmins points out three dimensions of brand value: Actual amount, band breadth, and content of brand value. Herp builds upon the brand valuation model on conjoint measurement. In this model, brand value is defined as the sum of all incremental revenues earned as a result of branding a company.
It is seen that advertising support varies hugely from industry to industry. BBDO’s brand valuation model also considers the advertising in brand valuation, which most of the other models do not considers and present a distorted picture. The Brand Equity Evaluation System is a multi-phase factor model of brand valuation, which takes into account the differences between industries and solves the basic problem of the advertising support. This model also takes forward-looking variables to establish brand’s development potential. The model identifies eight determinants of brand equity.
The constituents of brand environment—sales performance, net operating margin and development prospects are aggregated into a joint factor of brand quality. The new brand quality factor is channeled together with the remaining four weighting factors (international orientation, advertising support, brand’s strength within its industry, image) to form an overall factor value. It is subsequently used as a multiplier of earnings before taxes. The monetary value of brand equity is the product of the average pre-tax earnings in the last three years and this combined the weighting factor. The detailed processes involved in implementing the BEES model are summarized in Figure.
There are few other methods to calculate brand value like “customer-oriented brand valuation model”, which is based on customer contribution margins. “Kern’s x-times-model” which is based on earning capacity, establishes the monetary value of a brand by capitalizing the value of potential earnings. License-based brand valuation proposed by Consor is yet another model which values a brand on the basis of the license rates typical of the industry and earned by comparable brands. It focuses on brand licensing, and the value calculated is the sum of money, another company would be willing to pay either to purchase the brand outright or to obtain a license for it.
“The market value-oriented brand valuation” approach is the method in which, the value of a brand is established by referring to the fair market prices of comparable brands. The other approach “capital market-oriented brand valuation model” was pioneered by Simon and Sullivan. They defined brand equity as the present value of all future earnings attributable solely to branding. Thus, from a financial markets perspective, brand value can be calculated from a company’s stock market capitalization or market value. But, this valuation method can be useful only for stock exchange-listed companies as the model is based on the idea that the stock price of a company will perform to reflect the future potential, its brands provide.
In the case of a single-brand company, brand value will therefore consist the company’s capitalized or realized market value. Brand value of a company can be calculated by using simple formula:
Brand Value = (stock price x number of shares) – (tangible assets + all remaining intangible assets)
If a company has more than one brand, the calculation is done pro rata for each brand’s share of total revenues or profits.
Brand valuation can also be based on the idea of the net asset value approach that is frequently drawn upon in the field of corporate valuation, which is called “cost-oriented brand valuation”. In net asset value approach, depending on the time perspective chosen, the assets may be valued either at their historic cost or at replacement cost. Brand valuation with the replacement cost method is done on the principle—what it would cost today to build up an equivalent brand from scratch. Whereas historic cost assumes that brand is an asset-based on resources that have been invested in it. Not only net asset value but enterprise value is also seen as a base to value brand equity. It also involves the aggregation of marketing and R&D expenditure relating to a brand. This method is used by Cadbury Schweppers for brand valuation. Historic Cost method, involves the aggregation of marketing and R&D expenditure relating to a brand. The problem is the isolation of costs specific to the brand alone, which may require the capitalization of costs incurred decades ago. Sander, Crimmins and Herp have proposed models based on price premium. In price premium-oriented approaches, the brand is seen as generating an additional benefit for the customer, for which they are willing to pay a little more. Sander proposed “Hedonic brand valuation method”, which is based on hedonic price theory. It explains product prices in terms of various product characteristics, or rather the extent to which they are present. On the other hand, Crimmins points out three dimensions of brand value: Actual amount, band breadth, and content of brand value. Herp builds upon the brand valuation model on conjoint measurement. In this model, brand value is defined as the sum of all incremental revenues earned as a result of branding a company.
It is seen that advertising support varies hugely from industry to industry. BBDO’s brand valuation model also considers the advertising in brand valuation, which most of the other models do not considers and present a distorted picture. The Brand Equity Evaluation System is a multi-phase factor model of brand valuation, which takes into account the differences between industries and solves the basic problem of the advertising support. This model also takes forward-looking variables to establish brand’s development potential. The model identifies eight determinants of brand equity.
The constituents of brand environment—sales performance, net operating margin and development prospects are aggregated into a joint factor of brand quality. The new brand quality factor is channeled together with the remaining four weighting factors (international orientation, advertising support, brand’s strength within its industry, image) to form an overall factor value. It is subsequently used as a multiplier of earnings before taxes. The monetary value of brand equity is the product of the average pre-tax earnings in the last three years and this combined the weighting factor. The detailed processes involved in implementing the BEES model are summarized in Figure.
There are few other methods to calculate brand value like “customer-oriented brand valuation model”, which is based on customer contribution margins. “Kern’s x-times-model” which is based on earning capacity, establishes the monetary value of a brand by capitalizing the value of potential earnings. License-based brand valuation proposed by Consor is yet another model which values a brand on the basis of the license rates typical of the industry and earned by comparable brands. It focuses on brand licensing, and the value calculated is the sum of money, another company would be willing to pay either to purchase the brand outright or to obtain a license for it.
Behaviorally-Oriented Brand Valuation Models
Some 10 years ago, among both marketing practitioners and theoreticians, criticism grew louder that financial models were failing to do complete justice to the essential qualities of strong brands, since they concentrated on quantities such as stock market capitalization, earning-capacity value, license revenues, acquisition costs, price premiums or the customer contribution margin, when brand is not the only calculation of value in quantitative terms. Aaker defines brand equity as a set of assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm and/or to that firm customers. Aaker identifies five determinants of brand equity: Brand loyalty, brand awareness, perceived quality, brand associations and other brand assets. It is seen not only as determinants but also as outcomes of brand equity. These parameters, with help of few other important factors, give a new concept of incorporating brand strength as a demand-oriented component. They endeavor to explain what goes on in customers’ hearts and minds and what determines the value of brands from their point of view. Almost on the same lines, Keller defines brand value as the differential effect of brand knowledge on consumer response to the marketing of the brand. That is, customer-based brand equity involves consumers’ response to an element of the marketing mix for the brand in comparison with their reactions to the same marketing mix element attributed to a fictitiously named or unnamed version of the product or service.
Calculation of brand value based on Price Premium method, compares the revenues of an unbranded competing product with the brand. Revenues of an unbranded competing product are deducted from the revenues of a comparable branded product to establish the excess or premium revenue of the brand. This excess or premium gives the value of brand. BPL, Nike, United Color of Benaton, Lotto and Bata, for example, are able to command a higher price even when the product is outsourced. The suppliers to these companies cannot charge the same price if they sell their products directly to the consumers.
Based on the principle that consumer commitment is at the foundation of brand equity and loyalty, the Chicago research firm Market Facts has developed a “Conversion Model”. This model is designed to measure the psychological commitment between brand and consumer. The model segments users of a brand into four groups: Entrenched, Average, Shallow, and Convertible. This model also predicts brand’s future fortunes. Walker and Chip in their paper ‘how strong is your brand’ discusses example, “in measuring the carbonated soft-drink category in the summer of 1991, Market Facts detected weaknesses in consumer commitment to Coke and Diet Coke. At the same time, growth potential was found for several non-cola soft dinks. By the first quarter of 1992, Seven-Up’s shipment volume climbed 8%, and other brands showed directional strengths and weaknesses as predicted.”
Prominent among ‘Behaviorally-oriented’ brand valuation model is, the Young & Rubicam model which is based on the principles of behavioral science. The Young & Rubicam brand model, Brand Asset Valuator (BAV) can be used as a diagnostic tool. The BAV model is the result of a large-scale study Y&R conducted in 1993-94, encompassing 30,000 consumers and 6,000 brands in 19 countries. It is an attempt to value brand by breaking consumer connection into its two parts—brand stature and brand strength, the marketer can assess the health of the brand. Brand strength is a measure of brand distinctiveness that measures how distinctive the brand is in the marketplace and brand relevance measures whether a brand has personal relevance for the respondent. Brand stature, on the other hand, is a combination of brand esteem, which measures whether the brand is held in high regard and considered the best in its class and knowledge is a measure of brand understanding, which measures as to what a brand stands for.
Walker and Chip in their paper “How strong is your brand” discusses brands in the study with high familiarity include Coca-Cola, Jell-O, McDonald’s and Kellogg’s. Brands with high esteem include Rubbermaid, Philadelphia Cream Cheese, Reynolds Wrap, and Band-Aid.
BV = f {[Brand strength (differentiation, relevance)] and [brand stature (esteem, knowledge)]}
McKinsey defines the three Ps of the brand and gives a function “Quantitative brand strength elements = f (the 3 Ps of a brand)”, when three Ps stand for performance, personality, and presence. McKinsey’s method for determining brand value operates on the assumption that brand strength is definitively quantifiable. However, the system does not determine aggregate brand value, but rather
quantifies as target values for individual benefit components of brands from a brand management perspective and can be viewed as a model based on behavioral science only in terms of the drivers of the three Ps of the brand.
Other consumer-focused models essentially value brands along similar lines with varying degrees of sophistication. Some of the measures used are: Price premium, customer preference, replacement cost of brand, and the price premium that the name supports. The Icon Research and Consulting Brand Trek approach is yet another model for determining brand value based purely on the tenets of behavioral science.
Calculation of brand value based on Price Premium method, compares the revenues of an unbranded competing product with the brand. Revenues of an unbranded competing product are deducted from the revenues of a comparable branded product to establish the excess or premium revenue of the brand. This excess or premium gives the value of brand. BPL, Nike, United Color of Benaton, Lotto and Bata, for example, are able to command a higher price even when the product is outsourced. The suppliers to these companies cannot charge the same price if they sell their products directly to the consumers.
Based on the principle that consumer commitment is at the foundation of brand equity and loyalty, the Chicago research firm Market Facts has developed a “Conversion Model”. This model is designed to measure the psychological commitment between brand and consumer. The model segments users of a brand into four groups: Entrenched, Average, Shallow, and Convertible. This model also predicts brand’s future fortunes. Walker and Chip in their paper ‘how strong is your brand’ discusses example, “in measuring the carbonated soft-drink category in the summer of 1991, Market Facts detected weaknesses in consumer commitment to Coke and Diet Coke. At the same time, growth potential was found for several non-cola soft dinks. By the first quarter of 1992, Seven-Up’s shipment volume climbed 8%, and other brands showed directional strengths and weaknesses as predicted.”
Prominent among ‘Behaviorally-oriented’ brand valuation model is, the Young & Rubicam model which is based on the principles of behavioral science. The Young & Rubicam brand model, Brand Asset Valuator (BAV) can be used as a diagnostic tool. The BAV model is the result of a large-scale study Y&R conducted in 1993-94, encompassing 30,000 consumers and 6,000 brands in 19 countries. It is an attempt to value brand by breaking consumer connection into its two parts—brand stature and brand strength, the marketer can assess the health of the brand. Brand strength is a measure of brand distinctiveness that measures how distinctive the brand is in the marketplace and brand relevance measures whether a brand has personal relevance for the respondent. Brand stature, on the other hand, is a combination of brand esteem, which measures whether the brand is held in high regard and considered the best in its class and knowledge is a measure of brand understanding, which measures as to what a brand stands for.
Walker and Chip in their paper “How strong is your brand” discusses brands in the study with high familiarity include Coca-Cola, Jell-O, McDonald’s and Kellogg’s. Brands with high esteem include Rubbermaid, Philadelphia Cream Cheese, Reynolds Wrap, and Band-Aid.
BV = f {[Brand strength (differentiation, relevance)] and [brand stature (esteem, knowledge)]}
McKinsey defines the three Ps of the brand and gives a function “Quantitative brand strength elements = f (the 3 Ps of a brand)”, when three Ps stand for performance, personality, and presence. McKinsey’s method for determining brand value operates on the assumption that brand strength is definitively quantifiable. However, the system does not determine aggregate brand value, but rather
quantifies as target values for individual benefit components of brands from a brand management perspective and can be viewed as a model based on behavioral science only in terms of the drivers of the three Ps of the brand.
Other consumer-focused models essentially value brands along similar lines with varying degrees of sophistication. Some of the measures used are: Price premium, customer preference, replacement cost of brand, and the price premium that the name supports. The Icon Research and Consulting Brand Trek approach is yet another model for determining brand value based purely on the tenets of behavioral science.
Composite Models of Brand Valuation
A group of brand value measurement indicators has established itself parallel to the focus on psychographics values. Consultancy firms and academicians have proposed many composite models of brand valuation. The Interbrand’s brand valuation approach, AC Nielsen’s brand balance sheet and brand performancer, Gfk brand power model, Semion brand value approach and Sattler brand value approach are a few of the famous composite brand valuation models.
Interbrand consulting firm’s brand value system considers an earnings-based approach. The Interbrand model seeks to estimate the risk and inflation-adjusted benefits—the current and future earnings or cash flows—flowing from brand ownership. Under this model, the value of a brand is a function of two factors: its earnings and its strength. While the brand’s earnings are a measure of potential profitability, the brand’s strength is the measure of its reliability of its future earnings. The greater the brand’s strength, greater is the reliability of its future earnings and lesser is the risk. Since it is difficult to attribute all the earnings to the brand per se, adjustments need to be made to the earnings estimates.
In this model first of all the unbranded profit i.e., earning that would have accrued on a basic unbranded version of the product is eliminated and the historical profit at present day value is restated and adjusted for taxes. To calculate the actual brand earnings the profit attributable to other intangible associated with the business of the brand is deducted.
The model calculates the brand value by multiplying brand earnings with the brand earning with the brand strength multiple. This brand strength multiple is a function of multiple of factors like leadership, stability, market, internationality, trend, support and protection. These factors have been evaluated on a scale of 1 to 100 to calculate the brand multiplier. Some of the IT companies like Infosys, Rolta and Satyam are following a similar practice of valuation for their brands.
The seven determinants of the brand value are:
• Brand leadership—which stands for the ability of the brand to influence the market;
• Brand stability—the characteristic that has made the brand the inherent “fabric” of the market;
• Market—the structural attractiveness of the market, its projected growth, et al.;
• International presence of the brand—the brand’s attractiveness and appeal in a multiplicity of markets with a view to distinguish between regional, national and international brands;
• Brand trend—the brand’s ability to remain contemporary and relevant to the consumers;
• Marketing support—the quantity and quality of the investments made to support the brand and
• Legal protection enjoyed by the brand are the protection received from the legal system, patents, trademarks, etc.
Based on these parameters, Interbrand consulting determines the value of brand. Interbrand has given weighting to all these seven parameters like brand leadership has 25% weighting, brand stability enjoys 15%, market 10%, international presence of the brand 25%, brand trend 10%, marketing support 10% and legal protection enjoyed by the brand has 5% weighting.
Measurement of the seven variables, based on a detailed audit would determine a brand’s strength. This provides the discount rate that needs to be applied to the adjusted estimates of the brand’s earnings for determining its present value.
BV = Brand profit x Brand multiplier
The Interbrand approach while being valuable, especially in an acquisition and merger context, suffers from an accounting focus. This stems from the desire to ensure that the value arrived at is auditable. Further from a marketer’s perspective, the Interbrand approach does not explicitly measure consumers’ perception of the brand, which is critical for marketing decision-making, especially on brand extension.
Schulz and Brandmeyer, of AC Nielsen have used scoring model to develop a brand valuation model called “The AC Nielsen brand balance sheet”. The brand balance sheet relies on six criteria groups containing a total of 19 individual criteria that are deemed good indicators of brand value. The fundamental idea of the brand balance sheet is to relate a correlation between complex market environments, the significance of long-term brand cultivation and successful brand management. AC Nielsen felt that the brand balance sheet is not the absolute model for brand valuation and in search of better brand valuation model, it has developed an advanced model based on Brand Performancer.
The Brand Performancer attempts to deliver an integrative consumer and company-oriented brand valuation system. It provides tailor made data to the decision-makers for any specific information needed. The modular structure makes it possible to supplement gauges of brand value with analyses for the purpose of brand steering, financial brand valuation and tracking of brand leadership. The four modules are brand steering system, brand value system, brand control system, and the central element – brand monitor.
BV = [Annual sales of respective brands x Net operating margin x Relative brand strength x Perpetual annuity NPV discount factor]
One approach, which relies strongly on behavioral and image data in addition to financial values, is ‘Semion brand value approach’. He defines four brand values – financial value of the company, which is determined by earning before taxes and earning trends, brand strength that is determined by market share, market influence, marketing activities, distribution rate degree of familiarity, identity and potential, brand protection determined by product classification, brand environment and intern protection and brand image determined by consumer association, image position on market among consumer and vis-à-vis product.
BV = financial value x [financial value factor + brand protection factor + brand strength factor + brand image factor]
The market-oriented system of brand valuation, which combines a consumer-based perspective with a company-based perspective is proposed by Bekmeier-Feuerhahn model that operates on the assumption that brand value is derived from brand strength and brand earnings, both assessed on the basis of market prices. It is a comprehensive, integrative approach to build brand valuation that takes into account the special requirements of brand appraisal and yields a tangible monetary value.
The other well-known composite brand valuation approaches are Sattler brand value approach, Gfk brand power model and brand rating valuation model.
Interbrand consulting firm’s brand value system considers an earnings-based approach. The Interbrand model seeks to estimate the risk and inflation-adjusted benefits—the current and future earnings or cash flows—flowing from brand ownership. Under this model, the value of a brand is a function of two factors: its earnings and its strength. While the brand’s earnings are a measure of potential profitability, the brand’s strength is the measure of its reliability of its future earnings. The greater the brand’s strength, greater is the reliability of its future earnings and lesser is the risk. Since it is difficult to attribute all the earnings to the brand per se, adjustments need to be made to the earnings estimates.
In this model first of all the unbranded profit i.e., earning that would have accrued on a basic unbranded version of the product is eliminated and the historical profit at present day value is restated and adjusted for taxes. To calculate the actual brand earnings the profit attributable to other intangible associated with the business of the brand is deducted.
The model calculates the brand value by multiplying brand earnings with the brand earning with the brand strength multiple. This brand strength multiple is a function of multiple of factors like leadership, stability, market, internationality, trend, support and protection. These factors have been evaluated on a scale of 1 to 100 to calculate the brand multiplier. Some of the IT companies like Infosys, Rolta and Satyam are following a similar practice of valuation for their brands.
The seven determinants of the brand value are:
• Brand leadership—which stands for the ability of the brand to influence the market;
• Brand stability—the characteristic that has made the brand the inherent “fabric” of the market;
• Market—the structural attractiveness of the market, its projected growth, et al.;
• International presence of the brand—the brand’s attractiveness and appeal in a multiplicity of markets with a view to distinguish between regional, national and international brands;
• Brand trend—the brand’s ability to remain contemporary and relevant to the consumers;
• Marketing support—the quantity and quality of the investments made to support the brand and
• Legal protection enjoyed by the brand are the protection received from the legal system, patents, trademarks, etc.
Based on these parameters, Interbrand consulting determines the value of brand. Interbrand has given weighting to all these seven parameters like brand leadership has 25% weighting, brand stability enjoys 15%, market 10%, international presence of the brand 25%, brand trend 10%, marketing support 10% and legal protection enjoyed by the brand has 5% weighting.
Measurement of the seven variables, based on a detailed audit would determine a brand’s strength. This provides the discount rate that needs to be applied to the adjusted estimates of the brand’s earnings for determining its present value.
BV = Brand profit x Brand multiplier
The Interbrand approach while being valuable, especially in an acquisition and merger context, suffers from an accounting focus. This stems from the desire to ensure that the value arrived at is auditable. Further from a marketer’s perspective, the Interbrand approach does not explicitly measure consumers’ perception of the brand, which is critical for marketing decision-making, especially on brand extension.
Schulz and Brandmeyer, of AC Nielsen have used scoring model to develop a brand valuation model called “The AC Nielsen brand balance sheet”. The brand balance sheet relies on six criteria groups containing a total of 19 individual criteria that are deemed good indicators of brand value. The fundamental idea of the brand balance sheet is to relate a correlation between complex market environments, the significance of long-term brand cultivation and successful brand management. AC Nielsen felt that the brand balance sheet is not the absolute model for brand valuation and in search of better brand valuation model, it has developed an advanced model based on Brand Performancer.
The Brand Performancer attempts to deliver an integrative consumer and company-oriented brand valuation system. It provides tailor made data to the decision-makers for any specific information needed. The modular structure makes it possible to supplement gauges of brand value with analyses for the purpose of brand steering, financial brand valuation and tracking of brand leadership. The four modules are brand steering system, brand value system, brand control system, and the central element – brand monitor.
BV = [Annual sales of respective brands x Net operating margin x Relative brand strength x Perpetual annuity NPV discount factor]
One approach, which relies strongly on behavioral and image data in addition to financial values, is ‘Semion brand value approach’. He defines four brand values – financial value of the company, which is determined by earning before taxes and earning trends, brand strength that is determined by market share, market influence, marketing activities, distribution rate degree of familiarity, identity and potential, brand protection determined by product classification, brand environment and intern protection and brand image determined by consumer association, image position on market among consumer and vis-à-vis product.
BV = financial value x [financial value factor + brand protection factor + brand strength factor + brand image factor]
The market-oriented system of brand valuation, which combines a consumer-based perspective with a company-based perspective is proposed by Bekmeier-Feuerhahn model that operates on the assumption that brand value is derived from brand strength and brand earnings, both assessed on the basis of market prices. It is a comprehensive, integrative approach to build brand valuation that takes into account the special requirements of brand appraisal and yields a tangible monetary value.
The other well-known composite brand valuation approaches are Sattler brand value approach, Gfk brand power model and brand rating valuation model.
Impact of Technology on Branding
The business environment in recent years has gone through a sea change in its shape. One of the key factors of the unprecedented change in shape was the result of change in technology, which has also forced companies to get rid of traditional techniques of communication. The impact of the Internet on brand strategies is enormous. It has changed the boundaries of the competitive playing field and
created a land rush to establish brand through online channel. IBM, Microsoft, Coca-Cola are few of the pioneers of online branding exercise. Though new branding techniques have forced companies to get rid of traditional techniques of branding, the basics of branding remain same – winning customer mind share. Dr. Paul Temporal argues that, there is no change in the way people perceive a brand, traditional or hi-tech. People go for only those brands which they feel like accepting.
A brand in a networked economy can be defined using four inter-related elements satisfaction, collaboration, relationship and a story to suit the networked economy, which ultimately gives loyal customers to the company. Michael Moon and Doug Millison define it as ‘Fire brand’. A fire brand ignites the hearts and minds of customers through its interactions with the company and other customers. It unveils beginning-to-end strategies for strengthening company’s brand and building customer loyalty. A brand can become a firebrand when it fires community to action, and provides self-service satisfaction to vendors and other members of the community.
created a land rush to establish brand through online channel. IBM, Microsoft, Coca-Cola are few of the pioneers of online branding exercise. Though new branding techniques have forced companies to get rid of traditional techniques of branding, the basics of branding remain same – winning customer mind share. Dr. Paul Temporal argues that, there is no change in the way people perceive a brand, traditional or hi-tech. People go for only those brands which they feel like accepting.
A brand in a networked economy can be defined using four inter-related elements satisfaction, collaboration, relationship and a story to suit the networked economy, which ultimately gives loyal customers to the company. Michael Moon and Doug Millison define it as ‘Fire brand’. A fire brand ignites the hearts and minds of customers through its interactions with the company and other customers. It unveils beginning-to-end strategies for strengthening company’s brand and building customer loyalty. A brand can become a firebrand when it fires community to action, and provides self-service satisfaction to vendors and other members of the community.
Branding – A Collective Responsibility
Today, who doesn’t know of Nike and Starbucks? Sneakers were sneakers until Phil Knight came along to brand it as sports and fitness product and coffee was just a hot beverage until Starbucks created an excitement around its consumption by branding experiences. These brands stand successful even today because they consistently evoke positive feelings with each new product, services, or marketing campaign. These brands stand strong and have survived all bad and good seasons of business turmoil because they enjoy strong internal and external mix of branding.
It stands true not only for Nike and Starbucks but for any product or service offered to customers. Nike and Starbucks emerged as powerful brands because contrary to the conventional wisdom – branding stands true for external communication, its aim is to attract new customers and influence the old ones – they established their brand with the help of their employees. The old view has lost its significance in the
new market structure where companies in the midst of restructuring their business strategy need to communicate to their employees as they do with their customers.
In this new brand world, branding is not only domain of marketer but it has gone ahead to shop floor and, to the employee. In fact, brand-building exercise is the responsibility of the entire enterprise, including CEO. Most of the successful companies’ CEOs are managing branding exercise directly from most successful companies and the success stories of these companies have proved that the top boss of the companies should manage the branding exercise. Michael Dell of Dell Computer and Richard Branson of Virgin have done great job in positioning their brands globally. Richard Branson infused brand in the culture of the company and at Dell Computers brand was ingrained in the vision of company. Both these CEOs built strong relationship with the customers and employees. They have always seen brand as an important asset of company. Their initiatives helped Dell and Virgin to emerge as global companies.
It stands true not only for Nike and Starbucks but for any product or service offered to customers. Nike and Starbucks emerged as powerful brands because contrary to the conventional wisdom – branding stands true for external communication, its aim is to attract new customers and influence the old ones – they established their brand with the help of their employees. The old view has lost its significance in the
new market structure where companies in the midst of restructuring their business strategy need to communicate to their employees as they do with their customers.
In this new brand world, branding is not only domain of marketer but it has gone ahead to shop floor and, to the employee. In fact, brand-building exercise is the responsibility of the entire enterprise, including CEO. Most of the successful companies’ CEOs are managing branding exercise directly from most successful companies and the success stories of these companies have proved that the top boss of the companies should manage the branding exercise. Michael Dell of Dell Computer and Richard Branson of Virgin have done great job in positioning their brands globally. Richard Branson infused brand in the culture of the company and at Dell Computers brand was ingrained in the vision of company. Both these CEOs built strong relationship with the customers and employees. They have always seen brand as an important asset of company. Their initiatives helped Dell and Virgin to emerge as global companies.
Brand: The Changing Dimensions
Branding, with time, may have changed in form but elements of branding remain unchanged. Though branding is an enticing act for most marketers and consumers to associate certain positive, and exciting feelings with the process of brand management, there is a difference between the participation level of employees and customers. For the customer, it is an act of excitement and fun, which is done for awareness development. But for marketers, the same branding exercise means not only advertising and awareness development, but also strengthening the internal as well as the external core of brand.
Branding as an exercise is influenced by external and internal environments. The business functions, viz., marketing, sales, finance, production, research & development, and personnel have a definite role to play in brand-building exercise. Moreover, these functions are inter-dependent and intrinsically linked with one another for better functioning of business. The other set, which constitutes the external environment, comprises customers, competitors, advertising and public relation agencies, and distribution channels.
A company can develop power brands by maintaining a right balance between the external and internal environments. Bringing this balance helps brand create value through consistent positive quality delivery and its offerings, which satisfy customers and makes them opt for the brand regularly. At the other end, it also helps build a strong marketshare, maintain good price levels and generate strong cash flows. Companies like Coca-Cola, Microsoft, Intel, Nokia, Levi’s, Gillette, Disney, GE, American Express and Sony enjoy power brand status. These brands realized long back that brand management, as a function, has crossed the boundaries of marketing, penetrating into all other functions of business operations. They have also realized that the success of their business is mostly based on the success of their brands. They are experiencing brand-based business model. Sam Hill and Chris Lederer, associates of Booz-Allen & Hamilton, advocate that the next decade might see the brand-based business models becoming the dominant corporate norm. To develop a brand-based business, companies have to focus on a strong brand portfolio rather than an individual brand. To develop a portfolio of brands, it is required to classify brands of company into three groups: lead brand, strategic brand, and support brand. The lead brand is the center of brand portfolio – it carries most of the burden of the company’s sales and pulls customer to company’s product. The strategic brand lures new users to the brand portfolio. The support brands pull those customers who are on the fence, into the company’s product.
The key to the success of brand portfolio management is to think of brands as an asset and to measure the risk and return of brand. Moreover, developing a brand portfolio in this ever-dynamic business environment is not enough. Companies for sustained growth also need to convert their brand into Masterbrand, which helps create strong relationship with customers, provide direction to the employees, offer value proposition backed by entire company, help company erect greater barrier to entry, and infuse ability to innovate and change. Masterbrand also explains why a strong brand should reflect the organizational values, culture and strategy, which is very much reflected in branding strategy of global Masterbrand like American Express, AT&T, IBM, Samsung, and Sony.
Branding as an exercise is influenced by external and internal environments. The business functions, viz., marketing, sales, finance, production, research & development, and personnel have a definite role to play in brand-building exercise. Moreover, these functions are inter-dependent and intrinsically linked with one another for better functioning of business. The other set, which constitutes the external environment, comprises customers, competitors, advertising and public relation agencies, and distribution channels.
A company can develop power brands by maintaining a right balance between the external and internal environments. Bringing this balance helps brand create value through consistent positive quality delivery and its offerings, which satisfy customers and makes them opt for the brand regularly. At the other end, it also helps build a strong marketshare, maintain good price levels and generate strong cash flows. Companies like Coca-Cola, Microsoft, Intel, Nokia, Levi’s, Gillette, Disney, GE, American Express and Sony enjoy power brand status. These brands realized long back that brand management, as a function, has crossed the boundaries of marketing, penetrating into all other functions of business operations. They have also realized that the success of their business is mostly based on the success of their brands. They are experiencing brand-based business model. Sam Hill and Chris Lederer, associates of Booz-Allen & Hamilton, advocate that the next decade might see the brand-based business models becoming the dominant corporate norm. To develop a brand-based business, companies have to focus on a strong brand portfolio rather than an individual brand. To develop a portfolio of brands, it is required to classify brands of company into three groups: lead brand, strategic brand, and support brand. The lead brand is the center of brand portfolio – it carries most of the burden of the company’s sales and pulls customer to company’s product. The strategic brand lures new users to the brand portfolio. The support brands pull those customers who are on the fence, into the company’s product.
The key to the success of brand portfolio management is to think of brands as an asset and to measure the risk and return of brand. Moreover, developing a brand portfolio in this ever-dynamic business environment is not enough. Companies for sustained growth also need to convert their brand into Masterbrand, which helps create strong relationship with customers, provide direction to the employees, offer value proposition backed by entire company, help company erect greater barrier to entry, and infuse ability to innovate and change. Masterbrand also explains why a strong brand should reflect the organizational values, culture and strategy, which is very much reflected in branding strategy of global Masterbrand like American Express, AT&T, IBM, Samsung, and Sony.
Building a Power Brand
In 1998, Philip Morris took over Kraft in US and Nestle bought Rowntree in Europe. Philip Morris paid four times the value of the target company’s tangible assets whereas Nestle paid over five times. Such incredible payment for names were the reflection of the value placed on the brand in terms of long-term profit expectancy. Definitely, a good brand is a great asset but it takes years of dedicated effort to build it and great care has to be taken in maintaining the brand once it is established.
Many companies believe that they have a brand but in actual sense all they enjoy is name-recognition. The name-recognition may help a company in generating onetime business. A name becomes a brand when the customer associates the name with the set of tangible benefits and other set of intangible benefits from the product or service. A brand offers a distinct value proposition and consistent quality delivery,which, in turn, provides loyal customers to the company. Philip Kotler, a leading marketing guru says, “The most enduring meanings of a brand are its values, culture, and personality. Brands give the seller the opportunity to attract a loyal and profitable set of customers and strong brands help build the corporate image, making it easier to launch new brands and gain acceptance by distributors and consumers.” Moreover, a brand simplifies the everyday choice, reduces the risk of complicated buying decisions, offers emotional benefits, and offers sense of community.
In most of the cases, journey of power brand starts with unbranded ‘me-too product.’ With effective communication, an unbranded product generates brand awareness. Brand awareness backed by strong brand promise increases brand acceptance in the market in course of time. When the market starts accepting a brand, quality control helps increase brand preference and consistent promise delivery with passage of time generates brand loyalty. Strong brand loyalty is the first step towards the development of a power brand.
A brand becomes a power brand, when it meets all the branding basics – adistinctive product, consistent delivery, alignment between communication and delivery and brand personality and presence. A power brand helps a company leverage all available business opportunities. McKinsey’s five-part approach, ‘Brand Accelerator Model’ helps marketers position their brand. It proposes to build strong brands faster than the competitors. The five steps that build a strong brand are:
• Creating a compelling brand strategy
• Delivering a consistent, distinctive and inspiring customer experience
• Building unique brand presence approach
• Leveraging the brand for growth and optimizing brand architecture
• Shifting the brand organizational development.
In fact, a power brand provides a win-win situation to the customer and the company. This is what makes branding strategy one of the crucial factors for organizational growth. Brand strategy needs a careful thought and intensive planning backed with a well-researched study of the market and its complexities. CEO of Brand Stream, Scott Bedbury emphasizes that it’s time to build a strong
brand that evokes trust from customers.
Many companies believe that they have a brand but in actual sense all they enjoy is name-recognition. The name-recognition may help a company in generating onetime business. A name becomes a brand when the customer associates the name with the set of tangible benefits and other set of intangible benefits from the product or service. A brand offers a distinct value proposition and consistent quality delivery,which, in turn, provides loyal customers to the company. Philip Kotler, a leading marketing guru says, “The most enduring meanings of a brand are its values, culture, and personality. Brands give the seller the opportunity to attract a loyal and profitable set of customers and strong brands help build the corporate image, making it easier to launch new brands and gain acceptance by distributors and consumers.” Moreover, a brand simplifies the everyday choice, reduces the risk of complicated buying decisions, offers emotional benefits, and offers sense of community.
In most of the cases, journey of power brand starts with unbranded ‘me-too product.’ With effective communication, an unbranded product generates brand awareness. Brand awareness backed by strong brand promise increases brand acceptance in the market in course of time. When the market starts accepting a brand, quality control helps increase brand preference and consistent promise delivery with passage of time generates brand loyalty. Strong brand loyalty is the first step towards the development of a power brand.
A brand becomes a power brand, when it meets all the branding basics – adistinctive product, consistent delivery, alignment between communication and delivery and brand personality and presence. A power brand helps a company leverage all available business opportunities. McKinsey’s five-part approach, ‘Brand Accelerator Model’ helps marketers position their brand. It proposes to build strong brands faster than the competitors. The five steps that build a strong brand are:
• Creating a compelling brand strategy
• Delivering a consistent, distinctive and inspiring customer experience
• Building unique brand presence approach
• Leveraging the brand for growth and optimizing brand architecture
• Shifting the brand organizational development.
In fact, a power brand provides a win-win situation to the customer and the company. This is what makes branding strategy one of the crucial factors for organizational growth. Brand strategy needs a careful thought and intensive planning backed with a well-researched study of the market and its complexities. CEO of Brand Stream, Scott Bedbury emphasizes that it’s time to build a strong
brand that evokes trust from customers.
Elements of Branding
Brands are living components that we have been holding in our minds for years. What goes into them is both, logical and irrational. Products and services will continue to come and go but the residual experiences of customers who consume them will ultimately define the brand. These residual experiences of customers help brands develop an image.
The act of imprinting the brand image firmly in the minds of customers is a great challenge to marketers. The act of image building has two basic components, positioning and consistent delivery of quality.
Positioning a brand is about interaction with people, what they read in press, style of advertising, quality of products, and efficiency of after-sales service. Branding is nothing but positioning a product successfully in the minds of the customers. If a brand is well positioned in a customer’s mind, half the job of directing customers to buy their products or services is done. The power of a brand is all about how customers associate their feelings with the brand. Long-term customer association can be built only through building emotional associations around a product.
It is true that emotions help develop an everlasting image of a brand. In fact, they help the brand develop a god-like character. There are few other elements of branding, viz., functionality, point of differentiation, and the product’s value that gives brand strength to survive in the rough corporate weather. Once a brand attains a respectable status it needs to deliver consistent positive quality. It strengthens the bond between the customer and the brand and they tend to develop strong feeling for that particular brand. With passage of time, the very same positive feeling transform these customers into brand evangelists.
There are a few brands that successfully transform their customers into brand evangelists, like Apple Computer, Linux, and Harley Davidson. Harley Davidson is a brand which is built solely on emotional association and consistent quality delivery. It is perhaps the strongest brand in the motorcycle market. The other motorcycles in the market essentially with the same engineering quality and performance are not in a position to charge even one-third of the price of Harley Davidson is able to. Harley Davidson customers are always ready to wait for months to get a motorcycle. Definitely, Harley Davidson is one among the very few cult brands the global market has. Cult branding is more than just strong branding, though not all the brands are positioned to become cult brands. A few of the well known cult brands are Oprah Winfrey, Volkswagen Beetle, Star Trek, World Wrestling Enterprise, Apple Computer, Linux, and Harley Davidson.
The act of imprinting the brand image firmly in the minds of customers is a great challenge to marketers. The act of image building has two basic components, positioning and consistent delivery of quality.
Positioning a brand is about interaction with people, what they read in press, style of advertising, quality of products, and efficiency of after-sales service. Branding is nothing but positioning a product successfully in the minds of the customers. If a brand is well positioned in a customer’s mind, half the job of directing customers to buy their products or services is done. The power of a brand is all about how customers associate their feelings with the brand. Long-term customer association can be built only through building emotional associations around a product.
It is true that emotions help develop an everlasting image of a brand. In fact, they help the brand develop a god-like character. There are few other elements of branding, viz., functionality, point of differentiation, and the product’s value that gives brand strength to survive in the rough corporate weather. Once a brand attains a respectable status it needs to deliver consistent positive quality. It strengthens the bond between the customer and the brand and they tend to develop strong feeling for that particular brand. With passage of time, the very same positive feeling transform these customers into brand evangelists.
There are a few brands that successfully transform their customers into brand evangelists, like Apple Computer, Linux, and Harley Davidson. Harley Davidson is a brand which is built solely on emotional association and consistent quality delivery. It is perhaps the strongest brand in the motorcycle market. The other motorcycles in the market essentially with the same engineering quality and performance are not in a position to charge even one-third of the price of Harley Davidson is able to. Harley Davidson customers are always ready to wait for months to get a motorcycle. Definitely, Harley Davidson is one among the very few cult brands the global market has. Cult branding is more than just strong branding, though not all the brands are positioned to become cult brands. A few of the well known cult brands are Oprah Winfrey, Volkswagen Beetle, Star Trek, World Wrestling Enterprise, Apple Computer, Linux, and Harley Davidson.
Evolution of Branding
“Brands have taken on a godlike status: Consumers find greater meaning in them and the values they espouse than in religion.”
– Young & Rubicam .
Brands are more like “best friends” – they form an important part of our lives, carry specific meaning for every individual and are accepted or rejected based on how well they keep promises. Brands are so ingrained in our daily life that we cannot do without them.
Evolution of Brand
Walking down the memory lane ‘of branding’, we can find the English artesian Josian Wedgwood building the first modern business brand. Wedgwood was able to stimulate demand for his more profitable tablewares and command premium price over comparable tableware and other products. Those were the days of the 18th century when the term branding was not known. By the 1920s branding as a discipline had emerged as one of the key tools of marketing. Pioneers in the development of this discipline were Procter & Gamble and Lever Brothers.
Goodyear* in 1996 described the evolution of brand in six stages. The first four stages represent traditional classic marketing approach where the value of brand was instrumental as it offered customers certain ends to achieve; the last two stages represent post-modern approach to branding.
Stage I: Unbranded Goods – in early days, goods were unbranded. [Products such as matchbox and paper pins still fall under such category.]
Stage II: Brand as a Reference – with the emergence of mass production, customer had a choice. This forced companies to differentiate their offerings to customers. At this stage of branding, differentiation became the driving force, which was primarily achieved through changing physical product attributes.
Stage III: Brand as a Personality – with the passage of time, it became extremely essential for companies to differentiate brands on rational or functional attributes, as many products started making the same claim. Therefore, to differentiate their product from competitors, marketers started personifying their brands. ‘Beauty soap for film star’ – Lux is the classic example of brand as a personality.
Stage IV: Brand as an Icon – marlboro represents independence; Nike stands for winning; and Rolls Royce as an epitome of luxury. All these brands are deeply rooted in consumers’ mind – they are brand icons. In this stage it appeared as if consumer owned the brands and they used it to create self-identity.
Stage V: Brand as a Company – personifying company as a brand is an ongoing change that also marks the post-modern marketing. Post-modern marketing is about consumers being proactively involved in the brand creation process. Brand as a company is a stage where a company considers strengthening the total access of information about product and services with a customer-enhancing relationship.
Stage VI: Brand as a Policy – ‘The United Colors of Benetton’ ad campaign creates an ethical unity, Body Shop and brings to light social issues like environment and treatment of third world people. Such are the examples of brands in the stage of ‘brand as a policy’. Today, only a few companies have entered this stage, wherein their brands are closely identified with ethical, social and political issues that are the constituent elements of the brand as a policy.
These six stages clearly define the development of a brand from a ‘me-too’ product to a power brand stage and beyond. Coming out of the shell of product branding today, brand managers are branding every possible thing on this earth. The practice of branding, in the changed business environment, extends across a wide spectrum, from product to companies, to CEOs, to celebrities and to the extreme end of religion. Today, anything that falls under definition of a common noun can be a brand.
* Goodyear, Mary (1996), “Divided by a common language: diversity and deception in the world of global marketing,” Journal of the Market Research Society, 38 (2), 105-122.
– Young & Rubicam .
Brands are more like “best friends” – they form an important part of our lives, carry specific meaning for every individual and are accepted or rejected based on how well they keep promises. Brands are so ingrained in our daily life that we cannot do without them.
Evolution of Brand
Walking down the memory lane ‘of branding’, we can find the English artesian Josian Wedgwood building the first modern business brand. Wedgwood was able to stimulate demand for his more profitable tablewares and command premium price over comparable tableware and other products. Those were the days of the 18th century when the term branding was not known. By the 1920s branding as a discipline had emerged as one of the key tools of marketing. Pioneers in the development of this discipline were Procter & Gamble and Lever Brothers.
Goodyear* in 1996 described the evolution of brand in six stages. The first four stages represent traditional classic marketing approach where the value of brand was instrumental as it offered customers certain ends to achieve; the last two stages represent post-modern approach to branding.
Stage I: Unbranded Goods – in early days, goods were unbranded. [Products such as matchbox and paper pins still fall under such category.]
Stage II: Brand as a Reference – with the emergence of mass production, customer had a choice. This forced companies to differentiate their offerings to customers. At this stage of branding, differentiation became the driving force, which was primarily achieved through changing physical product attributes.
Stage III: Brand as a Personality – with the passage of time, it became extremely essential for companies to differentiate brands on rational or functional attributes, as many products started making the same claim. Therefore, to differentiate their product from competitors, marketers started personifying their brands. ‘Beauty soap for film star’ – Lux is the classic example of brand as a personality.
Stage IV: Brand as an Icon – marlboro represents independence; Nike stands for winning; and Rolls Royce as an epitome of luxury. All these brands are deeply rooted in consumers’ mind – they are brand icons. In this stage it appeared as if consumer owned the brands and they used it to create self-identity.
Stage V: Brand as a Company – personifying company as a brand is an ongoing change that also marks the post-modern marketing. Post-modern marketing is about consumers being proactively involved in the brand creation process. Brand as a company is a stage where a company considers strengthening the total access of information about product and services with a customer-enhancing relationship.
Stage VI: Brand as a Policy – ‘The United Colors of Benetton’ ad campaign creates an ethical unity, Body Shop and brings to light social issues like environment and treatment of third world people. Such are the examples of brands in the stage of ‘brand as a policy’. Today, only a few companies have entered this stage, wherein their brands are closely identified with ethical, social and political issues that are the constituent elements of the brand as a policy.
These six stages clearly define the development of a brand from a ‘me-too’ product to a power brand stage and beyond. Coming out of the shell of product branding today, brand managers are branding every possible thing on this earth. The practice of branding, in the changed business environment, extends across a wide spectrum, from product to companies, to CEOs, to celebrities and to the extreme end of religion. Today, anything that falls under definition of a common noun can be a brand.
* Goodyear, Mary (1996), “Divided by a common language: diversity and deception in the world of global marketing,” Journal of the Market Research Society, 38 (2), 105-122.
A New Brand World
Bedbury, who headed advertising and marketing divisions of Nike and Starbucks during their phenomenal growth, argues that now is the time to build a brand that evokes trust among its customers. In A New Brand World, Bedbury draws from his extensive experience and provides practical advice to develop brands to their full potential and build lasting value. Bedbury sets out the principles that helped these companies become leaders in their respective industries and offers battle-tested advice for keeping any business at the top of its game.
Scott Bedbury was instrumental in developing global brands like Nike and Starbucks. A New Brand World extensively covers inside stories on Nike and Starbucks and presents lively anecdotes from the experiences with most of the global brands like Harley-Davidson, Microsoft, Disney, and Pepsi.
Bedbury’s book is a solid refutation to The Fall of Advertising and Rise of PR written by Al Ries and Laura Ries. Ries partners argue that so many ad dollars yielding such uninspiring results mean that advertising is ineffective; however, Bedbury has a different idea on creating and developing a brand.
He says, “Unless your brand stands for something, it stands for nothing.” Bedbury’s words effectively convey the fact that it is time to build a strong brand that evokes trust from customers. Brand building is more than a responsibility of marketing managers or CEOs. Bedbury says that building and supporting a brand is everyone’s job—from CEO and down. Brand building becomes more important in current business environment for three reasons:
• To win customer trust and love.
• Brand is the only asset which can’t be copied and outsourced.
• Recognition in society.
Bedbury proposes eight principles for ‘A new brand world’.
Principle 1: Relying on Brand Awareness has Become Marketing Fool’s Gold Brand awareness and recognition have lost their significance in the changed business environment. Bedbury believes that brand has a karma, which in his view, will emerge as the ultimate definition of brand strength in future.
What we experience in our daily lives is the idea of that thing, which gives it lasting meaning—this is the fundamental essence of branding. A brand is the result of a psychological process. Branding is about taking something common and improving upon it in ways that make it more valuable and meaningful. Today, who doesn’t know of Nike and Starbucks? Sneakers were sneakers until Phil Knight came along to brand them as a sports and fitness product and coffee beans were just coffee beans until Howard chuitz branded them. These brands stand successful even today because they consistently evoked (and are still evoking), positive feelings with each new product, service, or marketing campaign. Bedbury says, “Brands are living component that we hold in our mind for years. What goes into them is both logical and irrational.” He adds to it by saying, “Products and services will continue to come and go. But, the residual experiences of customers who consume them will ultimately define the brand.”
The journey of most of the successful brands started with the focus on building a profitable product or service and an organization that can sustain the product. If the product or the service in offer has no great attribute, no amount of advertising will help. Bedbury comments on the situation, “Even the best advertising cannot create something that is not here.
Table 1
Brand Brand Mantra
Nike Authentic athletic performance
Disney Fun family entertainment
Starbucks Rewarding everyday moments
Chrysler An engineering company
Apple Computer Daring to be different
Principle 2: You Have to Know it Before You Can Grow it No two brands are alike. Every brand has in its core a substance that gives it strength. The management needs to understand the core substance —‘Brand-DNA’ before they grow the brand. Brand DNA defines the source of strength of the brand. Better understanding of DNA helps to grow the brand in future. Brand DNA is not the only key; every brand has brand mantra—an essence and ethos which defines product and company to the core customer. It is the touchstone that helps companies in shaping products and services, how they conduct their business. It has provided a useful mechanism which concisely expresses brand’s ‘generic code’. The wonder term ‘Brand Mantra’ was originally coined at Nike. At Nike, brand mantra is ‘Authentic Athletic Performance’ (Refer Table 1).
Branding must start inside the company before taking the flight to the undisclosed horizon of the turbulent world. If everyone in the company knows and understands what the brand is all about, then it will become easier to communicate that message to the world at large. Bedbury comments, “Though it is important to demonstrate consistently to the outside world that you know what A New Brand World your brand is (all) about, ultimately, it is even more important first to demonstrate this internally and to continue to do so at every opportunity.”
Principle 3: Just Because You Can, Doesn’t Mean You Should To survive in the market, business needs to grow. One of the ways to grow is to broaden the company’s brand portfolio. This calls for striking the right balance between the necessity of growth and the need of brand preservation and conservation. Brand preservation and conservation in this changed environment have become the main challenges of all brand managers. The managers should always be diligent about assessing the impact of additional ‘brand-width’. Bedbury proposes six methods for building intelligent brand-width:
• Co-branding and strategic alliances
• Brand extensions
• New distribution channels
• Excel product categories
• Sub-branding
• Acquisitions
Growing and nurturing any brand is a continuous process. Bedbury proposes three things, which the managers should avoid while growing a brand. First, he suggests that the marketplace in this era is dominated by customers who are information seekers. This has increased the competition in the marketplace, where if you lose sight of your customer’s changing needs, you are out of market. Second, never ignore the impact of “profit improvement programs” on your brand. And third, it will be foolish on the part of companies to expect success in one business field to guarantee success in another (Refer Table 2).
Principle 4: Transcend a Product-only Relationship with Your Customers Harley-Davidson owners don’t just buy a Harley; they have also become the proud owners of the HOG (Harley Owners Group), which is bound by ethos and shared set of values that cross many social and economical strata. Emotional potency gives the proud owner of any great brand (not only Harley-Davidson) opportunities to leverage a brand. It has been proved, time and again, that the great brands always fulfill the emotional needs of their customers. It is believed that the more skillfully marketed product captures a better emotional state of the target group. In fact, there are arguments that the successful brands are ranked higher on Maslow’s scale of needs, like Volvo uses security and BMW focuses on status.
Principle 5: Everything Matters “Brand environmentalism means accepting the responsibility to protect your brand and present it in the best possible light whenever and wherever it may be found. It means undertaking a commitment to constantly improve and safeguard the integrity and associative value of everything that surrounds the brand in all phases of development,” says Bedbury. Brand environmentalism is of critical value to any organization. At Starbucks, brand environmentalism is seen as its greatest strength.
Principle 6: All Brands Need Good Partners The human form of branding is reflected very well in the growth of branding. Both brands and small children flourish in an inspiring and learning environment where they are appreciated, respected, protected, and sometimes rejected, when not performing as per acceptation. Brands are not only influenced by people, they also influence people.
Table 2
Strategies Examples
Co-branding and strategic alliances
• Pepsi-Yahoo!: In this high profile co-branding effort, Pepsi agreed to promote Yahoo! on 1.5 billion bottles and displays at some 5000 stores nationwide. In turn, Yahoo! agreed to promote Pepsi’s product on the all-new co-branded website, ‘Pepsistuff.com’.
• Starbucks-United Alliance.
Brand extensions have proved lucrative in many situations (Today, it is a separate here is that every brand has its limitation).
• People initially emerged as a section of (The point to remember Time Magazine publication).
• Frappuccino, bottled and blended in the café, ‘Starbucks’.
New distribution channels—The catch is analyzing core product positioning before taking a brand in new distribution channel.
• Starbucks started selling its own branded line of espresso.
Excel product categories—Leveraging core brand strength.
• Caterpillar licenses its brand to the shoemaker Wolverine WorldWide, which markets Caterpillar boots.
Sub-branding takes a subset of the qualities of the original brand to establish a new brand.
• Miramax, a sub-brand of Disney.
• Lexus, a sub-brand of Toyota.
Acquisitions to acquire company’s brand value.
• Success: Chrysler acquired Jeep.
• Hiccups: Daimler acquired Chrysler.
As brands evolve over time, they absorb the environment and karma of any organization. If developed and nurtured well, they can be the only constant in the organization development. The responsibility of developing brand can be shared by the CEO and front-line employees. Though the importance and layer of operational efficacy is different in both the cases, the contributions are equally important. The CEO represents the brand at higher level of business pyramid i.e., investors, stockholders, and media. Front-line employees hold strongly the bottom of pyramid, i.e., the customers. They come face-to-face with customers and, in many ways, they epitomize and personify the brand for most people.
Though the committed CEO and frontline employees do their part of job sincerely, the creative staff remain critical for the customer mind penetration. The creative staff like product designers and copywriters should work on three key attributes:
• Concise—No more than two pages; one, if you are really good.
• Tight—Containing two separate focused statements, of where the A New Brand World business and the brand are today and where they must be tomorrow, in order to achieve success.
• Loose—Let them figure out how to get there. Though branding is the responsibility of everyone in the organization, there should be someone (preferably one) accountable for brand strategy. The company should have, preferably, one promotion department and one agency to deliver the promotional needs of brand (Refer Table 3). In the current situation when companies run more complex operations than their predecessors, the role of the CEO is more critical and challenging. It calls for the new position—Chief Brand Officers who manage the branding initiatives and coordinate with the CEO.
Their job includes:
• To review brand-sensitive research and insights.
• To review the status of key brand initiatives.
• To review brand-sensitive projects.
• To review new product and distribution strategy.
• To resolve brand-positioning conflicts.
Bedbury comments, “In the New Brand World, companies that aspire to distinguish themselves above all others must spare nothing in their leadership effort to make everything tie together, to make everything they do a refreshing extension of something timeless and valued, and to do it where it matters most—even if it means turning the entire enterprise upside down.”
Table 3
Brand Brand Form of Emotions
Kodak Idea of family
Disney Idea of family
Guinness Place of heart; culture
PepsiCo Emotions and Necktie products
Snackwell’s A mother and child are only an emotion away
Montblanc Writing instruments
MasterCard Priceless emotional relationship
Nike Forging emotional ties with women to expand the business
Principle 7: Big Doesn’t Have to be Bad The bigger the business grows, the more it is subjected to scrutiny—from the justice department, other anti-monopoly regulators, and media. The rule applies not only to companies, but also to the big brand. Big brand is perceived as the Goliath of its industry and attacked for everything it does. Today, consumers are looking for real deal—they are looking for substance, not hype; and, honesty rather than hypocrisy.
Customers are looking for:
• Purity in message: The idea is not to create a false image; instead, it is about building a quality product and gaining customer acceptance. Nike didn’t set out to become cool or hip—much less admired by young urban teens—but, it simply set out to provide the best possible footwear to champion athletes.
• Grass-roots marketing: Nike sponsored athletes instead of becoming the official sponsor of the Olympic Games. It never evoked the word ‘Olympic’ in its marketing efforts, but the company gained recognition as one of the most visible sponsors of the 1984 Olympics.
The advocating organization acquires a heart and soul by investing money on social cause: For example, Nike supports kid’s sports; Starbucks supports a cultural literacy program; and Pfizer supports AIDS drug donation. Moreover, alter-image is dangerous— when cool becomes too hot to handle.
Principle 8: Relevance, Simplicity and Humanity—Not Technology—will Distinguish Brands in the Future Technology is not changing the meaning of branding completely—it is about altering the value of branding.
The core values of any brand are:
• Simplicity
• Patience
• Relevance
• Accessibility
• Humanity
• Omnipresence
• Innovation
Some of these seven core values have already benefitted from new technology and some are undermined by it. In any case, it is unlikely that the new technology will change the value of a brand. These seven core values can be applied to any company regardless of the size and structure.
Large corporations have enormous influence on our personal life. They also influence our quality of life. A great brand foundation is built with many different bricks by many different people over many years. It gives employees a common understanding, not just for what they do for a living, but also for how they must do it. Over a period of time, a brand that is universally understood, inside and outside the company, will create a spirit whose value to the company cannot be overestimated. Bedbury says, “Let’s all become better, more respected, more meaningful, and more trusted brands—not just bigger and better.
Changing Face of Indian Advertising Mascots
Air India’s Maharaja which came into existence in the year 1946 and the Amul girl in 1967 are the mascots which captured the hearts of one and all in India. These mascots caught the attention of the consumers as they were charming and connected well with the consumers. Indian corporate have also seen few other mascots like Fido the cool swanky doodle of 7 Up, doughboy the sweet little butler of Godrej Pillsbury, Gattu who build brand Asian Paint, Chintamani who endorsed ICICI, Sunny who is creating magic with Sunfeast. The success of these mascots can be qualified by, the increase in the brand value of these brands consumer connect.
Decline of mascot power
The Indian market grew at a fast pace in nineties everything from pencils to cars, salt to luxury goods required an advertising campaign this was the time when we saw emergence of celebrity advertising and mascots lost their appeal. We also lived in a time when there was no argument regarding the fact that a celebrity can make or break a brand. The pampering and recognition given to the celebrity in the marketing of the product in some cases was even greater than the product itself. The advertising world, during this time strongly believed that the celebrities transfer their success, personality, status and power to the brand. They attributed reasons for the growth of celebrity endorsements to:
• Create great brand awareness for product
• Sustaining the brand image
• Stimulating and reviving brands
• Product association
However, the advertising world also realized that many brand ambassadors does not practice what they preach and sometimes controversies and unpleasant incidents connected with the celebrity causes damage. It is also observed that over exposure and multiple endorsements too can damage the image of product. The Indian market which is saturated with celebrity endorsements has seen emergence of the mascots.
Emergence of the mascots
The courage and optimism that common man of R. K. Laxman portrays and a middle-class Indian, that Chintamani portrays is certainly unmatched but the new age mascots are more attractive, and trendy. The advertisers have become more creative with the use of animation. The new age mascots have a lasting appeal and create a whole new persona for the product. They manage the product as efficiently as a celebrity. Moreover, in the current marketing scenario when the celebrity charisma diminishing away the world of advertising is turning back to mascots.
Celebrities get associated with too many products and therefore it is difficult to relate them with one particular brand, which is not the case with the mascots. For an example Shahrukh Khan endorse brands such as Pepsi, Airtel, Santro, Emami , and many more but Fido is just associated with 7Up. The strength of mascots lies in its uniqueness, and its power of effectively communicating the ethos of the brand like, Chintamani solves all our worries related to tax savings and good returns paving a new way for no chinta, Share Khan tell us how to smartly invest in stocks and reap rich dividends, Gattu with the brush in his hand and the smile on his face passes the message that a bright coat of paint will brighten up the house. Moreover the mascots are not as expensive as celebrities. The cost of creating these characters is as low as development of a normal commercial. Lowe Advertising creative director Delna Sethna claims that the first Chintamani ad cost around Rs 7 lakh. Moreover, the animated characters also give more scope for creative-flexibility.
Mascots are dynamic and they adapt with changing times. We should acknowledge how the Amul girl in polka dots has changed overtime, and Fido has makeovers with the changing time. The advertising world has also observed that the popularity of any mascot is not only based on the response they get, but also depend on the fact that these faces have a higher recall value.
Conclusion
The Amul girl was born in 1967 is still a popular mascot. She may soon enter into the Guinness Book of World Records as the oldest campaign to survive in the market. This goes on to prove that the mascots are more appropriate brand ambassadors. The impact and success of the mascot, depends on how effectively it conveys the brand values and the ideals that consumers would associate with.
Decline of mascot power
The Indian market grew at a fast pace in nineties everything from pencils to cars, salt to luxury goods required an advertising campaign this was the time when we saw emergence of celebrity advertising and mascots lost their appeal. We also lived in a time when there was no argument regarding the fact that a celebrity can make or break a brand. The pampering and recognition given to the celebrity in the marketing of the product in some cases was even greater than the product itself. The advertising world, during this time strongly believed that the celebrities transfer their success, personality, status and power to the brand. They attributed reasons for the growth of celebrity endorsements to:
• Create great brand awareness for product
• Sustaining the brand image
• Stimulating and reviving brands
• Product association
However, the advertising world also realized that many brand ambassadors does not practice what they preach and sometimes controversies and unpleasant incidents connected with the celebrity causes damage. It is also observed that over exposure and multiple endorsements too can damage the image of product. The Indian market which is saturated with celebrity endorsements has seen emergence of the mascots.
Emergence of the mascots
The courage and optimism that common man of R. K. Laxman portrays and a middle-class Indian, that Chintamani portrays is certainly unmatched but the new age mascots are more attractive, and trendy. The advertisers have become more creative with the use of animation. The new age mascots have a lasting appeal and create a whole new persona for the product. They manage the product as efficiently as a celebrity. Moreover, in the current marketing scenario when the celebrity charisma diminishing away the world of advertising is turning back to mascots.
Celebrities get associated with too many products and therefore it is difficult to relate them with one particular brand, which is not the case with the mascots. For an example Shahrukh Khan endorse brands such as Pepsi, Airtel, Santro, Emami , and many more but Fido is just associated with 7Up. The strength of mascots lies in its uniqueness, and its power of effectively communicating the ethos of the brand like, Chintamani solves all our worries related to tax savings and good returns paving a new way for no chinta, Share Khan tell us how to smartly invest in stocks and reap rich dividends, Gattu with the brush in his hand and the smile on his face passes the message that a bright coat of paint will brighten up the house. Moreover the mascots are not as expensive as celebrities. The cost of creating these characters is as low as development of a normal commercial. Lowe Advertising creative director Delna Sethna claims that the first Chintamani ad cost around Rs 7 lakh. Moreover, the animated characters also give more scope for creative-flexibility.
Mascots are dynamic and they adapt with changing times. We should acknowledge how the Amul girl in polka dots has changed overtime, and Fido has makeovers with the changing time. The advertising world has also observed that the popularity of any mascot is not only based on the response they get, but also depend on the fact that these faces have a higher recall value.
Conclusion
The Amul girl was born in 1967 is still a popular mascot. She may soon enter into the Guinness Book of World Records as the oldest campaign to survive in the market. This goes on to prove that the mascots are more appropriate brand ambassadors. The impact and success of the mascot, depends on how effectively it conveys the brand values and the ideals that consumers would associate with.
Mobile Advertising
The business of encouraging people to buy products and services using the mobile channel as the medium to deliver the advertisement message
— Internet Message Access Protocol
Mobile advertising is an innovative and a customer-centric approach to reach promising customers. It includes advertising in the form of Short Message Service (SMS), mobile alerts, Multimedia Messaging Service (MMS), mobile games and videos. Mobile advertising can be divided into two main categories: Mobile Push Advertising and Mobile Pull Advertising. Mobile Push Advertising, can be in form of solicited or unsolicited advertising News alerts, job alerts and cricket score alerts are a few examples in this category. Mobile Pull Advertising, on the other hand, is defined as advertising when users request for the services from the service-provider for instance daily horoscope.
Mobile advertising is the latest buzz in the field of advertising, since it is a cost-effective way to promote and inform the target customers. With the advent of new media, mobile advertising has become one of the most demanding and integral part of marketing mix.
Benefits of Mobile Advertising
Mobile advertising is cost-effective and offers flexibility to inform target group as and when required. In the case of mobile advertising the advertising message can be personalized with respect to Target Audience. The mobile advertising is interactive in nature and advertiser gets feedback immediately. Though mobile advertising offers flexibility to contact target group as and when required. It also gives option of permission-based advertising, which is also governed by telecom rules and regulations. The mobile advertising is still not brand creator but it is more helpful in brand recall and brand interactivity. The benefits of mobile advertising include: flexibility of content, speed of reach.
Limitations of Mobile Advertising
Mobile advertising has limited message content. It is mostly driven by key words and target audiences in most of the cases take mobile advertisements casually. Moreover it still has very limited reach as compared to other conventional tools of advertising. The visual display is not as impressive as TV advertising. Though the advertiser has more control on the mobile advertising but still cant calculate ROI of advertising more accurately. Most importantly, mobile advertising is often criticized for intrusion of target audience privacy.
Guidelines for Mobile Advertising
The Mobile Marketing Association (MMA) has published guidelines for mobile advertising. These guidelines are designed specifically for the Asia-Pacific region to encourage the use of mobiles for advertising-related purposes as well as its acceptance by marketers and consumers.
As of now it is not in practice. There are companies, and advertisers violating the defined guidelines but we are moving in the direction where the advertising world will take it seriously.
Conclusion
Mobile Advertising is at infant stage of the life cycle. The share of advertising spend on mobile advertising is minimal but when advertising spend is seen from the lenses of life cycle it is a good start.
— Internet Message Access Protocol
Mobile advertising is an innovative and a customer-centric approach to reach promising customers. It includes advertising in the form of Short Message Service (SMS), mobile alerts, Multimedia Messaging Service (MMS), mobile games and videos. Mobile advertising can be divided into two main categories: Mobile Push Advertising and Mobile Pull Advertising. Mobile Push Advertising, can be in form of solicited or unsolicited advertising News alerts, job alerts and cricket score alerts are a few examples in this category. Mobile Pull Advertising, on the other hand, is defined as advertising when users request for the services from the service-provider for instance daily horoscope.
Mobile advertising is the latest buzz in the field of advertising, since it is a cost-effective way to promote and inform the target customers. With the advent of new media, mobile advertising has become one of the most demanding and integral part of marketing mix.
Benefits of Mobile Advertising
Mobile advertising is cost-effective and offers flexibility to inform target group as and when required. In the case of mobile advertising the advertising message can be personalized with respect to Target Audience. The mobile advertising is interactive in nature and advertiser gets feedback immediately. Though mobile advertising offers flexibility to contact target group as and when required. It also gives option of permission-based advertising, which is also governed by telecom rules and regulations. The mobile advertising is still not brand creator but it is more helpful in brand recall and brand interactivity. The benefits of mobile advertising include: flexibility of content, speed of reach.
Limitations of Mobile Advertising
Mobile advertising has limited message content. It is mostly driven by key words and target audiences in most of the cases take mobile advertisements casually. Moreover it still has very limited reach as compared to other conventional tools of advertising. The visual display is not as impressive as TV advertising. Though the advertiser has more control on the mobile advertising but still cant calculate ROI of advertising more accurately. Most importantly, mobile advertising is often criticized for intrusion of target audience privacy.
Guidelines for Mobile Advertising
The Mobile Marketing Association (MMA) has published guidelines for mobile advertising. These guidelines are designed specifically for the Asia-Pacific region to encourage the use of mobiles for advertising-related purposes as well as its acceptance by marketers and consumers.
As of now it is not in practice. There are companies, and advertisers violating the defined guidelines but we are moving in the direction where the advertising world will take it seriously.
Conclusion
Mobile Advertising is at infant stage of the life cycle. The share of advertising spend on mobile advertising is minimal but when advertising spend is seen from the lenses of life cycle it is a good start.
Shah Rukh Khan The King of Endorsement
In 1993, Shah Rukh Khan first appeared in three ads for tea brand Brahmaputra. The ads heralded the arrival of Shah Rukh Khan as a brand endorser of some stature. The very next year, he ended up endorsing three more brands – Hero Puch, Cinthol and Mayur Suitings. The series of his hits not only established him as a super star of film industry but also positioned him as a bankable endorser.
In 1996 he was signed by cola giant Pepsi, which can be seen as the turning point of his endorsement career. Shah Rukh Khan since then, has endorsed Bagpiper, Hyundai Santro and i10, Top Ramen noodles, Jeanne Arthes, Clinic All Clear shampoo, Emami-Sona Chandi Chyawanprash, Lux, Omega, Airtel, Nokia, sunfeast, Compaq, Home Trade, Videocon to name a few.
The superstar Shah Rukh Khan has 34 brand endorsement deals for year 2008 which is down from 37 endorsement brand in year 2007. I believe that other celebrity like Hrithik Roshan, Salman Khan, Aamir Khan and Akshay kumar have not shown great interest in the endorsement market. In the given scenario it is important to understand what makes him the most popular celebrity brand endorser around?
Shah Rukh Khan has been around for a long time, and has become a bankable name. He is the only one who has proved to be consistent for last fifteen years (since the release of his first movie in 1992). In recent past we have seen that the actors like Hrithik Roshan, Salman Khan, Aamir Khan and Akshay kumar are also consistent and bankable name of the Indian film industry but they are not the corporate world darling. In my views corporate world not only look for these two factors there are something more than this. The other important factors are – corporate friendliness, image of celebrity, brand personality of celebrity.
Marketers claim that Shah Rukh Khan’s appeal cuts across age, gender, and class, and blends the characteristics that mirror multiple identities – the ordinary middle class guy who went on to became the King. The king is a traditional and family loving Indian.
The biggest plus about the actor Shah Rukh Khan is that he holds self-made man image. The common Indian man associates with him and aspires to become Shah Rukh Khan. In last few years Akshay kumar has also attained status of self-made man which is challenge to the king. The other plus about Shah Rukh Khan is his image of down-to-earth, approachable person and his ability of straddling the classes and the masses. He is not niche actor like Aamir, and not even a down market actor like Govinda. In this parameter also Akshay kumar has taken a lead. This new image of the Bollywood star Akshay kumar can be a threat to the Shah Rukh Khan’s endorsement kingdom.
The fact that Shah Rukh Khan has been so overexposed by advertising leaves little room for credibility among consumers. I can’t imagine Shah Rukh Khan driving Huandi Santro or i10 but the fact that the Shah Rukh Khan’s fans still associate him with the products is doing wonders for him.
In 1996 he was signed by cola giant Pepsi, which can be seen as the turning point of his endorsement career. Shah Rukh Khan since then, has endorsed Bagpiper, Hyundai Santro and i10, Top Ramen noodles, Jeanne Arthes, Clinic All Clear shampoo, Emami-Sona Chandi Chyawanprash, Lux, Omega, Airtel, Nokia, sunfeast, Compaq, Home Trade, Videocon to name a few.
The superstar Shah Rukh Khan has 34 brand endorsement deals for year 2008 which is down from 37 endorsement brand in year 2007. I believe that other celebrity like Hrithik Roshan, Salman Khan, Aamir Khan and Akshay kumar have not shown great interest in the endorsement market. In the given scenario it is important to understand what makes him the most popular celebrity brand endorser around?
Shah Rukh Khan has been around for a long time, and has become a bankable name. He is the only one who has proved to be consistent for last fifteen years (since the release of his first movie in 1992). In recent past we have seen that the actors like Hrithik Roshan, Salman Khan, Aamir Khan and Akshay kumar are also consistent and bankable name of the Indian film industry but they are not the corporate world darling. In my views corporate world not only look for these two factors there are something more than this. The other important factors are – corporate friendliness, image of celebrity, brand personality of celebrity.
Marketers claim that Shah Rukh Khan’s appeal cuts across age, gender, and class, and blends the characteristics that mirror multiple identities – the ordinary middle class guy who went on to became the King. The king is a traditional and family loving Indian.
The biggest plus about the actor Shah Rukh Khan is that he holds self-made man image. The common Indian man associates with him and aspires to become Shah Rukh Khan. In last few years Akshay kumar has also attained status of self-made man which is challenge to the king. The other plus about Shah Rukh Khan is his image of down-to-earth, approachable person and his ability of straddling the classes and the masses. He is not niche actor like Aamir, and not even a down market actor like Govinda. In this parameter also Akshay kumar has taken a lead. This new image of the Bollywood star Akshay kumar can be a threat to the Shah Rukh Khan’s endorsement kingdom.
The fact that Shah Rukh Khan has been so overexposed by advertising leaves little room for credibility among consumers. I can’t imagine Shah Rukh Khan driving Huandi Santro or i10 but the fact that the Shah Rukh Khan’s fans still associate him with the products is doing wonders for him.
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