Managing Brand Equity

Because consumer responses to marketing activity depend on what they know and remember about a brand, as the brand value chain suggests, short-term marketing actions, by changing brand knowledge, necessarily increase or decrease the long-term success of future marketing actions.

1. BRAND REINFORCEMENT

As a company’s major enduring asset, a brand needs to be carefully managed so its value does not depreciate.62 Brand leaders of 70 years ago that remain leaders today—companies such as Wrigley’s, Coca-Cola, Heinz, and Campbell Soup—only do so by constantly striving to improve their products, services, and marketing.

Marketers can reinforce brand equity by consistently conveying the brand’s meaning in terms of (1) what prod­ucts it represents, what core benefits it supplies, and what needs it satisfies; and (2) how the brand makes products superior and which strong, favorable, and unique brand associations should exist in consumers’ minds.63 NIVEA, one of Europe’s strongest brands, expanded from a skin cream brand to a skin care and personal care brand through carefully designed and implemented brand extensions that reinforced the brand promise of “mild,” “gentle,” “caring” and “protective”

Reinforcing brand equity requires that the brand always be moving for­ward—in the right direction and with new and compelling offerings and ways to market them. In virtually every product category, once-prominent and admired brands—such as Circuit City, Fila, Polaroid, and Slim-Fast—have fallen on hard times or gone out of business.64 Consider the plight of one-time highflier Nokia.65

NOKIA For 14 years, Nokia dominated cell phone sales as the world’s industry leader before being surpassed by Samsung in 2012, marking the end of an era. Once the pride of Finland, the company has found itself outsold by Samsung even on its home soil. How could such a high-flying brand come crashing to earth? In a nutshell, it failed to innovate and stay relevant. Nokia did not respond to the wildly successful iPhone and the shifting consumer demand that accompanied it. The company thought the iPhone was too expensive to manufacture and was not up to its own product standards. The iPhone reportedly failed Nokia’s “drop test,” in which a phone is dropped on concrete from a height of five feet at different angles. Nokia had actually spent $40 billion on R&D over the preceding decade and was a smart phone pioneer, but it chose not to invest in devices that anticipated what the iPhone eventually became. Without the right new products, Nokia began to be associated by consumers with a different era of technology, a fatal blow in the fast-moving, technologically intensive smart phone market.

An important part of reinforcing brands is providing consistent marketing support. Consistency doesn’t mean uniformity with no changes: While there is little need to deviate from a successful position, many tactical changes may be necessary to maintain the strategic thrust and direction of the brand. When change is necessary, marketers should vigorously preserve and defend sources of brand equity.

Marketers must recognize the trade-offs between activities that fortify the brand and reinforce its meaning, such as a well-received product improvement or a creatively designed ad campaign, and those that leverage or borrow from existing brand equity to reap some financial benefit, such as a short-term promotional discount.66 At some point, failure to reinforce the brand will diminish brand awareness and weaken brand image. Consider what happened to Sears.67

SEARS A classic U.S. company, Sears was one of the strongest department store brands for more than 100 years, associated with high-quality merchandise and responsive customer service. Facing financial difficulties in the early 2000s, the company started aggressively selling assets and cutting costs to maintain its revenue targets. As a result of spending only $2 to $3 per square foot on annual maintenance and repair of its stores, far less than the $6 to $8 per square foot spent by competitors Target and Walmart, Sears began hearing customer complaints about inattentive sales associates, dis­organized sales racks, and stores in disrepair. As one analyst noted, “[T]hey weren’t keeping [their] promise. Consumers are pretty sophisticated, and they walked into these stores and it was the same old place … without the freshness, the excite­ment or the interactivity of the experience.” According to the ACS index of customer satisfaction, in 2012 Sears was ranked 10th among 11 department and discount stores, and same-store sales had been in a prolonged six-year decline.

2. BRAND REVITALIZATION

Any new development in the marketing environment can affect a brand’s fortunes. Nevertheless, a number of brands have managed to make impressive comebacks in recent years.68 After some hard times in the automotive market, Cadillac, Fiat, and Volkswagen have all turned their brand fortunes around to varying degrees. General Motors’s rescue of its fading Cadillac brand was fueled by a complete overhaul of its product lineup with new designs that redefined its look and styling, such as the SRX crossover, the XTS and CTS sedans, the Escalade

SUV, and the new ATS sports sedan. A healthy dose of breakthrough marketing, including the first use of Led Zeppelin’s music in advertising, also helped.69

Often, the first thing to do in revitalizing a brand is understand what the sources of brand equity were to begin with. Are positive associations losing their strength or uniqueness? Have negative associations become linked to the brand? Then decide whether to retain the same positioning or create a new one and, if so, which new one.70

Sometimes the actual marketing program is the source of the problem because it fails to deliver on the brand promise. Then a “back to basics” strategy may make sense. We’ve mentioned that Harley-Davidson regained its market leadership by doing a better job of living up to customer expectations for product performance. Pabst Brewing Company did it by returning to its roots and leveraging iconic packaging and imagery and a perception of authenticity.

In other cases, however, the old positioning is just no longer viable and a reinvention strategy is necessary. Mountain Dew completely overhauled its brand image to become a soft-drink powerhouse. As its history reveals, it is often easier to revive a brand that is alive but has been more or less forgotten. Old Spice is another example of a brand that transcended its roots as the classic aftershave and cologne gift set that baby boomers gave their dads on Father’s Day to become positively identified with contemporary male grooming products for a younger Millennial audience. To revitalize Old Spice, P&G used product innovation and tongue-in-cheek communications that stressed the brand’s “experience.”71

There is obviously a continuum of revitalization strategies, with pure “back to basics” at one end, pure “reinven­tion” at the other, and many combinations in between. The challenge is often to change enough to attract some new customers, but not enough to alienate old customers. Regardless of the strategy, brand revitalization of almost any kind starts with the product.72 Consider how Burberry made its comeback. Eu Yan Sang, a company specializing in traditional Chinese medicine, did it by returning to its roots and leveraging key brand assets.73

EU YAN SANG Eu Yan Sang, a brand with more than 300 stores worldwide, has come a long way since opening its first shop in 1873. The brand has succeeded in growing from a traditional Chinese medical hall to a publicly listed company with stores in Hong Kong, Malaysia, China, Macau, and Singapore.

Traditional Chinese medicine (TCM) is commonly linked to images of elderly men measuring out dried herbs and brewing bowls full of black, bitter soup. Though TCM is popular with the older generation, younger consumers saw it as inconvenient. Eu Yan Sang remained stagnant with flat growth for a period of nearly 60 years. All this changed when Richard Eu took over his family business in 1989. Knowing he had to make the brand relevant to younger consumers, he leveraged Eu Yan Sang’s strong equity as a trusted brand and modernized it by going back to basics. Through research and development, he was able to provide innovative offerings such as ready-to-use concentrates and easy- to-swallow pills that changed the way Chinese medicine was consumed. The retail stores were also redesigned to give them a brighter and friendlier look. With the support of other marketing activities, such as advertising, road shows, and cooking demonstrations, Eu Yan Sang’s business has grown by leaps and bounds. Initiatives, such as the Eu Yan Sang TCM clinics that combined the best of east-west health care practices, help the brand stay relevant. In 2014 alone, the brand won over 16 awards. It was given the Gold for Reader’s Digest Trusted Brands Award, numerous healthcare awards across China and Malaysia, and was recognized for its commitment to product development and customer satis­faction in what has become a highly competitive market.

Source: Kotler Philip T., Keller Kevin Lane (2015), Marketing Management, Pearson; 15th Edition.

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