Applied Marketing Management Quiz 2

Endorsing brand

leading w/ strong sub-brand but leveraging corporate brand as an endorser Eg Marriott has M Courtyard, M Residence Inn-- they're endorsed by strong brand but separate

Brand Portfolio

Managing a brand often leads to expanding it or to creating new ones A good portfolio should create or exploit synergies The brands together should be worth more as a part of the portfolio than if they were standa loans Brand architecture must reflect the strategy developed in the brand portfolio House of brands (not connected, shadow endorser) Endorsed brands (token endorsement, linked name, strong endorsement) Sub-brands Branded house (same or different identities) Should be built around LT goals of the company

Defining Luxury from Consumer standpoint

Luxury brands are divisive, people either love or despise them They either think of them as: A sinful self-indulgence, lasciviousness Excess, extravagance Vicious indulgence OR An escape from/a cure of the ordinary Struggle for improvement

How is luxury specific?

Luxury is not more of premium, or beyond premium or more expensive than premium: it is elsewhere Luxury is Janus: 2 inseparable faces A sociological face: it represents and publicly incarnates social stratification A psychological face: ??

History of Luxury

Luxury items were used by tribes on occasions to honor gods, celebrate a chief, a victory, a marriage, etc Luxury has since then been associated with timelessness or eternity, as well as with social status Luxury was really born in the renaissance in europe, but evolved in the 19th century where artists became the ones who direct customers, not the other way around From buying access to eternity, wealthy ppl now want innovation with tradition, past with future Neither tradition nor fashion, luxury is now a hybrid between fashion and tradition where time of the past is restructured by the time of fashion/present Fight against time still endures

Luxury Market in Numbers

Luxury market grew by 4% in 2019 to an estimated 1.3 trillion euro globally Positive performance across most segments with 4-5% annual expected growth until 2025 Luxury cars, luxury hospitality, and personal luxury goods together accounted for nearly 82% of the total market

heterogeneity of consumer behavior

Not everybody consumes luxury the same way Luxury consumers pursue a diversity of goals: Signaling status Seeking a one-off custom-made product that no one will ever own (snob behavior to disassociate oneself from majority) Seeking products to assimilate to people wearing them (brand wagon effect, to assimilate to majority)

Goals of luxury collaboration

On what psychological motivations do collaborations rely? Need for uniqueness Need for newness Need for variety Which pillar(s) of luxury is (are) reinforced by collaborations? Exclusivity (similar to limited editions) Creative leadership (when associated with an artist or very creative brand)

Strategic Importance of Branding

brand has markers that provide brand associations, brand meanings, hence brand culture Brand culture is at basis of the power of brands Brand stories, associations, and images collide in everyday social life and a consensus view or common story emerges These become reinforced and conventional over time, endowing the brand w/ both tangible and intangible aspects

Why might brands fade away?

change in consumer taste, preference, new competitor, new tech, etc They didn't do anything wrong, it's just not relevant

what does clear brand architecture do

contributes to brand health and company value Makes it easier for customers to navigate offerings & avoid confusion Ensures Masterbrand is leveraged w/o overstretching Guides new product and becomes face of the biz

Different types of brands

corporate brands parent/umbrella brands sub brands endorsing brands ingredient brands private labels

what does a brand give you?

emotional connection

corporate brands

branding of a company itself as opposed to the products; ALSO the name of at least one product line Eg Coca Cola is a corporate brand but also has a line called Coca Cola

private label

brands that belong to retailer

definition of luxury

"Expensive rare objects with an image of good taste" "Traditionally the word luxury applies to tangible objects, suggesting superior materials and designs sold in an upscale retail environment" "Exclusivity, premium price, image, and status which combine to make them more desirable for reasons other than function" A luxury is a relative statement For some consumers, Coach is a luxury: it gives them a feeling of extra quality, of prestige, above that of all ordinary bags. Same for lancel Same that in India, clean drinking water is a luxury MY LUXURY doesn't imply social comparison.

Distinguishing in Luxury

"Luxury" (absolute meaning) from the happy few to the man in the street "A luxury" (relative meaning) for a specific group trading up for more quality and prestige, not the happy few "My luxury" (purely individual meaning/pleasure)

Do 6 facets of a brand identity on BC

(do it)

How to manage brand equity

Requires more than a long-term perspective Brands must be reinforced day after day through consistency Sources of brand equity should be enduring Fortifying vs leveraging

BAV as a tool for analysis

4 criteria: Energized differentiation: reflects brand's motio nand direction in the marketplace Relevance: how appropriate consumers perceive the brand to be Esteem: consumers' perception of quality of brand and how much it's respected Knowledge: degree of consumer awareness and understanding of brand

Brand Architecture Types as a Solution

Brand architecture solutions fall on a spectrum Most are hybrid solutions, falling somewhere between branded house and house of brands Ex: Disney Uses a mix of brand architecture solutions to built and protect its business

From Brand Culture to Brand Resonance

Brand culture yields brand equity as it's at the basis of consumers' willingness to pay more the branded vs non-branded product brand resonance is built over time and repeated interactions, it evolves towards a deeper relationship between the brand and its customers, when the brand resonates with its customers

what isn't included in brand portfolio

Branded elements live outside the architecture They may be trademarked or licensed .... MORE IN SLIDE

When to revisit brand architecture

Built to last Must be revisited when companies change strategic direction or the biz has added important capabilities that go beyond its existing brand structure

when should you use a fighter brand

Can you afford to spend precious resources ($, management time) on new low-priced (usually low margin) brand? The fighter brand shouldn't be used just to postpone tough decisions/buy time It should fit the overall strategy and resources of the firm Otherwise just hold the fort before you make a move

Hazards of Fighter Brand

Cannibalization When customers of the premium brand are leaving it to buy the low-cost one instead How to avoid: perceived differentiation. The low price must match a perceived lower quality. Otherwise the fighter brand becomes the very problem it was created to combat. Always do the math to make sure the low cost product is not cannibalizing too many premium brand customers. Calculate BECR. Break Even Cannibalization Rate = Low cost/fighter brand contribution/premium brand contribution Failure to eliminate the enemy The most favorable outcome is eliminating competitors. However, it can't succeed if it's weighed down by other considerations like the protection of the premium brand. It must be low quality but not lower than rivals How to avoid: the compay must be prepared to react quickly to customers and to adjust price and performance of the fighter brand to ensure that it doesn't jeopardize the premium brand or underperform rivals Failure to make profit Price tag must be competitive enough and yet high enough to ensure profitability Cutting cost by using production capabilities of premium products is dangerous as the quality differentiation might turn out to be minimal How to avoid: cruch numbers and make sure you ca nmake money while competing with rivals on lower level Englecting the customers If the fighter brand only copies the rival to meet a segment need, it might fail bc of rival's strong brand awareness adn familiarity with consumers inn that segment How to avoid: company must turn their focus to new target segment consumers and ADD MORE FROM SLIDE Diverting the company's attention Fighter brand becomes a liability if it diverts the company's attention from its core business-- the premium brand The range of a fighter brand is fairly limited; it is primarily used to fend off low-priced rivals, but can do little against other threats Fighter brands ca nalso make premium brands more vulnerable by siphoninng away resources and attention, delayign important strategic decisions How to avoid: company needs to reinvest in the premium brand to reinforce it and justify its premium price. Mgmt attention must balance out to the benefit of both brands

Luxury Consumers in 2020

Consumers looking for experience, not just owning a product Consumers with purposeful consumption Digital consumers

Why do people like luxury?

It elevates them It gives pleasure, beauty, style in life Gives them products with meaning, high quality, out of the ordinary With prestigious brands, known as visas of social distinction It symbolizes "becoming a person" Value of luxury product lies not only in eyes of that who holds it, but also in the eyes of others

characteristics of luxury

Exclusive Not easily reachable Expensive Timeless Not a need, but a want Status symbol Strong value proposition High class/elite Paying for more than product/service Quality

What can we do with declining brands?

FROM SLIDE

How did Google achieve resonance?

Google has achieved greater visibility of its search engine capabilities by attempting to establish an emotional connection between the product and its consumers

Typology of Luxury Brands

Horizontal axis is the aesthetic mode Left side, you're a novice and don't need to be an expert to appreciate the product Right side, you need to be an expert to really appreciate the brands

The Cycle of Luxury

In times of crisis we focus more on the function, versus later when it's more on status/symbol

categories of consumption, as defined by adam smith

Necessary Basic Affluence Luxury

Investment in tactics to maintain or build brand equity depends on the type of brand associations the equity is based on:

Product-related associations Non-product-related associations

Pre-owned market grows... fueled by 4 drivers

Professionalization of the trade channels Digital platforms replacing consignment shops, and now providing seamless end-to-end experience that guarantees authenticity and quality Consumer preferences for shorter ownership and sustainability Luxury consumers exposed to constant flux of styles through social media, not willing to own products forever, and more concerned about sustainability than ever before Broader access to iconic, scarce products Scarce luxury products, both iconic products or special capsules, can be readily located on secondhand digital marketplaces Access to luxury products at better price/quality ratio Participation in secondhand market provides lower purchase prices along with an income opportunity. Younger consumers spending less on products and more on experiences

Brand Architecture as face of the business

Represents the brand to external stakeholders Optimal architecture may not line up neatly with internal organizational structures-- and that's okay!

Signal preference and taxonomy based on wealth and need for status

Proletarian: not super rich, not trying to show off Parvenu: high wealth and want to show it off Patrician uses quiet signals-- if they're to buy a gucci bag, they'd buy a lowkey one. Still recognizable to some but not over the top

New trends in luxury

Sustainable development Collaborations pre-owned/second-hand luxury

what makes brands so powerful?

The collective perception of the brands

How is luxury threatened?

The middle class growth in many countries is a biz opportunity for luxury but also can be a great damage To capture huge demand, mass brands imitate luxury and its codes How will luxury show its difference and avoid running too much after volume?

Who will the next luxury consumers be?

The next meaningful shift will be generational Millennials and gen z will account for 45% of market by 2025

why is luxury market growing?

There are more very rich people Oct 2009: 130 Chinese billionaires in $ Forbes Feb 2010: 1,000 billionaires Forbes 2019: 2153 billionaires in $ The CLEWI index goes up, much more than the regular price index Since 1982, the CLEWI has outpaced inflation by an average 2.3% In 2018 the Forbes 400 are worth a record $3+ trillion, double the sum of a decade ago Democratization of luxury Economic growth: middle class feels optimistic, is richer, and wants to trade up Women work and marry later, have their own $ and disposable income Idea that "you are what you wear" Because the mass wants to own a bit of what symbolizes the better life of the happy few Economic growth makes you go beyond needs and liberates your aspirations Luxury is consumption at its best: it delivers rare, intense emotions (love, power, pleasure, pride, reward, social sign) Bc people like luxury

Luxury Consumption Dimensionality

There is no strict demarcation between utilitarian brand consumption or luxury brand consumption: they are on a continuum Luxury is learned and earned: All 3 values are acquired and learned over time The detection or constitution of luxury is a sensibility that is developed over time: it is the development of connoisseurship, the 4th dimension of luxury consumption

what is luxury today

This evolution has stimulated the consumption of luxury products but the central sociological function (signaling social stratification) has been lost Lux today is an incomparable experience, a refine product, a brand that means i have achieved something, i can indulge because i deserve it or because I'm worth it

How to revitalize a brand

Understanding the original sources of brand equity by profiling the brand knowledge structures guide repositioning by assessing: The breadth and depth of brand awareness The strength, favorability, and uniqueness of brand associations

luxury consumption mentality

Very often associated with guilt and sin (religious connotation) More recently luxury as a reward/taste of the exceptional Functional alibi-- you can justify it by saying, "well, i do need a car, so i might as well get the best of the best"

Indices of brand equity

Young and rubicam, Interbrand, D. Aaker Roughly all are based on: consumer loyalty, brand experience, trust, relevant differentiation/positioning, brand awareness, brand associations These indices are useful to analyze brand equity and the brand's possible opportunities or weaknesses

parent or umbrella brand

a brand that has a range of sub-brands in its portfolio eg P&G

ingredient brand

a component or an ingredient of a product or service is pulled into the spotlight and given it's own identity

Strategies for migrating mass-market brands to luxury brands

get from slide/notes

Triggers for revisiting brand architecture

merger/acquisition Too many brands/offerinngs are competing for attention and investment dollars Corporate brand and product brands have the same name, hard to distinguish Brands losing relevance w/ consumers Brand meaning has been diluted or stretched beyond credibility Programs, elements, features, or sponsorships are asking to be treated as brands

6 facets of a brand identity

personality, physical, values, self-image, user imagery, relationship

what does brand architecture do

provides rules for naming assets in a brand portfolio and specifies the relationships between them. Also determines marketing investment priorities and whether/how new acquisitions should be integrated to the portfolio

5 Pillars of Luxury

rarity/scarcity Social status/social gap Hedonic and refine experience Exceptional performance/quality Creative leadership (Kapferer & Valette-Florence, 2016)

Where does the word "brand" come from

the idea of branding a cow identification

Sub brand

the main brand creates a subsidiary or secondary brand. ... This new brand's attributes are distinct, yet related to the main brand. Sub-brands often have their own brand standards, logo, color treatment, etc. while some sub-brands reflect the same identity as the parent brand Ex: Apple has iphone, ipad, apple tv-- related to apple but separate

Importance of brand stories, associations, and images

they collide in everyday life and a common consensus emerges these become reinforced and conventionalized over time, giving the brand both tangible and intangible aspects

How do brands achieve resonance?

they must know what its identity is to be able to communicate consistently to create salience, judgements, feelings, imagery, and resonance